Harley Finkelstein, president, Shopify Inc.

Harley Finkelstein, Shopify’s president, said on a Q4 and  year-end earnings call this week that the vendor’s B2B gross merchandise volume doubled last year. He added that, in the fourth quarter, Shopify’s business with B2B companies “was up nearly 150% year over year.”

Shopify did not immediately reply to a request for specific figures on B2B-related revenue and GMV, but executives said on the earnings call that that they see the B2B market playing an increasingly vital role in Shopify’s growth plans.

An ‘exciting’ B2B growth opportunity

Finkelstein — referring to B2B as a “big and exciting growth opportunity” — said Shopify is experiencing B2B market growth with two types of companies: existing Shopify retail merchants adding a B2B channel, such as The Home Depot, home furnishings retailer Lulu and Georgia, and jewelry retailer BaubleBar; and newcomers to Shopify like Carrier, a global manufacturer of heating and cooling and other building-management systems.

He added that getting a client company like Carrier, which signed on as a client in Q4, was “opening the door to a whole new opportunity of industries we previously didn’t serve.”

Jeff Hoffmeister, Shopify’s chief financial officer, added that Shopify is seeing more demand from large enterprise B2B companies for the vendor’s multiple technology offerings, including Shopify Plus, international B2B sales, online payments, and physical store point-of-sale systems that integrate with Shopify’s ecommerce platform.

“All those things are the growth engines for the future,” he said.

Shopify says its store point-of-sale terminal is designed to integrate with the Shopify ecommerce platform and support “over 1,000 physical stores.” Referring the POS systems as new “on-ramps or entry points into Shopify,” Finkelstein said they “substantiate our role as the unified commerce operating system for merchants, whether they come to us to sell online, off-line, or anywhere in-between.”

He added, “We are building on our commitment to help merchants sell to all of their customers from a single, unified commerce platform, with upgrades to our B2B offering, including headless B2B storefronts and support for sales reps.”

Among other new features, the ecommerce technology company has also launched for merchants on the Shopify platform:

• Shopify Bill Pay, an expense management tool that lets merchants pay their vendors directly from their Shopify administrative application.
• Shopify Credit, a “pay-in-full” business credit card designed to help manage monthly cashflow and earn cashback savings without paying interest or fees.
• Shopify Collective, an application that enables merchants to source products from other companies on Shopify and have them shipped directly to customers.

Perks of unified commerce and integrated POS

A unified commerce environment, including integrated POS systems, can play a vital role for B2B companies trying to keep up with omnichannel commerce that extends to their physical branches and other outlets, B2B industry experts say.

“Key aspects such as ERP integration, branch-selling, and tools that aid the end customer in their job are crucial for a successful B2B platform,” says Justin King, managing partner of advisory firm B2X Partners. “Shopify’s acknowledgment and incorporation of these elements, along with their significant growth in B2B GMV and the acquisition of B2B-only merchants, position them as a potentially formidable player in the B2B e-commerce technology sector. Their commitment to providing a unified commerce platform for both online and offline B2B transactions further solidifies their intent to capture and expand their market share in this domain.”

Jay Schneider, the founder of digital advisory firm B2BSquared, adds that the Shopify platform still needs to show that it can handle complex online B2B interactions, such as those involving displays, configurations and quoting of products with extensive lists of attributes and complex pricing.

Finkelstein said that Shopify generated $441 million last year from its offline offerings, including POS hardware, “more than five times what our offline revenue was just four years ago.” Shopify estimates its total addressable market for offline and B2B business at “over $450 billion,” he said, adding, “We have barely scratched the surface of this opportunity and expect it to be a key growth driver in 2024.”

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Alon Partuk, CEO, Octup

Octup, an AI-driven ecommerce insights platform, says it “uncovers overlooked data” from brand manufacturers’ operations, including packaging, logistics and warehousing to last-mile delivery, returns management and customer support. In turn, it reveals opportunities to cut operating costs and boost profits, the startup says.

