Is Wholesale Becoming Irrelevant?

Ecommerce has simplified the shopping experience for buyers. This business model allows customers to find the apparel and footwear they want at a sometimes fraction of the cost. The result is traditional retail shops are reducing the amount of wholesale purchases they are making. This causes wholesalers to struggle at moving the amount of merchandise they once did.

Granted, with the ecommerce business model, a wholesaler could technically sell directly to the consumer online. The problem is that their revenue is still impacted. The consumer will only pay so much, and if they aren’t attached to a brand name, it is unlikely that the majority of people will find them easily. Wholesale companies need retailers just as much as a retailer needs the wholesaler.

As for ecommerce, wholesalers are also struggling to get into the doors of major companies. Most companies are willing to directly deal with juggernauts like Amazon, Wal-Mart, Target and others. That means for the wholesale distributor, they may struggle to move products when companies are already working with the major companies in the world.

For traditional brick and mortar stores to survive, they need to begin exploring alternative ways to purchase their inventory. They may need to begin working directly with manufacturers and buy in bulk to help reduce the cost. There is a need to cut down on the overall cost per item and this is one way to do that.

This doesn’t spell doom and gloom for traditional stores though. The truth is, not everyone wants to wait for the shipping process. There is something about going into the store and having the product right away. They can go home and use it in that minute, or pick up a last minute gift with ease. But that doesn’t mean the state of physical retail stores won’t change. Instead, they will evolve in nature.

Retail stores will begin to become more of an experimental ground. They will be a venue for getting the latest designs in front of people and working with vendors to help expand their reach. With the impact that is gauged in traditional stores, online marketers can use the information from vendors to help determine what products to fill their warehouses with.

In some cases, the retail location may simply be a visual showroom for the products. They will showcase the products and customers can then order the items and have them shipped directly to their home. This gives them the chance to physically handle an item and determine if it is what they are looking for. Warehouses may then work with a wholesale provider to keep items in stock, especially if they are in high demand.

With the changes in retail and the fact that ecommerce is coming into power, what does this mean for wholesale? If wholesalers want to continue to survive, they need to adjust their business practices and discover new ways to be a part of the evolution of retail. This may be achieved by branching out and supplying their own brand as a major online retailer, or finding ways to pass further savings to traditional stores. As long as they do take some kind of action, they can avoid extinction in the modern world.

 

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Photo: XcessLimited