The wholesale distribution sector has traditionally been seen as traditional, conservative, innovative, and technology-averse. This is not true for the last decade. However, it is clear that pressure to innov has increased for wholesale businesses.
The traditional wholesale model is becoming increasingly endangered. A pure product-centric business (buy-store/move-sell) is simply not enough for most distributors to remain profitable. Wholesalers face increasing pressure from many industry trends.
- Increased competition
- Supply chain disruptions
- Talent shortage
- Regulations are increasing
Many distributors believed they could reinvent themselves in 5-10 years. The pandemic created an almost perfect storm, much like the warm Caribbean water fuels a hurricane.
Since then, agility and flexibility have risen to the top of organizations’ priorities. Transformational initiatives are no longer a luxury. Wholesalers need new ways of running their businesses on multiple fronts. This makes innovation a crucial part of today’s market.
The wholesale distribution industry and the innovation imperative
Distributors must look for additional opportunities to complement their existing business, or develop new revenue streams and business models in order to grow from a product-based business.
This is what Professor Clayton M. Christensen called jobs that must be done in his book Competing Against Luck. You can create a solution-centric offering based on what your customers want.Multiple wholesale distributors offer IT services, such as web design, to help customers create web shops. These services helped small mom and pop stores to survive the lockdowns that were imposed by the pandemic. Additional value-added services include extensive project management and coordination.
Innovation is also fueled by new regulations. These are particularly important in the healthcare and food-and-beverage sectors.
AmerisourceBergen won the 2021 SAP Innovation Award for the category of industry leader. It created a track and trace supply chain solution and corresponding hub to address a new law that aims to ensure the safety and security in pharmaceutical supply chains. This solution allowed the distributor to work with thousands of business partners, and comply with messaging regulations.
A circular economy is possible
Sustainability and the need to create a circular economy are another drivers of innovation in wholesale distribution. This area has new regulations that demand greater visibility throughout the supply chain.Emissions and C02 reporting are quickly becoming more than a marketing tool. Customers, investors, as well as the general public, demand a serious approach towards going green.
High-tech distributor Betchtle has created a series of reusable shipping materials and packaging materials.
Be adaptable to changes in the workplace
Wholesale distributors should also consider the future and the impact on the employee’s lifecycle. How can distributors draw new talent? How can you prepare your workforce for the challenges and opportunities ahead?
Although the pandemic has encouraged the adoption of virtual meetings concepts and mobile work, it has also accelerated no-touch business transactions. However, even before that, there have been waves of change in the job market. It’s becoming more difficult to find front-line workers (e.g. Although it’s becoming more difficult to find front-line employees (e.g., truck drivers and warehouse workers), the demand for knowledgeable customer-facing employees is growing significantly (e.g. Support and sales
Robotics and automation can be used to automate tedious tasks and create more attractive jobs. Artificial intelligence is also able to support agile decision-making and propose solutions. It can also digitize knowledge so that it can be easily shared across the organization.
How wholesale distributors could drive innovation
What’s the best way to plan and invest in innovation for wholesale distributors?Listen to your customers and employees as a first step. What are their solutions to getting things done? What would make their life easier?
A design workshop allows you to bring together key team members to brainstorm some ideas, then create some prototypes to test solutions-centric designs. This type of approach can lead to innovative business models and advanced concepts.
When you are approaching transformative initiatives, particularly disruptive ones, one main concern is giving your new venture a fighting chance. It is difficult, and some might even say impossible, to disrupt one’s organization.
It is as important to create the right organizational culture for these projects as the idea itself. This could be an incubation center or spin-off that isn’t part of the traditional company structure. It can allow for greater flexibility to fail quickly and share key lessons.
There are many opportunities, but there is a lot of work ahead
We will see more forward-thinking projects, and innovation as the markets evolve in a dynamic environment. Like digitalization, social changes are also dynamic. Trade is at the heart of many megatrends.
In the future, advanced technologies such as robotics and artificial Intelligence will likely bring new possibilities.
The industry of wholesale is expected to continue to be one of the most popular in the coming years, with an equally dire need for innovation.
The wholesale distribution sector is constantly evolving in this modern age. This means that it faces increasing pressures. These are the key innovations that will impact the wholesale distribution industry, and keep it competitive and healthy.
Modernizing processes
Wholesale and distribution companies can now create more efficient processes and track and collect data through digitization and automation. The distribution industry relied on paper trails for each shipment. This was not only cumbersome and out of date, but it also led to unintentional errors. Companies can now keep up with industry leaders and streamline their processes by adopting cloud-based technology.
By tagging every item in a warehouse using wireless tracking technology, your team can automate inventory. They will know exactly where they are and can track their movements during distribution. These tools leverage the power of GPS and Internet of Things and mobile tech to save your company time, money, and effort.
Unparalleled customer service
It’s easy to let the relationship side of business slip as automation increases in frequency. Business-to-business customers (B2B), however, are beginning to expect the same level service as those who use the business-to consumer (B2C). Amazon and other leaders in the retail market have created a new level service. This includes personalization, responsiveness, superior communication, and product delivery.
How can you prioritise product presentation and delivery? High-tech tools that use 3D imaging to digitize product inventories give customers a clear idea of what you have available. As customers increasingly use smartphones and iPads more frequently, there are many channels to showcase your products.
It is possible to monitor the devices that your customers use on your website and optimize your products and listings for them. Customer feedback and reviews have become an important marketing and sales tool as customers trust others to provide transparency and trust. This is thanks to Amazon and Yelp reviews.
Responding To Competition and Expanding Markets
Many companies are having difficulty deciding where to go next as competition grows and new markets emerge. Targeting a specific market, such as restaurant owners, independent food shops, medical and healthcare practitioners, is one way to go. You can become a trusted partner for retailers by focusing on a niche market or narrowing your focus.
Direct purchase from the manufacturer
Although wholesaler distribution is an important component of the supply chain for many products, customers are increasingly going direct to the manufacturer to get lower prices. Although price alone is motivating, wholesalers must step in. Customers will be less likely to purchase directly from manufacturers if you educate them about the value of your products and how they fit into the supply chain. Many customers lack the skills, equipment, management and systems necessary to work with the manufacturer for the best product and experience.
Wholesale distributors face immense pressure to keep up with demand and remain competitive. We get that. Our bankers are available to help you optimize your business. Learn more about the latest innovations in wholesale distribution and how we can assist your operation.