The risks and rewards of wholesale eCommerce

James Shakespeare
By James Shakespeare
2 Jul 2014

Businesses of all types are increasingly moving towards providing great online experiences. Booking holidays, restaurants and cinema tickets are things that we expect to do online. So it’s quite natural that retailers would want the same convenience and freedom to shop whenever they want when ordering stock from wholesalers.

For a wholesale business, adopting eCommerce has many appeals and advantages: efficiency, cost savings and greater freedom for customers. But as with online retailing, there are potential implications and pitfalls with taking your business online. There’s also the absolute certainty of missed opportunities, frustration and wasted time if you get it wrong.

Essentially though, a wholesaler that is open for business 24 hours a day should have a significant advantage over one that closes at 5.00pm.

People are expensive

And of course there’s an opportunity for a significant cost saving if retailers can place and track orders directly on your system rather than having to go through a call centre.  But before you replace that call centre, you have to be clear that you understand and can replicate (or improve) everything that it does.

For wholesalers there can be real issues about whether your systems, processes and facilities could cope with a significant increase in sales. Its best to think these through ahead of time.

In reality call centre workers are doing much more than just a mechanical data entry process in response to phoned instructions. There will probably be elements of upselling, cross-selling, advice and promotion going on. Phone staff are also representing your business and your brand and helping to build customer loyalty through the service they provide.

Queries about new products, stock levels and delivery times are probably also being handled continuously. If your new eCommerce system can’t support your customers and answer their questions as well, or better than somebody on the end of the phone then you’re not making your customers’ lives any easier. 24/7 access to an inferior service is not progress!

User experience still matters

It’s tempting to think that a wholesale eCommerce site can get away with things that retail sites couldn’t. Does it matter if pages take a while to load, if navigation is a bit more difficult than it needs to be, or if it’s not glaringly obvious how you place an order or adjust quantities? Tempting, but misguided.calls_ecommerce

Think again about what you are replacing when retailers place an order through eCommerce rather than by talking to a person. If you make the process more difficult than it should be, will your retailers look for somewhere else to get their stock?

Or will they continue just to pick up the phone and make your eCommerce investment a waste of money? A sure sign that your eCommerce initiative is failing is when your call volumes remain the same - people should genuinely find it easier to go online to do what they need to do.

Brand

Business growth is often a motivation behind wholesale eCommerce.  An efficient online system offers opportunities to attract and win new loyal customers. This inevitably means that the way it looks and how effectively it reflects your brand becomes critical - particularly when there’s no interaction with sales or support staff.

The design standards of your existing site or online catalogue might not be good enough to meet the new challenge - so taking an eCommerce module on to what you have might not do the job you need. 

Similarly, the user experience you offer will be a strong indicator of the type of service people can expect. Using a template or off-the-shelf eCommerce solution may not deliver an experience that people want to repeat.

Take a look at this site from Gadsby. Their customers are predominantly retailers and hospitality businesses. Yet the site looks and feels like a retail eCommerce site. Customer experience and brand identity are clearly important.gadsby_homepage

What happens if it works?

Supposing you manage to create a great looking, easy to navigate wholesale eCommerce site; what you’ve created is a website, not an online business. What happens behind the scenes is probably even more important.

When Tesco launched online shopping in the early 2000s the system worked something like this: orders were routed to a central computer, printed and then faxed (remember those?) to the customer’s local store for picking. Tesco’s worst nightmare would have been large-scale adoption of internet shopping before they had fixed a proper integration with stock management and distribution systems.

And, in reality, the systems still aren’t perfect as items that are available to order but not in stock frequently result in substitutions in the delivery.

So reflect on what the behind the scenes processes might look like for your wholesale business. Today, a member of your call centre staff can check stock levels and confirm a delivery with your customer in real time. Your wholesale eCommerce solution will need to do the same. 

stock_mangement_logos

You’ll need a similar level of integration with your payments and accounting system and sometimes this can be tricky.

And if you’re really successful?

If business growth is one of your objectives you need to be clear about what success looks like - and the implications for your business. Here’s something we published recently exploring many of the strains that going online places on a business.

For wholesalers there can be real issues about whether your systems, processes and facilities could cope with a significant increase in sales.  It’s best to think these through ahead of time.

Adopting eCommerce is also an opportunity to reassess your wholesale business model and service.

Retailers will have different business pressures. For some, holding minimal stock will be the priority. Express delivery may be an important option that allows retailers to run on lower stock levels even if delivery costs a little more.  

While you are looking at making the ordering process more convenient it makes sense to explore other opportunities to add value to your service.

You might, for example, decide that drop-shipping becomes a viable option as a result of better integration of your ordering, inventory and shipping processes.  And there are implications here as you become responsible for the condition of the goods when they arrive with the customer and potentially for handling returns. Producing the appropriate labelling and customer information for each shipment also becomes an issue as retailers often want the shipment to appear as though it came from them.

And, of course, if you start to ship directly to the end customer, couldn’t you sell to them directly too? There are loads of implications with that one, not least the potential impact on relations with your existing distribution network. A discrete retail brand perhaps? 

Convenienceresponsive

Your retailers are probably going to appreciate the new levels of convenience you are offering.  They don’t need to be tied to a phone or a desk to do business with you and if it makes sense for them to order stock out of hours, they can.

But as soon as you offer this freedom you have to ask what people will do with it. Out of hours or away from their desk, they are less likely to be using a PC or laptop. How good does your shiny new wholesale eCommerce site look on a mobile or tablet screen? How easy is it for people to place orders using a smartphone?

If you’re looking to make it more convenient for people to interact with your business shouldn’t you go the whole hog and have a mobile responsive site? You probably should if you want something that will continue to deliver a return into the future.

There are many reasons why wholesalers should adopt eCommerce.  Clearly there are benefits in terms of cost savings and improved convenience for retailers and distributors. But as with all things digital, it isn’t an instant or magic solution, despite what your eCommerce design agency might be telling you. It certainly helps to go in with your eyes open.