How Can Wholesale Distributors Compete with D2C?

As Direct-to-consumer (D2C) sales continue to increase, how can wholesale distributors compete with manufacturers wanting to sell directly to their consumers, changing the traditional distribution model? In this blog post, we discuss a few ways they can stay competitive.

Commonly referred to as the “middleman” is wholesale distributors who work with both the manufacturer of a product and the retailers or in some cases the end-user consumers. 2022 has seen an increase of manufacturers looking to sell directly to consumers, foregoing the traditional supply chain model and bypassing wholesale distributors altogether. Why? Typically, this is done to decrease costs and increase efficiency, but wholesale distributors bring a great deal of value to this supply chain model. Also labeled “supplier disintermediation,” more manufacturers have turned to digital platforms to circumvent any restrictions in the supply chain to sell direct, having the potential to disrupt the wholesale distribution industry significantly.

We outline a few ways for wholesale distributors to prove their worth, with the hopes manufacturers want to continue working with them to deliver the very best products and customer service to the consumer.

Ways for Wholesale Distributors to Stay Competitive Include:

Showcase Expert Staff – Remind both the manufacturer and retailer that you employ knowledgeable staff who’ll provide prompt, accurate, and often personalized customer service every time. If you’ve been known for exemplary customer service, you have a greater chance of keeping the traditional supply chain model intact because you’ve likely formed lasting business relationships. If your manufacturing partner has chosen to sell direct, remind them of the many benefits of looping your business back into the equation based on this point and the others below.

Reduce Costs – Look for ways you can help streamline the operations to reduce costs and improve profit margins for everyone involved. Manufacturers may think selling direct is best and they’ll earn more, but that’s not always the case. Often there are more logistics involved that aren’t considered. eCommerce can be burdensome for manufacturers who are not well-versed in these operations, so excelling in online selling will be an incentive to keep you in the mix. Wholesale distributors have been known to benefit both parties by facilitating deliveries quicker and as cost-effective as possible.

Meet a Wider Range of Customer Needs – Simply stand out as the better option and this means finding ways to add value wherever possible. Research to determine what your retail or end-user customers struggle with or which of your competitors lack advertising or other service offering and create opportunities. If you don’t already pre-assemble or package various items, you might consider implementing that service so that you fill a need.

Utilize Data and Analytics to Help Your Partners – Many wholesale distributors utilize customer relationship management software to supply a comprehensive view of company operations and success. It reveals areas for improvement, predicts consumer behavior based on past buying trends, and increases efficiency for members of the supply chain overall. Staying in communication with manufacturers and retailers, and supplying them with data and analytics can only help show you care and are a beneficial piece to the supply chain puzzle.

In summary, determine what your wholesale distribution company excels at and hone that skill! Highlight the fact you have much to offer both manufacturers and end-users – this will give you a better chance of continuing to work with both.

We hope you enjoyed reading our blog post about how wholesale distributors can stay competitive with the shift to the D2C business model. Follow our blog for more articles on the distribution industry and what our team at NSA can offer distribution companies wanting to take their business to the next level with a sophisticated Enterprise Resource Planning (ERP) solution.

Visit our website to discover more about how we work with distribution businesses just like yours or contact us directly at (516) 240-6020. We look forward to hearing more about your business operations and how we may be of assistance.

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