The Rise of eCommerce in Wholesale Distribution

The business-to-business (B2B) wholesale market is valued at a staggering $7.7 trillion worldwide. To earn a bigger slice of this pie, there is relentless pressure on wholesale distributors to differentiate themselves in a competitive market. This means that distributors are increasingly taking inspiration from the successes of the business-to-consumer (B2C) sector in customer service, user experience, and ease of purchasing. In this respect, one of the key trends in the B2B sector is the rise of digitalization and eCommerce. These are essential pillars of B2C growth that B2B wholesalers can adopt to establish a competitive advantage in logistics. The pace of change, however, is breathtaking: In the U.S. food service industry alone, digital penetration is predicted to reach 70% by 2019, compared to 50% now. Looking forward, wholesalers should have an eCommerce strategy in place to migrate conventional operations to a digital platform. But first, let’s define eCommerce and the new digital journey available in wholesale purchasing.

What is eCommerce?

For years, wholesale distributors have maintained an order processing system that relies on phone, fax, and desktop inventory software creaking under the pressure of multiple inputs. Let the whiff of nostalgia dissipate, however, and the harsher reality is of a system ripe for human error, with little real-time visibility of where orders are in the supply chain. Despite the rise of eCommerce in B2C purchasing, wholesale distribution order processing technology was stagnant for many years.

With eCommerce, the combined functions of wholesale distribution are incorporated into a single digital dashboard that can be accessed simultaneously from multiple devices—on both the distributor and customer side. Data is stored in the cloud, substituting real-time updates for manual inputs, and creating a continual backup that keeps operations running in case of hardware failure.

In 2017, we at AMMEX recognized the need to streamline our own order processing systems. Our new eCommerce platform, launched in early 2018, provides wholesale distributors with the ability to access partner resources and place orders day or night. At the same time, we wanted to maintain the human element of our process and give customers the option to continue purchasing through traditional methods.

The distinguishing feature of eCommerce, however, is that it brings the customer into the relationship from the start. Wholesalers can provide each customer with a secure login that gives them access to a private portal for searching products, placing orders, making payments, and tracking shipments. In place of a paper trail (and the ordeal of reconciling purchase orders with invoices), eCommerce software collects a digital profile that leverages analytics to deliver business insight and customer service.

A walk through the digital journey

An eCommerce ERP solution releases efficiency and value throughout the buying process, particularly when compared to conventional practices:

What is driving eCommerce?

Inevitably, the giant broadline distributors have blazed the trail where eCommerce is concerned, not surprisingly given their greater resources for investing in digital platforms. US Foods, for example, launched its eCommerce platform in 2013, which was generating $16 billion net sales by 2016. Likewise, the expansion of Amazon into an extended network of sectors sets the bar higher for all distributors. For the food service sector alone, 25% of restaurants already buy their equipment from Amazon, according to the Cleveland Research Company.

Smaller independent distributors do not need to be intimidated by the challenge set by US Foods, Amazon and others. (or Co.) Rather, the giants have helped normalize eCommerce as standard practice, shown its benefits, and expanded its reach. Many smaller wholesale distributors have taken note of the trend and have started utilizing their own website to streamline order processing.

Setting up an eCommerce distribution platform does not require a drastic overhaul of operations. Neither does it tear into the bottom line. Most digital platforms are designed to integrate neatly into the existing offline setup and to grow incrementally, prioritizing those areas where maximum ROI can be secured.

Distributors are also not alone in making this shift. Suppliers are just as responsible for supporting the trend as their distribution partners. As you are evaluating your product sourcing strategy, consider partnering with a supplier that offers digital assets to make this transition easier. At AMMEX, we offer a variety of high-quality images, product videos, and descriptions to make loading our products onto your eCommerce site as seamless as possible.

The benefits of eCommerce

For wholesale distributors, eCommerce turns logistics into a key point of differentiation, taking pressure off product and price. Analytics allow the supplier to measure costs, trends, and inventory down to the last unit and cent and to respond quickly to changes in the market. Statistics show, too, that businesses switching to a digital platform reap the rewards of higher customer retention rate and higher purchase volume.

More important, eCommerce chimes with the demand for customer-centric sales models, empowering choice and applying the ease of use and convenience that dominates in the B2C sector. Quite simply, customers, whether B2B or B2C, expect their next stock delivery to be as fast and agile as their Amazon delivery at home. They expect to be able to search according to the price and quantity parameters they set, and they want regular updates about (and control of) the status of that delivery.

The challenges of eCommerce

Does eCommerce signal the end of the direct sales representative? Admittedly, Forrester e-business analysis predicts that 22% of U.S. sales agents across all sectors will have disappeared by 2020. Perhaps disappear is too dramatic, however—rather, today’s face-to-face sales rep will transform into a sales consultant. Customers will manage their own orders, but they will still need the support of explainers, navigators, and product experts with extensive knowledge of each supply line.

At AMMEX, we will continue to assign a sales representative to every customer whether they purchase online or through traditional channels. If you have already signed up for a wholesale distributor account, you can find the name and contact details of your representative under your account information. This representative is always available to answer your questions regarding products and the order process. It’s in that way that we continue our commitment to building partnerships with our wholesale distribution customers.

Conclusion

Despite the growth of digitization, 47% of manufacturers still don’t have an eCommerce team. Getting started, however, is not the hardest obstacle since most digital solutions can be outsourced to an ERP provider. The real challenge is cultural. Wholesalers must align all aspects of the business with front-end digital processes once they are in place. That means harmonizing marketing and sales activity in a measured lead generation campaign and streamlining processes and inventory management. Want to check out our new wholesale eCommerce platform?

Request your wholesale distributor account today.