Happy New Year’s Eve!
Taking time to reflect is important, so this week we took a look at our 2023 predictions and whether or not they were true or false. In next week’s newsletter, we’ll share our 2024 predictions. Happy New Year’s everyone!
On a personal note, my big goal for Applico was to launch the distribution industry’s first VC fund and make a few outstanding initial investments. We accomplished both of these goals and that’s a great reason to celebrate! Here’s one of my favorite DJ’s if you’re looking for a great party mix tonight: Joyobonix.
2023 Predictions:
Winning in B2B will return to efficiency and innovation.
Result: True
This prediction was related to the Covid build up of inventories. Distributors were optimizing to have products available and had built up large inventories. We thought this would shift in 2023 as the supply chain normalized. And, instead, the key tactic for distributors to outperform was ‘getting back to basics’ and running an efficient, and optimized operation … and of course, leveraging technology to help achieve that!
2023 is the year of strategics.
Result: False
This prediction was because tech multiples have declined and therefore, it should be easier for large B2B distributors to make tech investments or acquisitions. According to our Q3 ’23 data on distributor tech investments, unfortunately, there wasn’t a sizeable difference in distributor tech activity in ’23 compared to ’22. We haven’t published the Q4 ’23 data yet; however, measuring the first 3 quarters in ’23 against ’22, there were a total of 9 tech investments or acquisitions by distributors in ’23 and 8 in 2022.
CVC’s will outperform.
Result: False
CVC stands for corporate venture capital fund. This prediction was that CVC’s would become more active, on a relative basis, compared to traditional VC investors. The reasoning was that tech startups are looking for strategic capital now more than ever – creating a great opportunity for CVC’s. Unfortunately, it seems like the CVC’s have maintained the same level of participation, not necessarily increasing or decreasing relative to the rest of the VC landscape. Here’s a great report from SVB on the state of CVC.
Distribution Technology will be recognized as its own venture segment.
Result: True
Technology for B2B distributors has gone by the wayside for far too long. We predicted that 2023 would be the turning point and while there’s no perfect way to measure this, we believe this prediction was correct. We saw multiple events exclusively focused on helping distributors meet and adopt new technology solutions this year, including our own event The Innovators Summit. Our event and others were phenomenally attended by both distributors, tech startups and leading VC investors. At the Innovators Summit, we heard from Drew Oetting, Founding Partner at 8VC, a leading VC fund focused on supply chain investing with over $8 billion assets … and he called out B2B distribution as a key focus for 8VC and a number of their portfolio companies.
eProcurement and SaaS to Marketplace will dominate.
Result: True
We’ve written many times about the shift of B2B distributors’ customers to purchase through digital. But, that this shift in buying behavior is happening more and more through eProcurement 2.0. We’ve seen 2023 be a huge accelerant in this new buying behavior and our upcoming Top 50 B2B Marketplace ranking will reflect how many of the new B2B marketplaces, actually started as SaaS tools. These SaaS tools provide value to the customer of distribution – and then the SaaS tool adds procurement functionality to help the customer better procure from distributors.