2024: Digital Obstacles and Opportunities for Wholesalers and Manufacturing Companies
2024: Digital Obstacles and Opportunities for Wholesalers and Manufacturing Companies
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Feb 20, 2024
In a world where digital technology forms the linchpin of society, SMEs in the wholesale and manufacturing sector are at a crucial tipping point. New technologies and changing market demands are forcing the sector to rapidly revise its approach. Why is digital transformation so urgent in this sector? In this article, we put forward the necessary practical answers. The goal: adapt. In order to seize a smart competitive advantage in the 2024 landscape. From embracing e-commerce to implementing advanced data analysis.
Digital transformation pressure
The wholesale and manufacturing sector in Europe is subject to the pressure of digital transformation. In 2024, evolution can no longer happen in small steps. Companies must strategically consider the impact of the digital world on their familiar business model from within. The digital transformation pressure is unprecedentedly high. It is up to companies to adapt and innovate their business models, processes and operational strategies in response to rapidly evolving digital technologies and changing market conditions. And it doesn't stop there. Increasing competition and changing customer expectations put extra pressure on the situation.
Europe versus America
According to research, European companies lag behind American companies in terms of investment in research and development (R&D) and the adoption of digital technologies. That phenomenon is clearly visible in studies from The Centre for Economic Policy Research (CEPR) from 2020. Data from 2019 also shows that larger companies are more driven to embrace new digital technology than smaller competitors, and that digital companies promote better management policies and are more dynamic.
A striking example: the European Investment Bank published that only 46% of EU companies took action to become more digital during the COVID-19 pandemic, compared to 58% of American companies. Furthermore, a larger proportion of American companies (66%) use advanced digital technologies compared to the European Union (61%). The gap between digital and non-digital companies appears to be widening because digital companies are clearly investing more.
Competition from all angles
The next challenge on the sector's agenda is growing competition. New digital players are popping up like mushrooms via e-commerce. And the possibility of direct-to-consumer (D2C) business models for manufacturing companies also represents a large share of direct competition in 2024. D2C is a sales model in which producers or brand owners sell directly to the end consumer. They seem to skip a few necessary intermediate steps – distributors, wholesalers or retailers – but it turns out to be a harsh reality in the sector.
The increased competition inevitably leads to extra pressure on prices and margins. In a sector where margins are often small, this is a threat to keep a close eye on. Digital tools that analyze data are becoming vital for players who work with small margins.
How does this proliferation of digital players arise? E-commerce platforms are no longer rocket science and are easy to use, allowing you as a producer to immediately cast your net wide without major upfront investments. Traditional companies must bravely continue to compete with these new players who prioritize customer-centric experiences, innovation and personalization. To remain relevant, digitisation and innovation are essential.
Changing customer expectations
At the sector level, digital technologies are transforming the B2B market, with business customers increasingly expecting digital efficiency and customization. It forces wholesalers and manufacturing companies to take a critical look at customer relationship management. Giving customers real-time insight into business processes, such as inventory and logistics, seems an essential step to keep them on board. And systems for dynamic pricing and customer-specific product adjustments are also becoming increasingly important. Embracing this digital transformation automatically translates into a better position in the market segment to meet the sky-high expectations of B2B customers.
Roadmap for SMEs: 4 concrete steps
If we translate the challenges of the sector into concrete steps for SMEs in wholesale or manufacturing, we find that this sector is best focusing on the four topics below.
1. E-commerce and online presence
However you look at it: online presence is your key to the new digital world. With a solid e-commerce platform and a digital environment that adds value for your B2B customers, a website must transcend the transactional to retain customers. From detailed product information to customer-specific pricing and a streamlined, secure ordering experience. A real challenge for many SMEs, it turns out. And therefore also a gap in the market. A competitive advantage to be reckoned with. It is a smart move to integrate these online channels into the traditional sales process. The result is an omnichannel and complete customer experience that meets all digital expectations.
2. Digital Basic Infrastructure: ERP/WMS/CRM
Excel files are still among the most used administrative tools within various departments today. However, the most high-performing companies use a more integrated system, where different tools are transformed into a unified software solution. The starting point of such a system is a digital basic infrastructure. ERP (Enterprise Resource Planning) systems provide integrated business management, WMS (Warehouse Management Systems) optimize inventory logistics, and CRM (Customer Relationship Management) supports improved customer relations and sales processes. In 2024, these systems must work together seamlessly, provide real-time data, and offer mobile accessibility to gain speed in the battle for the customer.
3. Data and Business Intelligence (BI)
A strategy around data and Business Intelligence will also be a key element in 2024. The systematic collection and analysis of data from ERP, WMS, CRM systems, and e-commerce platforms provides valuable insights to focus on cost savings, operational efficiency, and improved customer satisfaction. It enables companies to act proactively and make calculated predictions for their sector. Consider better inventory management and insights into new market needs. Essential elements that offer a competitive advantage over the rest.
4. Automation of business processes
Automation is the logical next step in increasing efficiency and reducing costs. By automating routine tasks, SMEs can focus more on growth areas such as customer service and innovation. AI and machine learning are becoming not nice-to-haves, but must-haves for companies that want to optimize processes and maintain a competitive edge. Automation can lead to significant improvements in production, inventory management, order processing, and customer service. The start? A digital basic infrastructure.
Conclusion
2024 will be an important year for SMEs in wholesale and manufacturing. Digital transformation is becoming a crucial phase in which adapting to and integrating digital technologies is not an option but an absolute necessity. The more concrete the actions, the better. From setting up an effective e-commerce presence and implementing integrated digital systems such as ERP, WMS, and CRM, to leveraging data for smart decision-making and automating core processes.
The goal? To stay ahead of the competition in order to become the customer's favorite. But also to maintain margins and meet growing expectations. It is time for decisiveness and action to stay on board.