SAP White Paper
Trends in the Wholesale Distribution Industry
Riding the Waves of Disruption in
Wholesale Distribution
Adapting Business-to-Business Paradigms to the
Experience Economy
©
2
01
9
SA
P
SE
o
r a
n
SA
P
affi
lia
te
c
om
pa
ny
. A
ll r
ig
ht
s
re
se
rv
ed
.
1 / 12
2 / 12
Table of Contents
Five Forces Disrupting Wholesale Distribution
Roadblocks to Overcome
Intelligent Experience Management
Machine Learning, Analytics, and the IoT
The Triad of People, Strategy, and Technology
4
6
8
10
11
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
Gone are the days when wholesalers escaped
the spotlight and simply purchased, ware-
housed, and moved products in bulk behind
the scenes. Digital transformation continues
to disrupt business, and the new paradigm
of becoming an intelligent enterprise is on
the horizon. Customers and employees alike
demand superior experiences that harness
emerging technologies and seamlessly con-
nect all facets of the buying and distribution
process. And many wholesalers have been
left scrambling to adapt to a global, always-
open marketplace.
3 / 12
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
4 / 12
As digitalization accelerates in virtually all indus-
tries, both your customer base and your workforce
demand quick access to all necessary information
and a rich portfolio of services to support their
tasks and goals. Business buyers transfer their
expectations from purchases as private consumers
to their interactions with wholesalers, including
consistency across channels and personalization
of recommendations. And as in the business-to-
consumer (B2C) market, large networks and
dense social media connections allow business-
to-business (B2B) customers to inform themselves
about new developments and exchange notes on
experiences.
HEIGHTENED CUSTOMER EXPECTATIONS
Customers today are goal oriented as never
before, especially business customers who, by
definition, have only limited time. Expectations
for speed, simplicity, reliability, personalization,
and availability are high and growing higher daily.
Business buyers are also Internet-savvy consum-
ers, so their private purchasing experiences set the
bar for their business purchases. Online research
and online buying are therefore increasingly
relevant to the B2B buying process.
DIGITALIZATION OF THE BUYING JOURNEY
Whether customers start online and then move
offline or complete their entire purchase online,
the customer journey is increasingly digital – and
undergoing continual change. Customer prefer-
ences are shifting toward mobile and Web-based
channels, slowly extending and enhancing – but
also in some cases obsoleting – traditional sales
channels. Businesses now routinely engage with
customers across all media using texting, portal-
based self-service, and social media channels.
And through a wealth of new technologies, such
innovations as chatbots, natural language interfac-
ing, and artificial intelligence are fueling a quantum
leap in the digital customer experience. Just as
travelers can arrive at their destinations by a multi-
tude of different paths, each customer journey is
unique, potentially touching half a dozen different
contact points along the way. This multichannel
communication is quite new for many wholesalers
and requires intensive collaboration among differ-
ent departments.
SHARPER COMPETITION
Your competitors are already busy disrupting
20th-century business models. And as mergers
and acquisitions create new international players,
the lines between manufacturing, wholesale, and
retail are blurring. Digital commerce giants have
already grasped the incredible opportunity to apply
their technological expertise to leap forward from
the B2C model into B2B processes. Tightening
profit margins drive the demand for continuous
innovation across all sectors. Price transparency
and low switching cost are the new normal, driven
by ubiquitous online connectivity.
WORKFORCE EMPOWERMENT
Big Data and technologies are the heartbeat of
industry today, but people remain among the most
valuable asset in any organization. In a competitive
global environment, successful professionals can
choose from multiple opportunities, and compa-
nies must work to retain top talent. Providing
employees across the value chain with the right
tools and insights empowers organizations to
refocus on high-value, collaborative innovation
while keeping the workforce engaged.
Five Forces Disrupting Wholesale Distribution
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
5 / 12
Typical new features that help employees be more
successful at their jobs in a more engaging work
environment include:
• Predictive lead management and deal scoring
to improve win rates
• Predictive sales forecasting based on analysis
of trends to boost market awareness
• Identification of customers at risk to reduce
income loss
• Automated invoice and payment matching and
approvals processes to decrease time spent on
repetitive tasks
Positive Work Experience
Attractive compensation is essential to recruiting
and retaining talented staff, but a positive and
productive work environment is also highly
desirable. And the workplace is increasingly
digitalized, underscoring the importance of a
positive employee user experience. Companies
must offer easy-to-use front ends, solid pro-
cesses for collaboration, and effective tools to
deliver context-specific insights.
Productivity Tools
Having grown up with computer technology,
millennial and gen-Z workers bring not only new
skills but also new expectations regarding work-
place productivity tools. Better tools mean higher
employee engagement and, ultimately, more reve-
nue. And engaged service teams create a better
customer service experience.
