B2B ecommerce is a critical and fast-growing channel for wholesale distributors. But they need to deploy the right digital technologies for effective supply chains to make ecommerce a viable business model, write Mark Jordan and Susanne Adam of SAP.

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Mark Jordan

Ecommerce is growing in wholesale distribution, and online sales have hit an all-time high over the past few years due to disruption and the influence of technology on customer behavior. Forward-thinking businesses are embracing online channels to sell their products and reach a growing customer base that has increasing expectations of a positive customer experience.

Last year, the sudden onset of change was a wake-up call for many wholesale distributors because it exposed weaknesses in their ability to manage their supply chains.
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Susanne Adam

The opportunity to create an online presence that transcends traditional sales channels is becoming more attractive to wholesale distributors as they look to remain relevant in a competitive digital global economy. By embracing transformation and making the move to ecommerce, distributors can reinvent customer service, tap into new markets, lower operating costs, and increase the bottom line.

Leveraging this business model is an essential step for wholesale distributors to take in the digital age. Still, although it opens a window to drive innovation, it also comes with the challenge of fine-tuning their supply chain to manage demand as online sales channels take center stage. This scenario is where distributors must improve supply chain resiliency to help ensure the long-term success of their business.

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Supply Chain Resiliency in Ecommerce

Resiliency as a concept has woven its way into many conversations as wholesale distributors consider new capabilities for their business, especially with the growing promise of ecommerce being a preferred channel for many customers.

Resiliency may have a different meaning for some, but in this context, it is the ability to withstand and recover from difficult situations with minimal disruption to a business. Last year, the sudden onset of change was a wake-up call for many wholesale distributors because it exposed weaknesses in their ability to manage their supply chains.  The shortcomings of disconnected systems and processes left businesses unprepared to meet the challenges.

Distributors will need to consider some form of digitalization of their business to manage the effects of future disruptions practically. Investing in the right digital technologies for more responsive operations, end-to-end transparency of their supply chain, and effective collaboration among stakeholders, is required to ensure resiliency and also to evolve ecommerce into a viable business model.

A2021 Digital Commerce 360 | B2B survey of 100 B2B sellers finds that 48.2% of companies ended the year with digital sales growing by at least 25%, including 13% by as much as 75%. In comparison, 18.1% of B2B sellers reported flat or declining B2B digital commerce sales, including 3.6% that reported a drop in online sales of at least 25%.

Many companies that sell physical products or services are exploring the option of ecommerce even though it may only currently be contributing to a fraction of their business.

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With ecommerce growing at a rapid speed, the survivability of businesses may rely more and more on the success of sales from online channels, especially for new customer acquisition/retention as the buying process becomes more automated or controlled by younger buyers.

E2E Visibility for Wholesale Distributors

Today’s customers seek instant gratification, particularly when ordering online because they crave immediate responses with the desire for a fast, seamless click-and-collect order process. For wholesale distributors, the ability to acquire products can be challenging due to a mismatch in customer and supplier demands, resulting in back-orders, stock-outs, and late delivery. The inability to reflect that for the end customer can erode trust. The significance of E2E visibility in ensuring that wholesale distributors can source and fulfill customer needs is crucial to business sustainability because a great customer experience requires a supply chain that adjusts easily to misfortune or change.

With the growing importance of digital sales channels, any weak links in the supply chain will be realized by the customer. A customer ordering online expects the same reliability regarding delivery dates as when talking with a sales rep on the phone. A customer’s trust can only be kept when promised delivery dates are kept, independent from the channel.

Winning customers over with an ecommerce experience depends on many factors, such as high-quality product information, an extensive assortment, relevant product search, and recommendations. Price is not always the most important factor in buying decisions; the ability to acquire products in the time needed and reliably may outweigh the cost of products or services. Wholesale distributors can keep customers satisfied through:

  • Availability: Visibility into the supply chain lets wholesale distributors consistently provide products to customers. With accurate inventory information, distributors can benefit from lower shipping costs by reducing emergency or partial shipments and avoid overpromising and under-delivering.
  • Reliable delivery commitment: In the wholesale distribution industry, a key factor is reliable order commitments. A customer must have access to accurate delivery information at all times as their business will rely on the products and services that they are purchasing to conduct their operations.
  • Seamless buying experience: If there are choices between comparable products that have different availability, getting this information to the customer enables them to make decisions based on their current needs.

Achieving E2E Visibility in the Supply Chain

Providing real-time visibility into operations can be one of the biggest challenges for wholesale distributors but is singularly one of the most important factors in building resilient operations.

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Gaining end-to-end visibility is a journey and not necessarily a destination. There may be different tools that are being used for different parts of the operation, but ultimately the goal is to enhance control over your inventory to ensure better operational decision-making and create optimized outcomes through effective risk and performance improvement.

The journey includes integrating front-to-back-office systems to connect business processes, applications, and data to effectively manage customer experiences, reduce costs, and increase margins.

The solutions used must handle the tasks at hand, and they may require some upgrades to improve efficiencies and keep costs manageable. To create optimized outcomes, using a single source of truth for operational data and accurate upstream/downstream visibility is essential. So, distributors need to graduate from managing their operations in excel or using multiple disparate and disconnected systems.

The bottom line is that regardless of the systems distributors use, the systems need to be connected to eliminate information latency, and aggregating data from all systems can help deliver the best customer experience possible.

The only way to meet today’s customer expectations

B2B customer buying dynamics are shifting, and their expectations are high. Wholesale distributors are under pressure to transform business models and offer online shopping experiences that meet the modern customer’s expectations. For distributors, online stores are an opportunity to expand and retain their customer base. If wholesale distributors do not want to get left behind in an evolving marketplace, they need to act and progress toward ecommerce. They can only succeed in this transition through supply chain resiliency to successfully navigate change and keep up with demand.

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Mark Jordan is a solution manager at business operations software provider SAP SE and has more than 21 years of experience in enterprise software product management and business development.

Susanne Adam is a principal solution manager at SAP for wholesale distribution. She has worked with client companies on customer engagement strategy and various projects in the wholesale and retail industry. Follow her on Twitter @susanneadam3.

 

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