Brands continue to invest in wholesale as their key source of revenue, but feel there’s a lack of standardization, sell-through data and proper support from retail accounts.
That’s the conclusion of a NuOrder survey of 688 respondents who work for brands to determine how they view their wholesale partnerships and distribution process, and what the future looks like for their industry. NuOrder, a business-to-business wholesale e-commerce platform, sent the survey to both clients and non-clients.
Overall there was no general consensus on how respondents view the future of wholesale as a revenue stream. Some have a positive outlook, while others don’t have a hopeful view. This is largely attributed to the detrimental impact that COVID-19 has had on the industry.
Most respondents reported using a b-t-b software solution and believe that using the right tool offers a better customer experience for the retailer. Smaller brands said they didn’t have the budget and that’s why they haven’t onboarded a technology.
About 12 percent of respondents said their company’s revenue was between $36 million and $100 million, 29 percent said their companies revenue was between $5 million and $35 million, and 28 percent said their company’s revenue was $5 million or less. The remainder preferred not to say or didn’t know.
On average, the brands surveyed said 60 percent of their wholesale business was with big box, multibrand retail accounts and 40 percent was with specialty boutiques. Forty-one percent of respondents have 16 years or more of experience.
Most of the respondents said they won’t be moving away from wholesale, which was an indication that the channel is still a primary revenue stream for brands. Respondents reported that their main strategy for growing business is split between increasing their retail accounts and trying to grow their business by selling deeper into existing accounts with more products. In fact, 46 percent said they’re trying to increase the number of retail buyers who bought from them, 41 percent said they were trying to sell more into their existing base of retailers, and 13 percent said they were moving away from wholesale toward direct-to-consumer.
It was no surprise that most brands reported that they heavily rely on trade shows and showrooms to secure retail accounts. Most of the brands reported having strong relationships with their retailers that have been forged over time. When asked how they find and secure the majority of their retail partnerships, 36 percent said trade shows, 18 percent said showrooms, another 18 percent said e-mail outreach, 9 percent said marketing outreach, 6 percent said phone outreach and 13 percent said “other.”
When asked how they would rate their overall satisfaction with their relationships with retailers, the majority said they were satisfied and over 20 percent said they were very satisfied. About 10 percent said neither, and a small percentage said dissatisfied or very dissatisfied.
The key pain point was lack of standardization, followed by lack of alignment on ordering process, lack of support from retail partnerships, supply chain not streamlined, and lack of data. Other pain points were a cumbersome ordering process, written errors, lack of logistical process, and lack of access to live inventory. Respondents said every part of the process needs to be upgraded, from a supply chain that needs to be streamlined to lack of sell-through data and lack of alignment when retailers submit orders, which is causing stress for brands.
Many brands report having seen a moderate amount of change in the wholesale process in the years since they’ve been in the industry, with younger, less experienced respondents responding that the biggest shifts they’ve seen have been the closer collaboration that brands and retailers are maintaining versus more experienced participants (11-plus years) who cite the merging of retailers and shift to immediate/in-season purchases (from pre-book).
Those who have seen little or no change cite the resistance to online methods and an overall reliance on showrooms and trade shows as contributing factors to slow growth. Respondents mentioned a lack of forward-thinking change is something they would like to see shift in the wholesale process.
The survey found that the ecosystem of wholesale distribution is primed for change, as there is reported dissatisfaction with analogue methods and outdated systems of operation. Brands say they have strong relationships with their buyers and believe a transformation can collectively be made with the right tools and plan in place.
As far as making it through the coming year, 43 percent have a positive outlook about the wholesale business as their primary source of revenue, 37 percent have a neutral outlook, and 21 percent have a negative outlook.
Those with a positive outlook point to strong operational models that support growth, while those with a negative outlook believe that COVID-19 might be the demise of retail. Some of the respondents said they have untapped potential after they have been able to automate and streamline more processes internally. But with wholesale business decreasing, especially with COVID-19 closing retailers, e-commerce is increasing.
The survey showed that direct e-commerce and online retail is projected to see the most growth. While the future of wholesale is viewed less optimistically, one in four brands are still committed to investing more in wholesale than over other channels, such as direct-to-store physical retail and dropshipping.
The brands that have a positive outlook for their business have an infrastructure that is supported by online tools, such as using tech stacks that automate and streamline processes as well as provide more accurate reporting. The resistance and fear to change are what is hurting brands that don’t hold the same optimistic view for the future of their business, the survey found.
Some 71 percent of respondents are currently using or have used a b-t-b tool during the wholesale process. Those that aren’t said they don’t have an immediate need or the budget.
Respondents were asked where they see b-t-b solutions providing value. Digital tools that provided more compelling digital line sheets, faster and easier selling, and a better customer experience for retail partners held almost equal significance to brands.
The survey asked what part of the wholesale process do they wish technology could solve or do a better job of solving, and most indicated that almost every part of the process would be better off, such as assortment planning, digital line sheets, inventory management, b-t-b payment processing, order management, shipment tracking/order, fulfillment/distribution, and forecasting and planning.
Asked how they plan to use this information, Olivia Skuza, NuOrder’s cofounder and co-chief executive officer, said, “The wholesale process has been ripe for change for quite some time, and the findings from our survey indicate that COVID-19 accelerated the demand for digital tools and the need for standardization in the industry. Digital tools are still in their infancy on how they can advance wholesale but we are continuously listening to the market. We are quickly evolving and expanding our already robust virtual showroom offering as more brands and retailers integrate them into their normal workflow and they become the new standard of buying and selling.”