The wholesale distribution industry stands at a pivotal point of transformation. While traditional business models have served the industry well for many years, multiple forces now create an urgent need for adaptation and change.
The pressure to evolve comes from various directions. Large e-commerce players disrupt established competitive landscapes, while social changes affect workforce availability and expectations. Global events test supply chain resilience, and regulatory requirements add growing complexity to operations. Meanwhile, technology innovation creates new opportunities but also widens the gap between early adopters and those slow to modernize.
Understanding these trends and their implications is crucial for anyone working in wholesale distribution, as they shape both current operations and future strategic decisions.
Increasing Competition
Increasing competitive pressure (New players like Amazon, blurring lines between B2B and B2C, empowered customers …).
Business Impact
- Disruptors are making headway in markets traditionally served by distributors absorbing demand in their core business models.
- Wholesale must protect their core business model by evolving their existing processes for increased efficiency.
- Wholesalers need to evolve their business model towards a platform, service or solution business to create differentiation and ensure relevance
Mergers & Acquisitions
With increasing competition key players are expanding vertically on a national and internal level and vertically along the value chain to ensure market relevance.
Business Impact
- Increasing size and complexity of business models as distributors evolve into multi business model operations.
- Softer disciplines like Value, Change and Experience management are becoming key topics to justify and manage acquisitions in the most effective way possible.
- Integration of expanding ERP landscapes, harmonization of data and processes become an ongoing effort.
Social Dynamics
With the rapid takeover of all aspects by the internet, and associated technologies, changes occur in work-life patterns, job expectations and user behavior
Business Impact
- Resources need to be focused on value add activities and find relief from manual, low efficiency tasks.
- Employer of choice status goes beyond recruitment and retention – to fundamentally revolutionizing the way people engage.
- Wholesale companies are facing a talent crisis, and will have to develop strategies to win and keep young talents.
Technology Innovations
Resilient supply chains require technology to deliver in line with customers requirements and react to global events
Business Impact
- A truly integrated supply chain execution suite is needed to manage logistical capabilities tightly coupled with a robust eCommerce experience
- Requirements are centered around a higher sophistication in mid-term demand and supply planning as well as short term purchase optimization
- Wholesalers need advanced capabilities to better plan their supply chain networks, assess supplier risk and execution abilities considering various risk factors
Global Dynamics
The Internet has enabled new platform business models that changed customer expectations on catalog, availability and deliveries
Business Impact
- Distributors may lose strong customer relationships in and become mere links in supply chains
- Customer expectations have changed; they expect increasing complex value-adding services and have a low degree of customer loyalty
- Ubiquity of items necessitates a global supply chain, amplifying the impact of unplanned events like disasters or changes in tariffs.
Government Regulations
Constant changes to regulation and compliance rules for both domestic and international operations
Business Impact
- Incremental compliance costs decrease margin
- Resource drag on maintaining compliance and reporting requirements
- Increased product sourcing and distribution challenges
