- On February 2, 2021
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Wholesale Distributors Forge a Path Forward
2020 presented a challenging year for every industry, and wholesale distribution is no exception. Wholesale Distribution trends 75% have reported transportation issues due to COVID-19 restrictions, and nearly 50% have reduced inventory amidst the uncertainty (3). Drastically shifting demand and logistical limitations have caused distributors to incorporate new strategies to keep things running smoothly and cost-effectively.
The trends towards greater automation and increasing resilience, especially in distribution supply chains, are likely to continue throughout the next year. Here are some of our predictions for 2021.
The pressure to become more environmentally friendly is pervading every industry in 2021. Besides the benefit to the environment, green logistics are cost-effective, promote brand goodwill, and increase customer loyalty. In fact, brands that advocate for sustainability grow 5.6 times faster than their competitors (1). The United States 2021 administration requires distributors to be more conservative with their carbon footprint, with regulations like California’s WAIRE program that require distributors to pay emission-based fees. Packaging is another area of improvement where distributors are incorporating more recycled ingredients into their packaging, not only reducing emissions but also decreasing costs.
Integrated Enterprise Resource Planning (ERP) technology gives warehouse distributors a complete picture of their business operations, from orders to shipping and packing, to delivery. You can use real-time data from your orders and demand forecasting to plan the optimum route for each of your shipments, therefore reducing emissions and transportation costs. Furthermore, you can see exactly what you have in store at any given point in order to reduce waste and even plan to repurpose extra materials for packaging. Having all of your information in one place also allows you to easily pull reports to meet any government or industry regulations around sustainability and reporting.
Whether you are selling directly to a consumer or B2B, every customer in 2021 expects a convenient and smooth shopping experience. Omnichannel selling is a method that allows a client to shop via multiple channels, including on a mobile device, laptop, in person, or over the phone. The Harvard Business Review reported that 73% of all customers are omnichannel customers, meaning they use multiple channels while completing a purchase. Furthermore, omnichannel customers spend 4% more on every shopping occasion in the store and 10% more online than single-channel customers (3). Wholesalers need to prepare for an increase in omnichannel selling in 2021. Being able to provide customers with multiple purchasing methods is no longer a luxury, it is a necessity.
ERP technology gathers all your customer data and orders in one place. Whether a customer places an order on their mobile device, via phone, or in person, you can view their entire profile and purchase history in a single platform. This allows you to determine trends and spending habits so you can better forecast demand and make sure you are providing the optimal customer experience every single time.
Distributors are increasingly focused on adopting greater levels of automation and efficiency into their businesses, especially within their supply chains. Smart supply chains require connectivity and visibility both inside and outside the warehouse, providing easy access to information for rapid decision making. 50% of companies believe that technological advancements have a significant impact on supply chain, logistics and transportation operations, with 81% of supply chain managers citing data analytics as a crucial factor in reducing costs (5). Increasing technology and automation is even more important for warehouse distributors post-pandemic, as they look to increase resilience and manage disruption.
Within the warehouse, technology that allows for greater automation and data integration gives you more visibility into inventory. You can view exactly where your inventory is located, what the turnover rate is, how much it costs to store inventory, and how much is expected to come in and go out within a particular timeframe. This helps you decrease excess inventory and waste, significantly reducing costs, while also ensuring you have enough inventory to meet demand. Inventory management technology allows midsize distributors to do more with less product, which is especially important in times when supply chains are strained by border closures and decreased production capacity. Outside the warehouse, you have a complete picture of your distribution chain, starting from the supplier you are purchasing from all the way until a particular order leaves your warehouse and is received by a particular customer. This is especially important in times of unpredictable changes in supply and demand like the disruption of 2020, when the need for essential goods skyrocketed. Warehouse distributors using ERP technology are able to better plan for shifts in demand and get the right products in stock and delivered to the customers that needed them most.
In 2021, it is no secret that e-commerce is exceptionally important for all types of business. In March of 2020, a worldwide survey by Statista found that 11% of manufacturers and 10% of distributors were generating 81% to 100% of their revenues through B2B e-commerce, and that was before Covid-19 was widespread (4). This trend was further accelerated by the disruption of the pandemic and will continue to impact the warehouse distribution industry well into the coming year. In order to stay competitive, midsize distribution companies need to have an easy way for customers to view, select, and purchase products online.
Having a system that provides features like customer portals, allowing customers to easily place orders and interact with distributors, is essential to doing business in today’s digital age. Technology such as Electronic Data Interchange (EDI) allows companies to communicate in real-time to both their customers and their suppliers. This automates the flow of data from documents such as invoices, purchase orders, shipping notifications, and more, allowing you to stay digitally connected to your consumers at all times.
2020 saw major shifts in the types of products in high demand, and distribution companies needed to find new avenues to appeal to customers. With retail and foodservice hard-hit by the pandemic, many distributors needed to identify new opportunities. For example, while food distributors have seen a sharp decline in orders from restaurants, new go-to-market models provide huge potential. Subscription recipe boxes like Blue Apron, Freshly, and Purple Carrot are expanding rapidly and the food truck industry is estimated to generate $1billion in revenue (2). This shift will continue in 2021 as new brands and businesses gain traction.
Distribution companies can use technology to organize data from past orders and pull reports, allowing them to identify trends and growing markets. Having this type of information readily available allows you to focus on the areas of your business that have the greatest capacity for growth, so you can maximize revenue even in challenging times!
The warehouse distribution industry was faced with unprecedented disruption COVID-19 had on businesses across the globe. Midsize distributors are finding ways to streamline their supply chain and identify opportunities for future growth in 2021. Greater automation and a customer-centric business model will allow distribution companies to not only start on a path to rapid recovery but grow their business in 2021 and beyond.