In recent years, there has been an incredible digital transformation in the wholesale sector. The biggest tech trends continue to shift to digital-first models and have a diverse range of digital elements to create unrivalled customer experiences.
To best achieve this, close integration between customer-facing platforms, back-end systems and warehouse systems is critical for transparency and real-time information.
Businesses are looking for tech solutions that optimise their supply chain end-to-end, and so Order Management Solutions (OMS) are becoming increasingly popular. This manages stock, processes orders, and picks, packs, and despatches products from a central system. An OMS ensures that all business areas, including the warehouse, are flexible and agile enough to meet customer expectations.
“The deployment and uptake of ecommerce in the wholesale and distribution industry has been accelerating year on year, and it’s great to see so many businesses embracing the power of online commerce,” comments Andy Pratt, Business Development for Oporteo. “What we are seeing now is an expansion from B2B ecommerce to ‘direct-to-consumer’ capabilities where wholesalers can reach new target audiences and business opportunities.”
The ultimate goal for wholesalers going forward is to integrate all back-office systems with customer-facing platforms to provide a single, seamless customer experience. Therefore, businesses need to retire legacy systems that are not agile enough to meet changing business needs and require time-consuming and costly developments.
“By migrating to a digital-first ecommerce system, businesses will have the power to respond to market disruptions faster and easier, whether that is integrating to a new sales channel, publishing vital product information, or updating the layout and content of your site,” says Pratt. “Overcoming the restrictions of outdated ecommerce solutions and embracing these omnichannel innovations has been a game-changer for Oporteo’s customers.”
Andrew Robathan, Director of eCommerce at TrueCommerce, comments: “Without doubt every wholesaler will have had to struggle with the peaks and troughs of demand during the pandemic and even though demand may now be a little more predictable the issues with the worldwide supply chain and long lead times continue to pose a big headache. Coupled with work force recruitment difficulties and increased global competition the need to use I.T. has never been greater in this sector, automation and cost reduction are the wholesaler’s best defence.”
Internally wholesalers are upgrading ERP and WMS systems to better predict and manage demand whilst also investing heavily in customer facing B2B ecommerce solutions to provide better transparency, convenience and lower the cost to serve.
“Depending on the maturity of the wholesaler’s digital strategy the % of their customers online spend varies between 40 and 85%, even where we see the highest levels of adoption there is always a certain element that will still be transacted through EDI and other channels,” says Robathan. “To get to 85% is a great achievement when you consider the reduced cost of sale and also the follow-on savings when the majority of those customers will also use online to self-service their account post purchase.”
Most wholesalers will already be trading online and with the right solution they may be seeing adoption levels in excess of 40% but are aware that they haven’t been able to move the dial any further due to functional or usability limitations with the current solution.
The majority of these are likely to have contracted someone to build an e-commerce store using one of the popular ecommerce toolkits favoured by web developers, this has meant they have ended up with a totally bespoke solution and they are now responsible for driving their online R&D strategy by re-contracting the necessary developers to implement enhancements and keep up with the competition.
These businesses will now be looking to upgrade and will have a very well defined list of requirements, coupled with an urgency to re-launch their ecommerce strategy. They are unlikely to go down the self-build route a second time and instead purchase a solution with a much quicker time to value where constant innovation will be part of the service.
The pandemic has accelerated and highlighted certain factors in the consumers’ decision making process with them looking more into the origin of the product they are buying, how much trust they have in the brand, the working conditions for the employees of that brand and their ethics and environmental credentials. Maintaining an awareness of how consumer behaviour is changing will ensure wholesalers are stocking the right brands and the products that are going to be in highest demand.
“For wholesalers our supplier EDI provides the backbone to their replenishment and continues to be a cornerstone of most operations whereas our B2B e-commerce solution is dominant for their customer transactions where visibility of stock, alternative items, restock dates and back-order management are very important at the moment,” adds Robathan. “In addition to EDI and B2B e-commerce we are also uniquely positioned in the market-place to also provide automation of other sales channels such as orders received as PDFs or by email, this is another product where we are seeing increased demand as wholesalers strive to automate and reduce cost.”
Tanya Pepin, Director at TWC comments: “Wholesalers are, unfortunately, a logical prey for hackers with ransomware – they turn over huge sums of money and have made relatively low investment in IT, which makes this sector an ideal target. Also, wholesalers rely on technology to process orders and payments so an IT outage will force them to close their operations down completely, which means they are a softer target for paying up to make the problem go away. Tightening up on security protocols, investing in adequate protection and closing down entry points is business critical; this is not a gloomy warning but a reality – several wholesalers have been hit already.”
Wholesalers are beginning to grapple with how to extract value from the data they are sat on about their customers and sales.
Customer data is arguably the highest value asset wholesalers have after stock.
“Understanding how to sell more products to existing customers is the easiest way to grow sales and using data to evidence opportunity to suppliers unlocks more investment,” adds the spokesperson. “Wholesalers are on a journey with their data but with Amazon as a competitor, it must play a central role in any wholesaler’s strategy right now.”
Covid drastically changed shopper behaviour, and not just for consumers.
Delivered wholesalers performed very well during the early phases of Covid lockdowns when convenience retailers were too busy to leave the shop and lockdowns made getting out difficult.
