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24th February 2021 | in Blog

How to Evaluate Your Wholesale Distribution Business Model


2020 proved a tumultuous year for businesses in all sectors. The coronavirus pandemic, coupled with Brexit uncertainty, made for an unstable commercial landscape, and it’s only now that we’re beginning to see renewed confidence and green shoots of recovery.

Wholesale distributors didn’t escape 2020’s tumult; nor were they worst affected. Indeed, many distributors, particularly those affiliated with ecommerce retailers or who sold wholesale PPE, cleaning supplies, DIY or plastics, stood to profit from the huge increase in demand – even if their supply chains were stretched to the limit.

For others, however, the pandemic offered a hard wake-up call. Bringing shortages in supply, freefalling demand, and long delays at customs desks; 2020 left many wholesale distributors shaken, and with a need to take stock of processes, workflows and strategies throughout their business and supply chain.

It’s for this reason that wholesale distributors should take the time to evaluate their business model, factoring in not only post-COVID-19, post-Brexit recovery plans, but other trends and developments with the potential to disrupt their operations in the coming years.

In this post, we’re addressing the chief disruptors that look set to shake-up distribution, as well as the tactics wholesale distributors can use to stay profitable and relevant in the coming months and years.

What Are the Main Disruptors Affecting Wholesale Distribution?

Wholesale distribution businesses face significant disruption in the coming years, and not just as a result of the COVID-19 and Brexit fallout. Emerging technologies, marketplace channels, changing consumer demand, and a growing competitor base all threaten continuity and growth within the sector, making a business model evaluation a critical undertaking.

There is a silver lining to all of this, however. These unique challenges and environments also offer opportunities to savvy wholesalers able to spot and exploit gaps in the market.

Let’s take a look at the key disruptors, beyond Brexit and COVID-19, which could affect how wholesale distribution businesses operate in the coming years.

Digital Transformation

Emerging digital technologies, such as mobile business apps, business intelligence tools, web-based ERP, and AI and automation, have already proved a pervasive force for industry, and there’s no sign of digitisation slowing anytime soon. In the wholesale distribution arena, digital is something of an ‘omni-disruptor’, affecting processes and workflows throughout the entire supply chain.

Businesses yet to face up to the challenges of ever-increasing digitisation would do well to consider emerging technologies as part of their state-of-play assessment. The integration of solutions such as enterprise resource planning (ERP) software can ease the adoption of new systems and technology, standardising processes, data and interfaces across an entire operation.

Expanding Competition

The wholesale distribution sector is expanding, with demand from multi-national conglomerates like Amazon and other marketplace websites opening up space for a greater number of distributors. This, coupled with technological advancement, means that well-established wholesale distributors need to be wary of the competition like never before, and find ways to embrace it.

Embracing next-gen technologies; new distributors have the capacity to cause major disruption for established brands reliant on traditional business models. Additional investment in omnichannel technology and systems may be necessary to head-off upstart rivals, particularly in B2C distribution, which is likely to see rapid expansion as online continues to outstrip the high street.

What do we mean by omnichannel technology? As markets continue to become more competitive, hosting a successful ecommerce site is no longer enough to stay afloat. Instead, a multi-channel approach is needed, one that covers all bases – including smartphone apps, telesales, ecommerce, in-person trade counters, and alternative sales channels, like Amazon and Google Shopping.

This multi-front strategy not only ensures your products and services are in the right place at the right time, but that there are few windows of opportunity for rivals to establish dominance on sales platforms you’ve previously overlooked.

 

Other Disruptors within the Wholesale Distribution Sector

As digitisation continues to change the face of supply-chain-reliant businesses, wholesale distributors must stay abreast of emerging trends and technological advancements. But what else should they be aware of?

  • Disintermediation – or the removal of the ‘middleman’. As suppliers and retailers look to cut costs and reduce time-to-market, distributors face the precarious possibility of being removed from the equation. They must, therefore, find a way to combat direct deliveries, whether it’s faster delivery times, easier returns, cheaper logistics costs, or increased personalisation options.
  • Consumerisation of B2B distribution – B2C has long been considered the more challenging arm of distribution, mainly due to the huge demands placed on distributors by customer-facing retailers. Now, B2B distribution is experiencing something of a consumerisation, as organisations look to squeeze more efficiency from their supply chains.
  • Move to online retail presents opportunities for distributors – distributors are well placed to assist retailers in the increasingly-digital consumer marketplace – particularly those who previously relied on bricks and mortar stores. Offering seamless logistics, including bulk deliveries to a single warehouse location as opposed to multiple high street locations, it’s essential that distributors take advantage of the increasing number of retailers looking to establish a faster and more efficient ecommerce offering.

How to Refine Your Wholesale Distribution Business Model

In the midst of unprecedented challenges, there’s no time like the present for wholesale distribution businesses to take stock of their practices, processes, supply chain, and policies. But what areas of focus should traditional wholesale distributors consider when assessing their past, present and future business model?

Open to Technology

Regardless of present-day challenges and issues, technology will continue to prove the major disruptor to wholesale distributors long into the future, so integrating future-first technologies ought to be a primary point of focus.

Consider the investments you can make now to mitigate the impact of technological disruption. Taking the right steps towards full digital transformation now will keep you on the front foot, and in a position to integrate emerging tech as it lands, as an agile, competitive early adopter.

A holistic approach is necessary to affect real change that will drive growth and ensure business continuity for wholesale distributors. Be sure your IT team is adequately resourced and skilled to embrace opportunities, or that your business partners with suitable tech companies who can take a broad approach to digital transformation, rather than just looking at tech platforms in isolation to one another.

Market Vigilance

Taking stock of the market, chiefly your competitors, is a good place to start your self-assessment. What are your competitors doing? What have been their most recent successes? And what kind of technologies, products and services have they invested in to keep their business buoyant? BuiltWith is a great little tool which provides insights into the digital tools your competitors are utilising.

Market vigilance is of extreme importance in this ever-evolving, ferociously competitive business landscape. Staying abreast of distribution trends in both the B2C and B2B arenas is more essential than ever, with continuity measures in place should your partners seek to take the disintermediation route.

Invest in Innovate New Products, Services and Offerings

Manufacturers, suppliers and retailers are experiencing similar pressures as those faced in the field of distribution. That’s why providing a range of innovative new products, services and distribution models could be an effective way to stay relevant and win more custom in the years ahead.

Businesses in every sector are seeking improved efficiencies, reduced costs and greater ROI. Product and service innovation can go some way towards delivering this, with brands trusting you to deliver in their increasingly demand-orientated market space.

 

We hope this guide on evaluating your wholesale distribution business model offers some food for thought on the challenges, disruptions and opportunities which lie ahead in your industry. At Intact, our innovative ERP solutions are developed to help brands get more from their systems and workflows. For more information on our future-fit, industry-specific ERP solutions, visit the homepage or get in touch.

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