Digitalization in the wholesale industryChallenges | opportunities | strategies

Digitalization in the wholesale industry

In 20 years, how will people look back on today’s wholesale industry? Will they view it as a business model from a bygone era, long since superseded by more modern alternatives? Absolutely not. Instead, what they will see is the precise moment when the wholesale industry set a bold new course for the future. Our current era will be remembered as a time of change and upheaval, driven by the wider digitalization of society. A period with fundamental implications for our personal lives, for how we collaborate at work, and for the way companies interact with each other.

It is vital that wholesalers confront these changes now, given their profound impact on business models and defining importance for the way wholesalers communicate and cooperate with their customers in the future. In order to remain competitive in the medium to long term, it is essential that wholesalers embrace digital transformation and fully utilize the new opportunities that e-commerce presents. In short, there is a great deal of work to do—with many issues to address:

  • Customers have been exposed to mainstream e-commerce for years and expect the same standards of convenience and service from their business procurement processes. For younger generations of customers and buyers in particular, shopping online is as natural as using a smart phone.
  • New competitors are penetrating markets that were previously dominated by wholesalers. Platforms such as Amazon not only have sophisticated digital knowhow, an extensive technical infrastructure, and logistical expertise, they also have the necessary financial firepower.
  • As the Internet continues to boost transparency into both offer content and pricing, customers are becoming increasingly sensitive to price, service, and quality. If any of these elements are lacking, the usually tech-savvy and well-informed online consumer is just a few clicks away from choosing a competitor.
  • More and more manufacturers are now selling directly to consumers. As they bypass traditional, multi-tiered distribution channels, they are eating into wholesalers’ revenues.
  • Although many companies continue to operate highly efficiently via traditional processes, that efficiency will decline in relative terms as the world around them goes digital. Companies that embrace digital transformation now will have a clear competitive edge.

The good news is that by leveraging their existing core competencies and adopting the right digital strategy, wholesale companies can not only keep pace with the changes outlined above, they can turn them to their advantage. Using a tailored digital strategy, it is possible to achieve faster growth, create more efficient business processes, stabilize profit margins, and open up new channels and customer groups.

The focal point of this strategy should be the customer base with its various needs and expectations. Wholesalers can accelerate sales by catering to that base with a B2B e-commerce platform that is both deeply integrated into all relevant business processes and capable of delivering a consistent and personalized shopping experience across all available touchpoints. The continuous availability of customer-specific information on products, inventories, and delivery or account status, combined with user-friendly self-service options and 24/7 after-sales service, are just a few examples of the added value that will strengthen and maintain customer loyalty over the longer term.

In our new white paper, we examine various aspects of digitalization with reference to the wholesale industry. Get it here for free: www.intershop.com/wholesale.

Dr. Jochen Wiechen

CEO Intershop Communications

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