Who will be the Black Swan of the Wholesale Distribution Industry?
Last week, I met a Black Swan and that meeting made me really nervous. Since then I have been thinking about whether there is a Black Swan of Wholesale Distribution industries. Is one already there and we are not aware? Or is there one coming up soon? Many of us have already experienced a Black Swan ….for example, Uber as part of the transportation industry. What are we talking about? Nassim Nicholas Taleb – a professor and philosopher – found out that before the discovery of Australia, everybody believed that all swans are white. The sighting of the first black swan was a complete surprise. If you haven’t already done so, you should read Nassim Taleb’s book “The Black Swan”. Taleb defines a Black Swan as a highly improbable event with 3 characteristics: it is unpredictable, carries a massive impact, and looking backward, it appears less random and more predictable. The Black Swan changes the way people look at the world. Following that description, Google and Netflix are Black Swans as well. At first, Google was a search engine. Since then, a lot has happened. We now have YouTube and other Internet related businesses that belong to Google. There is also Alphabet that has a bunch of other subsidiaries like Calico, Google Capital, Google Fiber and so on. Google is continuously expanding into new businesses and transforming into a hybrid, or even digital, conglomerate. Is this Black Swan, Google, taking a bold step by leveraging converging industries and digitization? Many innovative businesses are built on verticalization and diversification in combination with new and digital technologies. Another area of business innovation is based on new digital services. Are you familiar with “Daggi Bee” https://www.facebook.com/Dagi.Beee; http://www.dagi-shop.de/ or “Pay per laugh” https://www.theguardian.com/stage/2014/oct/14/standup-comedy-pay-per-laugh-charge-barcelona ? Or do you have your own avatar that helps you to select the right clothes via an online shop? Digital infrastructure allows companies to connect business processes end-to-end across enterprise borders, and offer services or source processes out to business partners. After reading the first really engaging chapters of Taleb’s “Black Swan”, I have been reflecting about the 10 years I have worked with wholesale distribution companies. On one hand, it does not appear that there have been many innovative business models. However, with a more bold and broader look, what about Alibaba, Amazon Supply and others? Aren’t they the new digital business models in the area of Wholesale? Looking at new trends that are relevant to the Wholesale industry, we see Internet of Things technologies like sensors that help measure the performance of end-to-end business processes and deliver indicators to increase efficiency. 3D printing is just in the beginning stages, however it will deliver the potential to change business processes and business models, for example how and where goods are produced, especially for mass customization. The next big things will be machine learning and autonomous driving which offer innovation opportunities for logistics and transportation as well as typical distribution functionalities. As many wholesale distribution companies are still sandwiched between production companies and craftsmen or retail companies, they are under high pressure to transform and innovate. Based on the business opportunities opened up by internet technology in particular, wholesalers risk getting squeezed out of the value chain. The critical question is who will be the owner of the upcoming B2B2C businesses? Leveraging big trends like Internet of things and methodologies like Design Thinking and CANVAS to develop and innovate new business models, it won’t be long until the ”Black Swan of the Wholesale Industry” will be born. SAP would love to assist you in accelerating that process. Feel free to get in contact with us.