Buying groups can help wholesalers

Today the independent wholesaler faces the toughest trading conditions in recent memory. While inflation is cutting into his profits he is also battling with an economy (and thus a customer base) that refuses to grow. Added to this the end user is continually looking for a better deal in an ever transparent marketplace.

The independent delivered wholesaler has traditionally won and kept business on the quality of his service, but in today’s market price is king.

Tough times call for rationalisation certainly, but there is only so far the smaller independent wholesaler can go. So the question is how can being a member of a buying group help alleviate the pressure for the wholesaler?

There are the obvious advantages of preferential trading terms along with access to a national promotional plan, but what can be done by the head office to really drive growth in the short term when every business is finding it tough to keep the cash flowing?

At Confex we have looked at the whole ‘trade chain’ and tried to implement changes to develop business throughout this chain. Some examples of new head office initiatives since the start of the financial downturn in 2008 are:

l A central distribution warehouse offering consolidated drops helping get the trade started (with the aim of opening up a direct account with the supplier once the turnover has developed).

l Keeping the supplier/member relationship active. The national account manager is now under-resourced and so the head office can form a relationship triangle with trade events now playing an important role in this process.

l Reacting to market pricing. With volatile pricing due to inflationary pressure it is important that wholesalers are updated with price movements and have continued access to the keenest pricing in the market. We have implemented a monthly pricing strategy with suppliers whose goods are a global commodity, while using fixed contract pricing to hedge against volatility in the market.

l Growing end user sales. Implementing an online marketing mechanic for members to personalise their offer sheets, giving them the tools to competitively target new and existing customers in one mailshot.

l Lowering business costs for the wholesaler. Starting to use the group buying power to look outside the box with negotiated group terms on fuel and associated products.

The wholesale marketplace has changed dramatically since 2008 and by 2012 there could well be fewer players, whether due to takeovers or liquidations. The independent wholesaler must ensure their future through loyalty to their chosen buying group, while letting the group take the risks needed to drive growth.

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