Leveraging Digital Technology for Growth and Efficiency
Last year the SAP Wholesale Distribution team published a whitepaper titled “The Path to the Connected Distributor”. It suggested that wholesale distributors must seriously review and redefine their business models to capitalize on the growth of e-commerce in the industry. In summary, it stated that current distributor revenue streams, and future novel ones, should be included in business plans.
B2B buyers have become more sophisticated and expect the same customer experience in business that they have come to rely on in their personal lives as consumers are empowered by digital technologies. The omni-channel experience includes high-touch and personal experiences across online, call center, and in-person interactions.
Traditional wholesale distributors must evolve into digital connected distributors in order to sustain growth and improve order-to-cash efficiencies.
Below are five significant commerce trends directly affecting distributors:
- Commerce Has Become More Personal
Consumers are experiencing greater personalization and power while shopping online. They receive instant information on price and availability and enjoy tailored service. They carry this expectation across to their interactions with distributors. Wholesalers are facing pressure to alter their order-to-cash process rapidly and radically and provide the same type of end-to-end tailored service that has become routine in retail.
- Competition is Originating from Non-Traditional Sources
Online giants like Amazon and manufacturers who sell direct have become disruptors and are moving into the markets and channels traditionally served by distributors. Wholesalers are being squeezed, as customers are opting to buy direct or choosing online marketplaces, neither of which require the customary services of a wholesale distributor.
- Changing Demographics are Having an Impact
Many people who do the purchasing are getting younger. Distributors are facing the challenges of understanding and catering to the commerce needs and styles of new millennial and Gen-Y buyers.
- The Marketplace has Increased Velocity
Viral trends emerge instantly and disappear just as quickly. B2B customers constantly reinvent themselves and their offerings for demanding end consumers. This compels every distributor to evolve more swiftly, become more efficient, and provide more memorable customer experiences.
- The Industry is Consolidating
The need for contemporary wholesale distribution services and increasing market pressure is fueling increased M&A in the industry. Distributors are expanding and acquiring adjacent businesses that can provide new agile business models and processes.
In a recent MDM survey, “improving e-commerce capabilities” was a top response to the “How do you plan to build revenue over the next 12 months” question. E-commerce was also the leading response (50.4%), when distributors were asked “Which top technologies they intended to explore in the next 12 months”.
Digital transformation is about leveraging current technology in order to adapt to the way customers want to buy. Distributors need to view the future through a customer-centric lens to create an understanding of the entire buying process and transform into a growing, efficient, and connected company.