Internet Of Things Drives New Business Models For Wholesale Distributors

Karen Lynch

Today, we work in a hyperconnected world where people and objects are linked together constantly. A digital economy is driving transformational change for companies in nearly every industry.

For wholesalers, this revolutionary change offers extraordinary opportunity. With business models evolving, wholesale distributors that understand the connections will have a decided advantage. New markets and potential partnerships will be possible.

Wholesale and the Internet of Things

Wholesale distributors wanting to consider new business models need to understand new economic drivers. Several new forces have emerged in recent years that are fueling the digital economy.

First is the hyperconnectedness of products. The Internet of Things includes items such as products and tools equipped with sensors, software, and wireless connections.

These items can “talk” to each other to collect, store, and send data. Devices and people can connect more easily with affordable wireless service that’s easy to access. One study estimates that the number of connected devices will reach 75 billion by 2020.

Complementing the Internet of Things is the rise of supercomputing and cloud computing. Cloud computing enables companies to store massive amounts of data virtually and inexpensively, allowing for platforms that foster collaboration among employees, suppliers, wholesalers, and retailers.

Big Data has paved the way for powerful analytics software and platforms. These tools allow massive data sets to be stored, accessed, reported on, and analyzed, often in real time.

For employees, access to this data enables better, faster decision making. A richer understanding of the data also means more meaningful interactions with partners and customers.

Connecting the physical and digital

Companies finally see the potential when physical and digital assets are interlocked. Trends are emerging that show the influence of the Internet of Things on wholesale distributors.

Smart products, new business models

More companies today are embedding sensors in their products. Partnerships between manufacturers, wholesale distributors, and retailers allow data access, often in real time.

With richer information, distributors can serve customers much better. Information on a product’s end of life, service, and maintenance needs is now available instantly. Automatic replenishment orders can be generated as products are used.

Data as a driver

Wholesale distributors recognize they have vast amounts of data available in-house. This data can provide a deeper understanding of true customer profitability. Predictive analytics can project future demand patterns, allowing for better collaboration with key suppliers. The same data helps employees anticipate and manage business instead of reacting to it.

Technology-driven marketing

Marketing is playing a growing role in wholesale distribution. Customers expect the same level of attention and ease of use in business transactions as in their personal transactions.

Fortunately, technology is available to monitor customers’ digital footprints, which helps wholesale distributors better understand what is needed and when it’s needed. Often, the distributor can leverage these insights before the customer even realizes a need for products or services.

New alliances

New business models that focus on seamless collaboration are emerging. Many of these partnerships would not have made sense or been feasible just a few years ago.

For example, consider a network of distributors that in the past would have considered themselves competitors. Today that network has joined together to provide better service to customers. The network works because members recognize that certain locations or products are better served by other members.


Wholesale distributors that leverage the Internet of Things can gain significant advantages on the competition. By understanding and leveraging the data they have and the partnerships they can forge, distributors are poised to find new revenue streams and better relationships with customers.

The possibilities are endless.

To learn more about digital transformation for wholesale distribution, click here.

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.