A group of investors led by Tal Ventures is backing Octup with $4 million in pre-seed funding. Octup says it will use the funding to “broaden the rollout of its 360-degree end-to-end discovery platform for ecommerce.”

Alon Partuk, founder and CEO, says he founded Octup in 2022 to “tap into deeper operational insights beyond standard metrics to uncover real opportunities,” adding, “We believe it’s crucial to understand how key business metrics like lifetime value and client retention relate to the quality” of a company’s service.

Prior to Octup, Partuk founded outdoor gear and apparel brand and merchant Apricoat, where he says he got the inspiration to develop Octup. He remains a director of Apricoat.

Octup says its technology helps global brands across such product categories as apparel, supplements, consumer electronics, skincare, and cosmetics jewelry.

John Michael Fabrizi, president and chief operating officer of outdoor apparel and hiking gear brand Coalatree, says in an Octup press release that Octup’s technology has helped Coalatree produce a 14% increase in customer retention, a 12% reduction in cost per order, and 9% revenue growth.

Fabrizi adds that, prior to Octup, Coalatree “grappled with data silos and missed opportunities due to disjointed insights across platforms, which limited our revenue potential.” He says Octup’s “user-friendly platform bridges these gaps, enhancing cost efficiency and profits.”

Ron Ostroff, the founder and managing partner at Tal Ventures, says his firm backs Octup for its ability to deliver “transformative benefits to ecommerce businesses, cultivating substantial growth and bolstering profitability.”

Octup says its financial backers also include Bullet Ventures, HCS Investors Group, World Trade Ventures, and the founders of unicorn technology companies Trax and Rapyd.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Peloton is No. 45 in the Top 1000. The Digital Commerce 360 database ranks North America’s leading online retailers by their web sales.

“Peloton and TikTok both move at the speed of culture to better serve our respective audiences,” Oli Snoddy, vice president of consumer marketing at Peloton, said in a press release. “We collectively recognize the way people engage with fitness is constantly changing. Our team is excited to complement TikTok’s already burgeoning fitness content by introducing the magic of Peloton to new audiences, and in completely new ways.” 

The videos will also include popular TikTok formats like “get ready with me” videos, CNBC reported. Those video types are among the most successful at influencing consumers to make a purchase, according to research from Morning Consult. Nearly one-third of Gen Z TikTok users say they’ve made a purchase based on “get ready with me” and “routine” videos.

The videos will be available in the U.S., U.K. and Canada.

TikTok enters ecommerce

The TikTok partnership is the first time Peloton has created custom content for a channel besides its own. In addition, it comes as TikTok is making a name for itself in ecommerce.

The social media company, owned by ByteDance, first launched TikTok Shop in the U.S. in September 2023 after nearly a year of testing. TikTok says it has about 150 million users in the U.S. who can make purchases inside the app while scrolling through videos. 

“Culture, communities and conversations live on TikTok, and this offers brands an opportunity to deeply connect with their audiences. When it comes to the fitness category, we have thousands of communities coming together to connect on everything from #TheFitnessJourney to bonding as #RunnersOfTikTok,” Sofia Hernandez, global head of business marketing at TikTok, said in a press release. “We’re thrilled that this partnership will bring inspirational fitness content and entertain Peloton users who come to TikTok to learn, connect with instructors, share fitness journeys, and find community.”

In 2024, TikTok aims to compete with Amazon for online shoppers. The company set a goal of $17.5 billion in U.S. ecommerce sales for the year, Bloomberg reported. In 2023, TikTok Shop attained about $20 billion in global merchandise value. The majority of sales came from Southeast Asia.

Peloton tackles a rebrand

Peloton announced a rebranding effort in May 2023 after pandemic success was followed by declining popularity and stock prices.

“We’re shifting perceptions from in-home to everywhere, fitness enthusiasts to people at all levels, exclusivity to inclusivity across all Peloton Members present and future,” chief marketing officer Leslie Berland said at the time.

