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The outlook for wholesale distribution in 2017

The outlook for wholesale distribution in 2017

Wholesale distributors are seeing an unprecedented era of disruptive change, with rapid developments in technology, altered patterns of consumerism, and emerging forms of competition set to continue through 2017. With non-traditional business sources bringing new rivalries to traditional B2B wholesale distributors, the latest forms of tech requiring investments in both time and money, and service models changing to meet growing and shifting customer expectations, the next twelve months will require wholesale distributors to be flexible in their approach, and to adapt to the challenges, needs and demands of a constantly and rapidly evolving marketplace.

Within this guide, BlueBridge One will examine five upcoming trends and disruptive practices and movements that are likely to hit the wholesale distribution industry in 2017 – we’ll outline how wholesale distributors can adjust accordingly and react positively, to not only keep up with the curve, but to stay ahead of it.

Trend 1: A new competitive landscape caused by ‘disruptors’

As a wholesale distributor operating in today’s highly competitive market, there is ongoing pressure to keep up with known and existing business competitors, who may be expanding their offerings geographically, or launching their products through new multi-channel outlets, such as e-commerce portals.

But it can also appear as though a multitude of previously unknown rivals can spring up seemingly overnight, often with a revolutionary new way of doing things. These disruptive brands may not have originally operated in a competitive B2B wholesale distribution space, but may be retailers or niche services that have expanded their offerings to bring them onto the radar of wholesaler distributors. (Such as Amazon.)

Disruptors can offer multiple lines of trade, have low overheads, minimal infrastructure, and are usually maximising the benefits of the latest technology. These non-traditional and non-conformist wholesale distribution businesses are re-shaping working practices, and re-defining the way that customers view the way they shop for and receive their goods.

To compete and stay relevant, forward-thinking wholesale distributors need to take the opportunity to upgrade their own strategies and procedures, and employ tactics used by disruptors. Established wholesale distribution businesses need to understand the added, or perceived added value that new companies or services are offering, and take actions to minimise the effect on their own enterprise and raise the level of their own processes.

Trend 2: The fallout and opportunities from Brexit

2016 saw the biggest shock to economists and political forecasters for some years, with the nation’s voters opting in favour of leaving the European Union, a move dubbed Brexit. Once enacted, Article 50 of the EU’s Lisbon treaty will begin a two year transition period of the UK withdrawing from the EU.

The effect that this will have on the UK’s economy, businesses and industries, including wholesale distribution, is difficult to predict. The UK wholesale distribution industry generates £980 billion in total wholesale turnover, and employs over 1 million people. The EU, as the world’s largest economy, accounts for 44.6% of the UK’s exports for goods and services, and 53.2% of imports of the same commodities. The initial response to the leave vote saw an early drop in the value of the pound, with some businesses re-evaluating their UK operations, and inflation set to hit prices throughout 2017 – this is good news for exporters, less so for importers. If you export you may already be benefiting from Brexit, with the currency change making it cheaper for your international customers to buy from you without the knock-on effect from the UK economy. If you don’t sell internationally already, 2017 may be a good time to strongly consider it. Brexit is likely to result in new trade deals with countries outside of the EU, a factor which can be taken advantage of by wholesale distributors – ensuring your systems are well positioned in order to maximise the opportunity this presents now will reap the benefits later on. Businesses may also need to be equipped for transactional changes that may occur when dealing with the EU, such as alterations to tax regulations.

Such political uncertainty has also led to businesses remaining unclear as to what the result means for pricing and trade relations. Inflation is likely to be reflected on in-store prices for 2017, as the pound falls and rises in global commodity prices impact the supply chain – as the cost of goods purchased overseas rise, retailers will face the decision of sharing this burden with customers through increasing prices instore, or incorporating the loss into their margins. Official retail figures for December 2016 demonstrated weak levels of sales in some sectors, with a monthly drop of 1.9%, reflecting decreasing consumer confidence – economists had not foreseen seasonally adjusted growth figures as low as those issued by the Office for National Statistics. In areas such as clothing however, reports were more positive, with the general consensus being that consumers may have brought forward their purchases in order to beat incoming inflation rises.

The wholesale distribution industry is currently in stand-by mode, awaiting the government’s next actions and those in sectors that are most aligned with EU trade may suffer heaviest until trade agreements are reached.

The UK looks set to opt for one of two strategies when undertaking trade negotiations. Following the Swiss model would see the UK negotiate bilateral agreements for certain sectors within the EU; the FTA Approach facilitates a complete withdrawal of the UK from the single market, forcing the UK to negotiate individual agreements per country. With the model that it chooses, the UK government will be looking to sustain the highest levels of profits while minimising costs for exporting and importing goods.

