Many janitorial and sanitation (JanSan) distributors share a common problem – fear over shrinking margins. This is a legitimate concern when you consider the dramatic changes underway within today’s JanSan marketplace.
When margins get tight, JanSan buyers have traditionally looked for a better cost of goods. This can result in the potential overstock of product, tying up cash flow and negatively impacting turns. This “buying more for less” strategy is a common misconception and JanSan distributors are are uncovering that it can actually be a detriment to their organization. Instead, decision makers must develop strategies that adapt to market forces and boost profitability. Fortunately for JanSan distributors, wholesale offers an accessible, price-conscious opportunity to re-imagine supply chain operations. Although you may have limited wholesale as a strategy in the past, now may be a good time to look beyond direct buys and make additional investments in e-commerce experiences that attract and retain modern customers.
Top challenges for today’s JanSan distributors
To fully understand the value wholesale offers you as a distributor, it’s important to think through the complex problems that threaten JanSan businesses.
Perhaps the greatest reason behind eroding margins is that everyone now wants a piece of the JanSan pie. Consolidation of smaller distributors and easy access to JanSan products means companies that have not traditionally offered JanSan products can do so, and fast. It’s more than Amazon applying pressure to your order sizes and margins, although the retail giant has made quick inroads into the lucrative JanSan market.
On top of overcrowding, your organization must navigate shifting customer profiles and expectations. More buyers are now responsible for purchasing cleaning supplies in addition to other products like office supplies, and they expect a one-stop shop that makes life easy. Many buyers are also younger, meaning they’re less influenced by traditional sales tactics, they come prepared with research and they desire B2C buying capabilities when interacting with B2B companies. But it’s difficult for distributors to impress JanSan customers with dynamic, personalized and seamless interactions, as many still struggle to master basic e-commerce capabilities.
This new commerce model challenges your ability to improve inventory turnover rates and boost margins. From underperforming lines of business to a shortage of reliable truck drivers, many JanSan distributors struggle to make on-time deliveries and confidently forecast. An inability to turn inventory into cash is only made worse as the costs of capital increase. JanSan distribution operation is more expensive than it was 10 years ago, and decision makers must stretch limited resources to match the Amazon distribution and delivery standard.
With some luck, JanSan distributors can sustain another decade or two of business on their current courses. But to fully overcome today’s biggest operational challenges, decision makers must re-engineer their supply chain approaches and optimize the entire process around a fundamentally different JanSan marketplace.
Wholesale protects JanSan distributors’ competitiveness and profitability
When JanSan distributors embrace wholesale opportunities as part of their overall supply chain strategy, they can avoid falling behind as the market shifts. Of course, purchasing via wholesalers comes at a modest premium, but that extra cost improves speed to market and fill rates, while also alleviating concerns about slipping margins and offer distributors the flexibility to survive today’s complicated JanSan environment.
Wholesale operations offer two key benefits:
1. Category expansion
Sellers in verticals like office products have not hesitated to expand into JanSan, and JanSan distributors must do the same to remain competitive. However, adding new products can take JanSan distributors out of their comfort zones and budgets.
Wholesale is a low-investment, low-risk way to grow your product categories outside of JanSan and connect with new inventory and capabilities. JanSan distributors may not be familiar with breakroom products like coffee and cups, for example, but wholesalers are already established within these networks and can help distributors ease into category expansion and ensure competitiveness. Wholesalers also offer the technologies required to successfully manage these massive inventories across sales channels and geographies, taking this burden off of distributors.
2. Delivery efficiencies
JanSan distributors earn more money and happier customers if they can improve their inventory turns. Wholesale allows you to benefit from your partner’s existing supply chain capabilities and standards, leading to more efficient inventory turns. For instance, wholesalers help JanSan distributors address delivery issues like the growing shortage of drivers. Rather than stressing over missing drivers or sending out half-full trucks, wholesale consolidates suppliers and shipments to ensure more cost-effective operations. What’s more, wholesalers can guarantee dependable drivers and delivery routes.
Fulfillment strengths like these help JanSan distributors meet on-time demand expectations and offer seamless customer experiences. Over time, the supply chain efficiencies of wholesale help JanSan distributors free up cash, space and energy in other areas of operation. Sophisticated wholesalers also have technologies in place to add intelligence throughout the entire supply chain and use forecasting to inspire higher fill rates.
These two improvements – and many more – are available to JanSan distributors willing to explore wholesale routes. Wholesalers can help distributors reduce their inventory investments by as much as 60 percent, while also doubling inventory turns (if not even greater increases). Now is the time for JanSan distributors to measure the tradeoffs between wholesale and direct buys and strike the right balance for their unique needs and customers.
Contact your Essendant Account Manager or an Essendant representative to determine where your company should consider wholesale opportunities.
By Jeff Lancaster, Director of Value of Wholesale, Essendant