Will Distribution Business Survive Beyond 2022?

Distributors and wholesale dealers are not new to the B2B eCommerce industry. Throughout the eCommerce supply chain, distributors, manufacturers, and wholesalers face immense pressure and end up spending billions of dollars just to survive in the market. According to a recent market survey, almost 40% of the distributors feel the competitive pressure against manufacturers due to increased digitalization. This is because retailers can simply go online to get in touch with the manufacturers directly on the online wholesale marketplace. And this means that the eCommerce chain remains functional even in the absence of distributors. Due to technological ignorance, distributors feel left out. According to the market research in the last Fiscal year, 52% of the distributors have an eCommerce website, out of which 80% do not have a web store plan for the next two years. Despite the fact that the eCommerce industry is offering opportunities worth $6.6 Trillion to the distributors; more than 70% of the distributors are falling behind in the race due to eCommerce immaturity and lack of technology. Distribution is a costly sales channel because of

• Inefficient work structure
• Inadequate market coverage
• Insufficient financial support from the channel partners
• Inadequate online presence
• Insufficient knowledge about technology and software

End-users reach out to wholesalers directly due to their competitive pricing and strong online presence. Distributors fail to offer a competitive buying experience to the end-users, which is one of the preferential factors for the end-users, according to a market survey. The reason being, a majority of distributors fail to apply a good Product Information Management (PIM) system. This makes the work structure inefficient, lowers employee productivity, and increases maintenance cost making distribution an expensive sales channel. This is a vicious cycle that will go on unless specific measures are taken to bring changes in the channel. If you are a distributor, you must get ready to face the cut-throat competition in the race of digital transformation and follow some steps which will help you survive beyond the year 2022. So, what is it that a distributor must do?

Go Digital

Due to the overwhelming trend of online business, the distributors of the B2B industry are trying their best to establish an online presence before their competitors. However, before going online, try to conduct market research, understand what your customers are looking for, how much they are ready to spend, and who their favorite suppliers are. Unfortunately, there is a large percentage of distributors who have been in the market for more than a decade, offering a good customer experience through physical stores but, lack the knowledge of online sales. Take small steps to make a bigger impact. Below are some steps that you can follow to prepare yourself for the fierce online competition.

• Optimization. Optimize your website pop-ups to attract and retain new customers.
• Online Channels. Identify the right channels for online sales for your business. Not all channels are suitable. Look out for channels that help you reach your target audience. Identify the top and bottom performing channels and optimize them based on their ability to support sales.
• Connect. Help retailers and sub-distributors go online. Connect with them allowing them to reach out to you, whenever required.
• Customer Satisfaction. It is important to maintain the same customer service as your physical stores for better customer retention.
• Security. Have an eye on the hackers who focus on data leaks and cybercrimes

Reduce Costs

The next 3 years are critical for the B2B distributors. Over the years, distributors have spent hundreds and thousands of dollars on sales. From now on, they need to work smart and the first wise decision to make is to develop an IT infrastructure at low cost. Here’s how the distributor can make its mark over the online platform and also save money and time while doing so.

• Reduce your IT infrastructure costs. You only require the essential features that will add to the functionality of your online setup. Including different types of add-ons and features will only increase cost.
• Identify the right cloud platform. Cloud platforms offer a competitive edge over your competitors. An ideal cloud platform offers unlimited storage space, reliable and secure data management, automatic software restoration, high speed and mobility.
• Cloud Vs On-Premise. Move your IT infrastructure to cloud rather than on-premise to reduce maintenance costs.
• Make the right choice. Identify the right eCommerce platform to go online. The eCommerce platform must be user-friendly, flexible, customizable and cost-effective.

Outsourcing

Distributors can simply be left out if they do not show an online presence. However, focusing on online visibility is not the only task the distributor must focus on. They must also take care of logistics, vendors, sales channels, and much more. In order to increase the online visibility and simultaneously lower the burden from the team, you need experts who can take care of the Search Engine Optimization (SEO) and Social Media Marketing (SMM) activities. Let your team focus their time and energy on other important aspects of the business.

• Outsource. Outsource your SEO and SMM activities to an external agency. You can view the monthly reports to see how the company is performing online.
• Consistency. SEO activities must be a regular activity and have a periodic frequency. For instance, have strict timelines for your website to appear on the top page of the search engines, regular posts on social media pages, and so on.
• Experts handling. Let professionals handle the various types of content pieces for your business. Effective content for an eCommerce website includes detailed product description, well-structured schema, and well-structured product taxonomy. All of these content segments are essential to provide a better shopping experience to your customers.
• Content Management. Posting high-quality content with essential keywords is important for greater online visibility. Let your content be relatable to your readers. Include knowledge-sharing blogs, articles, infographics and images, vlogs, podcasts, etc., on your website regularly. In addition, content curation and management for products are crucial to building trust and reliability with your customers.

Exploring

Distributors rely on long-standing relationships with their existing customers but do not focus enough on creating a new customer base. Attracting new customers is as important as retaining the old ones. This can be made possible by exploring different markets and sales opportunities.

• Expansion. Consider expanding to newer markets. Try to understand your customers’ needs, analyze the changing trends of shopping, and expand your business to related products. Diversion based on customer needs can contribute significantly to business revenues.
• Exploration. A distributor must be open to exploring new markets and discovering the various importing options available. This allows the distributors to be more reachable to their retailers and end-users.

Conclusion

Let the retailers approach you, for unique services that the manufacturers are unable to offer, such as Vendor Managed Inventory (VMI) tools that automate the process of distribution and saves the retailer’s time and money. Retailers have to simply reorder, and the distributor provides whatever is being ordered, allowing the retailer to never run out of stock. This becomes possible when the distributor has a strong online presence. This way, distributors are bound to survive for many more years to come.