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Trends Affecting Wholesale Distributors

Posted by Gil Oliva on Fri, Sep 29, 2017 @ 01:16 PM

What trends are affecting the distribution industry?Fall has arrived. As distributors take a breath and prepare for the holidays, now is a good time to evaluate how this year went and prepare for what is ahead in order to keep your company’s competitive edge. To stay up-to-date, you should stay aware of what is trending in your industry. Here are the trends affecting wholesale distributors:


Increased Distribution Disruption

To many, the distribution business may seem very straightforward: A business orders product from the supplier; the distributor picks it up from the supplier, delivers it to the buyer, and customers purchase from the buyer.

The reality is that the distribution industry is evolving rapidly. Disruption is the new normal. Shoppers are changing. Baby boomers who might have shopped through traditional channels are retiring and in some cases may be spending less. Millennials now make up one-fourth of the workforce in the United States, and they shop extensively online.

Much of the evolution of the distribution industry can be attributed to the facts that:

  • Online commerce continues to grow. The traditional supply chain relies on product shipped in large quantities to stores. Online retailers and even some Original Equipment Manufacturers (OEMs) now ship products directly to customers.
  • Supply chain hubs have to get products directly to customers. Supply chain hubs and big box warehouses help distributors in some areas; however, not all of them are close enough to the group that is the largest driving force behind e-commerce: millennials. Additionally, the “last mile” conundrum, or how to get the products from the hubs to the purchaser’s home quickly, still poses a challenge to distributors.
  • Digital products don’t require shipping. Books, music and movies available digitally can be downloaded.

Embrace Technology – It Is Here to Stay

One way for distributors to stay competitive is to invest in technology. One example of this shift is the emergence of industrial vending machines that reduce waste of company supplies. We’ve seen another process shift toward automation. Automating processes can help speed up fulfilment and reduce errors inherent in older legacy systems. Distributors will continue to replace old technology and methodology with emerging systems that maximize efficiency and reduce error.

The challenge for many distribution companies, and companies in many other industries, is acquiring the working capital necessary to invest in technology. Traditional forms of financing may not always be the right approach for distribution companies. As of 2015, with the approval rate at just 21.3 percent, less than a quarter of business loan applicants received loans. Fortunately, invoice factoring is an alternative solution to your working capital needs.

Invoice factoring is a financing method in which a business sells its unpaid invoices to an invoice factoring company to quickly receive a majority percentage of the invoice value. This means that instead of waiting the typical 30-90 days for customers to pay invoices to get your working capital, a business could receive cash in as little as 24 hours. Aside from speed, other benefits include the fact that you may still qualify for funding with bad credit, and once approved, you control the invoices you send in to be factored.

Bay View Funding is an invoice factoring company that purchases invoices to help businesses get the working capital they need quickly. Contact us today to learn more.

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Topics: Distribution Financing, Wholesaler distribution, Invoice factoring

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