Wholesalers have always been a cornerstone of the B2B marketplace. Manufacturers made products and delivered them to wholesalers. Wholesalers built a business serving to retailers. The internet has changed the B2B marketplace and this is further showcased by manufacturers selling direct. To tackle this shifting market, here are a few strategies wholesalers can deploy.
Why Manufacturers Are Selling Direct
Chinese military legend Sun Tzu counsels in The Art of War, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.” Competing against direct manufacturer sales isn’t exactly war, but the statement holds true. Wholesalers need to understand why manufacturers are selling direct and strategize accordingly.
Manufacturers are under intense pressure from shareholders to increase value in any manner possible. One of the first solutions is to cut costs by cutting out the middle-man, or wholesalers in this case.
eCommerce for manufacturing may also move to direct sales to build their brand. Direct sales give manufacturers control of the entire brand experience. From marketing to order fulfillment, they are in control of their customers experience.
Another reason for manufacturer direct sales is to build customer data. By selling direct, manufacturers develop a vast repository of customer data and contact information. This data can be leveraged to support new product development ideas and other marketing promotions and campaigns.
Manufacturers selling direct shouldn’t discourage wholesalers. In fact, it should be an opportune time for wholesalers to re-assess their selling strategies. Below are few selling strategies wholesalers can use to help grow the business.
Strategies for Wholesalers # 1 – Deliver Exceptional Customer Experience
Your first strategy should be to provide a superior customer experience across all channels. Deploy an e-commerce site that delivers a consistent experience across all channels. Whether your customer is on the laptop, desktop, mobile site or calling your business over phone, be sure to deliver incomparable service. And that’s just the start.
Capitalize on the relationships you have built with your customers. Research from Forrester Consulting shows that 53% of B2B buyers list “excellent customer service and post purchase support” as one of their top 5 reasons for making a purchase. A manufacturer that is new to direct sales will have a difficult time meeting these expectations. Remember, manufacturers have built their business based on larger volumes. Wholesalers, on the other hand, are already perfectly positioned to proficiently handle smaller scale sales and returns.
B2B buyers have stated “transparent prices and product details” are the top two factor that determine loyalty. This means providing a personalized customer experience (like custom catalogs or custom pricing) accompanied with unrivaled service can truly differentiate your business from competitors. Show customers you understand their needs and they will respond positively.
Strategies for Wholesalers # 2 – Build Your Own Brand
If manufacturers have switched to direct sales to better control their brand, focus on building your brand. Offer what no manufacturer can: a selection of products across brand lines. With one purchase, your buyer can purchase multiple products but be sure your brand is clearly associated with the sale. Offering multiple brands that represent different price points is another differentiator wholesalers have over manufacturers. In addition, pick and choose products wisely. Offer products with higher margins and let the manufacturer sell the low margin items.
Become the destination for your industry and expand into new markets. Share your extensive product knowledge through content sharing and build upon your authority. Use the appropriate social media networks to build an image consistent with your brand values, voice, and look. Use social presence to drive traffic to your website and cement your brand’s reputation.
Today’s B2B buyers have many of the same expectations as B2C buyers. They want quick shipping and hassle-free returns. Become experts in LTL (less than truckload) shipping, parcel shipping, and express delivery. Many manufacturers selling direct have a difficult time with packaging and shipping individual products as they traditionally deal with larger shipments and crates. This can be a differentiator for your business. Be sure your brand offers deliveries that support:
- low quantity purchases (compared to manufacturers)
- on-time delivery and
- good condition handling.
Utilize your e-commerce platform to facilitate returns by automating the return merchandise authorization and providing pre-addressed return shipping labels.
Strategies for Wholesalers # 3 – Collect Customer Information and Act on It
This strategy is closely related to customer experience. Integrate a CRM with your e-commerce platform and get actionable data on your customers. Just like manufacturers selling direct in hopes of gathering more customer data, wholesalers need to start gathering data and act on it. A robust CRM will support an enhanced customer experience by capturing buying preferences and buyer data. Get in front of your customer with the right offer at exactly the right time. Capture all interactions in one place and give your forward-facing employees a 360 degree view of the customer. Better manage your leads and convert opportunities.
In addition, work closely with your customers to identify end-consumer trends well before the manufacturer takes notice. If the manufacturer hasn’t taken the time to develop the right processes and culture, the data they collect will be for naught. It’s not enough to know what the buyer does, you need to know why. This requires direct and authentic engagement; and most manufacturers are not positioned to do this.
Strategies for Wholesalers # 4 – Assess Whether Amazon Makes Sense
If the manufacturer sells directly on Amazon, it will be extremely tough to compete with them on that channel. Amazon’s Brand Registry program gives manufacturers total brand control which directly competes with resellers selling the same product. In addition, if anyone is selling a manufacturer’s products on Amazon, Amazon expects the manufacturer to sell those same products on Amazon Retail at more competitive prices. So we recommend you assess the situation and choose your battlefields wisely. Amazon could be one channel that is not to your advantage.
Evolve as the Market Evolves
These are just a few wholesale selling strategies. As the internet evolves, the market will evolve. The best strategy is to evolve with the market and digitize where possible. The Hegelian Dialectic swings like a pendulum. Manufacturer direct sales are currently trending up; but as manufacturers discover the difficulties in serving this market well, the trend may well reverse.