The global wholesale market has traditionally been an essential component of the supply chain, serving as an intermediary between manufacturers and retailers. According to the Business Research Company, the wholesale industry was valued at over US$49 trillion in 2021, with merchandise from numerous sectors passing through wholesale distributors on its way to customers. And this industry continues to grow, with a predicted value of more than US$64 trillion by 2025. However, the global wholesale market is changing, both due to shifts in technology and consumer preferences, and because of the challenges brought on by the global pandemic.
Recent years have seen e-commerce giants like Amazon and Alibaba substantially impact the B2B space, creating some tough competition in the wholesale distribution market space. With a massive variety of products and fast shipping, these companies are setting expectations that other businesses struggle to match. Many buyers are turning to these companies for fast and cheap products, leaving traditional distributors struggling to keep up.
Wholesale distributors are also seeing a trend of disintermediation: a growing number of manufacturers are beginning to sell directly to the retailer or consumer. As online marketing and selling continue to grow, manufacturers are developing their own e-commerce platforms that allow them to communicate more directly with their customers and improve service quality and delivery speed. For customers, ordering directly from the manufacturers is an opportunity to score better deals and potentially access a wider range of that company’s products than a given wholesaler may have in stock.
Finally, as with most industries, the COVID-19 pandemic has thrown a wrench in the works for wholesalers, leading to supply chain disruptions and labor shortages. Suppliers have had to contend with significant shipping delays (in both receiving and delivering products), shortages, and the need to find alternative products when some items become difficult or impossible to obtain. Not only do these challenges strain the purchasing budget, but they can also create friction between customers and vendors. On top of this, the ongoing pandemic means that warehouses have had to adapt their operations to ensure worker safety, and labor shortages mean that those workers are harder to find. This makes operational efficiency more important than ever.
To compete in today’s market, wholesalers need to add value that e-commerce giants or manufacturers can’t. Providing a platform for customers to browse and order from online is a key step, both to keep up with companies like Amazon and to reach a broader customer base than a wholesaler might otherwise have access to. But to stand out from the competition in today’s market, wholesale distributors need to consider where they can add value.
They may not be able to match the breadth of products offered by companies like Amazon or Alibaba, but wholesalers can provide something valuable instead: curation. On e-commerce giants like Amazon, it can be hard to tell whether a product is high quality or a seller is reliable, and these marketplaces tend to contain many knock-offs and counterfeits. By providing a curated selection of products based on quality, price, or other relevant factors, wholesale distributors can appeal to buyers who are looking for something specific.
Additionally, while wholesalers may not be able to compete with Amazon’s product range, they are capable of offering greater breadth of merchandise than the manufacturers who have opened new B2B channels. Retailers that stock a variety of products may prefer going to a few wholesalers that can meet their needs, rather than having to make many purchases from many different manufacturers. Convenience can be a powerful advantage.
Regardless of what strategy wholesalers may take to differentiate themselves, one thing is essential in today’s B2B environment: a well-run e-commerce platform. Buyers are increasingly looking for a B2B experience that is similar to online B2C shopping, with the ability to browse and order products online and with personalized features. A wholesale e-commerce platform still needs to offer features that are important to B2B transactions though, including a variety of pricing, payment, and shipping options. And while studies show that buyers spend less time with sales representatives than they traditionally have in the past, direct conversations with reps — whether in person or online — are still a valuable part of the sales process.
What else are wholesale distributors doing to stay in the game amid competition from e-commerce giants and disruptions to the supply chain? Many businesses are upgrading their systems and equipment with new technologies, allowing them to improve the efficiency, accuracy, and speed of their operations. An inventory management system can track and optimize inventory levels, making it easier to avoid being over- or under-stocked and to make the most of the available warehouse space. It’s also invaluable to maintaining a good e-commerce platform for online sales.
Inventory management software also helps enable supply chain automation by tracking stock levels, customer orders, and shipping information in real time. A more involved automated system can include robots designed to perform repetitive manual labor, which can free up staff for more complex tasks or help make up for labor shortages. Such systems can be expensive to install, but over time can result in substantial cost savings.
The past two years have created challenges for businesses around the world, and finding ways to adapt has been essential. However, the changes and innovations introduced during the pandemic can continue to benefit wholesalers well into the future, with new practices and technologies helping to improve both customer relationships and operational efficiency.
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