The company promoted its tiered membership products, which can be purchased without owning the stationary bikes it is best known for. 

In its first fiscal quarter of 2024 ended Sept. 30, 2023, about 67% of revenue came from subscriptions, the company said. Peloton lost 30,000 members in the quarter, and revenue reached $595.5 million, down from a pandemic high of $757.9 million.

The fitness company also launched a collaboration with athletic apparel retailer Lululemon in September. Lululemon now makes Peloton-branded fitness apparel, sold online and in stores. Lululemon ranks No. 27 in the Top 1000.

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Nike ranks No. 9 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers by online sales.

Nike Digital sales grow despite challenges

Online sales grew in most regions but faced challenges from price-conscious consumers this quarter, the retailer said. Nike Digital, encompassing global sales through the retailer’s website and mobile app, grew 4% in Q2. Digital sales grew 2% in North America, Donahoe said. That’s on top of 31% digital growth in Q2 of fiscal 2023. Meanwhile, online sales grew more than three times as quickly in Europe, the Middle East and Africa, increasing 7% year over year. Digital sales grew 14% in Asia Pacific and Latin America.

Sales were bolstered by the retailer’s strongest Black Friday week ever, CEO John Donahoe told investors. Holiday sales in both digital and brick-and-mortar channels grew 10%. However, outside of major shopping events like Black Friday, consumer demand was down online, even as in-store traffic grew over the quarter.

“While Nike’s store traffic continued to grow, we saw softness in digital traffic and higher levels of promotional activity across the marketplace,” chief financial officer Matthew Friend said. “We are seeing indications of more cautious consumer behavior around the world in an uneven macroenvironment.”

The retailer is planning to keep a tight leash on promotions going forward. “We’re not going to race to the bottom on digital. We’re going to focus on prioritizing brand health and brand strength,” Friend said.

Nike Digital sales in China

Nike Digital revenue declined 22% year over year in the Greater China region, the retailer said. At the same time, total revenue in China grew 8%. The retailer faced the same problems in China as in the rest of the world, with high promotions eating into margins as consumer demand online dwindled. However, in-store traffic remained strong enough to offset some digital losses. 

Double 11 Day, also known as Singles Day, was a bright spot for digital sales in the otherwise disappointing quarter. Nike was the top sports brand on Tmall for the shopping holiday. 

Tmall is an Alibaba-owned marketplace, along with Taobao. Taobao ranks No. 1 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the largest such marketplaces by gross merchandise value. Tmall ranks No. 2.

Female Nike members drive sales

Nike members remain a key sales group, the retailer says of its loyalty program. Women now make up 40% of members and are poised to become a more significant portion of the total as they sign up in greater numbers. 

Female Nike members are exhibiting greater demand than members as a whole, presenting an opportunity to sell more performance and lifestyle products, Donahoe says. Nike added new lines of leggings and bras, with pieces priced above $100, a higher price point than the retailer’s regular offerings. 

“More and more women are joining our brand by purchasing these leggings. In fact, statement leggings fueled our fitness apparel growth in women’s for the quarter,” Donahoe said. He noted similar results from appealing to women in footwear through both new brands and established franchises like Air Force 1s and Dunks.

Average order value grew among members in the quarter, although Nike did not specify by how much.

For the fiscal second quarter ended Nov. 30, 2023, Nike reported:

• Revenue grew 1% to $13.4 billion, from $13.3 billion.
• Nike Digital sales grew 4% year over year.
• Gross profit grew 5% to $6.0 billion from $5.7 billion.

For six months ended Nov. 30, 2023, Nike reported:

• Revenue grew 1% to $26.3 billion.
• Gross profit increased 3% to $11.7 billion.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Nike report.

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During the holidays, consumers buy more and more frequently. As they do, they’re more likely to purchase for others, shipping items to addresses that are not their own. That can mean they’re more likely to engage in bracketing, purchasing items of different sizes with plans to return those that don’t fit, Stein said Wednesday during a webinar on preventing holiday ecommerce fraud sponsored by trade group Merchant Risk Council.

