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Three Ways to Overcome Supplier Disintermediation in Wholesale Distribution

Mahesh Rajasekharan
Overcoming Supplier Disintermediation

In my previous blog, we detailed the existential threat that is supplier disintermediation, and the challenges it presents to enterprises everywhere.

Supplier disintermediation is a process by which wholesale and distributors are cut out of the supply chain in favor of manufacturers and suppliers going direct to customers. The age of the internet has enabled unprecedented opportunity, as well as drastic disruption in the supply chain. For many suppliers, cutting out "the middle man" is an option that becomes more and more appealing every year.

And while those challenges might seem daunting, there are several ways that enterprises can overcome this threat.

Here are three critical success factors for overcoming supplier disintermediation, and wholesalers able to follow these steps will surely be able to thrive despite the hurdles in front of them within the wholesale distribution industry.

1. Embedding B2C Experience into B2B E-Commerce

Today, the typical B2B buyer in a group purchasing organization (GPO) is highly influenced by their business-to-consumer (B2C) experiences with companies such as Amazon. They want:

  • Similarly intuitive, easy-to-navigate ordering platforms
  • High-quality 3D product images
  • Real-time inventory visibility to know if an item is in stock
  • Access to detailed specifications
  • Intuitive search options to facilitate comparison with similar items
  • Rapid access to complementary products
  • The ability to buy online with a variety of fulfillment options (e.g., deliver to branch, jobsite, my location, or your distribution center on consignment)
  • Real-time order tracking

As distributors consider how to be the middleman in business, exploring e-commerce with an embedded B2C experience as a strategic lever for improving sales and customer service can be a powerful weapon for wholesale distribution firms to overcome disruption.

2. Omnichannel Convenience

In addition to e-Commerce, omnichannel is becoming mission critical as customer expectations increase and go-to-market channels proliferate.

The B2B buyers who shop on Amazon expect digital services such as customized reporting, multichannel ordering, and full visibility into distributors’ inventory. Per McKinsey, 57 percent of survey respondents said omnichannel convenience was one of the top three improvements distributors should provide.

Features those respondents want, among other things, include 24x7 customer service, a complete e-commerce website, order tracking, and real-time inventory management. Customers expect to make 30 percent more of their purchases from distributors via online means. Building strategic agility and flexibility into their supply chains is critical to becoming digital and supporting omnichannel and e-commerce business models.

3. Technology to Drive Digitalization

Wholesale distribution is still lagging behind most logistics companies in terms of digital adoption. However, wholesale distributors that invest in digital strategies can accelerate sales growth, expand customer reach, and improve customer retention. Below are the key technological capabilities that can help them be the middle man in a relationship and counter the threat of digital disruption:

  • Leveraging data science and analytics to (a) better support organization-wide decision-making and (b) serve customers based on their preferences
  • Focusing on efficient warehouse and transportation management
  • Implementing real-time inventory management and order tracking
  • Enabling omnichannel experiences across mobile and web with intelligent search capabilities for complementary products and product specifications
  • API and ecosystem integration to enable real-time end-to-end business processes

The digitally driven trend toward removal of intermediaries is not going to slow down; rather it will gain speed in the years ahead. An ecosystem integration approach can help. Warehouse distribution businesses that adapt now will become the most agile competitors of tomorrow.

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