The next big development in eCommerce is not B2B – it’s W2C

Let me start by throwing a couple of numbers at you.

Did you know there are 1.8 million wholesalers across the EU? That's a lot of wholesale businesses in a market of 500 million people!

If you break that down further and just count wholesalers in the durable goods market in the UK and Ireland, there are still 46,000 such businesses across these islands.

Within that sector, in 2015 and in the UK alone, over £100 billion of business was carried out purely in online B2B sales.

That largely excludes other digital platforms and market places which have grown very rapidly since 2015, such as mobile, Amazon and eBay.

Overall, if you look at the rate of growth in the B2B ecommerce market - wholesalers, distributors, manufacturers and others - it actually outpaces B2C ecommerce at a rate of 2 to 1.

On top of that, market research firm Gartner, who have carried out some significant international studies, are predicting double-digit growth year-on-year up to 2020 in this space.

All of that evidence points to an explosion and transformation in B2B ecommerce for wholesalers.  Even if we accept it has grown from a relatively small base, the very rapid growth we are now seeing year on year is a trend that cannot be ignored and is reshaping the entire industry.

To take advantage of this trend wholesalers and all B2B businesses will face a need to modernise their business. They need to get better use of technology, constantly evolve management and systems of their whole supply chain and integrate their customer facing systems "including their web presence and mobile experience - including mobile apps into the warehouse and back office systems.

There is no doubt that some wholesalers are feeling some pressure from customers to react faster and provide more information and more efficient ordering systems. Irrespective of their size, those customers are now demanding digital services and are looking for online ordering systems.

As a customer, they’re looking for better information, up-to-date stock information and accurate price information. Large players in the supply chain are demanding of their wholesale suppliers that they comply with their own in-house digital systems and digital ordering mechanisms.

And there's one very big reason for all this: the massive developments in retail buying experiences in recent years.

B2B customers now expect that same level of satisfaction from their B2B buying experiences.  They are looking for the same kind of flexibility, convenience and customer service as they get with the leading online e-tailers.

The power of the collective

One high street trend in retail in recent years has seen many independent retailers combining into buying groups to compete with chain stores.

A version of that is also happening in wholesale where buying groups are now the norm for the independent wholesaler.

So let's come back to what I believe W2C really is.

What we see is that wholesalers are facing increased competition, and that increased competition has prompted them to look at new markets.

That new market often means skipping the traditional middle-man and going directly to the customer - either a high street retail customer or an independent business customer.

This is what wholesale-to-consumer looks like. It's happening already in certain sectors with the likes of Screwfix,Victoria Plum or MicksGarage.com.

To some extent W2C is what some of the biggest players such as Amazon already are.

So when we look at W2C and what's coming down the line, we see competitive pressures driving more and more wholesalers to look at a direct-to-consumer models.

The future

I firmly believe wholesale is the future of retail. It's already happening.

What does that mean for traditional, bricks-and-mortar retail?

It's clear that the amount of footfall on the high streets around the world is under pressure, and driving that pressure is a combination of two things.

Out-of-town shopping. Suburban complexes and “big box” stores that are, in so many ways, closer in model to traditional wholesalers than traditional retailers.
The Internet. People are buying online, on mobile, on their PC, on their tablets.

So it seems that right now, bricks-and-mortar retail has become more an event experience than a need experience.

The range of events goes from the smallest (festivals encouraging people to shop and eat and hang out in town centres) to the biggest (global retail events such as Black Friday).

Retailers becoming wholesalers

So it’s clear that wholesalers, traditionally business-to-business operations, are effectively becoming retailers, going direct to the consumer (W2C).

And here’s the thing. The flip side is also true.

Online retailers are also driven to be wholesalers themselves.

Here’s a typical example:

• They start out purely as an eCommerce operation
• Things go well and they start to scale up
• With that scale comes the realisation that they're actually running a warehouse
• So they’re an eCommerce outfit but in order to fulfil their orders they have a warehouse — and yet they don't have a high street presence

To me, that’s very, very similar to what a wholesaler is.

There are requirements for those retailers-turned-wholesalers also. They need to develop from a straightforward retail ecommerce system into something that actually integrates everything - automated fulfilment and delivery, stock management, integration with accounting systems and lots more besides.

Where do wholesalers fit into the new normal?

Given these developments, it’s fair to say that the changes we’ve seen across all buying experiences in recent years have been phenomenal.

