Shift in Competitive Landscape for Wholesale Distribution and the Technological Response

This blog references research collated by our Sage colleagues and offers insight into the current challenges faced by the wholesale distribution sector and key points of consideration for those considering investing in new technology with a view to “future proofing”.

First, let’s look at some of the influencing economy-related factors.

Post Brexit, the UK Global Tariffs system has not only suppressed the margins of importers and exporters, but also caused disruption to their operations. Since January 2021, businesses moving goods between the UK and any European Union country have had to file import and export declarations, record origin of goods, calculate Regional Value Content and follow quotas.

The price of shipping goods from Asia to Europe has risen significantly and continues to creep up, forcing the cost to market for wholesalers up at the same time. In addition, latest government data shows a quarter of UK wholesalers reporting product prices rising.

In grocery, additional pressure has come from rather left-field during the pandemic, with wholesale seeing increasing encroachment from not only the anticipated pressure from supermarkets, but also from non-traditional retailers, including Amazon.

Environmental impact measures and product tracing requirements also add to the load.

Supply Chain Challenges

New platforms are being introduced that are reducing and (in some cases) eliminating the need for the wholesaler, allowing, for example, smaller retailers to buy smaller volumes direct from manufacturers at wholesale prices.

It is clear that many of the post-COVID and post-Brexit effects on supply chains are not going to disappear. Wholesale and distribution businesses therefore have little option but to look to improve the agility and efficiency of their operations in order to maintain their margins.

The Response

The wholesale distribution industry has not stood still in the face of these challenges. According to the Office of National Statistics, it continues to dominate UK ecommerce sales, and this has required the ability to maintain customer service and distribution standards at a level equivalent to ecommerce retailers, despite the smaller but more frequent nature of orders as a result.

In addition, a significant number of wholesalers continue to extend their offerings to include B2C models, building their own consumer brands or acting as ‘own-label’ providers.

To achieve this, investment in systems is not a ‘nice to have’, it’s a requirement to keep up with the competition. Accounting and ERP systems need to integrate seamlessly with these investments to deliver the promised operating efficiencies.

Innovation for Sustainability

With the erosion of the traditional revenue model, innovation is the only way to ensure business sustainability. Wholesale distributors need to:

• Enhance stock management to enable them to keep inventory relatively low but availability high. This means intelligent management of the supply and distribution.
• Automation of processes – this enables businesses to ride out fluctuation in staff levels, improve productivity and keep prices competitive.
• Digitise front to back-office processes, eliminating manual, paper-based tasks as much as possible.
• Provide greater visibility and control to management, to enable agility and quick informed response to changes in purchasing habits and economic factors.

A Sage Solution to the Challenges

Sage 200, particularly when integrated with Eureka Solutions-developed enhancements specifically for wholesale distribution, provides a clear window on finance, operations, customer service with full control. Real-time insights with the transparency to identify and respond to issues quickly gives our customers the edge.

Our Sage 200 Trader Package enhances the capabilities of Sage 200 Professional with:

• Integration with ecommerce, warehousing, courier and CRM platforms.
• Rapid sales order entry functionality, ideal for telesales and trade counter environments.
• Rapid purchase order entry functionality with access to supplier history, stock details and more from one screen.
• Multi-dimensional stock capabilities, barcoding and more to give full merchandise control.
• A plethora of additional pieces of functionality including retail stock transfer, back to back orders, stock code aliasing and warehouse shortfall.

To discuss challenges you may be facing, to arrange a tailored demonstration or to find out more about how our experienced team could help, please contact Richard Christie, Business Systems Consultant, on richard.christie@eurekasolutions.co.uk, call 01355 581960 or fill out the adjacent website form.