The first posts in this Wholesale Distribution Industry Outlook blog series covered the topics of Operational Mobility and Traceability. Today, let’s look at the topic of wholesalers expanding their business models, increasing their value-added services.
Historically, the wholesale distribution model was more simplistic – efficiently deliver manufacturers’ products to retail customers at a competitive price while providing great customer service. Today, however, manufacturers and retailers are expecting more from their wholesale distribution partners. And, although these additional service demands can be revenue generating, they can be challenging to execute, as they are traditionally outside of the most distributors’ core competencies.
Leading wholesale distributors are now offering value-added services to manufacturers and retailers. Some are kitting products, executing trade activities, financing growth initiatives and hosting business systems and related infrastructure. They are doing all of this with the goal of improving their own order processing and inventory management, as well as strengthening a differentiated relationship with vendors and customer.
Although these are considered value-added services today, in the near future, they will soon be expected, driving down any premiums distributors may be collecting today. As these value-added services become mainstream, wholesale distributors will need to make each of these functions run efficiently, as well as find ways to make them more attractive compared to their competitors. Take trade execution, for example. Wholesale distributors need not only to track and submit accruals and chargebacks, but also to have business intelligence to guide manufacturers of needed pricing or promotions based on inventory levels or competitor pricing.
- What value-added services are you not providing your manufacturers and customers compared to your competitors?
- What efficiency improvements can be made to these value-added service functions?
- Do you have the data and analytics in place to be able to provide more effective services?
Read the next blog in this series – Wholesale Distribution Industry Outlook: Analytics.