With such ambiguity ahead, the majority of any resulting downturn is most likely to be felt in 2017; immediate and pro-active actions are needed now for wholesale distributors to best face the challenging months ahead. The best course for confronting the imminent problems is by ensuring your wholesale distribution business is running at optimum efficiency, in order to minimise wasted costs and prepare your operations for coping with unforeseen circumstances with the best hope of success.

Likewise, making sure that all systems are operating at peak levels will maximise resilience to a difficult trading climate, providing the best service and focusing on customer retention. Optimising inventory management processes, making the best decisions on warehouse and stock locations, accurately forecasting sales and analysing stock trends will encourage continued growth and the best possible performance, preparing your business for every eventuality. Having the right business management software in place can help to add the flexibility your operation needs when adapting your business model to changing political and economic landscapes.

Trend 3: The customer is at the heart

The way that end-consumers purchase from retailers, and businesses buy from their B2B suppliers is constantly shifting. The massive growth of online shopping, and the increasing demand to be able to buy from any device, at any time, is transforming the way we think about transactions. Consumers are now more willing to abandon long standing brand loyalties in favour of companies who offer greater short term gain, such as a lower price, or a desirable shipping service - a highly connected digital landscape means that buyers are more fluid in their approach to moving from business to business, accessing the information they need to research and compare specs, standards, and pricing before making a purchase.

Continually changing customer expectations and disrupted relationships mean that wholesale distributors need to place greater emphasis on meeting new standards, perceptions, and improving customer care. The industry focus is shifting from products and services to customer relations and experience, as customers dictate how they want to do business.

For multi-channel distributors, there is an increased pressure to deliver a cohesive customer experience across a number of different outlets and platforms. Even wholesale distributors with one sales channel are becoming more connected and visible to their audience – being exposed to customers via websites and social media platforms around the clock requires all businesses to think more seriously about topics that had previously only been the realm of marketers, such as branding, content and creative. Customer engagement is a high consideration for levels of retention and satisfaction, and providing consumers with an informative and enjoyable online experience, provides an additional level of care and attention. Websites and social media channels present further opportunities for convenient lines of customer service, with live chat options, or trained staff available to immediately help with queries and solve problems.

Ultimately, wholesale distributors need to invest time and money into understanding the changing requirements of their target market, and invest in an improved level of customer care - or face being left behind in favour of a competitor who can better meet these expectations and provide greater levels of customer satisfaction.

The ability to have one record of everything a customer does, across multiple channels is becoming more and more important. A retail shop shouldn’t be separate from e-commerce, and so on. Investing in the right tools (like NetSuite) to give this view will help you to put the customer at the heart of your business.

Trend 4: AI and emerging technology

There have already been many advancements in both the development and use of future tech throughout wholesale distribution and retail channels, with innovation and adoption set to continue in 2017. This year, wholesale distributors should be taking note of trends in software and machinery that have the potential to transform the ways orders are taken, fulfilled and delivered. Some key ones are:

Robotics

The use of robotics in order fulfilment is an increasing practice in warehouse premises. Improving the speed of task completion dramatically, artificial intelligence allows wholesale distributors to expand their order fulfilment capabilities, improve efficiencies, and reduce costs.

Internet of Things

The Internet of Things (IoT) is a network of physical objects which contain sensors and electronic components designed to gather data – data which can be used by businesses to develop better customer service and improve internal operations. The large volume of data produced previously impeded its use as a commonplace practice, but today’s cloud technology has improved data management and storage, and new analytic capabilities allow companies to dissect and utilise the results in more practical applications. Wholesale distributors can capitalise on IoT sensors in areas such as warehousing, transportation and equipment monitoring to automate processes and improve operations. For example, when restocking warehouse bins, the bin itself can advise of a stockout situation, turning an inanimate object into a helpful tool for stock inventory management.

Checkout-less stores

This year, Amazon Go is introducing the buying public to checkout-less shopping. Amazon Go stores allow the customer to walk in to a bricks and mortar environment, select the staple food items they wish to purchase, and walk away without physically paying. This is made possible by highly advanced tracking sensors that identify which items a shopper has selected, to be automatically charged to the individual’s Amazon Prime account. It’s the ultimate use of technology for consumer convenience, and could revolutionise the way we are served (or not served) in-store. (For further information on Amazon Go and its effect on wholesale distributors, read our blog post here.)

