Opinion: Marketplace platforms could offer wholesalers a huge sales opportunity

David Gilroy

E-commerce offers wholesalers the opportunity to increase their influence, sales and customer numbers, says David Gilroy


I am faced with a procurement challenge. How can I quickly source two fire extinguishers, a refrigerated cabinet, protective work wear and security cameras for a store launch? I need all of the items in 48 hours, but there is not one store or wholesaler that stocks such an eclectic range.

I start my search online and within 30 minutes I have all the goods ordered with next-day delivery. This is typical of the purchasing shift, already in motion and now significantly accelerated since the Covid-19 pandemic. Buying is fast becoming online first and stores second, and it’s a trend that’s set to continue. The Sunday Times reports that during lockdown, online food sales leapt from 7% to 13% of total grocery takings in around two months.

Could this be a signpost to rethink wholesale? Customer choice and range in wholesale settings is limited by the size of the available selling space and the capacity of the supply chain infrastructure. Wholesalers with their tight margins need to generate positive cash flow and cannot afford to be holding inventory that doesn’t turn quickly.

Ranges must be tightly focused on fast-moving consumables, which rules out service lines such as fire extinguishers. Scaling up is constrained by the speed and cost of real-estate acquisition. Now, e-commerce has revolutionised the way we buy and all trading businesses must have the multichannel option.

This offers wholesalers a brilliant opportunity to build on their credentials as solution providers. With their comprehensive customer databases, they are in a unique position to exploit e-commerce and add value right across the mix. The key question is how best to proceed.

Most wholesalers now have some kind of transactional online and digital offering. One option to expand reach and choice is to build up the range online. This can be painstaking, requiring a lot of management time and resource.

Another option is to shift to a marketplace platform model like Amazon or eBay, but focused on the business community. A wholesaler can really expand their business by connecting complementary sellers to their customers, but on their terms and consistent with their brand values.

A B2B marketplace platform is customer-centric and, by providing a fast and frictionless experience, links buyers to the relevant goods they need from a trusted source. This enables a wholesaler to build a compelling seller community around its core proposition.

They can extend choice from existing suppliers, introduce new local ones and carry a wider curated range at low risk. They are able to increase share of spend, acquire new customers and insert higher-margin products. It also allows them to test before adding to a main range, identify trends and optimise their inventories.

Wholesale trading is more nuanced than retail and requires business-specific functionality, such as bulk ordering capability, tiered quantity discounts, amends to purchase orders, customised pricing for certain customers, and B2B payment types and terms. Specialist operators such as Izberg, Wizaplace, Uppler and Mirakl are making big inroads with B2B marketplace platforms such as this.

The ever-extending universe

Metro France is a long established and successful wholesaler to the foodservice industry. It is dedicated to its customer base, which comprises primarily of entrepreneurs of taste: independent hospitality operators, restaurants, pastry chefs, pork butchers et al.

Its 98-strong warehouse network across France has the country covered and expansion through store openings is limited. When it took the decision to set up as a marketplace merchant and become a one-stop shop, its universe opened up.

In the tableware and kitchen category alone, it now has 20,000 products, of which 8,000 lines are supplied by resellers. It has added more than 5,000 of these, which in turn operate as an omni-channel sales force for Metro.

Vendors can fulfil directly or use the warehouse network as pick-up points across the country.

Metro effectively leveraged the agility of its marketplace during the Covid-19 lockdown to sell PPE equipment to restaurants when the sector was at a standstill, thus helping the industry to keep going. All of this underlines Metro’s authority as the go-to place for the vibrant French catering industry.

Expansion and agility

Gordon Food Service, meanwhile, is the US’s number-three foodservice distributor with more than $13bn in sales. Through a new identity called Relish Works, it launched Orderve in 2018, a B2B speciality food marketplace platform for sellers to offer a drop shipment service direct to restaurants.

It now has more than 500 vendors on the platform, each with their own shop front. In this way, it has built up a comprehensive range across the categories. For example, it offers more than 200 lines of preserved seafood. Orderve adds value by continually following up on customer service and being highly responsive.

A customer recently needed a specific brand of salted cod, and in the words of managing director Scott Edwards: “We really focus on being agile. Within half an hour we had a new vendor onboarded for the customer and the product was on its way to the restaurant that day.” Orderve has plans for rapid global expansion.

Promoting local producers

Pourdebon launched as an online marketplace for high-quality gourmet food and drink from artisan producers in the Ile de France region. Its 300 producers offer a 7,500-product range. Through the platform, customers order directly from the vendors and arrange delivery direct to their premises.

This approach addresses two key challenges we have in UK wholesale: the management of slower-selling diverse fresh products and the ability to bring locally sourced produce from various regions into play without the inventory risk.

Digital leadership

Turner Price is a member of the Country Range buying group. It stocks around 4,500 food items and delivers multi-temperature across ambient, chilled, butchery and produce with annual revenues of £60m and just over 2,500 customers. It successfully launched an e-commerce site two years ago.

This became well established, but Turner Price wanted to significantly improve choice for its customers. Sales and marketing director Julian Owen explains: “We looked strategically at ways to improve growth. We could see that we were constrained by warehouse space and vehicle capacity, and we determined that digitally mobilising our business was the answer.

“We spent six months thinking strategically, looking at technology options and hit upon marketplace solutions, which are far more advanced in Europe than in the UK.

“We deliver to our customers up to five times per week and enjoy strong relationships. This gives us credibility. By creating our own Turner Price marketplace platform, we are in position to build on those customer relationships through a far wider range choice by offering carefully selected complimentary resellers, while at the same time avoiding the complexity of the fulfilment and administration of actually owning the goods.”

The Turner Price marketplace is due to launch in November, and the onboarding of resellers has already started with some big brands such as Arla Foods signed up. Owen is targeting up to an additional 10,000 lines from between 100 and 200 resellers on the platform. The offering will include speciality foods from all parts of the UK. Through promoting reseller competition, customers will benefit from sharp pricing.

The marketplace will also extend customer reach way beyond the current catchment. Owen says: “We were introduced to marketplace specialists Mirakl and their expertise and enthusiasm has been invaluable to us in landing this project. This exciting technology enables different and wider customer relationships not possible before. We are on track to be digital leaders in wholesale.”

Summary

Marketplaces as destinations where sellers and buyers meet to trade are thousands of years old. These platforms are a natural progression from the traditional village and town markets. Wholesalers have their long-established and loyal customer bases – a busy depot often resembles a marketplace.

Using an online solution, they can offer a wider sweep of curated goods and services, with the additional benefits of data insights and commission earnings. These are the new markets and the concept is compelling.

David Gilroy is the founder and managing director of Store Excel

Coronavirus wholesale industry
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David Gilroy
David Gilroy is the founder and managing director of Store Excel. He was previously the convenience retail lead at W2 Commercial and held operations director roles at Bestway Wholesale and Nurdin & Peacock.

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