Distribution trends to consider in your 2023 plan

Distribution trends to consider in your 2023 plan

The wholesale and distribution industry is one of hardest hit sectors due to disruptions in the supply chain and technology, which allow manufacturers to reach customers directly. To counteract this effect, distributors have been developing a series of practices that are becoming trends for the coming year. In this article I will highlight the most significant distribution trends that we have observed.

2023 Economic trends

The American economy, though stronger than most other countries, has been severely affected by high inflation and rising interest rates. However, there have been some positive signs. For example, consumer spending has been strong, despite high inflation, rising 1.7% by the end of the year. The PMI index also shows a slight upward trend. Whatever the trend in economic data, well-managed companies can compete and thrive in this environment. Here are some projections courtesy of Trading Economy:

2023 Distribution trends

Distribution trends to cope with e-commerce retailers

Many retailers are offering their customers options to shop online, either for pickup or delivery through agreements with delivery companies. In response to this trend, distributors are investing in building their own e-commerce stores or using major e-commerce platforms such as Amazon and Walmart for this purpose.

New entries in the B2C product delivery

The competition to reach the end customer worsens with the advent of many new e-commerce companies that work with limited or no inventory, therefore, with less operating costs. As the old saying goes: “if you can’t beat your enemy, join him”. One of the distribution trends that we have been seeing is the alliance that distributors are making with these newcomers. We recommend learning about these new companies and evaluating the benefits or convenience of working with them.

Automation and IoT

Inventory management and carrying costs are the most significant component of a wholesale operation. This reality has led to the development of multiple WMS and IMS solutions aimed at distribution operations of all sizes; and, with the focus on offering these solutions as a SaaS model, the costs are perfectly adjusted to the structure of distributors, wholesalers and manufacturers.

Integration of information

The existence of multiple sales channels forces companies in the distribution industry to generate enough information to evaluate and analyze the performance and profitability of each channel. For this reason, one of the distribution trends that we have observed is the automation and integration of core distribution processes.

Employee retention

Like all industries, wholesalers and distributors are struggling to find the workforce they require.  This situation has triggered one of the distribution trends observed: employee retention. In our article “Motivation techniques to develop committed employees” we highlighted different methods to drive engagement and retention. The most used are: compensation plans, work environment, security, recognition and status, and growth trajectory.

Development of customer loyalty

Competition in the field of distribution is increasingly fierce. In this context the distributors have been working for some time on ways to stand out above the competition by building customers’ loyalty trough personalization of B2B products and services. There are many ways to do this. One approach is to offer customizations or modifications that are specific to the clients’ business. Another way is to offer a higher level of service than the competition, such as hotline customer support and expedited shipping. Regardless of which approach you take, the goal is to make your customers feel like they are your top priority.

Improving sales agility

In the rapidly changing environment we have been describing, distributors have been working to make their sales fulfilment as fast and agile as possible. We explored this trend in “How to improve sales agility in a distribution operation”. Below a summary image.

I hope this article has been helpful to you. I will continue to post information related to warehouse management, distribution practices and trends, and the economy in general. If you are interested in this article or want to learn more about Laceup Solutions, please subscribe to stay updated on future articles.

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