Wholesale Distribution Industry Overview
When marketing to the wholesale distribution industry, it is important to have a firm understanding of the current wholesale distribution market. B2B Technology Lead Generation is much more effective with a strong understanding of the target market. With annual sales of about $7 trillion, the US wholesale distribution industry includes about 330,000 companies. For the period between 2015 and 2019, the output of the US wholesale distribution industry is forecast to grow at an annual compounded rate of 5 percent. In the US, the 50 largest distributors are generating 25% of the industry revenue.
A respected industry overview cited the industry’s growth over the last decade as having been ‘above average’ as compared to other industries. Over the last decade, distributor revenue grew 60%. If this sounds less than enthusiastic, here’s the reality check they provide: during that 10-year period, while distributor revenue grew nearly 60% – with computers, electrical goods, and machinery leading the pack – retailers only showed 40% growth.
Knowing there is a core reliance on technology to keep up with growing efficiency in the market, Frantz Group offers strategy services and lead generation for technology providers targeting the wholesale distribution industry. Our emphasis on this target market over the years gives us a keen insight into the pains, needs, and desires of wholesale distributors that we can put to work for your organization. Our approach to B2B inbound marketing can give your firm the visibility and conversion potential it needs to be effective marketing to wholesale distributors.
Primary indicators will continue to dictate growth in the industry. Of four primary wholesale industry indicators, three have slowed, while one is a great cost savings for distributors- Although growth is projected moving forward, total wholesale industry sales fell 3.6% in 2015, compared to 2014. Total US manufacturers’ shipments, an indicator of demand for industries in the wholesale sector, fell 4.1% in September 2015 compared to the same period in 2014. US tourism spending on all tourism goods and services decreased 0.8% in the second quarter of 2015 compared to the same period in 2014. Here’s some improvement: The average US retail price for diesel and regular gas fell 32.2% and 24.7%, respectively, in the week ending November 16, 2015, compared to the same week in 2014.
Increases in labor productivity are trending upward. Thanks to continuing advances in technology to improve efficiency of warehouse and distribution operations, industry labor productivity rose more than 20% during the decade of 2003 and 2013.
Industry opportunities that recur in comparative reading include, internet sales possibilities for distributors who can develop online catalogs to extend their markets beyond traditional limitations, logistics services potentially offered to customers for inventory management, just-in-time delivery and fulfillment services, and, the additional revenue to be realized from adding processing services for appropriate industry segments where materials can be further manipulated to fill manufacturers’ or possibly other distributors’ needs, or individual products can be pre-packaged into specialized groups prior to shipment to retailers or other distributors, etc.
Challenges to the wholesale industry, in addition to fuel prices, include three key items: competition from manufacturers and large retailers who bypass distributors by selling directly, the impact of fluctuating interesting rates upon already-tight profit margins, and the fact that distributors’ businesses tend to be impacted by the economic conditions of the geographic areas they serve. While we’re on the subject of geography: challenges to international growth for wholesalers include the logistical concerns that go with multiple locations as well as the integration of records, orders, etc., and the increasing need for heightened and more highly sophisticated security. These concerns are mirrored for foreign sources of supply to US manufacturers and distributors, also.
In terms of what pundits call the competitive landscape, tech vendors take note: While technology is helping the wholesale distribution industry increase efficiencies to improve its bottom line (inventory management and order fulfillment for example), technology is also helping manufacturers and retailers looking to rob business from distributors by improving supply chain efficiencies. The distributor/manufacturer/retailer dance gets more complex as distributors work to increase revenue by adding services that are helpful for – and billable to – manufacturers and retailers, in addition to net-new logistics services for clients and possible independent online catalog sales… Increasing complexity with technology as a key enabler.