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Conquering the Wholesale Distribution Market Place

By Kevin Hoyle, CEO, B2BGateway

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Kevin Hoyle, CEO, B2BGateway

B2BGateway and NetSuite first partnered way back in 2001, back when NetSuite was known as NetLedger and the term ‘cloud computing’ was not yet invented. Back then we just referred to the cloud as plain and simple, doing business over the internet. In the intervening 15+ years, the world of EDI and ERP has changed a great deal; and many integrations now use web-services and CFO’s are actively seeking cloud based ERP systems such as NetSuite. These solutions provide instant anywhere ERP access, along with fully integrated EDI solutions, through cloud technology and they are both affordable and available to the masses.

“By using the EDI 900 transaction set series, Wholesale Distributors can automate and communicate electronically with their 3PLs”

Since B2BGateway became NetSuite’s EDI partner in 2001, the Wholesale Distribution market has evolved significantly. The traditional supply chain route of; manufacturer to wholesaler to box store retailer has been altered. Now, we have online shopping carts, multi-layered e-commerce stores and drop shipping where the retailer may never handle the goods. EDI technology has played a major part in automating and simplifying all e-commerce solutions. Take for example the EDI 846 transaction set or inventory inquiry document. The EDI 846 is used by Wholesale Distributors to communicate inventory levels to their trading partners. It has become particularly important for online retailers such as Amazon to have this information at hand, especially when drop shipping. Online retailers cannot reliably offer goods to consumers without having up to date inventory information from their distributors. Cloud based, fully integrated EDI solutions can solve this problem by instantly sending electronic inventory updates from NetSuite to the trading partners.

Furthermore, many Wholesale Distributors are now outsourcing their warehouse and transportation needs to Third Party Logistics Providers (3PLs). By using the EDI 900 transaction set series, Wholesale Distributors can automate and communicate electronically with their 3PLs. Going beyond conventional EDI, NetSuite users can have their EDI 945 transaction sets (warehouse ship advice), received from the 3PL fulfill their transactions in NetSuite.

In Wholesale Distribution, margins are tight and getting tighter every day. Customers have choices of where they can purchase their products and the competition is always out there. Through better management of the warehouse, dead stock can be eliminated, items can be purchased that have better turn rates, and long lead time items can be better forecast. Wholesale Distributors can use EDI to optimize order entry, but they can also use EDI for Advanced Ship Notifications (ASNs), invoicing, creation of shipping labels and in some cases for ‘Just in Time’ (JIT) inventory processing and ‘Vendor Managed Inventory’ (VMI).

As we start 2016, more and more distributors are beginning to sell directly to consumers through e-commerce solutions such as NetSuite’s SuiteCommerce platform, Magento, Shopify, etc., and see it as an important driver for growth. Wholesale Distributors, whether they are very mature commodity businesses or young technology distributors, are facing the same challenges with respect to e-commerce. Essentially, an e-commerce company relies on a virtual storefront to sell goods and the distributor to fulfill the orders. In the past, Wholesale Distributors shipped to a B2B world of brick and mortar organizations. Generally, goods would be packaged in lots of dozens or grosses. Now with e-commerce the Wholesale Distribution business is beginning to cover both B2B and B2C (business to consumer) marketplaces, where the customer is buying in quantities of one or two. As such, product packaging has had to change and the methods of handling items are different for these reduced quantities.   

Further, e-commerce has substantially changed retail. In a Wall Street Journal article, Sarah Nasshauer describes that retail now has between 13 and 20 different seasons. We all know about Christmas, Halloween, Spring DIY season, but there are seasons like Storage and Organization in January, Allergy Season in late spring and Fall Gatherings (rakes and sweaters) in early October. Wholesale Distribution needs to fulfill orders for these new seasonal demands, so they need technology to better manage their inventory and to be able to quickly handle orders and order changes. Wholesale Distributors need to be more nimble than ever in order to meet the changing needs of their customers.

NetSuite is a great product to use for managing a Wholesale Distribution organization. NetSuite has fantastic inbuilt functionality, but it also supports a complete eco-system of third party add-ons, such as B2BGateway’s fully integrated EDI (which can be found on the NetSuite SuiteApp platform). By continuously adding or improving third party applications and verifying their quality through verification processes such as ‘Built for NetSuite’, NetSuite can be assured that their customers are getting the very best integrated cloud technology and market leading solutions.

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