Last updated: Building a profitable distribution business: CX matters

Building a profitable distribution business: CX matters


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Two seismic shifts are impacting the B2B world: New players are bypassing traditional value chains, and buyers expect every business to provide a consumer-grade customer experience.

In order to build and maintain a profitable distribution business, distributors must shift to these new expectations on multiple fronts simultaneously. They must transform essential pieces of their business model while balancing the need for personalizing customer interaction while scaling efficiently.

In this ever-changing era, wholesale distributors need to address new market changes to be adaptive and profitable. Without answering these growing customer demands, distributors can expect to fall behind their competition and lose out on profits.

Three trends are changing the traditional distribution model:

  1. E-commerce adoption
  2. Personalized customer experience
  3. Intelligent technologies

Here’s what distributors need to do to adapt to these trends and boost their profitability.

Adopt e-commerce STAT for a profitable distribution business 

E-commerce has grown exponentially since the start of the pandemic. In fact, according to Magnus Meier, SAP VP and Global Head of Wholesale Distribution Unit, e-commerce jumped 10 years forward in just 90 days when the COVID-19 pandemic began.

Despite the drastic jump, the trend did slow down over the course of the year. However, the facts are still staggering. In 2020, e-commerce adoption totaled a six-year relative jump.

“Wholesale distributors that were already heavily invested in digitalization are definitely ahead of the curve. The tools they need to be effective in an economy like this, they already have in place,” Meier said.

For late adopters, time is running out. An e-commerce strategy is vital to provide B2B customers the value-added services they have become accustomed to with other companies. The days of cost-plus pricing are quickly coming to an end.

To be sustainable and maintain a profitable distribution business in a dynamic environment, distributors must adapt an e-commerce strategy as quickly as possible.

Create personalized customer experience 

B2B customers have lost patience with generic responses and lengthy delays in obtaining information. They expect a personalized, consumer-grade experience. If they don’t get it from one distributor, they will find it from another.

While only a small number of distributors tout their ability to provide personalized experiences, B2B customers are demanding a change in the industry. Distributors can either adapt to protect their profit or risk losing customers in the process.

“Distributors can make use of the capabilities that are there and really gear their strategy to a personalized market,” Meier said.

To adapt and scale outstanding customer experience, distributors must utilize new technology. By moving to a proactive model of technology adoption, they will change from a traditional distributor to a personalized experience solution provider.

Intelligent technologies fuel a profitable distribution business 

To put themselves in a competitive position and increase profitability, distributors also need to take the time to evaluate and implement intelligent technologies. The digital shift has long been occurring, but the rapid advancement in technologies is not something many distributors have set themselves up to adequately handle.

The era of simply relying on bolt-on artificial intelligence and machine learning capabilities is quickly advancing. Soon distributors and other B2B companies will use these technologies for everyday operations, if they haven’t already. “Every distributor should have a long-term vision,” Meier said.

Chatbots and other data-driven systems can already anticipate customer needs and provide answers without a human ever being involved.

By adapting to these trends sooner than later, distributors can realize a more profitable distribution business. The world is changing and so are B2B customers. Distributors that choose to stick to traditional models rather than customer-centric solution models will fall behind.

Find out how top B2B sellers give buyers the speed & convenience they expect. Get the report HERE.


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