INNOVATIVE BUSINESS MODELS
Wholesalers have traditionally served to
warehouse products, acting as intermediaries
between suppliers and customers. In today’s
market, however, they can no longer thrive with
this basic business model. Well-established rela-
tionships with suppliers and customers no longer
guarantee survival. Wholesalers must reinvent
themselves as information-centric digital entities,
reinventing business processes and reimagining
business models to gain competitive advantage.
1. “Make Your B2B Business a Digital Business,” Forrester, June 2018.
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Of B2B buyers research
at least half of their work
purchases online1
64%
Riding the Waves of Disruption in Wholesale Distribution
Roadblocks to Overcome
ized customer experiences difficult, if not impos-
sible. Sharing information across the enterprise
becomes a challenge as well, since customer data
is often distributed across several systems and
various departments. Salespeople cannot readily
access all the relevant information they need to
build a comprehensive customer view. Customized
legacy solutions lacking agility and adaptability
have a negative impact on customer experience
and, therefore, on the revenue. The consequences
of insufficient digitalization include dissatisfied
customers with greater churn potential, high
employee frustration, and limited business growth
due to constraints on innovation and differentiation.
LACK OF TRANSPARENCY
The inability to maintain full enterprise-wide
visibility limits success in the modern economy.
Companies cannot count on sufficient revenues
unless they streamline and integrate their front-
end processes – marketing, sales, commerce, and
services – to optimize the customer experience
across every channel of interaction. Additionally,
disjointed legacy processes prevent internal
stakeholders from understanding upstream
and downstream operations, limiting their
engagement to the task at hand rather than
overall corporate health.
Businesses are generating an overwhelming
volume of data today, but many of them are
unable to put their data to use to gain new insight,
improve productivity, and generate new business.
Wholesale customers can have so many touch
points with their suppliers that keeping every-
thing aligned may seem overwhelming. And the
challenge gets even trickier if sales, service, and
marketing operate as stand-alone entities with
separate processes and databases.
SILOED ENVIRONMENTS
Customers everywhere are well informed today.
They gather information on their own through
colleagues, peers in industry associations, on
social networks, and from competitors’ Web
sites. Businesses must stay one step ahead of
their customers as well as their competitors. But
unless there is an enterprise-wide data manage-
ment system, limited access to real-time insights
can cause teams to make decisions based pri-
marily on old results and incomplete data – or
even on instinct alone.
LEGACY SOLUTIONS
Siloed organizations tend to feature legacy
applications that don’t integrate easily with one
another, making delivery of consistent, personal-
6 / 12
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
7 / 12
2.–6. SAP Performance Benchmarking.
When sales executives can capture and access every customer activity, including
all communications such as appointments, dates, telephone calls, e-mails,
letters, and meetings, companies experience 17% lower customer churn.2
17% lower customer churn
When contact-center agents have access to back-office information at the
point and time of interaction, service organizations average 15% shorter
call-handling times.3
15% shorter call-handling times
When sales forces qualify a higher percentage of sales leads, channel
managers post a 20% higher rate of achieving quota.5
20% higher rate of achieving quota
When organizations leverage multichannel communication to optimize
customer contact, they record 13% higher satisfaction levels.4
13% higher satisfaction levels
When organizations personalize and adapt campaign offers in real time
based on similar prospect responses and offer profitability, they realize
18% higher revenue growth from new customers.6
18% higher revenue growth from new customers
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
8 / 12
An intelligent enterprise harnesses its data
effectively to achieve desired outcomes faster –
and with less risk. It is lean and agile, reacting
to market shifts and developing new revenue
streams faster than its competitors. And it pro-
vides the right insight to the right people at the
right time and in an understandable and digest-
ible format to improve both the employee
experience and the customer experience.
EMPLOYEE EXPECTATIONS
Workers today expect employers to maximize
the use of automation for repetitive tasks and
increase the use of intelligent technologies to
improve processes. They are at home with many
applications of artificial intelligence (AI), the
Internet of Things (IoT), machine learning, and
advanced analytics.
Seamless Information
To keep savvy employees happy and productive,
you must provide a seamless user experience
and easy access to such features as a standard-
ized, 360-degree customer view across devices;
real-time visibility into upstream and down-
stream operations; and consistent, streamlined
workflows. And you must provide intuitive tools
to support cross-functional internal and external
collaboration.
Intelligent, context-specific information for
sales and marketing professionals in wholesale
distribution should include:
• Relevant customer history and product data
readily available during customer interactions
• AI-powered deal recommendations and lead
scoring
• Suggestions in standard workflows for
strategically advisable next steps
• Identification of customers likely to churn
and the factors that influence them
Smart Tools
If your teams have limited access to insights,
their decision-making is primarily reactive. To
become proactive, they need flexible self-service
data visualization and dashboarding appropriate
for users at all skill levels. Then, they can share
preconfigured visualizations or easily design ad
hoc reports that help address specific business
needs. Advanced analytics applied to consoli-
dated data across multiple sources helps them
understand trends, draw new insights, and turn
data into action.
