Apr 21, 2017

How can wholesalers successfully operate in a disruptive market?


Electrical wholesalers have found themselves in a state of flux as product life cycles continue to shorten and their customers demand higher levels of service. The digitalisation of sales channels has left many concerned over where wholesalers will stand in the e-commerce arena alongside established price-cutting competitors and manufacturer’s own digital selling platforms.

Last year, Voltimum partner, LEDVANCE, took a closer look at the issue, producing a white paper that discusses how wholesalers can successfully operate in a disruptive market.

Focused on the lighting industry, the study set out to: "Analyse the disruptive character of LED, smart home technology and digitalisation to see how these trends have changed the behaviour and expectations of installers and contractors as the key customer group or electrical wholesalers."

Survey data was collected from 3,600 installers in six countries (US, UK, DE, IT, TR, BR) and interviews were carried out with 140 wholesaler representatives from four regions (Western Europe, Eastern Europe, North America, Central and South America).

The challenges

When interviewed, wholesalers were asked what they expect their top three challenges will be in 2020. As you would expect, price pressure scored highly (featuring in 61% of responses). However, 70% believed that offering the right product portfolio, with the right innovations, will be a key factor. Also, 52% of interviewees identified the threat of competition from other online platforms as a major cause for concern.

The data used to analyse installer buying habits was collected by Voltimum. Surprisingly, only one-third of the installers listed price as a key consideration when purchasing via digital channels. The ability to compare products and gain additional information about new technology featured in over half the responses.

These results suggest that we have reached, what the authors label, a renaissance in "value selling"; where product information, reliability and, above all, service levels, play a greater role in digital purchasing decisions.

Beyond price

The study concludes that wholesalers should avoid the price-based, lower-end of the digital LED market and work towards creating strong, customer-centric brand identities that offer clear value propositions.

For B2B wholesalers to succeed in the higher-end of the digital market, four core (brand) levers are identified:

  • Know your customer
  • Implement the right price structures
  • Define your value proposition
  • Go beyond the product.

To help meet these goals, the report includes a checklist guide for wholesalers to follow and improve "day-to-day" business at the counter. It also provides examples of how other e-commerce operations, such as Amazon, have taken similar measures to take a customer-centric approach to separate themselves from their competitors.

Amazon has been able to strengthen loyalty to its brand (and avoid pricing wars with competitors) by focusing on the needs and wants of its customers to develop its Amazon Prime service. By offering extras like media streaming, enhanced shipping options and bespoke promotions, Amazon has created a VIP experience that its customers are happy to pay extra to be a part of.

Installers want the same things that all consumers want: the right product, right now! They also need technical product information, education about new technology and solutions, after-sales support etc. Electrical wholesalers should be in the best position to offer a winning digital sales model that not only meets service expectations but also adds extra value support for their customers.

Only by responding to these needs, and playing a strong brand game, will wholesalers ride the "disruptive" wave not get shortcut by their competitors. Download the report here.

Contact Voltimum in your country