Are Wholesalers an Endangered Species?

The traditional role of wholesalers is quite simple; they buy significant quantities of products from different manufacturers, store them in warehouses and resell them to customers, whether retail, industrial, commercial, institutional or contractors. Their role is to have the right product when it is needed, at the lowest price. Pretty simple.

That was all good in the past, but now things are changing — and changing fast! In the last 5-10 years, companies like Amazon, Alibaba and eBay have completely changed the dynamic of the shopping experience. Consumers now expect to find what they need easily, at the right price, with high quality, delivered to them where they need it, how they need it and when they need it. And, although consumers can be quite loyal (for example, always starting their search on Amazon.com), they will quickly go somewhere else when they don’t find what they need. How do I know? I do it all the time!

What does this mean for wholesalers?

It means that wholesalers need to adapt and become more flexible or they will be left behind. Customer expectations are rising – merely providing products at low prices does not cut it anymore. They are looking to their wholesalers for more: they expect special treatment, they want value-added services, and they want their shipment packaged to their needs and delivered where they need it at the time they need it.

For example, think of a contractor ordering electrical products and needing them at multiple locations on a job site. That’s one order with multiple items that need to be delivered to different locations, even on different floors of the same building, and these deliveries have to be clearly identified and routed appropriately. For wholesalers, this means that processes in the warehouse where these products are coming from better be flexible, otherwise a lot of manual and costly interventions are going to be needed to pull it off OR expectations are not going to be met and the contractor may choose someone else the next time.

Don’t be afraid to charge for services

Interestingly enough, it seems like today’s customers are willing to pay for the additional services they ask for. Just like Third-Party Logistics (3PL) companies are expected to provide value-added services, wholesalers are now expected to do the same. Not only will wholesalers need to have the people and the systems with the appropriate capabilities in their warehouses, but they will also need to have the capability to capture the cost of such additional services in order to be able to charge accordingly.

Explore new partnerships

Another trend for wholesalers centers around collaboration and potential consolidation of the industry. Producers/manufacturers are trying to align themselves with fewer business partners than in the past, selecting them based on their capabilities, their reach, and (especially in the case of wholesalers) their ability to become more than just a distributor of their goods. To keep up, wholesalers need to explore new partnerships with their customers, suppliers and other potential solution providers.

Invest in distribution management software tools that can change with you

In order for wholesalers to respond to today’s demand from their customers, they need to have the right tools and the right systems in place. Demand Planning, Analytics, and Supply Chain Execution systems like warehouse management software and distribution management software with complete function and feature sets are necessary for wholesalers to become more than just distributors of goods. Since change is constant, these systems have to be flexible, built with capabilities that can be easily extended as needed, when needed, and at a very low cost.

Increasing demands from customers is very challenging for wholesalers today, and at times it may seem to them that their existence is threatened. But at the same time it is creating a wealth of opportunities that will be very beneficial to them. Wholesalers that embrace the changes and undergo the transformations they need to make to serve today’s customers will be well-positioned to benefit from them.

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