Written by Adelina Peltea, VP of Marketing at TradeGecko, this post was first published on Small Business Informer in August 2014. This is a syndication of that original article with some tweaks. Enjoy.
While retailers have come under the spotlight lately for their shift and mix between brick and mortar shops and e-commerce stores, wholesalers – their richer peers judging by the almost-double-revenue industry – have started experiencing a major under-the-radar transition as well.
Meet the Wholesaler 2.0
They're not just focused on negotiating with suppliers and manufacturers for better deals, but also very keen to offer a better purchasing experience for their B2B customers. They manages multi channel sales, reaching out to both distributors further down the supply chain and to end-consumers. In addition, they streamline their operations, including inventory, order management and accounting processes, from one single dashboard in the Cloud.
Based on our customer data, the Wholesaler 2.0 in the US has on average, 29% higher monthly revenue, and saves about 4 hours of admin work per day as compared to traditional wholesalers.
Motivated by business growth and empowered by technology developments that offer easy-to-use online software, these wholesalers have come to disrupt their own business model and industry, with resounding repercussions for the entire supply chain.
Spoiled by the online B2C shopping experience in their free time, distributors buying from wholesalers are starting to prefer the same great online buying experience for work too.
In the wholesale industry, loyalty towards suppliers is very common, especially when the negotiated prices on products are satisfactory for the distributors. Therefore, although there are many B2B marketplaces out there for acquiring new B2B customers, including big names like AmazonSupply and Alibaba, wholesalers tend to stick with with existing B2B customers at pre-negotiated prices. This has led to the need of having an exclusive and invite-only platform, where distributors can login and view products and prices their wholesaler has for them.
Wholesalers increasingly see the value in shifting operations from phone calls, emails and spreadsheets, to a self-service system in order to capture orders. This transition allows them to save time, eliminate errors and leave better paper trails. These aspects are so valuable that wholesalers are even offering their B2B customers extra discounts to purchase online through the self-service platform.
Some avant-garde wholesalers have even invested tens of thousands of dollars in developing their own private B2B shops, as the existing B2C ecommerce solutions are unable to provide the personalized experiences and data privacy required in B2B.
Nowadays, private B2B ecommerce solutions are readily available to serve wholesalers in a cost-effective and hassle free way – without any requirement for technical skills for setup and management.
This trend is still in its early days, but from our experience, the adoption of such B2B ecommerce platforms is happening at a fast pace.
Wholesale is by definition B2B – selling to other wholesalers, distributors or retailers in big volumes. So this might come across as shocking to some, but now more and more wholesalers are going for B2C channels too.
B2C prices are still higher than what is offer for B2B though, as wholesalers are not out to to eliminate the middleman completely as he bears all sales and inventory risks. Going multichannel is simply a way to “put the eggs into more baskets” and gain more revenue, enabled by easy-to-use B2C online shop builders like Shopify, WooCommerce and Magento, and by B2C marketplaces like Amazon.
However, these platforms help only partially, because selling online still requires investments in the form of time and budget. While wholesalers are unable to dedicate fully to their B2C channels, the overall mix does bring them higher revenues nonetheless.
Now, “putting the eggs into more baskets” brings about more administrative work, potentially leading to an inventory and accounting mess. We’ve actually met a jewelry wholesaler who was holding the stock committed to her online B2C retailer in a box in order to avoid an out-of-stock sale situation, but this prevents that stock from being sold on other sales channels that could have performed better.
And then came the cloud. Silo-ed operations and channels are now history. The Wholesaler 2.0 can now manage every business backend process from one single dashboard, integrating (in a few clicks) all his sales channels with inventory data, accounting records, shipping instructions etc.
All information is automatically synchronized and always up-to-date, saving admin time and allowing growing businesses to focus on more important things.
Today’s wholesaler has changed, adapted, and improved himself to cater to the global market in ways that were impossible before.
More importantly, the trickle-down effects of Wholesale 2.0 will have a substantial impact on the entire supply chain and all its related industries as a whole. It will revolutionize trillion dollar industries, and fundamentally change how business is done.
Effects will certainly be noticed in the not-too-distant future.
But one thing is for sure: B2C ecommerce is not substituting intermediaries, and the Wholesaler 2.0 is not substituting retailers. It’s just that the lines between what used to be distinct roles have been blurred.
How the global market reacts and adapts to the Wholesaler 2.0, and its effects on various interconnected industries will be a much anticipated and fascinating journey, one that we are extremely excited to be a part of.
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