What is wholesale distribution 2024: Definition, examples, benefits
Wholesale distribution is a vital link in the global supply chain. Learn the basics of wholesale distribution and get examples of top distributors in the industry.
As distributors continue to reset and recalibrate in a constantly changing market, what are the 2023 wholesale distribution trends ahead?
From all indications, the intense pressure on wholesale distributors to transform during the pandemic isn’t going away. Economic turbulence, an influx of new competitors, and a talent shortage will force them to find new ways to remain competitive and drive growth.
As they tackle the challenges ahead, they’ll be applying lessons learned from the past three years.
For example, distributors that invested in e-commerce before COVID saw their e-commerce activity grow significantly as sales moved online, according to a Modern Distribution Management (MDM) report. Those that had been slow to adopt e-commerce had to catch up fast.
Now, nearly 21% of distributors say e-commerce sales account for 20% to 30% of total revenues, a trend that’s likely to continue and even expand, the report found. Many wholesale distributors also overcame their conventional ways and accelerated investments in technologies like data analytics and artificial intelligence to grow their business.
Wholesale distribution is a vital link in the global supply chain. Learn the basics of wholesale distribution and get examples of top distributors in the industry.
Looking ahead to the next year, wholesale distributors will face disruption on a large scale. Digital transformation will remain the name of the game.
The rise of direct-to-customer commerce has put them in competition with many of their own suppliers. D2C grew 45.5% in 2020 making up 14% of total retail e-commerce sales, according to eMarketer, which expects this trend to continue through at least 2023.
The growth of B2B marketplaces, fueled by online giants like Amazon and Alibaba, have also disrupted the wholesale industry. In 2020, B2B marketplaces grew at seven times the rate of overall B2B e-commerce.
All this competition means distributors will need to double down on e-commerce and digital transformation next year. According to a Gartner study, 83% of B2B buyers prefer using e-commerce for ordering and payment.
In order to boost their e-commerce capabilities, many distributors are focused on improving online search capabilities, including SEO, product pricing, and AI-driven personalization, the MDM study found.
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With e-commerce, mobile devices, and quick access to information, the modern B2B buyer is vastly different from years past. They expect the same kind of convenient, fast, and personalized experiences that they have in the consumer world.
Today’s B2B customer expects the company they buy from to understand their individual preferences and needs. In fact, Forrester says personalization has shifted from a nice-to-have to a necessity in B2B sales.
A Forrester study found that 52% of marketing leaders plan to invest in personalization.
Next year, distributors will focus on providing tailored customer experiences by:
Whether the pandemic fades away or lingers, e-commerce remains table stakes for all distributors, as an eye-opening study revealed massive shifts in the industry.
Inventories are rising as over-ordering during the pandemic is coming back to bite manufacturers in their collective tail ends. Shipping delays, supply shortages, and transportation delays seem to be the rule rather than an exception these days. And labor costs and shortages are mucking with everything.
Add in the war in Ukraine, global political tension, and tariffs, and distributors face tremendous supply chain challenges.
Many companies are wisely trying to get ahead of this wholesale distribution trend by implementing intelligent business process management capabilities that not only help them design greater efficiency into their supply chains but allow them to move product around the globe more sustainably.
This technology enables them to plan more strategically and be more resilient, meaning they can adapt to unanticipated changes in supply and demand more quickly without sacrificing cost or quality. They’re focused on real-time supply chain visibility for better decision making and improving logistics.
Gartner says this drive toward resilience is a big deal for supply chain professionals with 87% of them planning to invest in technology to enable it in the next two years.
In 2023, expect to see changing logistics models with the evolution of transportation as a service and new fulfillment models such as warehouse-as-a-service and micro-fulfillment centers.
In such an intensely competitive market, wholesale distributors can’t afford to stand still. They need to find ways to add value in ways that their peers and online players can’t, which makes innovation is a top wholesale distribution trend for 2023.
There are four main ways distributors are transforming their business to meet customers’ changing needs and gain competitive edge:Breaking out of old ways of doing business by taking an innovative approach helps distributors differentiate themselves to win customers, find new revenue streams, and increase customer loyalty.
Innovation in the wholesale distribution industry has become table stakes for survival, meaning wholesale distributors must find new ways to run their business on multiple fronts.
The cloud, e-commerce, automation, artificial intelligence, and the internet of things are transforming every industry. Distributors have a reputation for being traditional, but any of the time they thought they had to change evaporated in a flash during the pandemic.
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Like many other industries, wholesale distribution is struggling with an ongoing labor shortage. Last year, 47 million US workers quit their jobs as part of what’s known as the Great Resignation, with wholesale among the most-impacted industries.
While front-line workers like truck drivers and warehouse employees are harder to find, the competition for for customer-facing sales and support staff is intense. Distributors can find themselves struggling to attract the expertise they need as workers increasingly look for high-profile, purpose-driven brands.
Employee recruitment and retention must be a priority in 2023. One way to do that is by improving the employee experience, starting with listening to employees to gain insight and identify areas for improvement.
Take their expectations for work-life balance into account, and look for ways to streamline their workday:When employees aren’t bogged down in routine tasks, they can focus on higher value activities that give them more job satisfaction. When employees are happier in their work, they’ll more likely to stay.
In order to attract new talent, distributors need to focus on growing their brand value and showcasing their social and environmental efforts.
A positive employee experience helps drive the success of a company, from both a financial and social point of view.
With sustainability impacting how their customers operate, distributors that focus on it can differentiate themselves to stand out in a crowded market and drive growth.
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Successful wholesale distributors invest in a variety of technologies to ensure a fluid purchase process from start to finish. They also embrace tools that help them track, understand, and analyze every customer touchpoint with their companies to maximize customer experience.
Wholesale distributors are at a crossroads unlike any they have ever faced. But they’ve already made great strides in adopting technologies to help them rise above any adversity coming their way. By sustaining that momentum, they can not only survive, but thrive in the coming year and beyond.