With the dawn of a new year, there comes a new set of possibilities for the future. In order to best prepare for those possibilities it is great to keep an eye on current trends and patterns to see where things may be headed. Here, we’ve decided to outline the trends we may see this year – both new and continuing on from 2021.
Worker shortages will continue unless something changes
The distribution industry has long been plagued by labour shortages and that is not showing any signs of changing as of now. It does not help that many companies are competing with each other for existing talent instead of attracting new ones into the field.
With the advent of COVID-19, many distribution companies are struggling to find quality talent with the same amount of money they used to pay before COVID-19. After all, what incentive is there to work in a risky environment (pandemic-wise) when safer alternatives can bring in the same amount of money and maybe even more? In some areas unemployment grants can even compete with salaries and wages in the distribution industry.
In order to attract more workers, distribution companies have resorted to increasing labour costs which cuts deeply into profits which are already low and adds pressure to inflation trends. In order to combat this in 2022, distributors may need to find creative ways to recruit and retain employees while managing rising labour costs.
Value-added services will become key profit-driving factors
In order to compete with rising costs and competition, distributors will need to deliver more than just distribution services. Value-added services will allow businesses to stand out from the rest and may bring a lot more variety into the distribution industry.
In 2022, distribution companies are more at risk of competing with their own customers. More manufacturers are looking to sell directly to consumers – cutting out traditional distributors from the equation. In the US, direct-to-consumer (D2C) sales grew by 40.5% in 2020. In 2017, Nike reduced the number of retail partners from 30 000 down to 40. This is only the beginning of the D2C trend, and we see it continuing into the future.
Value-added services allow a way for traditional distribution companies to still remain relevant in a world where D2C has become the norm. Distributors will need to show why they should be chosen. Quality, cost, and service will be the determining factors.
Digitisation will be essential
Digital was important even before the pandemic. Now, it will be essential. In order to compete with the upcoming D2C competitors, distributors will require a level of accuracy, efficiency, and speed that legacy systems cannot achieve. In order to remotely compete, distribution companies will fast-track their digitisation efforts.
Having workers with the proper digital skills will become a lot more important – especially so considering the aforementioned worker shortages. Navigating an automated system will become a crucial trait for workers, and as cybercrime continues to rise, protective tools will become ever more important.
Thanks to the pandemic, we have learned how to travel less, work remotely, and communicate more effectively through online platforms like video-conferencing. It is unlikely that we will return to the “old normal”. At most, businesses will find the perfect blend of the old and the new to become a lot more flexible. However, there will be a shift towards online meetings over in-person meetings regardless of our situation.
B2B e-commerce will be THE standard
At the centre of digitisation efforts, B2B e-commerce will be a necessary standard for all distribution businesses to uphold if they even want to compete at all. The past few years have revealed that without an online customer experience, distributors cannot survive in the midst of powerhouses like Amazon. The changes in the industry may seem subtle at first, but as more people find online resources to purchase items that offer experiences similar to their personal online experiences, these changes will accelerate and become overt in due time.
The traditional sales rep approach will become all but ineffective. Studies show that buyers spend about 17% of their time meeting with suppliers while about 45% of their time is spent doing research both online and offline. In an increasingly digital world, businesses offering the best e-commerce services will dominate.