How Wholesale Distributors Use Technology to Compete

(6 minute read)

As I continue to think about the current environment facing wholesale distributors, I think it all boils down to three key issues: leveraging technology to add value, attracting top talent, and changing the mindset to compete on customer experience instead of price. Market dynamics will always present both challenges and opportunities for investment and innovation. So the trick is to focus on aligning people, processes, and technology in such a fashion that businesses can both scale and prioritize as they deliver added value.

The good news is that if they get this alignment right, distributors are poised to beat out market disruptors because of their deep understanding of their customers’ businesses and their relationships with suppliers. However, they can’t do that without investing in technology and being agile enough to implement the right components at the right time. That’s because the technology that businesses invest in does two jobs, it helps them compete by adding value and it helps them attract talent. More than that, the right technology can also help businesses streamline the overall team required for success.

That said, distributors must also focus on making the changes that make the most sense for their business. Here are some things to keep in mind.

Innovate and Provide Complete Solutions to Stay Competitive

Customers still expect to place, manage, and track wholesale orders online, in addition to having the option to conduct business via traditional channels. However, since the onset of COVID, some distributors have seen over a 700-basis point shift from other channels into touchless methods such as e-commerce, EDI, e-procurement, and automated email-to-ERP during the pandemic, according to a report published by National Association of Wholesale Distributors.

On one hand, this omnichannel model presents an opportunity for new markets and customers. On the other hand, it also offers a more level playing field for disruptive newcomers. This is where innovation comes in with investments in value adds that are designed to both improve customer experience and reduce cost to serve. Depending on the business and what’s right for them, that could mean personalized online storefronts, subscription services, using sensors and machine learning to trigger automated replenishments, and more.

Competition Inspires Personalization and Value-Added Services as New Revenue Streams

As distributors develop more customized offerings, they will continue to gain ground on their competition and eventually overtake them. This is because they have a deep knowledge of their customers’ businesses as well as long-term relationships with suppliers. That knowledge also puts them in a unique position to find new customers and identify new market opportunities.

With that in mind, distributors need to become solution oriented and work to balance a deeper portfolio with strategic value that mass-market retailers cannot replicate. This is where a digital business framework comes into play by bringing together transactions and insights, allowing distributors to use data to:

1. Deliver an outcome-based customer experience
2. Re-platform core businesses and bring together business process and analytics in real-time to drive smarter and faster decisions
3. Support a more informed and engaged workforce across all employees and contractors
4. Facilitate supplier collaboration
5. Make effective use of the Internet of Things and Big Data to drive real-time insights and new business models

With the focus here, businesses can compete on customer experience, not price.

For the Best Customer Experience, Get the Right People and Give Them the Ability to Focus on High Value Contributions

As customers interact with distributors through both digital and traditional channels, it emphasizes the need to attract the right talent and invest in teams that can align around and achieve strategic goals. If the goal is to create a customer experience that feels relatively frictionless and builds loyalty, then the transformation required will be built by the people inside of an organization. If those people are freed up from more bureaucratic or non-value-added processes, then they will have the time to focus on value and vision.

The function of technology in this instance is as a tool to empower people with training, data and resources, as well as focusing their time on what is most important. It can also help streamline the overall team required for success by simplifying the business user’s experience and improving workforce efficiency. From CEOs to purchasing managers and financial analysts, every employee can quickly access the information and capabilities they need. Guided processes help ensure that even new hires are equipped for success and adhere to the distributor’s standards and procedures. Role-specific user cockpits consolidate the relevant information and context users need for data-driven decision making.

The technology options can be overwhelming when you look at artificial intelligence and machine learning, advanced analytics, and all of the other possibilities. The key is to start wherever you are and implement in modular deployments with cloud solutions, to accommodate your specific needs and priorities. Then, as industry or market dynamics shift, you can choose each new element based on customer need, differentiation, value realization and targeted ROI. Capital gains are then maximized because this stairstep approach allows you to keep an eye on both your present and future needs. And, just as important, your plan can evolve over time as situations continue to shift.

Moving Forward

This evolution of wholesale distributors will continue into infinity because competition never stops. Technology will continue to evolve at an ever-increasing pace. Market disruptors will continue to show up. And attracting the best talent will always be competitive. Thus, the best defense will be to leverage technology to build better business processes and provide real-time data so that distributors can compete, learn more, and give their employees more fulfillment in their roles. It also means that they’ll have more ability to focus on creating innovative strategies that will drive more growth over time.

This blog is an abridged version of an expert brief titled, How Wholesale Distributors Use Technology to Compete. To get the full text, download the expert brief.