Running a profitable wholesale business increasingly depends on how efficiently you can sell and deliver – this is perhaps more important than what you’re selling.
The adoption of e-commerce has changed not only the way retailers operate, but is having a significant impact on the way wholesalers do business. According to the NAB Online Retail Sales Index, Australians spent $24 billion online over the 12 months to November 2017, representing a year-on-year growth of 14.4 per cent. This rise in online shopping has created new service expectations around order-to-dispatch time-frames, and consumers penalise retailers who perform poorly. To build loyalty, it is also essential that retailers have sufficient stock of top-selling items, ahead of their competition.
If there were any doubt on the relevance of e-commerce habits for wholesale distributors, you need to look only at Amazon and Alibaba. Two of the largest e-commerce platforms in the world now offer similar service levels on their business-to-business (B2B) platforms as they do on the business-to-consumer (B2C) side.
“The adoption of e-commerce has changed not only the way retailers operate, but is having a significant impact on the way wholesalers do business.”
For wholesalers, this shift means that traditional supply chain methods – relying on manual processes and labour-intensive spreadsheets – are no longer good enough. Retailers now demand their wholesale partners streamline their back-end processes and help them create opportunities to win new business, based on the strength of their service standards.
Great expectations from customer to consumer
The concept of ‘just in time’ inventory was pioneered by automobile manufacturer Toyota in the 1980s and quickly spread to all areas of stock delivery. For ‘just in time’ delivery to work, the wholesaler or supplier needs to deliver stock just as it’s needed, reducing overheads for the retailer. Of course, the timeline from order to delivery has become shorter and shorter over time. While major retailers in the United States are offering two-hour delivery services, in Australia the peak delivery guarantee in the fashion space is currently a same-day service – but I am confident this will change. To help retailers achieve this, wholesaler supply chains must be finely tuned so they recognise what is needed, it is delivered when required, and to a high level of customer satisfaction.
In the world of retail, as soon as an order comes in, the clock starts ticking. Wholesalers that rely on outdated, complex manual methods for order entry and fulfilment simply won’t be able to compete and offer the same speed as a business that is fully automated.
“Wholesalers also benefit from business intelligence (BI) that helps uncover insights and drive better performance through real-time monitoring tools and historical trend analysis.”
Warehouse efficiency separates a great wholesaler from a good one
To become fully automated, a wholesaler needs an intuitive system that will calculate the quickest picking route and direct the picker, define the best order allocation and automatically print dispatch notes, barcode labels and the invoice, if required. Many retailers use enterprise resource planning (ERP) software to automate these processes and track business performance easily.
Warehouse efficiency is another key area of distinction between a highly profitable wholesaler and a mediocre one. Metrics such as order-to-delivery time and picking accuracy of the order all have an impact on customer satisfaction, as well as financial performance. A wholesale business can’t improve its delivery times if it doesn’t know what those delivery times are in the first place. It also can’t measure the time taken for pick-and-pack if it doesn’t know what steps are involved.
Returns can also have an effect on the bottom line, and goods returned through inefficient processes touch many hands and departments on the way back to the warehouse, with each step incurring an additional cost.
By pooling together business data, powerful ERP systems deliver actionable insight that businesses can leverage to identify gaps and opportunities they can take advantage of. The cumulative effect of new efficiencies at each step in the order-to-delivery process will provide significant speed and accuracy improvements, all of which are felt at the customer level and the bottom line.
The rise of e-commerce has also had an impact on the way retailers source their suppliers. If an item is out of stock at one wholesaler, a retailer is also likely to shift their business. For the wholesaler, this ‘no second chances’ environment means that they must have deep insight into inventory levels. Using an ERP system combined with intelligent forecasting based on historical sales can help a wholesaler automatically generate the appropriate purchasing prompts to maintain stock levels.
Wholesalers also benefit from business intelligence (BI) that helps uncover insights and drive better performance through real-time monitoring tools and historical trend analysis. For example, BI insights could help a sales manager realise that some markets are being underserved, or that customer appetite for express shipping is larger than anticipated at certain times.
Taken together, a combined ERP and BI can help a wholesale business better meet the needs of retail customers. It can bring efficiencies to the wholesale sector, allowing wholesalers to ditch manual methods entirely and fully automate their supply chain to offer the rapid delivery guarantees that consumers and their customers are demanding. This provides the wholesaler with a solid differentiation that allows them to service and add value to the retailer, delivering a long-term and future proof solution.
Paul Goepfert is the chief marketing officer at Pronto Software. For more information visit www.pronto.net.