Intelligent Experience Management
7. “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,” an SAP Center for Business Insight
study with research and analysis support from Oxford Economics, 2017.
64% of leaders say their employees are now
more engaged thanks to digital transformation,
compared to 20% for other respondents.7
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
9 / 12
CUSTOMER EXPERIENCE ENHANCEMENT
Customer experience is a key new dimension
along which to measure corporate competitive
advantage and eventual success. Today’s custom-
ers are unimpressed by experiences that are not
personalized in at least near-real time. They have
no patience for referrals or handoffs to other busi-
ness functions – and they are typically just a click
away from your competitors.
Additionally, when the quality of the customer
experience varies across channels, conversion
rates suffer. A consolidated view of
customer information across all
channels and departments is
crucial for targeting, seg-
mentation, account review,
and service. You must be
able to share a full and
consistent customer
profile across the back
office and with all front-
office channels.
And customers must have access to self-service
privacy settings and preference management.
DATA PROTECTION
Because it is essential for personalization,
customer data is king. A single data flow across
functions is the backbone of an intelligent enter-
prise, in which everyone has the same readily
available view of each individual. But with the
creation and collection of burgeoning volumes
of data, customers are increasingly sensitive
about their privacy. And because customer data
is highly marketable, as several recent
news stories have demonstrated,
protection against its misuse is
essential. Companies must
take care to secure data
against theft or fraud and
protect customer privacy,
or expect stiff fines from
government and industry
regulatory bodies.
8. “ SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,” an SAP Center for Business Insight
study with research and analysis support from Oxford Economics, 2017.
70% of leaders have seen significant or
transformational value in customer satisfaction
and engagement from digital transformation,
compared with 22% of others.8
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
10 / 12
Emerging technologies are upending old
assumptions about the way we do business.
The latest machine learning technologies use
self-learning algorithms to deliver increasingly
insightful information about customer behavior
so that marketing staff can identify the best audi-
ences to target. Analytics tools help produce
contextual insights for fast and confident
decision-making. IoT technologies make it
possible for machines to exchange information
with one another and their human operators.
CUSTOMER INTERACTION
Machine learning algorithms can provide support
for strategies to convert leads, promote customer
retention, and match recommendations to indi-
vidual preferences. Orchestration applications
based on machine learning can help you under-
stand customer journeys to optimize campaigns
and enrich the customer experience. Embedded
predictive analytics and machine learning scores
facilitate targeting and segmentation and can
fold in third-party models as well.
Intelligent bots can facilitate a whole new para-
digm of interactions by helping your customer
service agents work more efficiently. These bots
eliminate repetitive, limited-value engagements
and serve as digital assistants, so agents can
focus on more-complex tasks. Bots can interact
with users online or in any communication chan-
nel, bolstering the kind of robust customer service
that encourages repeat purchases and helps turn
customers into brand ambassadors. And for cus-
tomers who want to act on their own, self-service
offerings complete the intelligent customer ser-
vice portfolio.
NEW BUSINESS MODELS AND REVENUE
STREAMS
An intelligent enterprise is data driven and insight
driven, always on the lookout for new revenue
opportunities and new monetization models to
capture narrow market segments and add value to
existing processes. Instead of focusing on products
singly, it expands its offerings to include services
and bundles of products and services that deliver
complete solutions. The integration of machine
learning technologies helps wholesalers innovate,
for example, through intelligent up-selling and
cross-selling of related products and services to
increase deal size.
Companies need no longer wait for degraded
performance to recognize the need for asset
maintenance. IoT technologies suggest new busi-
ness models that include predictive maintenance
based on real-time analysis of sensors reading
indicators such as material stress and changing
environmental conditions.
Machine Learning, Analytics, and the IoT
9. “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,” an SAP Center for Business Insight
study with research and analysis support from Oxford Economics, 2017.
50% of digital leaders are investing in machine
learning technologies, compared with 7% of others.9
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
11 / 12
Although it usually makes a big splash, new
technology alone is not enough to guarantee a
successful transformation. An intelligent enter-
prise depends equally on talented and highly
skilled people and a well-designed and well-
executed strategy.
PROACTIVE MIND-SET
People play a key role in a company’s digital tran-
sition. They develop the ideas for new business
models and harness the technology that under-
pins them. Digitalization requires a mind-set that
seeks for ways to reimagine rather than merely
extend business models. It means learning to
be proactive and staying agile in a world where
change is constant. Since trying something new
always includes the possibility of failure, your
people must be comfortable with a new level of
risk. And they must be willing and able to think in
new ways, beyond functional boundaries and cur-
rent daily tasks. In short, an intelligent enterprise
depends on a company culture that considers
digitalization an exciting business opportunity
and not merely an annoying technology trend
for the IT department to address.
