The threat of Amazon on independent wholesalers

Neil-TurtonNeil Turton on the threat of Amazon to independent wholesale, and why wholesalers need to improve their online service

Brexit may be dominating everyone’s thoughts, but wholesalers must focus their efforts on improving their e-commerce offerings this year. Otherwise they will begin to wonder where their customers have gone. There’s been a major shift of consumer behaviour to online.

There’s the notion about infinite range and Amazon is a prime example of this. I heard at the HIM Future of Convenience conference last month that the online retailer currently has more than 150 SKUs of mustard on sale, and that’s just one example of Amazon’s entire product range.

When Amazon begins to saturate the consumer market in five years, you can see retailers, foodservice and catering businesses ordering products in wholesale case quantities from them. There’s no doubt Amazon is currently having meetings discussing how they can capitalise on this opportunity.

Buying groups and wholesalers need to look at how they can add the notion of infinite and extended range into their strategy. They need to do this now. One way is by adding niche brands from specialist suppliers and wholesalers that can’t be purchased anywhere else to offer a point of difference.

You need to also look at wholesale behaviour within the industry itself. We saw Tesco and Booker’s merger last year. You can’t presume consolidation will stop happening this year and companies will stop trying to push for lower prices, both offline and online.

Elsewhere, personalisation is key and it can take business-to-business e-commerce to a new level. This is one of the things I did when I was at Nisa. For example, a retailer shopping from the wholesale website would be prompted if they were a certain quantity away from an ordering discount. They would receive personalised proposals when they were buying online.

A large improvement in e-commerce capability is one new area I’m looking to bring to Sugro’s wholesale members. There is still a role for the traditional cash and carry, but you have to offer online services, such as click-and-collect, to bring customers in.

Some Sugro members have showrooms that retailers visit. In other groups, for example, Time Wholesale Services has a showroom in its Rainham depot demonstrating the Lifestyle Express convenience brand to customers when they visit to either pick up or browse stock.

Customers who order online are then given a reason to stay in the depot. This strategy has struck a good balance between online and cash and carry.

Buying groups can also help their wholesalers develop their employees. We can offer more bespoke training tools and help with telesales with online support. This is the modernisation the industry needs to see.

This technology exists and the industry can do it because it’s so prevalent. There have also been many developments such as artificial intelligence, which can help tailor a wholesaler’s offering even further.

The buck starts with buying groups and wholesalers. They need to consider what they’d do differently if they were to start their business again today and how they would challenge the thinking of a traditional organisation. Independent wholesale is way behind where it needs to be right now.

Neil Turton is the managing director of national buying group Sugro

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