First, digital disruption is altering how goods are acquired across the business to consumer (B2C) and business to business (B2B) landscape. It is also changing how goods and services are marketed. No matter what we do, understanding and acting on this is critical to success.
Changing demographics and the accelerating consolidation of resellers in the B2B space is a function of this digital disruption. The adage, ‘Get Big, Get Niche or Get Out’ is still true today. We’ve said it before: broadline resellers today require scale to compete. Scale creates the resources required to keep up technologically and creates the efficiencies needed to compete. No company exemplifies this more than Amazon: Unmatched scale + huge investments in technology = super-efficient, and clearly winning.
For manufacturers and brand owners, this disruption can be a blessing. There is no excuse for any company to have anything less than a good website, in fact we would suggest a great website. It is your face to the reseller and more importantly, the end user. Today, a website should be considered table stakes for all suppliers; especially as it doesn’t have to be an expensive proposition. Top off a good website with a commitment to digital marketing and suddenly suppliers are talking to and building relationships with the people that are buying and using your products. The benefits to you are enormous: 1. reliance on the reseller as the gatekeeper to the consumer is diminished, 2. user feedback can spur product innovation, and 3. loyalty programs can be executed, among many other positives. If this is an area you are struggling with, let us know. Highlands is helping more and more brands develop and execute digital marketing strategies.
Secondly, traditional distribution models are morphing rapidly. This is especially acute with anyone in the middle – wholesalers. Many wonder about the future of the wholesaler when Amazon has greater product breadth, super delivery and, at times, pretty good pricing.
If you consider the office channel, the financial pressures that have spurred the proposed merger between S.P. Richards and Essendant point to the challenges faced by two notable wholesalers. The idea that they combine and then go direct has been a widely discussed theory. Now that Staples private equity owner, Sycamore Partners, has entered the fray, it is clear that no matter what happens, the wholesaler, as we have known them, will soon disappear.
As always, change brings opportunity. Everyone in the supply chain, from brand owners, to resellers, to manufacturer rep groups, can thrive in this new world. Learning how to navigate new, parallel channels will present growth opportunities. And, the survivors are likely to have scale and coverage, plus offer a wider range of services relevant to this new market dynamic.
