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    2023 Distribution Industry Outlook

    2023 Distribution Industry Outlook


    Top Distribution Trends to Expect in 2023  


    A new year creates new opportunities, as distributors continue to transform their business to meet the needs of the consumer. From continued pandemic pressures, labor and supply shortages, rising competition, and price increases over the past few years, businesses have learned to adapt and remain stronger for it. 

    Wildcards in the industry have accelerated and pushed distributors towards advancing their business technology with more momentum than ever before. Learn how distributors are forecasting a challenging but positive outlook on industrial markets as they focus on customer experience, supply chain transformation, diffusion and growth in 2023. 


    2023 - A Year of Distribution Opportunity

    How are Distributors shifting to meet consumer needs and demands?

    Reacting and Shifting to Meet Consumer Trends:

    Distributors are reacting and shifting to meet consumer trends through detailed preferences, real-time communications, tailored advertisements, and providing consumers the ability to order what they want, when they want it. Personalization continues to be a priority with 52% planning to increase spend on content marketing and personalization technology. 

    Omnichannel selling:

    2023 consumers expect the ability to purchase and receive orders quickly and efficiently from a variety of channels. Distributors will continue to invest in seamless, highly integrated, cross-platform shopping and purchasing experiences to meet consumer demand and customer expectations. 90% of consumers are now expecting brands to offer multiple shopping platforms.  
    Google found that omnichannel customers have a 30% higher value than those who shop using a single channel. It has never been more critical for distributors to use up-to-date technology to keep track of the complexity and enhance the visibility of an omnichannel presence. Incorporating advanced business software solutions that bring together the entire business with real-time analytics, KPIS, and up-to-the-minute visibility to help analyze the market and improve ROI will be a huge focus this year. 

    Facing Stronger Differentiation with Rising Competition:

    As manufacturing competition rises with direct selling, and large retailers offering a wide variety of products at a low cost, distributors strive to sufficiently meet the needs of the consumer while also standing out as a preferred vendor.  
    Facing Labor Challenges:  
    Labor shortages continue to be a hurdle due to inflation, rising costs of skilled employees and political instability. Whether it’s the inability to find qualified employees or cutting staff/reducing headcount to have less fixed cost, organizations are working hard to position themselves through cycles of growth and retraction.  

    The lack of available experienced employees is causing a ripple effect, as many businesses are facing slower production rates, inaccuracies in inventory levels, and struggling to maintain customer satisfaction. Businesses are motivated to manage risk and reassess their work environment for their employees through new hiring processes, retention tactics, and compensation rates.  

    Selling Private Label Brands: 

    Private label brands are at the top of consumers shopping list this year due to low cost and high availability of the product. Profit-driven price inflation and supply-chain complications have majorly impacted consumer buying patterns. 80% of consumers are now choosing private labels and shopping at different marketplaces strictly to save money. Even in economic downturns, the sales of private label goods continue to rise. US retail sales of private label brands are projected to hit $5.94 trillion in 2024 and continues to grow. Large distributors are moving to sell private label products to be progressive in the industry, improve profit margins, and take market share during economic downcycles.  

    Managing Supply Chain Risk:
    Whether it’s customer expectations, delivery time, or quality control, supply chains can only support a business and its customers when it is resilient. No matter what industry you are in, supply chains continue to increase in complexity. Businesses are adopting agile decision-making processes and utilizing technology to obtain new levels of supply chain information.  
    According to Forbes 2022 State of Supply Chain Management: 

    • 70% of businesses identified economic instability as the biggest threat to supply chain performance. 
    • 43% of executives indicated the need for better visibility into their inventory.
    • 76% noted that the growth of digital transformation would help overcome the business hurdles surrounding disparate siloes of materials and a lack of data knowledge.

    Cloud ERP is influencing thousands of global distribution operations with the ability to access important data within a single integrated system, from anywhere, at any time. No matter the size of your company, improved supply chain management increases the production process and can prevent issues or delays. 


    The Benefits of an Integrated Supply Chain

    Customer Experience and Transparency: 
    Customers have more options than ever before, to purchase what they want and when they want. They expect their experience to be smooth, low cost, fast shipping, and great customer service. It is essential that businesses gain customer trust through the transparency of the entire purchasing and shipping process. Transparency improves customer experience, problem resolution, enhances brand loyalty and boosts sales with repeat business.  
    A positive customer experience will keep your customers coming back for more. According to Slack, “Transparency strengthens business accountability. By making data readily available to employees and the public, leaders can hold their businesses accountable and ensure that every step the organization takes is in its own best interest.”


    Accelerated Investments in Technology:

    Distributors are increasingly embracing automation and innovation through Artificial Intelligence (AI), Augmented Reality (AR), blockchain, and cloud-based software. These types of technologies continue to increase productivity, security, mobility, integration, and drive innovation. Distributors are also leveraging technology more than ever before to increase collaboration, associations, and create synergies between platforms and departments such as shipping, EDI, and ecommerce. With the right technology in place, distributors can thrive in a continuously changing industry and make faster decisions.  
    What are the Benefits of Digital Transformation:
    • Increased Collaboration 
    • Innovation 
    • Customer Experience 
    • Operational Excellence 
    • Visibility & Transparency of Business Analytics  

    A recent Gartner survey outlines global business spending on cloud technology is forecast to grow 18.4% to total $304.9 billion, up from $257.5 billion the previous year. Cloud business and operation management is becoming a new way of life to connect employees, share critical information, and improve processes.

    Transparency is a major factor as distributors find ways to keep customers informed and supplied, which is more challenging now than in the past. Distributors will be utilizing ecosystems, partnerships, marketplaces and technology to obtain new levels of growth. 


    Cloud ERP technology provides the competitive tools distributors need in a world where quality and transparency are extremely important.  

    Technology is always changing and providing growth challenges and opportunities for distributors every year. Ensure your business is up to date with the latest technology trends and innovations to keep up with your competitors and customers.  
    By embracing cloud ERP as part of a digital inventory and warehouse management strategy, distribution companies are not only prepared for today’s fast-paced, highly competitive environment, but are positioned to significantly improve their business with better visibility.

    NetSuite is the #1 cloud ERP system on the market that can help distributors run more efficiently and cost-effectively. 
    To learn more about NetSuite for your business, contact Protelo today for a free consultation.

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