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How Wholesale Food Distributors Can Compete with Amazon

Rianna Greenfield
Wednesday, May 15, 2019
Table of Contents

Amazon is a pioneer in B2C eCommerce, and as we have discussed previously, there is a very real chance that the company will expand into the wholesale foodservice distribution industry. 92% of wholesale distributors consider Amazon to be a direct threat, and they are worried about what will happen to their companies if Amazon enters their industry.

As scary as it may be to think about the effects this potential move will have on the industry, all hope is not lost. How can small and medium-sized foodservice distribution companies protect themselves should Amazon decide to become a wholesale distributor?

Are Wholesale Food Distributors to Blame?

It is a well-known fact that the wholesale distribution industry has been slow to adopt new technology. Believe it or not, it wasn’t until a few short years ago that industry leaders like US Foods started to offer online ordering to their customers.

While tech giants like Amazon focused on projected consumer trends to help craft the modern eCommerce landscape, wholesale distributors chose to use the same tried and true business methods that made their companies successful years ago. Unfortunately, suppliers have not changed with the industry. Amazon saw this as an opportunity to expand into the wholesale industry, and it will continue to do so with wholesale foodservice distribution.

The industry’s slow approach to adopting B2B eCommerce platforms is alarming. In a 2018 MDM survey, only 32% of wholesale distributors reported having a comprehensive digital strategy in place. Compared to the same survey conducted in 2015, just 31% of suppliers had a digital strategy. Furthermore, out of those surveyed, only around 20% of respondents are planning to adopt B2B eCommerce within one year, while 15% are considering offering their buyers mobile apps.

In order to fully compete with tech-forward newcomers, wholesale food distributors need to evaluate their digital strategies and provide B2B eCommerce options to their customers.

Technology and Wholesale Food Distribution

eCommerce offerings are changing rapidly and are having a tremendous effect on customer purchasing behavior. In order for suppliers to survive Amazon’s entry into wholesale food distribution, they need to not only adapt quickly, but also remain vigilant and keep their eCommerce offering up-to-date with industry standards.

Historically, wholesale suppliers have relied on legacy systems as their sole eCommerce platform. However, these systems are unable to keep up with new technology and do much more harm than good. Luckily, B2B eCommerce is becoming increasingly focused on cloud-based software as a service (SaaS) solutions.

Instead of turning to an indirect channel or legacy system for their digital sales solution, many wholesale distributors are seeing the value in partnering with a SaaS provider to offer a robust eCommerce platform because of the value and flexibility it provides. For instance, a B2B eCommerce platform like BlueCart, gives suppliers the tools to compete successfully without having to depend on a 3rd party to manage their sales process.

Choosing the Right SaaS Solution

The future of many small and medium-sized distribution companies is dependent on what kind of eCommerce platform they implement. Choosing the right platform isn’t hard, but suppliers need to make sure that their system has features that will benefit their business.

By far, the most cost-effective eCommerce solution is a SaaS system. Why should small and medium-sized distributors partner with a SaaS provider?

  • Fast & Easy Implementation: with a SaaS solution, distributors “rent” their eCommerce platform from technology experts, who also handle the set-up, maintenance, and support processes.
  • Seamless Integration: SaaS solutions can integrate with many ERP systems, making day-to-day business operations run smoothly
  • Free for Customers: most SaaS systems offer free ordering platforms for buyers
  • Omnichannel Ordering: suppliers gain access to branded mobile websites and apps, giving their buyers the opportunity to order anytime, from anywhere
  • Custom Digital Catalogs: SaaS platforms make it easy for suppliers to update product pricing, product descriptions, and stock quantities with digital catalogs. Catalogs, order guides, and pricing can be customized for each buyer.
  • Increased Sales: intuitive platforms, coupled with advanced search functionalities, make it easy for buyers to discover new products and grow their average order size
  • Better Customer Service: built-in CRM platforms and in-app chat features allow for better sales experience and improved customer service
  • Sales Rep App: distributors can make their sales reps 20%+ more efficient, improve the sales process, and increase field sales with a dedicated sales rep app.

The Wholesaler’s Next Steps

Wholesalers cannot ignore the threat Amazon poses on the foodservice distribution industry. It is crucial that small and medium-sized businesses take steps now to protect themselves in the future.

First, distributors need to evaluate their businesses and identify their areas of weakness, for example:

  • Are orders often incorrect because of items are out of stock?
  • Are customer invoices sent on time every month?
  • How much time do sales reps spend doing data entry?

Once distributors have identified their pain points, they can choose an eCommerce solution that is best for their business.

Next, wholesalers need to make sure their eCommerce solution integrates with their current ERP and CRM systems. Sure, a particular eCommerce system may look great on paper, but it is useless if it doesn’t sync with back-office and front-office programs, like accounting software and order management tools. The right eCommerce solution should either integrate seamlessly with a company's most used programs or help to fill a gap in operational processes.

Finally, a major upside wholesale distributors have over companies like Amazon is their ability to offer omnichannel ordering, which allows their customers to place orders either on eCommerce platforms, over the phone, or in-person with a sales rep. Even though as many as 80% of wholesale buyers prefer suppliers with mobile and online ordering capabilities, doesn’t mean distributors should abandon some of the traditional practices that they have built their businesses on.

Amazon, along with a number of other tech-forward companies, are poised to shake up the wholesale foodservice industry. Entering into the world of B2B eCommerce is critical for distributors, but it cannot be done half-heartedly. Developing a well-rounded eCommerce service is important for wholesale suppliers if they want to protect themselves as the industry continues to evolve.