They may also buy several times a day, he said.

“During Black Friday, we might have a customer come back three or four times that day to take advantage of a promotion,” Stein said.

All of those behaviors might trip a merchant’s fraud-warning system if the system is not adjusted to take holiday shopping behavior into account, he said. He added that automation helps by enabling Everlane to customize its fraud-prevention rules. Those rules are based on such factors as time of year, ecommerce fraud issues the brand is seeing and the potential impact.

Everlane uses fraud-prevention tools from Sift. Sift is listed as the payment security and fraud-prevention provider to four retailers in the 2023 Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales. Everlane is No. 271 in the Top 1000.

Fighting friendly fraud requires good communication

Stein said a common kind of fraud activity online retailers like Everlane face is so-called “friendly fraud.” In these scenarios, consumers use their own credentials to make a purchase but later demand a credit card refund, also known as a chargeback.

In some cases, the consumer just tries to get away without paying. But, Stein said, there can be many other reasons for this kind of dispute. Examples may include the consumer not recognizing the merchant name that appears on a credit card statement. A shopper could forget they signed up for a recurring subscription. Or a refund the consumer requested might take longer than expected to show up in the cardholder’s account.

“The best defense against friendly fraud is really clear communication,” Stein said.

He says Everlane tries to communicate clearly throughout the purchase process what was purchased, when it will arrive, its return policies and how the customer can get help if needed.

Ensuring the brand appears on notifications and billing statements

Everlane also makes sure all the emails the customer receives are branded by Everlane. An example is that shipping notification emails come from Everlane and not a delivery service. And Everlane makes sure its name and phone number appear on the credit card statement so that a customer with a concern can reach Everlane, instead of simply calling their bank to dispute the transaction.

He also said it’s important that items not eligible for returns are clearly indicated as such at every step. If the purchase of a product is final, Everlane notes that on the product page, at checkout and in confirmation emails.

“It’s really clear all the way through the user journey,” Stein said.

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He said Everlane stores data on all transactions. That helps to fight chargebacks that occur when a customer disputes a purchase. That includes keeping data on the shipping address and IP address. It also means saving any communication with the shopper and photos a delivery service might provide of a parcel left at the shopper’s doorstep.

That kind of information can help the merchant challenge a chargeback, he said. The card-issuing bank likely will only take one or two minutes to consider the chargeback request. That process leads to a decision on whether to refund the amount to the consumer. At that point, the merchant’s account is charged for the purchase price.

Friendly fraud is likely to become more common as younger consumers account for a larger share of shopping, said Rebecca Alter, trust and safety architect, Sift, who spoke with Stein on the webinar. She noted a Sift survey showed that 42% of Gen Z consumers, those born between 1996 and 2010, say they have or would commit friendly fraud, such as by denying they received an item they did receive.

Combating gift card fraud on ecommerce sites

Bulk orders of gift cards are a common type of holiday fraud, Stein said. Fraud indicators could be large or frequent purchases, or a purchaser who has five or more payment methods on file. He said Everlane also looks at the risk profile of the gift card recipient. That profile can offer clues as to whether the transaction is fraudulent.

“We even look at the messages contained within the gift cards,” he said. “Fraudsters typically don’t put a lot of creative thought into these messages. Sometimes a manual review can elicit some pretty obvious signs of fraud.”

More tips for fighting ecommerce fraud

Stein also encouraged online merchants to revalidate payment methods of customers who have not shopped in a long time. In the interim, he said, criminals may have captured that person’s credit card information. Once they have it, they can use it to commit fraud.

Alter said it’s important for an online retailer’s fraud team to have all the information related to a transaction. Then, it should be kept on a single dashboard so they don’t waste time collecting data. That leaves them with more time to focus on making decisions.

