Business

Is warehouse to customer (W2C) the next big thing?

Warehouse with variety of timber for construction and repair. Delivery concept. 3d illustration

IN Europe there are about 1.8 million wholesalers, 46,000 of which are in the UK and Ireland that carries out over £100 billion of business purely in online business to business (B2B) sales. That largely excludes other digital platforms and market places which have grown very rapidly, such as mobile, Amazon and eBay.

Overall, if you look at the rate of growth in the B2B e-commerce market - wholesalers, distributors, manufacturers and others - it actually outpaces business to consumers (B2C) eCommerce at a rate of 2 to 1. Market research by Gartner has suggested that the B2B market will enjoy double digit growth, year-on-year up to 2020.

It's suggested that all this points to an explosion and a transformation in B2B e-commerce for wholesalers that cannot be ignored.

Traditional wholesalers will need to modernise their business if not already done so and adapt better use of technology including mobile apps feeding into the warehouse and back office accounts systems.

What's becoming the norm, is wholesalers facing increased competition, and that increased competition has prompted them to look at new markets.

To operate in these new markets it often means skipping the traditional middle-man - either a high street retail customer or an independent business customer - and going directly to the customer. This is what wholesale-to-consumer looks like, and it's happening already in certain sectors, with the likes of Screwfix, Victoria Plum or MicksGarage.com.

Indeed, closer to home, I'm in no doubt, that many of us have already engaged this Christmas time, with one of the largest players in this warehouse to customer W2C environment – Amazon!

So when we look at W2C and what's coming down the line, we see competitive pressures driving more and more wholesalers to look at a similar direct-to-consumer model of doing business.

So is wholesale the future of retail? I believe this is already happening, which poses the obvious question - What does that mean for traditional, bricks-and-mortar retail?

It's clear that the amount of footfall on the high streets around the world is under pressure, and one of the things that's driving that pressure, is out-of-town shopping. Large unflattering, warehouse like superstores, that are closer in model to wholesalers, than traditional retailers, with on-line purchasing functionality as an addition.

Of course there are some wholesalers who do not have to go direct, as a result of having built up strong supply chains and strong businesses. But there are others who are under severe competitive pressure.

These wholesalers see that there is an opportunity - or perhaps even a necessity - to make a play into a completely different market, with minimal change to their business model.

:: Trevor Bingham (editorial@itfuel.com) is business relationship manager at ItFuel in Craigavon. Follow them on Twitter @itfuel.

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