Amazon-Like Customer Experiences Are Within Reach For Small And Midsize Wholesalers

Karen Lynch

Part 9 of the “Digitally Transforming Industries” series

Small and midsize distributors sat up and took notice this past year when Amazon entered wholesale sales. For years, wholesale firms rarely sold inventory online – holding an unwavering belief that e-commerce cannot match the close, personal, service-oriented nature of their customer experience with retailers. Yet, buyers are beginning to favor convenience and ease over one-on-one relationships.

Wholesale distribution firms that support customers’ preference for e-commerce-driven interactions will likely succeed in 2017. And technology and business process innovation are key components of successfully creating an e-commerce platform. According to IDC industry brief “Wholesale: Small and Midsize Firms Are Using Technology to Sharpen Business Practices and Improve Customer Engagement,” “applications and modernized operations offer the opportunity for inherently more flexible small and midsize companies in this industry to ‘leapfrog’ larger, but less ‘technology enabled,’ competitors.”

Increasingly, small and midsize distributors are waking up to the near-term and long-term opportunities of adopting digital commerce technology. However, as IDC’s industry brief reveals, high priority is placed on improving efficiency and managing costs instead of streamlining the customer experience and innovating new services-based revenue streams. 

Tech-enabled experiences extend the distributor-customer relationship

As more distribution firms realize the importance of real-time information and simplified processes, I suspect that a growing number will invest in technology platforms to achieve these business goals. Even those that are still using legacy software systems will seek out solutions that enable decision making at the exact moment of need. From the sales rep in the field and the call center agent to the finance manager and procurement specialist, access to real-time information across all departments will help everyone serve customers as efficiently, effectively, and knowledgeably as possible.

Consider, for example, the foundational support of an enterprise resource planning solution. By automating back-office activities such as basic materials management, finance, and procurement, the workforce can be freed from performing repeatable tasks, enabling them to focus on capturing vendor chargebacks and rebates to ensure every dollar hits bottom-line profitability. This approach is a smart strategy to not only increase profitability but also provide competitive pricing and value proposition.

Predictive analytics is another technology that can help firms further differentiate themselves. Wholesalers own more data than any other player in the value chain – acquiring a veritable trove of real-time data on manufacturers, buyer preferences, pricing, and demand patterns. Information such as historical demand, long-term weather forecasts, and neighborhood demographics can help distributors understand what each of their retail customers will likely sell on a given day and help ensure that they are stocked accordingly.

Digital business networks also improve sourcing of new and alternative suppliers. Regardless of trading partners’ back-end IT platforms, firms can conduct touchless transactions – from purchase-order creation to accounts payable – and reach beyond the local marketplace to procure goods customers want.

But the human touch is still relevant and compatible

No matter how digitally modernized the customer experience, human interaction is still a necessary part of the value that small and midsize wholesalers offer. The services they provide are consultative in nature. And while Amazon may not be providing this level of service at this very moment, don’t count on this for the long term as an advantage to win sales opportunities.

The rise of digital-dependent lifestyles has empowered people to expect immediate service, a wide range of choice, and access to the right products. However, online commerce alone is not the solution. With executive commitment, aligned business processes, and partner enablement, firms can gain the insight, efficiency, and access they need to increase customer loyalty and engagement – which, in the end, will lead to revenue growth and profitability.

To learn how your business can better prepare for the digital economy, check out IDC’s industry brief, sponsored by SAP, “Wholesale: Small and Midsize Firms Are Using Technology to Sharpen Business Practices and Improve Customer Engagement.” Be sure to check every Tuesday for new installments to our blog series, “Digitally Transforming Industries,” to explore the various leadership roles in today’s growing small and midsize companies.

Karen Lynch

About Karen Lynch

Karen Lynch is the Vice President, Global Wholesale Distribution Industry Business Unit at SAP. She sets the vision and direction and execute the go to market plan to address the needs of Wholesale Distributors across the globe by using SAP solutions.