Are Wholesale Distributors Really Technology Laggards?
Recently, Brian Fanzo and Daniel Newman, co-hosts of the popular S.M.A.C. Talk (social, mobile, analytics, cloud) Technology podcast, caught up with Karen Lynch, vice president, global wholesale distribution industry business unit, SAP, on an episode of an extraordinary series entitled Digital Industries, which examines how digital transformation is affecting 16 different industries.
Until recently the industry has been a self-proclaimed tech laggard. But …
Digital transformation is becoming incredibly important in the wholesale distribution industry.
The Amazon standard
Companies like Alibaba and Amazon are significantly changing the game for wholesale distribution. They are delivering immediate innovation in response to consumer demand. So how do wholesale distributors address these challenges? Listen to a sound byte from the podcast.
The first step that up-and-coming distributors are taking is to lay a foundation for technology and customer interaction. Many of their existing systems are homegrown and the people who can maintain them are retiring. So getting core business processes that are standardized and stable is critical to having a stable digital core on which they can build.
Their new hires mirror the type of technology they are trying to implement; in short, they are employing people who are younger than ever. The hope is that these young people will understand forward-thinking technologies more readily. Lynch explains, “What wholesale distributors are working towards are customer-facing solutions, because as their employees are going to be getting younger, you can imagine their customers are as well.”
The average age of a Sam’s Club member is likely much higher than the average age of the Amazon shopper. The overall objective of employing these new technologies is the change of the normally business-to-business (B2B) world of wholesale distribution into one that more resembles a business-to-consumer (B2C) experience.
Looking at industry leaders like Amazon, we can see that the experience of the platform is just as important as the products that are being marketed there. People expect the same sort of experience at work that they have at home, and until recently most distributors have not been able to provide this kind of experience to their customers. However, new e-commerce and omnichannel technologies are beginning to gain prominence in wholesale distribution. The implementation of these technologies will move the customer experience forward in this industry.
Walk before you run
The widespread nature of distribution lends itself to any technology that improves the ability to do remote business.
Mobile is currently a high priority for wholesale distributors, as they have hundreds of sales reps out working with their customers. But the need is not limited to just sales. Lynch explains, “What we’re finding is that their workers want to be able to have very simple, easy-to-use solutions, and they want to be able to execute transactions on an iPad.”
A distributor that can access and organize data through a branded lens will have a leg up on its competitors. For example, suppose a distributor receives social media feedback from a franchise product within its retail structure. That distributor immediately forwards this information to its network of sales representatives around the world. All these reps, regardless of location, are able to update their talking points when in conversations with customers. This is the same advantage that a cloud-based security package with automated updates gives to a retail company with multiple servers.
The Internet of Things in wholesale distribution
Distributors also are beginning to investigate the possibilities within the Internet of Things, but it is still early days. Applications in which wholesale distribution companies can use data collected from sensors and provide insight to their customers, who in turn can be more proactive and then profitable, could be game-changing. Currently, however, there is more focus on mobility and the customer experience.
Branding and wholesale distribution
Wholesale distributors have never worried about a brand in the same way that consumer product companies have. Wholesale distributors are often some of the largest companies that people have never heard of. But that is changing. More distributors are bringing on marketing executives, a move that would have been completely unheard of a few years ago. They understand that distribution platforms now need to market themselves, not only to attract the best customers in their industry, but also to get the word out to help with recruiting and retaining the best employees.
Fortunately, social media makes branding easier now than in any previous business generation. As Lynch points out, it’s as simple as “… getting blogs out on LinkedIn, getting Facebook posts out there so that people can understand them, and so that they can be top of mind to people who are scrolling through the Internet.”
Don’t be a technology laggard
The biggest and best wholesale distributors are forward-thinking in terms of technology. Distributors in this B2B industry are really acting more like a B2C industry, because their customer expectations have changed tremendously over the past few years.
To listen to this episode of Digital Industries for the wholesale distribution industry, co-produced by SAP and S.M.A.C. Talk Technology Podcast, click here.
Transforming into a truly digital business is much more than just implementing new technology to meet the demands of a digital age. It’s more than keeping up with the deluge of transformation happening all around us. Digital transformation is about understanding how to harness these changes and incorporate them into your business strategy. It’s about driving agility, connectivity, analytics, and collaboration to run a Live Business. A digital core empowers you with real-time visibility into all mission critical business processes inside your four walls, and in your interactions with customers, suppliers, workforce, Big Data, and the Internet of Things.
For more on how SAP can help you drive your own digital transformation in the wholesale distribution industry, visit us online.