Drone and autonomous delivery

Progress in driver-less vehicle technology is advancing rapidly, if not yet widely accepted. Experiments involving convoys of driver-less trucks have already taken place, and autonomous deliveries could provide solutions for driver shortages, hiring costs, safety, and fuel consumption, and lead to lower shipping costs and improved delivery speeds. Drones are also emerging as a delivery method of the not-toodistant future – despite current restrictions prohibiting their official flight use for business, tests are commonplace, and the next few years could see the technology regularly used as an air-borne courier service, and within warehouse spaces for inventory handling.

Trend 5: The need for speed

With more and more brands and innovations encroaching into territory formally occupied by pure play wholesale distributors, and an online economy allowing us to consume products and services around the clock, the pace is constantly increasing for the wholesale distribution industry. The way in which goods and services are sold is not the only differentiator for organisations – how quickly an order can be completed is now under greater scrutiny.

The increase of millennials working throughout the supply chain has seen B2B wholesale distributors experience a shift in their target demographic. They must now cater to a tech savvy buyer, who brings their perceived need for immediacy, and familiarity with an ‘always on’ culture to their business expectations and transactions. These new clients for wholesale distribution businesses want to purchase when and where they want, and want things quicker than ever before.

The speed of processing orders, and super-fast and efficient delivery are now critical metrics for wholesale distributors. Businesses need to review their workflow efficiencies to improve the standard and pace of order fulfilment, and assess the logistics of the operation. The possibility of providing new delivery solutions, such as click and collect, can also be considered. A further development that may help delivery speeds is another form of emerging tech utilised in intelligent order processing – this method involves the system automatically deciding on the best location for fulfilling an order, such as the closest warehouse, or a retail store local to the customer, ensuring that travel times are kept to a minimum.

Conclusion

Understanding the ongoing and fast-paced revolutions that are occurring in this digitally-led age of wholesale distribution is the first step for businesses looking to keep up with the changing times. The second phase is to embrace these forces, to not only survive, but to thrive as customer expectations, and the models we put in place in order to meet those expectations, continue to progress.

To be in-line with the continued and increasing immediacy of electronic consumption in 2017, multi-channel distributors will need to fulfil orders even more quickly, without a loss in accuracy or efficiency. Logistics and delivery methods may need to be reviewed and altered, whilst emerging technologies such as robotic picking can be utilised to improve warehouse efficiencies.

For some, the rapidly changing climate in wholesale distribution for 2017 will force recognition that their digital enablement capabilities are lacking. Remedies may involve launching a B2C ecommerce site, as well as a feature-rich site for B2B buyers, or re-evaluating the end-to-end processes and business systems that may be holding them back from operating at their peak rates of efficiency. Operating at optimum levels in all areas of the organisation will be essential to withstand the uncertain economic trials to come in the next few months, with the impact of Brexit yet to be fully determined.

Using BlueBridge One to combat and incorporate these 2017 trends

Knowing that your end-to-end business processes are operating as efficiently as they can be, and that your systems and processes are up to date will allow your wholesale distribution business to forge ahead in 2017. Implementing leading business management software will help you to stay in control and maximise your potential – to find out how BlueBridge One can guide you through the use of NetSuite to reach your business goals, visit us online at www.bluebridgeone.com

About BlueBridge One

BlueBridge One is an award winning business solutions provider. Since 2003 we have specialised in partnering with customers to implement NetSuite ERP solutions to meet the individual requirements of businesses in the multichannel distribution vertical.

BlueBridge One provides the ability to integrate Wholesale Distribution alongside In-store, Online and Machine to machine operations to enable seamless, end-to-end supply chain management. Through efficiency, reduced cost and enabling flexible and agile control of the supply chain, this creates a platform for growth.

We partner with customers, delivering long term solutions and high levels of satisfaction. Throughout the life cycle from implementation and integration to ongoing support, our aim is to ensure you are retained as a customer year after year by providing a superior level of individualised service.

ERP is a critical piece of business technology which often requires significant investment. Customers need to operate with complete confidence in the service and support channel. We are the right-sized partner for growing and mid-market multichannel distribution businesses that wish to be valued and are assured of our undivided attention when it is required.

BlueBridge One is a stable business that takes a long-term view. We invest in our people and in the process of them achieving full NetSuite certification as consultants. The majority of our team are long term employees and this continuity is pivotal in enabling our high long term customer retention rate.

The cloud-based technology that powers NetSuite is also the chief enabler of no-bricks companies and virtual businesses. Some solution providers take this business model so far it feels like you are kept at arm’s length. BlueBridge One maintains a geographic centre in the UK at Weybridge, Surrey and a sub-Saharan Africa regional presence in Gauteng, South Africa, with an emphasis on establishing faceto-face contact with customers across EMEA. This provides the frame of reference of ‘faces and places’, supporting the mutual trust that is essential between partnering businesses.