So where to wholesalers and B2B companies fit into this? What to they need to do?

I believe that W2C - changing tack from their traditional approach and selling direct to the consumer - is definitely one option.

Of course there are some wholesalers who do not have to go direct and have strong supply chains and strong businesses. But there are others who are under the sort of competitive pressure mentioned above and they see that there is an opportunity - or perhaps even a necessity - to make a play into a completely different market with their same business model.

The strategy

One key thing every company interested in moving into W2C must do is put a strategy in place from the start.

And it’s fair to say that lots of traditional marketing rules apply here. Wholesalers who want to exploit this new opportunity need:

• To size the market and look at the opportunities there in detail
• To evaluate the competition
• To figure out a route to market
• To understand what change it's going to bring into your existing company

This opportunity might present a number of new things to consider in an organisation, particularly around new skills and technologies. But it is obvious that it can also deliver a great deal of success.

Platform partner

Those stresses around skills and technologies can possibly cause a whole lot of friction if not handled correctly.But the great thing is that if wholesalers do handle them well it can open up a whole new world of possibility.

The skills and technologies required are something not typically available in-house in a wholesale company (almost by definition, given that it is a move into a new direction).

So once the business decision is taken, the next important decision will be to decide to partner with a technology provider.

The requirement, given the needs of wholesalers, is a platform that scales. To do that it needs to be real time and fully integrated.

What does that mean?

Real-time

Live stock levels, fully in sync with your warehouse, should be available to all relevant parties, such as your sales reps in the field and customers who might be browsing your catalogue on the web with a view to placing an order. They all need the right stock and pricing information at their fingertips.

Fully integrated

When those orders are processed, they need to be integrated back into your ERP or account system so that wholesalers can deliver the fastest turnaround possible to the customer. After all, customers expect nothing less these days - especially business customers who are likely to need that stock as quickly as possible in order to fulfil orders to their own customers.

Apart from the key elements of real-time information and systems integrations, there are several other factors to bear in mind:

Easy digital catalogue management: Wholesalers typically have very large digital catalogues, often with hundreds of thousands of SKU codes.

Automation of key processes: So that the business can operate efficiently and scale without the requirement of adding more staff and resources to manage an increase in business.

Support of the platform: This one is critical and can sometimes be overlooked. Investing in a technology platform to allow fully integrated, real-time web and mobile ordering by your customers and reps is one thing. Having reliable support for that platform from a technology partner is another. When things change or on occasion when things go wrong, wholesalers need to count on fast, reliable support from their platform provider. The wholesaler’s business is moving goods in volume and at speed. Systems and software should allow that to happen, not get in the way. Making sure your partner can fully support the technology is critical to its success in the long run. Wholesalers need to be able get on with the marketing and operations of the business and rest assured that the technology runs for itself.

Data privacy: Another key thing to bear in mind for B2B and wholesale companies looking to move into a consumer space relates to data privacy and consumer protection laws. These laws have been in existence for quite a time already but they are being strengthened and renewed all the time, including with the recent introduction of GDPR - the EU General Data Protection Regulation. GDPR really strengthens and protects consumers in terms of how data is stored by corporations. And data privacy is definitely another thing to consider when you're looking at your platform provider:

• Do I understand the law around data privacy?
• Am I duplicating this customer data?
• Am I taking care of it?
• Where exactly is it being stored, and is it being stored securely and sensibly?

That can have an impact if you don't have everything in order. It's not an insurmountable problem by any means, but it is certainly something that needs to be considered, and it's definitely another question to ask when considering your platform provider.

Fulfilment

Fulfilment should not really be a problem. It's really a technology issue, or at least technology's a good part of the solution. Wholesalers investing in a W2C direction need:

The ability to process orders quickly quickly.

To have those orders go straight from digital channel - app, mobile or web - onto the picking list in the warehouse efficiently.

Having good deals with logistic partners to be able to deliver those products to consumers.

It should be a given that any full-featured digital platform should be able to connect to another platform and be able to kind of track orders and provide that kind of order fulfilment tracking.

Technology can also help automate things like returns and customer support.

A new business model

All in all wholesale-to-consumer or W2C - you heard it hear first! - is a business model that's growing rapidly in popularity.

So much so that I believe we're on the verge of an explosion in shopping - and wholesalers will be at the centre of it.

Would you like a demo?

Our (award-winning!) team will be very pleased to talk you through the Aphix platform.