After years of revolutionary digital change, the wholesale industry may be disrupted.
In this report, Deloitte shares their believes about the different market challenges distributors in the paper marketplace and the cleaning marketplace are facing. In this report, you can learn what those companies offering janitorial supplies, facility supplies, hotel room supplies distributors are facing and may continue to face if they don't adapt.
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Disruption B2B Sales.
The implications of accelerating digitization on distribution are profound. This is, after all, an industry where F2F selling is foundational and where B2B often still means belly to belly. As such, distributors should be shaken by the reality that by a three-to-one margin, B2B customers would rather self-educate about products and services than talk to a sales rep; 59 percent of customers would prefer not to talk to a sales rep at all; and by 2020, one million B2B sales reps are expected to be redundant. The impact of this mindset shift becomes more compelling when you consider Deloitte's research projecting YoY growth in B2B e-commerce of 19 percent is faster than projected growth in B2C. Perhaps the only other times' distributors have faced such significant channel disruption was in the 1960s when household phone adoption reached 80 percent and the late 1990s when computer and Internet penetration also reached 80 percent.
In addition to digital’s potential for opening new go-to-market channels and enhancing supplier/customer engagement and collaboration, it is also driving greater pricing and availability transparency. Some distributors have thrived in market niches with a certain level of pricing and availability opaqueness. However, digital is enabling customers to more efficiently “shop” for items from various suppliers, and for distributors to offer an endless aisle of products. As e-commerce, online marketplaces, and other digital tools gain further acceptance and capabilities, they will further drive transparency, increase pressure on gross margins, and commoditize some specialty products. In the MRO segment, the majority of buyers are already shopping across at least four channels: online marketplaces, consumer retailers, traditional distributors, and direct from the manufacturer. These disruptions will continue to pressure revenues and margins, while the infrastructure investments they represent will pressure SG&A ratios. The net result is that while digital creates opportunities for leading distributors, it will continue to erode value with the slow movers.
Most people were unaware of how time-consuming the traditional payment process at the end of a taxi ride can be. Uber noticed, however, and its users value the ability to exit the car as soon as they reach their destination.
Buying bulk products such as soap and laundry detergents, toilet paper, bottled water, and dog food are some of the hidden burdens of grocery shopping. Amazon’s enables quick and easy reorders with fulfillment to the home. Distributors of the future will also understand that effectively engaging customers demand true innovation in executing the value chain.
Traditional approaches to inventory, logistics, pricing, rebates, and network will be reimagined through the application of advanced analytics and technology innovations. Given the importance of data, analytics, and technology to both engaging customers and executing the value chain, distributors will also need to leverage IT to truly energize—not just enable—the business. This seemingly simple umbrella framework (engage the customer, execute the value chain, and energize the business), along with its supporting imperatives, can provide a powerful roadmap for navigating the inflection point.