Wholesale & Distribution
Assessment of Digital Maturity

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Synopsis

Of all the industry sectors Wholesale and Distribution are probably the most threatened by ecommerce. Manufacturers are beginning to sell directly to consumers or sell through mass market platforms such as Amazon or directly to retailers. The geographical territory of the wholesaler or distributor is increasingly becoming less relevant and the realm of the commission salesperson, the so called “middleman”, except for some specialized industries such as pharmaceuticals, is threatened to its very core. Although the jury is still out, the change to ecommerce is seen by some to be both a threat and an opportunity. Enter Digital Transformation.

For the Wholesale and Distribution industry, the digital transformative emphasis seems to have been, and so promoted by vendors in some cases, on technology and operational matters with too little a focus on commercial strategy and the needed digital reinvention of customer engagement. In the meanwhile, according to Forrester, a market research company, almost 40% of B2B buyers are now finishing their purchases on Amazon. The percentage of B2B buyers finishing their purchases on distributor sites has fallen from 30% in 2015 to 16% in 2017. Buyers prefer sites like Amazon that are easy to use, fast, with broad selection, limited login requirements, and built-in trust. Amazon is part-platform, part-marketplace, and part-reseller. By various estimates, Amazon currently sells one-third via digital e-commerce sales, one-third via reselling/white labeling, and one-third via third-party resellers.

That the B2B wholesalers and distributors are under threat is not in doubt. For example. In wiring connectors, Amazon Business has 77,764 listings compared to a Big-4 distributor’s 2,855. Amazon has products listed from 106 of the 120 manufacturers offered by a Big- 4 distributor. Even worse for distributors, 96 of these 120 distributors, or 80%, already sell directly on Amazon and prices on Amazon are often 25 to 30% less. Between Alibaba and Amazon Business there seems to remain very little space for survival. Compared to this existential threat, the degree and pace of any appropriate or commensurate digital response (Maturity), being mounted by the Wholesale & Disgtribution industry, can only be assessed to be on the low side and of the order of 10-15%.

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Interesting news, opinion or short blogs on Digital Transformation pertaining to companies in Agribusiness.
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Digital Transformation Case Studies in Agribusiness compiled from publicly available sources
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Case Studies

Digital Transformation in Wholesale & Distribution - CASE STUDIES

New Relic reduces Cloud costs from 40-90% for Infomedia a software vendor

 

Case Study Auto Parts Dealership New Relic Infomedia Background

Established in 1987, Infomedia serves 170,000 users representing 39 global automaker brands in 186 countries around the world with software for spare parts catalogs, parts and service sales, and lubricant point of sale solutions for oil companies. Infomedia provides about 200 discrete applications that help dealers service their customers while maximizing profitability. With dealers depending on the Infomedia’s software, performance and reliability become critical.

The Challenge

With innovation being Infomedia’s key competitive strategy, the company was one of the first software vendors to use Amazon Web Services (AWS) in 2012 in Australia. The key challenge was to preserve Infomedia’s level of service and performance as it transitioned to the cloud and Infomedia did this, in part, by liberal provisioning of infrastructure. But it found itself unable to track actual customer experience as well as the causes of any performance issues which it addressed by adding more infrastructure capacity in the form of cloud resources. It could not accurately distinguish between capacity constraints and suboptimal software resource consumption. As a result not only did costs face potential escalation but application performance was also at risk.

The Input

Infomedia chose New Relic, a pioneer in modern application performance management in the cloud, to help increase their operational visibility in the cloud. New Relic allowed them to better observe their application performance as well as consumption of cloud instances needed to provide the level of performance for the customer experience that they needed to maintain.

The Outputs

They used the New Relic APM to monitor application performance, New Relic Infrastructure to track the use of the underlying infrastructure to deliver that performance and the Health Map visualize the overall inter-relationship of application performance and infrastructure. They could be running 50 or more Amazon EC2 resources per application with 10 or more versions running at the same time and it was only with New Relic that they could accurately visualize and distinguish between application and infrastructure performance.

The Outcomes

This new ability to disaggregate application performance and infrastructure consumption allowed them to address the two issues separately to optimize application performance while also improving infrastructure utilization through the insights they obtained on each aspect. For example, one application alone was found to be using 49 large instances, indicating that the problem was more likely to be in deployment. This helped them reduce cloud spend by over 40%, and improved their decision making on provisioning for other applications. In another example, an application was found to be memory intensive rather than CPU intensive as was previously envisaged. In this case the savings were almost 90%. This also helped them to further improve customer experience.

In addition to resource optimization and application performance improvements, the insights provided by New Relic helped improve another key aspect of Digital Transformation – namely company culture. The causal transparency has helped to reduce “finger Pointing” and also improved the level of trust between executive and operational personnel.

 

Sources: New Relic

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