The wholesale sector is now at a vital juncture. Wholesale distribution companies played a big part in selling, acting as intermediaries between producers and consumers, confirming that goods reach where and how they should, but everything is changing.
More and more retailers and producers are putting money into their distribution channels, effectively eliminating the intermediary and supplying goods directly to customers. So, the said distributors are having a hard time maintaining their market position and sustaining profitability.
Several wholesalers are stuck between producers, increasing rates to cover operational expenses, and retailers, looking to pay considerably less for bigger orders to meet consumer demand. There are also many other challenges in the segment, like the growing competition between companies.
Stock management concerns are not new to the distribution sector, but the industry is yet to produce a full solution to the complicated issue.
Are you thinking about starting a distribution business and are unsure what stock management is? It is the process of keeping a record of every product, which comes in and goes out of the storage center. It is vital in the sector; without it, there is no way you know the amount of stock sold out, plus how much is left in warehouses. If you are not aware of the amount of inventory left, then you cannot restock goods as this move will lead to delays.
The main challenge which distributors face nowadays may be that customers are being increasingly demanding from time to time. This mainly happens because the millennials have arrived at the age, which sees them occupy authoritative positions in businesses globally.
Generation Y grew up surfing the web on their smartphones and ordering products online, so they have become used to B2C companies’ customer service standard. When they move over to business-to-business sales, they expect such service quality from distributors. That is alien to wholesalers as they never previously had to bother about keeping consumers happy through value-added solutions like how they are asked to today.
As stated above, retailers and producers are increasingly keeping distributors away and are using their channels to get goods to customers. The producer can sell products at a much higher rate, plus the retailer receives these for a cheaper price than they would from the wholesaler. In other words, it is a win-win situation for both parties, but not so for wholesalers.