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Wholesale 2.0 – The Under-the-Radar Disruption and Transformation of Today’s Supply Chain

Adelina Peltea

August 14, 2014

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While retailers have come under the spotlight lately for their shift and mix between brick and mortar shops and e-commerce, 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.

He is not only focused on negotiations for better deals, but also on offering a better buying experience to his B2B customers, managing multi-channel sales reaching out to both distributors further down the supply chain and to end-consumers, and streamlining all operations, inventory, orders and accounting from one dashboard in the cloud.

For example, the Wholesaler 2.0 in the US has on average 29% higher monthly revenues and saves on average 4 hours per day of admin work compared to traditional wholesalers, according to research from TradeGecko, a provider of cloud tech solutions for wholesalers.

Motivated by business growth and empowered by technology development offering easy-to-use online shop builders and online inventory management software, these wholesalers disrupt their own business model and industry, with repercussions for the entire supply chain.

MIGRATING B2B CUSTOMERS ONLINE FOR SELF-SERVICE

Spoiled by the online 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 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 do plenty of business with existing B2B customers at pre-negotiated prices. This has led to the need of having an invite-only platform, where distributors can login and view products and prices the said wholesaler has for them.

Wholesalers see the value in shifting from phone calls, emails and spreadsheets to a self-service system to capture orders, as it allows them to save time, eliminate errors and have better records. These aspects are so valuable to them that wholesalers are even offering their B2B customers extra discounts to purchase online.

Some avant-garde wholesalers have even invested tens of thousands in developing their own private B2B shops, as the existing B2C e-commerce solutions are unable to provide the personalized experiences and data privacy required in B2B. Nowadays private B2B e-commerce solutions are in place to serve wholesalers in a cost-effective way and with no technical skills required for setup and management.

It is still in its early days, but in our experience the adoption seems to be happening at a fast pace.

GOING MULTI-CHANNEL, REACHING OUT TO BOTH B2B AND B2C CUSTOMERS

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.

The B2C prices are still higher than B2B ones, as they have no interest to eliminate the middle-man completely, because he bears all sales and inventory risks.

Going multi-channel 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 to name a few, and by B2C marketplaces like Amazon. These technological platforms only help partially, as selling online also requires expertise and investments of time and marketing budgets. Wholesalers cannot dedicate fully to their B2C channels, but the overall mix does bring them higher revenues.

STREAMLINING ALL OPERATIONS, INVENTORY, ORDERS AND ACCOUNTING INTO ONE DASHBOARD

Now “putting the eggs into more baskets” implies more administrative work and could create an inventory and accounting mess. We’ve actually met a jewelry wholesaler that was holding the stock committed to the B2C online shop in a box in order to avoid an out-of-stock sale situation online, but this disables the stock to be sold on other sales channels that could perform better or faster.

And then came the cloud. Siloed operations and channels are now history. The Wholesaler 2.0 can manage everything from one dashboard, integrating in a few clicks all his sales channels with inventory data, accounting records, shipping instructions etc. All information is automatically synced and always up-to-date, saving admin time and allowing growing businesses to focus on the important things.

WILL THIS TRANSFORM THE WHOLE SUPPLY CHAIN?

Today’s wholesaler has changed, adapted, and improved itself to fit the global market.

But more importantly, the trickle-down, knock-on effects of Wholesale 2.0 will have 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 seen perhaps even on the massive global retail industry, in the not-too-distant future.

But one thing is for sure: e-Commerce is not substituting intermediaries, and the Wholesaler 2.0 is not substituting retailers.

It’s just that the lines between the roles have been blurred.

How the global market reacts and adapts to the Wholesaler 2.0, and its effects on the various respective interconnected industries will be a much anticipated and fascinating journey, one which we are extremely excited to be a part of.

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