What We Will See In Wholesale Distribution's Growth

Michelle Schooff

Where is wholesale distribution going? It’s a question of concern to many in the industry as disruption changes how business is done. Hosts Brian Fanzo and Daniel Newman discussed this topic in a recent episode of the S.M.A.C. Talk Technology Podcast. Their guest was Karen Lynch, SAP’s global wholesale distribution industry business unit lead. Is B2B moving towards B2C? How can existing wholesale distributors change to meet customer expectations? Here’s a quick overview of what was discussed.

An industry in transition

It wasn’t very long ago that a wholesale customer would call a distributor’s customer service rep looking for an unusual part. The customer couldn’t figure out what the right part should be. After spending a long while on the phone describing the part, the distributor’s customer service rep would come up with what they hoped was the right part. But for today’s digital customer, the old ways seem antiquated.

Today’s customer wants faster, more accurate results. With mobile technology, customers can snap a picture to send to the customer service rep. The distributor’s digital core, paired with machine learning, can automatically identify potential matches to the pictured part. The customer receives an immediate reply identifying the part’s stock number and how to order it.

Situations like this illustrate how machine learning helps a wholesale distributor improve productivity and customer relations. Instead of spending time trying to keep clients, the digitized wholesale distributor can instantly solve the problem and go on to other issues at hand. It allows them to compete on equal footing with digitally native distribution giants.

Disruption in the wholesale distribution industry

Lynch sums up the industry’s past very succinctly: “Wholesalers, for many, many years, had survived on their ability to effectively process sales orders, and it was coupled with these great customer relationships that they had for many decades. Most wholesale distributors are smaller, family-run operations, so there were handshake agreements that go back years and years.” However, she also notes that in the face of disruptive companies such as Amazon and Alibaba, those old relationships aren’t enough to keep customers loyal.

Wholesale distributors are having to transform their businesses in ways that had not been conceived of only a couple decades ago. Smaller distributors are having to differentiate themselves through value-added services or other unique ways. It has to go beyond simply providing opportunities to place fast orders online. It must extend to creating a unique customer experience that builds loyalty.

Changes and innovations in fulfillment

Today’s wholesale distribution customer has changed as well. The push for a better customer experience in B2C sales has changed the expectation in B2B transactions. There’s an expectation that their order will arrive very quickly. Many wholesale customers have come to expect next day/second day delivery, and they expect these efficiencies in business-related transactions as well. One way those expectations are being managed is through smart vending. As an Internet of Things fulfillment option, smart vending places a vending machine filled with commonly used items at the customer’s location. It’s the equivalent of having a sales rep on hand 24-7 in the customer’s location.

When the customer needs an item, they can swipe their badge at the vending machine to access that item. It’s instantly available with no waiting for fulfillment. The machine automatically charges the item to the correct cost center. This helps automate the customer’s accounting system and improve back-office efficiency. If the customer wishes, automatic replenishment can be set up to make the process seamless. The distributor can use advanced analytics to optimize the product mix in each customer’s smart vending machine.

Adopting B2C customer-centricity within B2B

Lynch adds, “[B2B customers] want to feel the distributor understands who they are, what they want, even to the point of sometimes trying to anticipate what they will need before they even need it.” B2B customers still expect a fast, seamless ordering experience while at work. They don’t want to deal with difficult interfaces or wait until business hours to get their order placed. They want to add minimal input to get the job done.

One area where Lynch sees wholesale distribution changing is the shift from efficiencies to better service and unique value. Whether it’s a vending machine or photo part recognition, today’s customer wants automation and ease of process. If they’re ordering temperature-sensitive material, they want automatic notification if the temperature falls outside of their requirement; this is now possible through Internet of Things sensors. The capability of the wholesale distributor to provide more convenience to the customer is paramount to future success in the industry.

Improving ordering, fulfillment, and shipping of goods will become crucial ingredients to wholesalers’ digital transformation. To hear the full conversation with Karen Lynch listen to the S.M.A.C. Talk Technology Podcast episode. At under 15 minutes, it’s perfect to squeeze a little innovation into your coffee break.

Hear the full podcast episode here. Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Consumer Industries. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

Michelle Schooff

About Michelle Schooff

Michelle Schooff is a global marketing director in the life sciences and wholesale distribution industries for SAP. She is responsible for the marketing strategy, messaging and positioning for SAP solutions in the global marketplace. With over 20 years experience in technology and marketing, Michelle builds strategic marketing plans that drive growth, innovation and revenue.