Wholesale isn't dead after all - but it is seriously overdue digital investment.

Back in October 2019, Nike shocked independents (and Sports Direct) by announcing it would radically reduce supply via its wholesale channel and focus on a Direct to Consumer (D2C) model, supplemented by a small number of large retail partners - predicting that “undifferentiated mediocre retail won't survive”. Their words not mine.

As other brands followed suit and focused on D2C growth, tempted by ownership of the customer relationship, control over the end-to-end brand experience and the increased margins it offers, it seemed that the era of wholesale as an engine for growth was over.

Wholesale was dead. Finished.

But fast forward three years and it appears its death may have been exaggerated. This month alone, Sketchers and Puma reported >20% growth in wholesale sales, more than double that achieved in D2C, Columbia sportswear said it will “double down” on wholesale to fuel its growth and Allbirds - formerly a DTC-only brand - continued to expand its wholesale channel. Wholesale is back!

Wholesale - its appeal and challenges.

There are lots of reasons why D2C is attractive, but the constant challenge of customer acquisition, combined with infrequent purchase rates and sky-high fulfilment and returns costs aren't amongst them. D2C-focused distribution also makes it hard to shift excess stock, when combined with a full-price strategy as Nike have found recently.

Retail partnerships can help overcome these problems and offer an attractive route to growth, particularly in new markets where partners already know their customers, but they present significant challenges too - how can you scale your wholesale channel without an army of Sales Reps and Account Managers and an epic Helpdesk operation and how can you ensure you present a consistent brand experience across your partners' digital channels?

The answer isn't just to cut the long-tail of independent retailers, but to find ways to harness their specialist expertise to support and grow your brand - as Columbia recently said "to be more democratic". This involves learning from the success of the D2C channel and investing in digital innovation.

Enter wholesale experience innovation

For the last 20 years in D2C we've been studying customers and the problems they are trying to solve, mapping their end-to-end journeys to identify their pain points, then creating digital products and services to eliminate this pain - the heart of digital innovation. It's time to start applying the same design-thinking approach to the wholesale channel.

The equivalent purchase journeys in wholesale are long and complex and involve more people (inside and outside the organisation), but are engaged with more frequently and have much, much higher value, so it's even more important to understand who these people are, their needs and expectations and identify how their experience can be improved - both at a practical and emotional level.

By doing this, brands have the opportunity to create self-service digital solutions that meet the needs and expectations of people across the entire wholesale purchase process, from the very early ranging decisions to content creation and the management of returns - offering the potential for better customer service, improved scalability and efficiency, as well as greater customer loyalty.

If it's enjoyable to work with a brand, people will choose to do so more often.

In addition, by understanding the content needs of retail partners across their digital channels, brands have an opportunity to produce content that meets these needs and supports much more powerful storytelling at a brand, technology and seasonal campaign level to elevate the overall brand experience.

They can also create and share the high-quality product photography and video assets partners need (either as a value-add or paid service) to present products in ways that are appealing to their customers, but also meet the standards to which the brand aspires. A huge cost and headache for both parties otherwise.

The need for digital innovation

For too long the wholesale channel has been overlooked from a digital investment perspective, as brands have focused on growing their D2C businesses. As a result. there are huge opportunities for brands to apply digital innovation to the part of their businesses that supports this channel and this process is only just beginning. It represents a new phase in digital experience innovation and it's one that's seriously overdue.

It's harder to achieve than in the D2C context of course, but the needs of people in the specialist roles typically present in large Key Accounts - from buyers to digital merchandisers provide valuable clues to the motivations, needs and journeys of people in smaller organisations, where these roles are typically combined.

In addition, internal teams, such as Sales Reps and Helpdesk colleagues often know much more than is recognised about customer needs and frustrations and are often the principal users of any tools that are already available anyway. The process of understanding these needs and creating new solutions to meet them is critical.

It's not easy to do and, whilst there are always quick-wins, it involves time and investment. The long-term benefits though, in terms of ability to scale, whilst improving efficiency and brand loyalty, mean there really is no choice.