The past few years have been times of challenges and changes in the wholesale industry as it grapples with obstacles caused by the global pandemic and other factors. Supply chain disruptions, rising prices, technological advances, and shifting customer demands have all impacted the market in recent years. Wholesale industry trends that emerged during the pandemic continue to influence the market in both positive and negative ways.
Customers in both the B2B and B2C spheres are increasingly making purchases directly from manufacturers, and wholesale traders are finding themselves in competition with their own suppliers. In order to remain competitive in a market where demand for wholesale suppliers is falling, companies need to continue following strategies adopted during the pandemic, increase efficiencies, and find ways to stand out from the crowd. Here are some of the key wholesale industry trends to watch during 2023.
Direct-to-Consumer Selling Continues to Grow in Popularity
An increasing number of manufacturers are opting to sell directly to customers rather than go through a wholesale trader, and this trend currently shows no signs of slowing. Direct-to-consumer (D2C) sales rose dramatically early in the pandemic as companies scrambled to deal with shifting demand and unreliable supply chains, but some businesses had already begun exploring the D2C space before 2020 and more will join their ranks in the coming years.
Dropshipping platforms, B2B marketplaces, and individual e-commerce websites are growing in popularity as ways for consumers to purchase directly from manufacturers. Some manufacturers are also opting to open their own brick-and-mortar retail locations. By shortening the supply chain manufacturers are attempting to reduce some of the risks involved, as there are fewer places for things to go wrong or to hit delays. Forgoing a wholesaler does bring its own challenges and risks, however, and businesses in the wholesale industry can use this fact to highlight the value they bring to manufacturers and retailers through their expertise and services.
Increasing Focus on High-Value Services
In the face of the growing popularity of D2C commerce, the next wholesale industry trend is companies looking to add value that manufacturers can鈥檛 achieve on their own. Wholesalers typically have experience, connections, and resources that manufacturers do not, meaning they can offer valuable services to businesses who aren鈥檛 familiar with D2C selling and logistics. This can help convince customers that they鈥檙e better off working with a wholesaler rather than trying to navigate the market by themselves.
By evaluating what services other wholesalers do or don鈥檛 offer and which aspects of direct selling manufacturers struggle with, businesses can identify opportunities to stand out from the competition and solve common problems that manufacturers might encounter. This may not win over those companies who are set on cutting costs above all else, but it can create enough value that others will consider it worthwhile to work with a wholesaler despite the current D2C trend.
Services that bring value to customers can include things such as pre-assembly and packaging, accurate tracking and data analytics, or fast and efficient fulfillment. Advice and project management can also help build a valuable partnership between a wholesaler and manufacturer. The time a manufacturer saves by having an experienced wholesale partner can make up for the expense involved in working with one.
Growing Demand for E-Commerce Platforms
B2B customers are increasingly expecting the option to make purchases online, and the onset of the pandemic accelerated this trend. As buyers of all kinds rely more heavily on e-commerce platforms to research their options and order products, to lack a web presence means to miss out on potential sales.
Today鈥檚 B2B customers spend considerably less time meeting with suppliers, instead opting to research their options independently. While salespeople remain an important part of the B2C sales process, they aren鈥檛 the only important part, and a strong web presence will help inform and entice potential customers before they ever come into contact with a member of the sales team.
The typical B2B buyer鈥檚 journey is more complex than it is for B2C customers, which means detailed information and ease of use are key qualities to have in an e-commerce website. The better informed a customer is, the more confident they will feel in making a large purchase. A successful B2B platform will also include functionality for aspects such as contract pricing and a range of pricing and shipping options that are normally unavailable to B2C customers.
New Technologies to Optimize Operations
The adoption of technological advancements is one wholesale industry trend that鈥檚 been around for some time, but the onset of the pandemic and the growing D2C movement have made it more important than ever. As manufacturers start to withdraw from using wholesale traders in favor of direct selling, competition in the wholesale trade industry is becoming more heated, making it essential to improve efficiency and reduce costs. This is where new technologies can shine.
Automation is a key tool across industries. For wholesale traders, it allows for easier and more accurate stock tracking and eliminates the need for manual data entry. It can even involve robots performing manual tasks that would typically be done by human workers, allowing the company to utilize its employees for more complex work and to compensate for any staffing issues.
Effective use of automation requires up-to-date IT systems that communicate well with each other 鈥� automation needs to be able to gather and transmit data seamlessly in order to work properly. This means there needs to be a product tracking system that knows how many of each product the company has in stock at any given time, where everything currently is, and what items need to be restocked. It also involves an analytics system that can use this data to provide information on past performance and future prospects, enabling wholesalers to make more informed decisions and business deals.
Another essential piece of software is a centralized database to store supplier and customer information in a way that is easily accessible to both staff members and other software programs. Keeping all this information in a centralized location reduces the chances of errors or duplicate information, allowing every part of the company to have access to the most up-to-date data.
Having systems like these in place can help wholesalers operate on tighter margins and cut down on expenses. A good inventory system combined with strong analytics allow companies to predict future demand and keep only enough inventory to meet that demand. A just-in-time (JIT) inventory model means that stock arrives when it is needed and doesn鈥檛 spend too long taking up space in warehouses. That extra space can be used to stock a larger variety of products or be leased to other companies for additional income, or the wholesaler can cut down on the amount of warehouse space they own or rent.
Software-as-a-service (SaaS) can also help wholesale traders reduce costs, especially smaller businesses for whom an on-premises system is costly to set up and maintain, perhaps prohibitively so. With SaaS, the service provider takes on the expense and labor involved in maintaining those systems, reducing the number of employees needed by the wholesaler and eliminating the need for a large infrastructure investment.
Labor Shortages Continue to Impact the Wholesale Industry
Multiple industries in several countries around the world have been experiencing labor shortages over the past few years, and these issues are expected to continue into 2023. The global pandemic has cut into the workforce, with a higher rate of death and disability reducing the amount of people able to do physical labor. And while many businesses and people have returned to normal operations by this point, some workers are still reluctant to take the risks associated with wholesale trade and other in-person jobs. Meanwhile, the demand for warehouse staff has been rising as consumers increasingly opt for online retailers over brick-and-mortar stores. It has also been difficult to find people with the right digital skills to work in an industry that is increasingly relying on technology.
Companies are therefore looking for ways to attract more talent to fill these shortages. Raising wages is one option, but it isn鈥檛 always enough on its own. Creating an inviting work environment can go a long way to attracting and retaining workers. This can involve incentives such as paid time off, on-site amenities, strong benefit packages, a focus on work-life balance, and training programs. While these things may cost money to implement, they can create savings in the long run by reducing turnover and attracting motivated workers.
As mentioned in the previous section, technology can also help wholesale traders deal with labor shortages. Automation and other systems can increase efficiency and reduce the number of employees required for day-to-day operations. It will still be important to attract skilled workers to operate these systems, but it can cut down on the number of warehouse workers needed at a time when fewer people are willing to take a warehouse job.
A Familiar Set of Wholesale Industry Trends for 2023
As we approach 3 years since the start of the pandemic, the global wholesale industry continues to feel its effects despite attempts to return to normal. The wholesale and retail industries continue to change and evolve, and wholesalers need to keep up with these changes in order to survive. Strategies that helped the industry get by during the pandemic remain important, and companies that choose not to adopt them run the risk of being left behind. Keeping on top of wholesale industry trends and looking for ways to stand out from the competition will be key to thriving in today鈥檚 market.
