Make local valuable or die in SMB Wholesale Distribution
Relation between local small and medium wholesaler distributors and their suppliers and customers is a long story, based on mutual confidence. But today there are like a small island, where the storm will come in. They know what, but not always when. It is called BTB Markeplaces, such as AMAZON BUSINESS pure player on BTB.
Recently Amazon Business entered the UK BTB Market bringing 100 Million articles and the free one day delivery . The temptation is there for wholesale customers, when you can have the same commodity product cheaper and faster, directly at your location, your long-time relationship might just blow away.
In office suppliers, in industrial supplies, in High tech supplies, in Food supplies, everywhere for Small and Medium Wholesale distributors the danger is hot.
In fact, this is harder than a storm, a storm is for a limited time, When a pure BTB market place like Amazon or Alibaba arrive, they Stay, they surround the local Business eroding their business day after day and at the end kill it.
Prepare, Survive and being stronger
To survive, they need to face and overcome the following challenges:
- Staying in same price range for commodity product, the price is always an easy comparison and everybody is entitled to change when getting the same at a cheaper price. They need to always compare their price, strengthen like never their competitiveness, spending less with same process
- They need to deliver differentiated services at the same time they deliver physical product, services that large BTB Market place player cannot bring like:
- Expertise on the choice of a complex product,
- Delivering behind the door, like replenishing directly the shelves of the fridge in the Food business or providing installation of an industrial product, providing training with physical presence.
- Being easy to do business with, not giving a single chance to their customers to be tempted to try the marketplace. But this means in turn, transparency of your system. This easy point includes noticeably the availability of stock immediately and the visibility of your stock where ever they are located.
- With tough competition on price the need to follow up precisely their margin, knowing where to downsize and where to upsize products which have a unique value.
In a nutshell they need transparency , productivity and add services to their portfolio of value.
Unfortunately those Local Wholesaler distributors are still driving their business sometime on EXCEL, sometime on siloed outdated software, requiring redundant entry and not accurate visibility.
They are also obsessed to review their e-commerce application or presenting apps to order to their customer, this is very nice but the nicest application need first to be reliable. What is the purpose to have a super e-commerce or nice digital apps, if at the end the stock presented on hand because not updated real time is wrong or unavailable on your e-commerce pages. The same if your prices are wrong, generating litigation, frustration and at the end “not easy business”
So again the move to a solid full integrated ERP, preferably on the cloud to avoid capital in infrastructure spending, such as a SAP Business by design, is a prerequisite to prepare the big battle to come.
Conclusion: cultivate their local difference
As a conclusion, it is not by making a bad copy of AMAZON they will survive but by stressing their unique local value services at a still competitive price point.
Having transparency, enough productivity to have their workforce spending more time in the front of the customer to bring more unique local services, this is what AMAZON will not be able to copy and it is more than a resistance, it is also a mean to grow otherwise than by a forced consolidation.