And, she added, merchants should adjust their fraud-fighting defenses in several ways during the holiday season. That’s when the volume of website traffic and sales increase. Recommended steps include raising the thresholds for flagging a transaction as potentially risky and automatically accepting more purchases.

It’s also important, Alter said, to give the riskiest transactions the highest priority so analysts are sure to get to them.

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Dan Kilcoyne, president and CEO, Mini Melts USA & Mini Melts of America Inc.

“We’ve been growing about 30% year over year for the past two years and already sold over 30 million cups of Mini Melts for 2023,” he says. And with plans for 10 new distribution centers, bringing the total to 33, he says Mini Melts expects to have nearly 10,000 additional distribution points and “a 50% sales increase in 2024.” The family-owned and -operated company doesn’t report revenue figures.

Mini Melts has built its brand on producing and marketing ice cream that is frozen to about minus-40 degrees, a process that produces ice cream with the texture of round beads or popcorn-like kernels in 13 flavors ranging from vanilla, chocolate and strawberry to birthday cake, banana split and cotton candy.

A unique way to manage timely deliveries to stores

Managing timely deliveries of Mini Melts ice cream and meeting each retail location’s inventory needs by volume and flavor assortment, however, relies on a mostly home-grown system of collecting, analyzing and sharing data on what’s selling at each location and systemwide.

The company uses its own freezer-equipped trucks to deliver its ice cream in cases of individual-serving cups that each retailer then keeps in Mini Melts-branded self-serve freezers or robotic kiosks. Mini Melts also organizes the retail freezers to support inventory management and reordering.

A mobile app lets delivery drivers remotely monitor inventory in Mini Melts self-service kiosks, which transmit sales data to the app each time a kiosk robotic arm fetches an ice cream cup and dispenses it through the kiosk retriever bin.

The company uses a predictive restocking method to manage deliveries and keep each retail location stocked with a full range of flavors and best-selling items. As Mini Melts collects sales data from each retail location, its data analytics team updates a predictive sales model weekly to forecast upcoming delivery volumes.

“Customers never have to call us,” Kilcoyne says.

(This article appears in a longer report on innovation and disruption in B2B ecommerce, B2B Strategy Insights: Standing Out in the B2B Crowd, available for a free download.)

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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After years of plodding along with the company’s content platform, Marc Lamothe, director of web technology, had his ah-ha moment when he was asked if he would implement the same type of monolithic content development platform again.

“The answer, was no,” Lamothe says. “Once I realized that, it got me thinking that we can change the system, and so we began looking into how to do it.”

American Bath is one of several companies featured in a new Digital Commerce 360 report, Standing Out in the B2B Crowd, for their innovative growth strategies. Other companies in the report range from the B2B marketplace Online Metals to workwear supplier Munro’s Safety Apparel and the Mini Melts ice cream brand. The report also includes B2B ecommerce sales and related data for the first nine months of 2023 as compiled by Digital Commerce 360.

Generating content with AI

American Bath’s search for a new content platform led it to Kontent.ai, a modular content platform that enables the planning, creation, and delivery of digital experiences that are customized to buyers’ needs in a short period.

Since implementing Kontent.ai’s platform, American Bath has been able to develop marketing and sales content for products faster, and seamlessly integrate data from a product information (PIM) system with daily updates, which creates more accurate product information, Lamothe says.

With better product information posted faster, Lamothe says American Bath has seen its search engine rankings on Google increase while its costs to generate content decreased significantly. He notes that the cost of developing content through Kotent.ai is 50% to 75% less than the cost of doing so through American Bath’s legacy monolithic system.

To read more about American Bath and the other companies featured in Standing Out in the B2B Crowd, download this complimentary copy.

Peter Lucas is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. 

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Bill Boucher, leader Wipfli’s manufacturing, retail and distribution practice. 

Bill Boucher, the leader of Wipfli’s manufacturing, retail and distribution practice, says manufacturers are moving beyond the market disruption of recent years to and further into the use of artificial intelligence and other practices to improve their resiliency, drive more business and operate more efficiently.