DEFINITION OF FUTURE PRIORITIES
To win customers for life, wholesalers need to
define their future priorities to effectively complete
their digital transformation. This table summarizes
the crucial elements of a strategy for wholesalers
who aim to become intelligent enterprises.
The Triad of People, Strategy, and Technology
Key Dimension Objective
Customer centricity Putting the customer’s point of view at the
center of every business decision
Employee empowerment Fostering an insight-driven, collaborative,
and tightly connected work environment
Digital supply chain Connecting the supply chain for greater
efficiency and responsiveness
Smart technology Driving innovation with machine learning,
the Internet of Things, and blockchain
technologies
New monetization models Offering new packages of products and
services and new subscription opportunities
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
Riding the Waves of Disruption in Wholesale Distribution
12 / 12
GAME PLAN FOR GROWTH AND
INNOVATION
Becoming an intelligent enterprise does much
more than simply automate business processes.
It embodies a radical vision for future commer-
cial success in any industry or geographical loca-
tion. In this paradigm, you keep your valuable
data visible in a single enterprise-wide flow to
help staff predict market trends and customer
behavior. You focus your people’s energies on
openness and innovation and provide them with
state-of-the-art productivity tools. And you
develop and nurture the agility to respond to
changes in a volatile global marketplace and
snatch opportunities from increasingly shorter
time windows.
The following steps can help your wholesale distribution business become an intelligent enterprise:
Take inventory of your
current business
processes.1
Focus resources so that
salespeople spend more
time interacting directly
with customers.5
Build a complete and
robust view of your
customer interactions.3
Promote deeper
collaboration across
departmental boundaries. 7
Foster agility with a flexible,
scalable system that lets
you react quickly to market
change.9
Identify roadblocks to
growth, such as repetitive
tasks and out-of-date tools.2
Share relevant customer
information seamlessly
throughout your extended
enterprise.6
Create a plan for
delivering best-in-class
customer experiences.4
Reduce IT costs and
improve business pro-
cesses by harmonizing
your solution landscape.8
Encourage the invention
of new business models
and revenue streams.10
LEARN MORE
To learn more about how to succeed by offering exceptional customer and employee experiences,
visit us online.
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
© 2019 SAP SE or an SAP affi liate company. All rights reserved.
No part of this publication may be reproduced or transmitted in any form
or for any purpose without the express permission of SAP SE or an SAP
affi liate company.
The information contained herein may be changed without prior notice.
Some software products marketed by SAP SE and its distributors contain
proprietary software components of other software vendors. National
product specifi cations may vary.
These materials are provided by SAP SE or an SAP affi liate company for
informational purposes only, without representation or warranty of any
kind, and SAP or its affi liated companies shall not be liable for errors or
omissions with respect to the materials. The only warranties for SAP or
SAP affi liate company products and services are those that are set forth
in the express warranty statements accompanying such products and
services, if any. Nothing herein should be construed as constituting an
additional warranty.
In particular, SAP SE or its affi liated companies have no obligation to
pursue any course of business outlined in this document or any related
presentation, or to develop or release any functionality mentioned therein.
This document, or any related presentation, and SAP SE’s or its affi liated
companies’ strategy and possible future developments, products, and/or
platforms, directions, and functionality are all subject to change and
may be changed by SAP SE or its affi liated companies at any time for
any reason without notice. The information in this document is not a
commitment, promise, or legal obligation to deliver any material, code, or
functionality. All forward-looking statements are subject to various risks
and uncertainties that could cause actual results to diff er materially from
expectations. Readers are cautioned not to place undue reliance on these
forward-looking statements, and they should not be relied upon in making
purchasing decisions.
SAP and other SAP products and services mentioned herein as well as
their respective logos are trademarks or registered trademarks of
SAP SE (or an SAP affi liate company) in Germany and other countries.
All other product and service names mentioned are the trademarks of
their respective companies.
See www.sap.com/copyright for additional trademark information
and notices.
www.sap.com/contactsap
Studio SAP | 61968enUS (19/02)
Follow us
Riding the Waves of Disruption in Wholesale Distribution
Gone are the days when wholesalers escaped the spotlight and simply purchased, warehoused, and moved products in bulk behind the scenes. Digital transformation continues to disrupt business, and the new paradigm of becoming an intelligent enterprise is on the horizon. Customers and employees alike demand superior experiences that harness emerging technologies and seamlessly connect all facets of the buying and distribution process. And many wholesalers have been left scrambling to adapt to a global, always open marketplace.
Latest in Industry 4.0
Siemens to Acquire Industrial Drive Technology Business
March 22, 2024
Cybersecurity-by-Design for Industry 4.0
March 21, 2024