In some ways, omnichannel initiatives seem likely to eliminate distributors from the supply chain. If consumers can access retail offerings directly, the story goes, they have no need for the services that distributors and wholesalers offer. But rather than disappearing, some savvy distributors are recognizing that the omnichannel trend actually offers them some promising options for growth and expansion.
In particular, unless they are Amazon, retailers lack the full spectrum of capabilities required to get products to consumers. Especially for smaller, independent sellers, an online channel might increase direct sales, but they still need help to maintain products in inventory, ensure efficient and accurate deliveries, and receive returns. Instead of their traditional roles (i.e., obtaining bulk products from manufacturers, holding them in warehouses, and then providing them to retailers as needed), wholesalers and distributors can perform more customized and personalized services that benefit various other parties in the supply chain.
For example, retailers still don’t want to have to hold substantial inventory, so a good distributor could offer benefits by warehousing products, then shipping them directly to consumers when directed to do so by the retail firm. Such deliveries may demand new competencies, which distributors may be uniquely positioned to develop. For example, a distributor might promise delivery within certain time windows and thereby ensure that a perishable shipment, for example, arrives when the customer is at home to receive it. If they can also ensure rapid replenishment, it might be worth it for a retailer to continue to rely on the distributor for conventional shipments of goods to its stores.
Another promising alternative would be to transform distribution centers into collection points or “pickup lockers,” such that consumers have another, potentially more convenient option for collecting the goods they order. Such centers also could function as collection points for returns. For retailers, the challenge of reverse logistics is becoming increasingly pressing, especially when consumers purchase items that are only available online but then return them to the stores, which have no place to put those items.
Discussion Question:
- How is omnichannel retailing improving the partnering relationships between wholesalers and retailers?
Source: Chris Petersen, Retail Wire, March 1, 2016