Smart Strategies for Distribution
Everyone in the wholesale and distribution business knows what the constant challenges in this fast-paced industry are: shrinking margins, rising costs, increased competition, and demanding customers. But not everyone has the solution to any of these problems. How can a wholesaler stay ahead of rapid shifts in consumer behavior?
My experience as General Manager of Intelligent Systems Romania has led me to affirm that there are two key strategies that can improve sales and margins, and streamline processing: collaboration and diversification.
Collaboration used to be an ERP-related buzzword that in the past was associated with supply chain planning. But today it has a whole new meaning: collaboration is the right way to accelerate sales during a pandemic.
“How do your customers sell your product today?” – I always ask our wholesale distribution clients this question. Afterward, I ask them to consider the many channels their customers sell through – brick and mortar stores, online stores, and an increasing number of marketplaces.
“Have you ever thought about how your customers get the data they need to effectively sell your products?” is another frequent question I ask when we’re still in the process of getting to know the customer. For example, if the customer will be selling products online, they are going to need item descriptions that entice online shoppers to buy. They will also need good images of the item – or even better, different images that provide multiple views.
“Have you seen how your wholesale customers are merchandising your products online”? I often find that our clients do not pay the needed attention to this and they are then surprised to find that in many instances, lacking descriptions and pixelated images that won’t do much to excite buyers are used.
This is easy to solve: wholesale and distribution companies can and should maintain better brand control and provide more value to their customers by giving them the data they need to sell more effectively. If they receive an electronic item catalog complete with professional images, accurate sizes or attributes, and excellent descriptions, then, surely, they would use it. Customers could easily import this data into their sales channels.
“What data can you provide your wholesale suppliers with?” In our integrated business solutions projects, we notice that a lot of companies don’t provide any – leaving few other options to their customers, other than the DIY approach. Many distributors provide a PDF catalog or tell customers to take the information from their website – which means a huge manual effort for customers. Inevitably, this causes delays in getting products to market.
In wholesale and distribution, choosing the right technology partner can eliminate the need to tackle all these issues manually.
Diversification can help improve sales as well. For example, a strategic question we always ask is “Can you sell in both wholesale and retail settings across multiple channels?”
In an ideal scenario, wholesale customers can purchase from the distributor’s website and view wholesale pricing, while the public could purchase by viewing retail pricing. Orders can be captured in a fulfillment system, and sales transactions can roll up under the appropriate customer details. Offering other channels the customers can purchase from can coincide with processes that have already been set up. Consequently, the distributor can sell more without having to add staff for support.
Furthermore, a system that keeps inventory synchronized between channels will free the distributor’s team from being chained to each system, having to manually update inventory levels everywhere.
The point is that diversifying channels can drastically improve sales – as long as a foundation is deployed that keeps item, inventory, customer and sales transactions synchronized between systems. Trying to manually update and access the data in these systems may increase sales, but the distributor won’t be able to keep up with its entry demands. In order to diversify, one needs a rock-solid foundation that will handle electronic data transactions, so that orders are filled accurately, products are accurately described and correctly shipped, all with the goal of providing excellent service.
In conclusion, distributors that evolve through collaboration with their customers provide a more robust, cost-efficient, user-friendly way of increasing sales without having to bring on resources to support growth. They can keep tighter control of their brand and help ensure brand consistency while at the same time build loyal, ongoing sales relationships with customers that inch out the competition. Distributors that constantly look to diversify their offerings often discover new ways of doing business before their competitors.