How can wholesale data analytics improve distributors' performance

An important business requirement for most distributors is to improve profit margins. Dwindling sales, the rise of e-commerce, high inventory costs, and not enough hours in the day are impacting profitability in wholesale distribution. Confronted with these multiple disruptions, many businesses are turning to their data and technology and implementing specialized wholesale data analytics to improve business performance.

Low sales figures in wholesale distribution

As competition from domestic and international business grows, wholesale distributors are facing increasing pressure to improve their sales figures.

Due to the surge in competition and aggressive discounting to win market share even your most loyal customers can be swayed by these offers. To maintain budget and ensure your sales teams have explored all opportunities, they need to be data-driven in real-time as relying on others for information doesn’t always deliver immediate results.

Requesting analysis from IT or finance generated reports is time consuming, and it can take days to receive an ad hoc report. When the report lands on your sales desk, it is static and doesn’t provide in-depth details or information about customer behavior over a long time. Another common approach is to rely on a sales rep’s gut feeling about the customer. A rep may have great instincts born from years of experience; however, instinct is subjective and can be misplaced without complete information.

With wholesale data analytics like Phocas, you have instant access to fact-based analysis in the one platform. The consolidated information comes from your company’s ERP system across operations, sales and finance and can also include other data sources that can be nominated by your business such as sell-thru data from retailers, human resources and supply chain information. All this data is integrated, validated and updated every day so your team is always accessing accurate business intelligence to make data-driven decisions.

Another great advantage of having a single source of data truth is that business people can drill into specific periods of customer data and review different data points that outline customer behavior and product performance in different categories. From this history, sales people can find valuable insights like when a customer has stopped buying or to accurately identify new cross-selling opportunities.

For example, many electrical distributors may expect to sell both LED lights and transformers to their customers. If you find you are only selling transformers, your customer may be purchasing LEDs from another supplier. There could be multiple reasons for this; the customer may receive a better price elsewhere, they may not be aware you sell the product, or they may buy some of the product but supplement it with a different brand from another supplier. When you have accurate data your sales team can have a conversation proactively with your customers and suggest ways to make it easier for customers to buy all electrical parts from you.

The rise of e-commerce

The shift to e-commerce or online sales has brought opportunities in the sense that distributors can broaden their markets and gain valuable data from customer behaviour. However, the relative low barrier to entry has also increased competition in some industries and there are ongoing challenges with shipping and logistics. This channel is technical and dynamic so it needs to be resourced with dedicated expertise.

While you may offer an omni-channel experience for your customers, it often pays to run a hybrid model using data analytics. To add value and build customer relationships, sale reps should continue to visit customers and share insights. If you offer rebates, you can also use current sales metrics to encourage loyal customers to reach targets and qualify in the set timeframe.

With data analytics, you have instant access to up-to-date, fact-based analysis at the click of a button. And with mobile accessibility, there is no excuse not to be prepared for customer needs. Many Phocas customers check live inventory levels while they are with customers. There's even an application to pair Phocas with Amazon’s Alexa so sales reps can query individual customer data between sales meetings.

High inventory costs affect distributors

Inventory management is a major expense for wholesale distributors. Many factors can add unnecessary costs to stock maintenance. For instance, low stock levels with long delivery times can result in lost customers if you aren’t able to fulfil their orders. At the same time, maintaining a high stock level of a product that doesn’t sell as quickly as you projected will cost you in terms of wasted inventory space. Worse yet, that product may never move and ultimately become dead stock.

With a data analytics tool like Phocas, inventory and operations managers can quickly analyze stock-turns, inventory-to-purchase ratio, or slow-moving stock to identify over or under stock, and enable you avoid stock outs. Tracking these stock metrics in Phocas are quick and intuitive, and with a customizable dashboard up-to-date stock levels can be viewed at a glance.

Business data can save time and address workloads

Another major challenge in distribution businesses is not having enough hours in the day. This often leads to long work days and interferes with a healthy work-life balance to reach set KPIs. Data analytics can improve efficiency, help everyone to save time and accomplish more in an average work day.

The ability to quickly slice and dice data for fast insights eliminates the time spent waiting for static reports. This enables sales teams to closely monitor customer satisfaction  and detect and prevent any potential challenges before they become problems. Early detection of a decline in purchasing patterns allows operations to adjust stock levels for those products. By identifying potential problems early on, business people minimize the time they would have spent to rectify the problems. 

An industry-specific data analytics tool such as Phocas enables wholesale distribution managers to achieve higher profit margins in a measured way, while they offer great customer support with accurate information.