How can wholesale distributors compete online?

By |
April 2, 2018
Wholesaler eCommerce Experience

If you’re a wholesale distributor who hasn’t started selling online yet you’re probably looking at the market and wondering how you can compete with the established players. I’m here to tell you that e-commerce isn’t just for the big retailers or pure-play online businesses with huge private equity backing. Wholesale distributors and other business can build online sales if they follow best practice e-commerce processes and listen to the right people.

Being a middleman or relying on retail partners is getting tougher and most wholesale distributors are now taking a hard look at their e-commerce and digital strategy. But most have realised that building a retail e-commerce business is not an easy task for many reasons, including:

  • eCommerce, in general, is complex
  • eCommerce technologies and operations (particularly marketing) are very different from existing roles and processes within a typical wholesale distributor.
  • eCommerce resources are hard to find and are expensive
  • Cost of entry can be high
  • A lack of quality instructional information and good consultants

How can wholesale distributors compete online?

Wholesale distributors can compete with the big retailers online by being smarter in how they make their investments. There are five general areas of investment that define an e-commerce strategy and these can make or break your success:

1. eCommerce platform and software

When it comes to e­commerce platforms and software, wholesale distributors can suffer from “they don’t know what they don’t know”. A repeating theme in ECommerce launch efforts is to see many C-Level execs pushed toward the preferences of their IT departments and/or local media agencies who are invested in the “feel good and control” of bespoke builds utilising open source technologies. The belief they hold and sell is that they can readily build you a custom e­commerce platform and that open source technologies can get you everything you need at lower cost. Maybe in a startup sense for a very short time this can be true but generally we see that these particular stakeholders do not own the end game of revenue generation and the extended set of business process transformation work that accompanies this new line of business. There are multiple layers of new process and function which are new and the skill base is usually shallow or even non-existent.  The projects soon turn into a blame game and project budgets / timelines blow out considerably.

You must carefully select your eCommerce platform software and ensure the solution comes with as many out of the box features as possible that will fit your business objectives. Ideally your platform is proven in your industry as a reliable solution and comes with real support options. You should also ask a lot of questions about time to market. At Ecomm2 we designed our solution so our client partners could launch inside 6 weeks.

2. Product data
For a wholesale distributor having poor / non retail ready product data is one of the biggest issues with getting started online. If this is your business you can breathe a bit easier because you’re not alone. This is more the norm. If you’re product data is not up to scratch you’ll need to allow resources and possible direct investment to get it ready for your online store. If you have a very large catalog our recommendation is to pick the top 10 – 20% of your most popular products and invest in building your unique descriptions, images and attributes for those products. Have your staff or third parties keep them accurate and up-to-date as you import new product data from your suppliers. Make the data on your important products as rich as possible.

3. Integration
If you’re a successful wholesale distributor chances are your pretty good at the whole warehouse operation thing (pick, pack and ship) and your account management is reasonably seamless. That’s why it’s important that your eCommerce solution can integrate with your ERP system. The ERP system is the lifeblood of most B2B organisations and the integration with your eCommerce store needs to be done correctly to ensure no major interruptions to business occur.

4. Consulting and resources
If you’re going to enter the retail eCommerce marketplace you will likely need to engage a consultant or resource to help you build the strategy and at least guide you through the setup phase. Unfortunately in Australia, NZ and across Asia quality e-commerce consultants are resources are very hard to find and extremely expensive. You also need to be careful that when you engage these consultants they have the right experience to help you build the end to end solution. Many proclaimed eCommerce consultants will focus on the website build yet have little understanding of the other areas of eCommerce. i.e. digital marketing, warehousing and logistics, customer experience. Make sure whoever you select can demonstrate they have done it before and can show you genuine success stories.

5. Digital marketing
This is without a doubt the biggest challenge for a wholesale distributor when running an eCommerce operation. “Build it and they will come” is often the mantra in companies where digital marketing and technology are not core. We see many times that wholesale distributors and even retailers build websites and then hand them over to their traditional marketing departments expecting them to be able to run the website and drive thousands of people to the online store. Unfortunately in 95% of these situations your marketing or IT department does not know how to drive online traffic. In most cases your marketing department has traditionally been focused on these types of activities:

  • Trade shows
  • Print Catalogs
  • In store flyers
  • Radio
  • TV
  • Community events

When you launch an eCommerce shop the shift moves to:

  • Search engine optimisation
  • Pay Per Click (Google adwords, Shopping and Display Marketing)
  • Email marketing
  • Affiliate marketing
  • Blog writing
  • Video creation
  • Digital design

The business needs to acknowledge from day one that these digital marketing skills do not exist in the organisation and need to be built or strategically managed into the company as a service.

Consider a partnership solution

When you take into account all of the above it’s quite daunting for a wholesale distributor to start eCommerce sales channels. The transformational effort required to go from being purely a wholesale distributor to multi-channel and selling online is seriously tough. At B2X our purpose is to remove all of that risk for wholesale distributors with an end to end partnership solution. We set up your online store with our best practice retail eCommerce solution and then take responsibility for driving traffic to your website and ensuring those visitors convert into online sales.

We believe that wholesaler distributors have an incredible opportunity to compete with all the big players. However, they must start today as these businesses are growing quickly and taking market share day by day. And when you don’t know what you don’t know…