Furthermore, stock shortages meant that retailers did not want to waste time going from depot to depot, they wanted to phone up or look online to source stock.
“This desire for convenience has remained,” says the spokesperson. “Cash and carry isn’t dead, far from it, but retailers will take a multichannel approach: shopping online and visiting depots and, just as consumers do, they love to research prices online so that they can find the best deals.”
As wholesalers get more data savvy, they are starting to think about algorithms they can build into their databases to start predicting behaviour.
This might be connecting weather events to demand planning for stock; identifying frequently occurring linked purchases that can be formalised into promotional deals; or it might be flags when customer behaviour changes such as lapsed visits, decreased spend or changes in the products purchased.
These ‘flags’ can be converted into targeted or personalised promotions to increase spend and visits.
Twenty years ago, a wholesaler’s key IT investment was their sales order processing/back-office system.
Today, wholesalers are realising that they need to invest more broadly in technology across the whole business and they need the best solution in each different area.
This means lots of different IT solutions (and vendors) working independently in each functional area but – essentially – connected securely so that data can be passed between different parts of the business.
Undoubtedly many wholesalers now have an online ‘depot’ and there is an increasing expectation for all operators to offer online ordering. Penetration of online varies considerably from wholesaler to wholesaler, however, with some still not offering any online facility and others with web sales accounting for ca. 90% of total orders. This will depend on the type of operator (it is easier for delivered wholesalers to migrate customers online than it is for cash and carry operators), as well as the effectiveness of the website to entice the customer to use it.
This trend will no doubt continue, however, the real blocker on ecommerce is probably not the customer, rather it is the wholesaler being willing to invest in the best technology to provide an elegant and seamless customer experience. Customers don’t want to place an order for something and then discover it is out of stock – they want to know when they have selected a product how much stock is available and that they will get what they ordered. Equally, a customer really wants to build his or her order through the day or week, adding items to the basket sporadically and switching between browsing on a PC and on a phone for convenience.
Intelligent search; personalised promotions; the same – or a broader – range of products as they see in depot or on a PLOF being available online; past order history for all trips, not just online transactions – are all essential for ecommerce engagement. Lots of wholesalers threw up a low-cost ecommerce solution quickly during Covid, which made sense for the short term, but will not drive loyalty from customers in the long term if it fails to offer these features.
Furthermore, the administrative cost of maintaining an ecommerce site separately to the main back-office system means re-keying and manual monitoring and there is a further cost burden because errors are more likely. It is essential that wholesalers invest properly in e-commerce and prioritise expenditure as they would when they allocate budget for a new sales order processing system.
Rob Mannion, founder and CEO of b2b.store, comments: “Over the last 12 months, we’ve seen wholesalers upgrade their e-commerce platforms to deliver higher levels of automation and sophistication.”
eCommerce is increasingly able to offer features that drive bigger baskets and in parallel drive significant efficiencies that cut costs, with customers asking for features such as automated workflows, managing abandoned baskets, marketing automation and live chat.
The Covid-19 pandemic has undoubtedly accelerated the shift towards e-commerce across the sector and, as customers become more accustomed to it, it is becoming increasingly sophisticated.
“Across our customer base, we are seeing a steady increase in customers actively choosing to place orders via e-commerce platforms,” says Mannion. “R&I Jones, for example, has seen this channel grow to 30% of its revenue, with soft drinks revenue at 50% through e-commerce.”
The ability of wholesalers to create their own, fully-branded e-commerce platforms in just a few clicks has been crucial to enabling this shift. Similarly, the emergence of Software as a Service commercial models allows wholesalers to try out different features to see what works for them, create a platform that evolves with their business and provides access to the latest cutting edge developments without the need to invest in their own, bespoke stores.
“We expect the e-commerce growth trend to continue, as wholesalers and their customers become more accustomed to the technology and how best to exploit it to enhance customer communications, streamline back office processes and, ultimately, maximise sales,” says Mannion.
Jon Roberts, senior sales manager at OrderWise, comments: “For the majority of 2021, the UK’s stock levels were at a record-breaking low – with shortages and supply chain disruption making headlines on what seemed like a daily basis. According to the Confederation of British Industry, shortages had not been so severe since 1983 and this had a major impact on businesses across all sectors and industries.
“For wholesalers, it created various challenges, leading many to consider new solutions. One of the biggest emerging trends we’ve seen over this period is the need for integrated and more accessible data via a single technology platform.”
Not only can connected software solutions streamline processes, they can also enable a far more proactive response to changing business scenarios and situations – something that is proving increasingly important. This trend has certainly accelerated as staff availability and rising costs across all roles continued to bite.
“We’re seeing an increasing number of wholesalers looking to create a comprehensive trade portal for B2B clients to self-serve,” says Roberts. “These portals go beyond just processing orders, as they can also provide their customers with tools to request and manage quotes, retrieve invoices and statements, as well as paying account balances.”
There’s also a growing number of wholesalers looking to deploy direct-to-consumer ecommerce offerings, however this is still an area where the majority tread with caution due to the potential conflict of interest with their customers. Currently, it’s only those wholesalers that have their own product range with a strong brand identity that are pushing into the direct-to-consumer space.
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