Eberhardt Weber

The B2B wholesale business is an essential part of the global economy, providing products and services to all kinds of customers. Despite its vast influence, however, the industry continues to face several challenges that impact its growth and success.

The single most crucial inhibitor to growth is the slower adoption of digital transformation in the B2B sector, especially when compared to businesses that sell direct-to-consumers. Without prioritizing digital transformation and modernizing to digitally-led sales processes, the long-term impact for B2B businesses will hit sales figures, profitability, and customer success. And the gulf between businesses that rely on legacy processes and those that adopt digital commerce strategies will widen, too. Moreover, companies will intensify this gap by introducing more automated tools to fast-track process enhancements.

Of course, change does take time. And it takes even more time when the day-to-day challenges always seem to take precedence over longer-term growth ambitions and digital transformation initiatives. As a result, many wholesalers get stuck in a cycle of troubleshooting to balance their margins and maintain customer satisfaction constantly, and this prevents them from moving to the next growth stage.

The fact that many digital commerce platforms were designed for B2C, with B2B features as an afterthought, makes it harder to overcome these daily challenges. The consumer ecommerce features are bent to try and fit a B2B proposition, but B2B sales journeys and business processes are often highly different and far more complex than their B2C cousins.

B2B digital commerce requires a digital solution that caters specifically for wholesaler needs and gives them the tools they need to use data and insights to their advantage. It’s worth taking a closer look at some of the biggest challenges specific to wholesalers — ones  that may be standing in the way of progress — and see how wholesalers can overcome them.

1–Inventory Shortage & Overstocking

Managing inventory levels is the trickiest task for any wholesale business. An inventory shortage can lead to missed sales opportunities, dissatisfied customers, and reduced order values. On the other hand, overstocking can result in increased expenditure due to the cost of holding excess inventory, which could also get damaged or spoiled if handled incorrectly.

Implementing an automated inventory management system will allow wholesalers to track inventory levels in real time and make informed decisions about when and how much to order. Alerts will not only be triggered as stock lines deplete, but these can be connected with other data, such as expected lead times for deliveries from different suppliers, seasonal changes in demand, or the frequency of repeat orders from large clients. In this way, inventory levels will work in harmony with customer demands so that products are not out of stock when the customer needs them, and not overstocked when they don’t.

2–Poor Visibility into Product Profitability

Determining which products are the most profitable and which ones are not may sound like simple business sense, but these details can often get lost when managing enterprise-level operations. In one scenario, siloed decision-making that varies from one department to another can lead to inconsistent strategies. Or, at the other end, giving equal importance to all SKUs can take the spotlight away from hero products that should otherwise have a greater share of sales to increase profits.

It is possible to create a more insights-driven strategy by collecting data on product profitability across different lines and then building the right product mix. With digital support, this product strategy can also create customer-specific catalogs. A digitized process will enable a far more sophisticated and dynamic approach to managing multiple lines and customers. Managers will no longer need to make all of the calculations and decisions manually. Using process mining technology, for example, the system will capture all the data for a holistic view and then provide insights on the most effective strategies. A platform designed for wholesalers will also make it easier to turn these insights into action by implementing the orchestration of the new rules.

3–Mismatch in Customer & Supplier Demands

The key to running a wholesale business successfully is balancing the demands of customers and suppliers. Wholesalers face a careful balancing act of keeping both customers and suppliers on good terms. Good supply chains will help protect margins, and good customer satisfaction is needed to protect revenue, but these are both on constantly shifting sands and require close attention.

Managing a supply chain using digital tools and insights will provide the analytics to know of any changes in real time so that these can be factored into the front-end customer experience. For example, a wholesaler may receive an order for a product that experiences unforeseen delays. Instead of having to apologize to the customer that delivery will be delayed and risk losing that relationship, an automated system can immediately identify suitable alternatives based on the customer relationship history and diffuse the situation. It could offer an adjustment to the order, for example, such as a discount or other promotional privilege, and keep the customer on good terms.

Or perhaps a manufacturer decides to change the price of its product, making it less competitive in the market, and a decision is needed on whether to continue to stock it. Again, process mining will help to identify the data relating to that product, such as popularity or profitability, and offer insights on the best course of action. In these examples, digitized processes speed up decision-making and minimize the impact of an issue on the end user.

4–Profit Margins & Cash Flow

Wholesalers must maintain the profit margins to remain competitive while also ensuring they have cash flow to meet maintenance and financial obligations and  experiment with new projects. Business owners need to carefully manage their pricing strategies and monitor their cash flow closely, taking steps to reduce costs and increase revenue wherever possible.

Dynamic pricing is increasingly coming into play to enable businesses to have more flexibility in their pricing strategies. In the same way that taxi fares increase when there are high levels of demand, and decrease at less busy times, so too can wholesaler pricing strategies.

At some points, it is worth changing prices to offer more promotions and bulk buying incentives to keep valued customers happy. But it is essential to protect margins when challenging new environments hit, a frequent occurrence in many wholesale industries. Wholesalers should make such adjustments on a customer-by-customer basis, too. By introducing dynamic pricing options, wholesalers can become far more agile in responding to market conditions. They are disadvantaged when facing changes outside their control if they don’t.

5–Slow Growth

In a highly competitive market with rapidly changing demands, dropping the ball on these challenges might mean management spends time troubleshooting, not on strategies that can grow the business. When executives manage operations inefficiently, it’s unsurprising that they hamstring growth.

Digital transformation is the fuel needed to accelerate growth. Neglecting to invest in it will mean losing a competitive edge over the long run. Key to this digital strategy is adopting a more data-driven approach that helps wholesalers maximize sales opportunities, reduce the cost of inefficiencies, and look after customer satisfaction.

About the author:

Eberhardt Weber is co-founder and CEO of Emporix, a cloud-native digital commerce platform provider for both B2B and B2C. He has been involved with digital commerce technology since 1997 and previously worked in management at ecommerce technology providers Hybris (now owned by SAP SE), Intershop, and Hewlett-Packard. In 2010, he founded Lieferladen.de, the first online supermarket in Germany.

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