State of Distributor Technology
NAW's Executive Roundtable
Happy Mother’s Day - hope everyone has a great day celebrating the hardest working people in our lives :)
I’ll be speaking at NAW’s Executive Roundtable this week in Dallas, here’s some of what I’m going to talk about.
Distributors who invest in technology – they are clearly seeing positive results. But, how and where should distributors prioritize their tech investments?
The B2B marketplace threat has morphed – and become more nuanced. Gone are the days of simply matching buyers and sellers. Today’s B2B marketplaces need to be more sophisticated.
Distributors who create and embrace a culture of change – they are best positioned to outperform the competition. Invest in your people. Educating them on new technologies and processes is the hardest part of digitization efforts.
Distribution Tech Leaders Have 35% More SG&A Cost per Employee
The biggest overhead expense a distributor incurs is people. Both sales people, as well as warehouse and fulfillment people.
Distribution tech leaders spend, on average, 35% more SG&A per employee as compared to our distribution tech laggards.
We don’t have a full breakout of SG&A from these distributors, but we can infer the increased spend coming from a couple different vectors:
paying SG&A staff higher salary and benefits
increased spend on technology and automation
However, because we don’t have visibility, it could also be because of having inefficient fulfillment operations or excess leases and warehouse space.
Another interesting data point: tech laggards have 10% more employees than the tech leaders. Could another reason for the increased SG&A spend per employee be because the tech laggards employ more people?
Are the tech leaders using technology to run a leaner, more efficient business? It certainly seems that way. By investing in technology, both for the customer and for internal efficiency gains, distribution tech leaders are spending more money on each employee – but they need fewer of them. And, they generate more revenue and gross profit per employee as a result.
At the roundtable, we’ll unpack this further and highlight specific areas that we see as opportunities for distributors to invest in technology.
B2B Marketplaces – A Transformational Year
As we highlighted in our 2024 B2B Marketplace report, there are a number of new entrants into our top 50 ranking this year. 7 of the new entrants have a new structure of business model and different go-to-market compared to many other previous B2B marketplaces.