Research reveals top challenges impacting profitability for wholesalers

And suggestions of opportunities for the industry

The past few years have been an incredibly challenging time for our wholesalers. We’ve seen various global and national events having a huge impact on how the wholesale industry has been shaped, in a very short period of time.

In the face of huge wholesale challenges, we’ve seen some remarkable innovation, and despite a lack of support from the UK government, the industry has for the most part managed to remain resilient and keep supplies flowing.

New research has revealed findings on the impacts on profitability for wholesalers, as well as asking industry leaders which challenges need to be prioritised, and how they can be addressed.

The research, conducted by the OGI Group, used a survey completed by managers from 255 wholesale and distribution businesses, pointed strongly towards 3 top impacts, alongside other illuminating findings on the future of wholesale.

What were the general findings?

A big focus from the respondents’ results seemed to follow a trend - That being the need for advancements in the use of technology within the industry. 98% of respondents are still using manual processes in some form, yet 80% agreed that automation would help them improve competitiveness, 38% stated inaccurate data affected profitability, and 82% stated that ERP systems could improve control. A further 47% stated that the implications of Brexit have had a big impact on wholesale profitability.

These results suggest the wholesale industry believes that a key way to improve profitability is found in technology.

Source: OGI Group

What are the top 3 challenges to wholesale businesses?

The results from the 255 respondents outlined Brexit (47%), staff costs (44%), and inaccurate data (38%) being the 3 major players impacting profitability for their wholesale businesses.

Both Brexit and staff costs are issues that rely on external intervention from the government, which has been continuously reiterated and publicised by the industry throughout the last few years. However, inaccurate data is optimistically something that can be addressed by wholesalers themselves.

Following these 3 key impacts, the below graph shows the remaining factors impacting profitability.

Source: OGI Group

What does inaccurate data mean for wholesalers?

Inaccurate data can be miscounted inventories, inaccurate stock levels or a lack of visibility over daily operations, such as an inability to track drivers and send, receive, or access updates when teams need them. Planners may not have accurate route data and have to rely on guesswork, drivers may not have accurate product or pricing structure information for the customer, and admin teams may find they have a lot of corrections, re keying or recreating PODs, invoices, and other delivery documents.

Inaccurate data may also be a long-term inability to track the performance of the business. This inability to monitor performance means wholesalers won't be able to see where their business is working, and where needs improvement. This lack of control over the workflow and distribution processes means inefficient practices can often go unnoticed, leading to tighter margins and impacted profitability.

Furthermore, a lack of performance insights can lead to ineffective managerial decisions, and a general increase of guesswork for entire teams.

One respondent from the survey told researchers:

“Sloppy work from our sales team where they follow an old price rather than checking up to date prices with suppliers and price increases from suppliers which are difficult to pass on to customers in the current climate.”

Source: OGI Group

Inability to strictly control pricing & product structures flows down to sales reps & drivers, who, without knowing, could be underselling products and missing profits for the business.”

The OGI Group reiterated that when looking to cut losses, push profits forward and remain competitive in today's market, technology is the answer.

“85% of respondents agreed that technology is vital to the efficient running of their business, while 80% agreed that automating business processes helps their companies stay competitive.”

While implementing digital systems has been shown to positively impact efficiency and profitability for wholesalers, the research has suggested that this may not be enough.

What are the impacts of using multiple systems for wholesalers?

Using some manual & paper-based systems, and other digital systems together, there will naturally be integration, communication, and maintenance issues that arise. These may be delays in recording, updates to and from drivers, or the need to manually maintain records, re-key information, review reports or correct them.

Throughout the distribution process, these different systems can lag in their communication, which shows through different teams having different information at the same time, which results in inaccurate record-keeping and difficulty correcting or responding to delays or mistakes. Each of these small disruptions can then build up as profit loss, additional work for teams, or both.

Overall, this disrupts the ability of each team member to complete their job in the most efficient and productive way, while also impacting the ability to report on operational changes.

Integrating systems, or finding a single system, streamlines an entire team’s workflow, helping them to work easier, more productively, and with less opportunity for miscommunication and error.

This has been reflected in the research, with 75% understanding the benefit of integrating all systems. Of those participants that wanted to find a single system, 57% said that reducing admin time was the key reason, 40% wanted to find a way to have accurate information, and 37% were looking to remove duplication to improve efficiency throughout the business.

“A single view of a business, with the same information available to multiple users will lead to better profitability, increased productivity and accurate data for planning purposes.”

Nick Davies, OGI Group

Finding a single system to manage your wholesale business

Integrating an entire delivery operation so it can be managed through a single system means all team members have the up-to-date information they need to complete their jobs in the most productive way.

A single system improves efficiency across every stage of the wholesale distribution process, eliminating duplication & inaccuracies while driving the business forward and enabling wholesalers to become more competitive in the future.

RouteMagic is a single system to help wholesale distributors and delivery businesses manage their entire operation while eliminating manual and paper processes. The System offers deep customisations so it wraps itself around a business’s unique preferences and processes, meaning that it has seen great success for businesses across a range of sectors.

It is a cloud-based system, offering office & mobile applications to help teams communicate and update each other in real-time, reducing admin and improving productivity on every level. It tracks performance and presents insights that help teams make decisions that promise results for the wider business, helping distributors understand where they need to improve and how they can grow moving forward.

You can find out more about our system here, or If you’d like to speak with one of our team, click below.

You can find a link to the research findings below:

Brexit, staff costs and inaccurate data impacting profitability in wholesale businesses

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