Earlier this year, Modern Distribution Management and NetSuite partnered to survey managers and employees about their 2018 wholesale distribution projections. If you haven’t yet read the findings, read on for a summary of the key points below. Or, download the full report.
2018 Wholesale Distribution Outlook
The growth outlook for distribution remains strong in 2018. More respondents have a positive outlook for 2018 than they did at this time last year, with 47.1 percent expecting sales growth of 5 percent to 10 percent (up from 41.3 percent a year ago). Upward progression is on the rise.
The primary business-specific concerns, according to the survey revolve around how quickly they’re adopting new technology, digitizing their operations, and Amazon’s presence in the distribution space. With a rapidly changing digital space, and a consistent shortage of staffing, the wholesale distribution industry requires businesses to deftly handle change.
Respondents’ business-specific concerns revolve around how quickly and efficiently they are adopting new digital advancements, how well they’re recruiting new talent that’s fit for their company, and how successfully they’re retaining customers. Amazon’s presence in the distribution space is a chief concern.
The anxiety over handling change is emphasized by respondents’ analysis of industry-wide concerns for 2018. The top three concerns for the year are the economy’s positive consistency, tax legislation’s impact on businesses, and M&A across the supply chain.
In line with the primary concerns, the top priorities for wholesale distribution firms this fiscal year are revenue growth, increasing profitability, and customer retention. Firms are also focusing on objectives outside of these top priorities (almost identical to last year), as demonstrated in the graph below.
Surveyed managers detailed multiple strategies of building revenue and cutting costs to meet the above objectives.
The most common way survey respondents plan to grow revenue in the next 12 months is from existing customers (51.7 percent), although this number is down from 58 percent a year ago. Adding new products or product categories was second again this year with 46.4 percent of respondents hoping to grow revenue this way, down slightly from 2017.
Respondents also outlined additional strategies for revenue growth, including improving e-commerce (38.1 percent, up from 35.6 percent a year ago), followed by expanding sales team (32.8 percent) and adding new sales channels (31.3 percent).
For the third year in a row, distributors’ top priorities for technology are to incorporate e-commerce, CRM, and mobile technology for sales. Also among their plans are Cloud/SaaS systems, finance/accounting technology, and other programs.
Additionally, responding firms broke down their timelines and intentions for technology updates, and the modes of technology utilized within their organizations. Below are the top four tools and the frequency of use across the industry.
The overall expectation for 2018 in wholesale distribution is positive. With hopes for technology utilization, streamlined processes, and improved margins, organizations are optimistic for the future of the industry.
Terillium is an award-winning Oracle Platinum Partner specialized in Enterprise Resource Planning consulting for consulting for Oracle JD Edwards, ERP Cloud, and NetSuite. Contact us to learn more about how we help businesses in the wholesale distribution industry.