“Manufacturers have shown remarkable resilience throughout these challenging times, a testament to their ability to adapt and thrive amidst uncertainty,” he says. “However, it’s imperative that we address critical areas such as employee retention, data security and rising costs tied to inflation. Our research shows while there are many obstacles, there is even more untapped potential in the areas of digital technology and AI that need consideration as we move forward into 2024.”

When the survey asked respondents about the importance of the manufacturing industry to embrace digital transformation and technological advancement, only 1% said it was unimportant. The responses were:

• 47% very important.
• 38% important.
• 14% somewhat important.
• 1% not important.

The survey found that only 36% of manufacturers were already using AI, but that 41% planned to invest in it.

Among those using AI, a majority of manufacturers said they plan to use it to improve operations, sales and overall growth.

The report found the following breakdown of how they expect to use AI:

• 70%, operations.
• 63%, sales and growth.
• 48%, robotic process automation/automation.
• 47%, financial reporting.
• 36%, front/back office.

The report notes that 88% of respondents said they anticipate increased revenue next year. Moreover, it says that most are targeting new customers more frequently than existing customers, while also planning to focus on increasing product sales in existing markets in 2024.

Wipfli says that employee retention was one  of the critical hurdlers survey respondents cited in the survey, leading them to increase pay and benefits to attract and retain top talent.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Ken Natori, president, The Natori Co.

“Videos were completely controlled by us,” Natori says. “They had high production budgets and involved carefully curated and intentional content. That was the past.” 

Now, Natori says shorter, user-generated-content videos are more popular with consumers. The brand works with influencers and features some of those videos at the bottom of its homepage.  

“There’s a much greater appetite from consumers to see video not intentionally curated by the brand but more curated by other people,” Natori says. “There’s more appetite for video, and videos are more plentiful. The technology makes it much easier to post videos from a number of different sources.” 

Natori uses video commerce vendor Firework and artificial intelligence software vendor Agora for video and livestreaming content. Natori says he can record video and use Firework’s app to launch livestreams on its website. He plans to use video to give consumers a “behind-the-scenes” view of products and experiences. 

The retailer plans to work with more social media influencers in the future as well as film more instructional/styling content. The retailer also plans to give shoppers an inside look with more “casual videos,” he says. He plans to film parts of a supplier trip to the Philippines in the coming weeks to give consumers a look at how Natori’s products are sourced. 

“The technology allows us to be creative quickly and easily,” he says.  

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Yoav Kutner

The distribution industry stands at a crossroads. For decades, the familiar model of manufacturers selling to distributors who then sell to customers has been foundational across industries. But with the emergence of digital tools that empower manufacturers to deal directly with consumers, this time-honored structure has faced deepening disruption.

While distribution remains essential, manufacturers can now own the customer relationship end-to-end with little input from intermediaries. Combined with the meteoric rise of ecommerce, this direct-to-consumer revolution threatens to make distributors obsolete. Amazon and other digital juggernauts are also building formidable logistics capabilities that threaten to undermine the function of traditional distributors.

To survive in this new paradigm, distributors must take a page out of the D2C playbook and undergo their own digital transformation. They need to reimagine their value proposition and business models for an increasingly tech-focused world. Distributors that fail to adapt risk losing relevance as manufacturers bypass them to sell directly to customers online. The choice for the distribution industry is clear: digitize or die.

The threatening dawn of D2C

D2C represents an existential threat to the traditional distribution model. Manufacturers are rapidly exploring innovative sales channels that feed directly to end users, taking cues from disruptive startups like Dollar Shave Club and Casper. These digital native D2C brands have shown that enormous success can be achieved when control over pricing, customer relationships, and end-to-end experiences is kept in-house.

For manufacturers, D2C delivers a gold mine of customer data to tailor products and personalize engagement. Combined with the explosive rise of ecommerce, producers now have direct access to vast pools of customers without the need for distributor middlemen. This trend is unlikely to peter out; between 2019 and 2022, customer-direct purchases increased by almost a third, with sustained growth forecasted through the middle of the decade and beyond.

