The Evolving Role of B2B Companies
The role of wholesalers is changing. Whereas they used to be the link between manufacturers and retailers/contractors, wholesalers are now increasingly becoming service providers. They need to adapt if they are to keep pace with the changing face of wholesaling. Digitalization can help them to do so – in the shape of an advanced warehouse management system (WMS) and order management system (OMS), for instance.
Traditionally, wholesalers served an important function in the value chain. They formed the physical link between the manufacturers and the companies selling to end users. That automatically made them a key communication channel for manufacturers too, but that role has now been taken over by the internet. Physical contact is no longer necessary in order to do business. For example, more and more manufacturers are in direct contact with end users through their own online stores.
Moreover, online marketplaces such as Amazon mean that end users can obtain products more quickly and conveniently. Nowadays, Amazon is used not only by consumers but also by companies that need specific professional supplies. There’s a clear trend towards everyone in the value chain wanting to get as close to the end user as possible, and the traditional role of the wholesaler does not support that.
Against that backdrop, it seems that wholesalers are potentially in for a very rough ride. Wholesalers need to start take action fast. If they want to secure a role for themselves, they will need to be able to offer the same service, speed and reliability as previously mentioned marketplaces – that’s a must. Besides that, wholesalers have to ensure they stay relevant by differentiating themselves not only from their competitors but also from the manufacturers themselves. In contrast to manufacturers, wholesalers have the benefit of physical stores, and they can set themselves apart by providing an on-site service center. As a result, we're seeing growth in service centers.
Additionally, something needs to change in the relationship between the wholesalers and their customers. That connection has traditionally been a transactional one, but it must now become based on emotion: even business customers are consumers when they are at home on the couch. They buy goods online, read reviews and appreciate good service. They want the same things in their business lives. Wholesalers that continue to take the traditional approach will not survive. Because others around them will change. Getting as close as possible to the end user means being proactive. Business customers expect the same experience that they receive as consumers, so ‘fast delivery’ doesn’t mean in three days’ time, but tomorrow – and preferably even today.
Executing those delivery windows requires outstanding logistics to get orders to the right destination quickly. You must be able to deliver on that promise, such as by opening small distribution centers and service points where customers can collect their orders. Ensuring that goods are in the right place at the right time is a complex process. To implement the necessary technological change, a company certainly needs a technology-minded board of directors because you can only achieve all this with an advanced warehouse management system (WMS) and order management system (OMS). After all, in addition to your current software you need an extra layer that can cope with customers’ new demands.
A large number of wholesalers are already on the right track: it’s easier for the smaller operations, who are more agile, and that’s much more of a challenge for bigger wholesale companies. Organizational agility is key.
This interview with Pieter Van den Broecke, Managing Director at Manhattan Associates, appeared in Evofenedex Magazine, October 2018