Mike McGee says wholesale can learn from larger retailers’ approach to data
I recently attended the Better Wholesaling Summer Roundtable, which explored a number of data-related subjects. There was clear theoretical agreement from all participants that data should be used for mutual benefit to help build the wholesale business; the trouble is though that reality gets in the way of this actually happening.
Mark Hamlin from Ferrero, who has had recent experience in both the wholesale and multiple trade, contrasted the differing attitudes on data provision and quite rightly pointed out that an opportunity is being wasted.
The wholesale sector does a great many things very well; I would suggest that working with suppliers proactively on data is not one of them. I am not suggesting that multiples should be slavishly copied either, rather that we should look and learn and take note of the good things that can help the sector.
Multiple data: Helping suppliers to see the bigger picture
The multiples make a lot of sales and stock data freely available to their suppliers (but do charge for participation in loyalty schemes and more advanced data provision). Why do they do this? You can be sure it is not for charitable reasons. No, they provide this wealth of data to enable their suppliers to deal with them more efficiently, ensure that they are kept in stock and crucially enable suppliers to develop winning strategies for their business development. To do this they give accurate information daily with no sales withheld or stores and depots hidden.
As usual, with that sector, there are of course some fairly large sticks with penalties for such things as out of stocks and a few small carrots in terms of increased sales; but the information is there to optimise performance for everyone.
As a result, the supplier category teams can assess promotions and activity effectively, logistic teams can forecast demand and sales people can have meetings with their contacts knowing everything about the account, its opportunities and its performance. The chances are they will also buy data through the various data providers to enhance their views and compare their products with the total market but this is not a necessity.
Wholesale data: Is data only a direct revenue stream?
The wholesale world is somewhat different. For one thing the amount and scope of the data available varies enormously,
which in itself is an issue if a supplier wants to get a market view. Fundamentally though, a wholesaler sells data to raise direct revenue, whilst a multiple provides data to suppliers to maximise operational efficiency.
Many wholesalers appreciate the monies that data generates but are then nervous about releasing it, as they fear what suppliers will discover. Often this concern is unfounded as supplier wholesale teams just don’t have the resource to look at any more than the headlines. Nevertheless, this had led to all kinds of restrictions on what can be seen and, in some cases, areas like grey product completely spirited away from view.
Others will not allow a supplier to see competitor’s products and some do not show individual depots. One is left wondering what exactly a wholesaler expects the supplier to do with the information – other than pay the bill of course. Seriously though, data has a certain value in assessing the market but the main return is in being able to take action based on it and precious few wholesale data sets allow that to the extent that the multiples do. And this is just at a business development level before you actually get to work on supply chain efficiencies.
There are differences: A game of chicken and egg…
There are, of course, structural differences which impact on this issue. In most cases the multiples run on minimal stock, and so it is vital that suppliers replenish them on a 48-72 hour basis, meaning it is sensible for them to see stock data. It is also true that the multiple trade focus on every part of supply chain in addition to terms/ price to maximise their return, although wholesalers could actually emulate that to some degree.
There may be some chicken and egg in this, but invariably the major suppliers have big teams that work with the multiples at every touch point, while in the wholesale sector it sometimes appears that the sales person has to do everything but drive the trucks to the back door. Is this because the multiples engage more and make more data available, necessitating bigger teams? Well in all honesty probably not, it is about scale and the consequences if things go wrong. However, more openness by wholesalers would provide the challenge to their suppliers to help develop the business and be a step towards more measurability of supplier performance.
A route forward? A blue print for proactive data and development
The Roundtable concept provides one potential route forward, where progressive wholesalers and suppliers could meet and develop a blueprint for more proactive data development. Perhaps selected suppliers could illustrate some best practice from the multiple sector and its applicability to wholesale and then mentor the wholesalers to deliver against this.
Admittedly, this kind of initiative has produced mixed results in the past, to put it politely. Time, resource, inertia and other priorities tends to be the death knell of such projects unless there is a demonstrable focus or immediate payback. It would be nice though to think that this could perhaps be picked up by Better Wholesaling, perhaps in conjunction with an industry body, supplier(s) or wholesaler(s) and at least develop some kind of potential blueprint for the future.
The other route is for a wholesaler that provides data to take a big step and gain a possible competitive advantage. It is unreasonable to expect anyone to give up what is now a pretty important source of revenue.
However, a basic package could be offered at nominal or no cost on the basis that the supplier then has to demonstrably show that they have used the data to improve business commensurate to at least double the market value of the data provided. This could be measured by more customers, margin or whatever. Additional charges could still apply for bigger data sets and participation in target marketing.
This must, however, be based on providing suppliers with all the applicable data as we must move beyond this practice of hiding things that often the supplier knows about anyway.
Best practice is just that and should transcend sectoral boundaries – data is an opportunity waiting to be realised for the wholesale sector but only if there is a cultural change.