As D2C continues to gain momentum, distributors are likely to find once-reliable clients starting to question indirect sales. This is particularly true of manufacturers who’ve sunk millions of dollars into their own digital capabilities, and, as a result, are rapidly seeking higher margins by eliminating intermediary markups.

A narrow window of opportunity 

Despite this, distribution remains essential across the majority of modern industries. Distributors provide vital value through their technical expertise, expansive product selection, and customer service. But much of this value can now be replicated or replaced through technology. Even the least future-facing manufacturers are wondering whether they need third-party distributors to the extent they once did — thanks, not least, to the sudden emergence of eye-catching alternatives.

Powerful ecommerce enterprises, like Amazon and Alibaba, have surged into the packing and delivery spaces, offering services once fulfilled solely by distribution specialists. Their expertise in digital shopping and advances in logistics allow cost-effective shipping of products — including large and bulky items — neutralizing an advantage established distribution players previously enjoyed. These digital disruptors are also beginning to match distributors in terms of technical proficiency, leveraging artificial intelligence, algorithms, and data analytics to close the knowledge gap.

For traditional distribution companies, the window of opportunity to secure a sustainable future is closing fast. But it isn’t too late for these tried-and-true providers to cement themselves as essential cogs in the ecommerce machine. To remain relevant in a rapidly digitizing world, they must recognize the need for reform, casting aside antiquated models to deliver the experiences that modern-day manufacturers — and their customers — want.

An investment worth making

Moving forward, distribution leaders must strive to deliver seamless omnichannel journeys formulated to meet fast-evolving customer expectations. Siloed channels and fractured data severely degrade these experiences, so the focus should be on unified commerce solutions spanning web, mobile, and marketplaces.

Investing in flexible, customizable B2B ecommerce platforms purpose-built for the distribution space provides a strong foundation for unified commerce, empowering distributors to blend digital efficiency with high-value account management and the other areas in which they excel.

To fortify fulfillment and logistics as customer demands escalate, distributors must also optimize supply chain operations for speed, transparency, and flexibility. They can achieve these operational improvements by digitizing warehouse management, selectively applying automation, exploring innovative last-mile delivery partnerships, and closely monitoring supplier relationships. While superior fulfillment and logistics remains a distributor stronghold, digital disruptors are advancing quickly, so established disruption players must urgently double down on this advantage before it evaporates entirely.

In both the short term and the long term, those that modernize their supply chains will gain a powerful competitive edge. However, to truly thrive in the evolving distribution landscape, distributors must expand their value proposition far beyond just moving products.

Doing so requires a realization that they shouldn’t be competing with manufacturers, but rather complementing their operations. This means providing services, insights, and specialist know-how that make them the expert distributor, an indispensable partner. With knowledge and relationships baked deeply into the customer experience, manufacturers will be less incentivized to cut distributors from the chain — especially in economically uncertain times when increasing value is imperative.

Ready to thrive 

There’s no doubt that D2C is here to stay, but manufacturers will continue to seek the services of digitally enabled distributors who provide value far beyond basic order fulfillment. That’s why, to remain competitive, distribution players must augment their value proposition by evolving into trusted advisors and strategic partners.

Getting this right relies on comprehensive digital transformation encompassing ecommerce, supply chain, and service delivery operations. Distributors that fail to adapt their business models and stubbornly cling to antiquated, unsophisticated approaches will inevitably fail.

Adapting to this new distribution reality is no small task. But it has become necessary for survival — and with the right tools and technology, it can be a remarkably painless process. With commitment to change, investment in digitization, and a tireless customer focus, distributors can reinvent themselves as next-generation enterprises ready to thrive in all market conditions — now, and in the future.

About the author:

Yoav Kutner is co-founder and CEO of Oro Inc., an open-source business technology company serving B2B merchants.

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