Lindsay Herbert, the author of internationally praised book, Digital Transformation, joins TWC Talks to weigh in on the issue of digital transformation in wholesale. Lindsay believes that true digital transformation means becoming more adaptive to change itself and looks at what this means for the wholesale industry and wholesale operators in particular.
In just 10 years, a massive digital-driven change happened in wholesale
Retailers used to want a sales rep to handle their orders by phone, but now the vast majority prefer to do the ordering themselves via a website.
But major digital-driven changes like this one are really only just beginning.
Clever calculations based on concepts like Moore’s Law and the Law of Accelerating Returns mean the next big changes across all industries will happen exponentially faster, and signs of them affecting the wholesale industry are already underway.
Just look at the number of cashier-less stores launching around the world, all sporting the following features:
- Fully digitised and connected inventory management to automate restocking and supply chain logistics.
- Customer and sales data being combined with external data sources like weather and traffic to anticipate consumer demand on a local level.
- Automated product detection and live tracking to cut shrinkage.
Adding to this is new competition from non-wholesale companies moving into the supply chain side of retail.
For example, Ocado is the biggest online-only grocery store in the world, and its success is directly attributed to its adoption of automation through robotics and AI in its warehouses. These technologies are now a core part of its business model, and it’s selling them to other retailers.
These innovations change our expectations as consumers in everyday life, and it doesn’t take long before these expectations enter our work lives as well.
This means your retailers are going to get increasingly demanding about the quality of the services you provide, while also expecting constantly shrinking wait times and costs.
But I know what you’re thinking: “My margins are fine, and who has time for ‘digital’ when you’ve got a wholesale business to run?”
Maybe if you just keep working hard and trust in the relationships you’ve built with your retailers, the acceleration of digital-driven change won’t affect your business.
But because you’re reading this article, I suspect even you don’t believe that.
Waiting until these changes become irreversible industry shifts — like how the majority of retailers abandoned phone ordering for online — means it will be impossible to adapt gradually when they hit full force.
It would be like sticking to pallet trucks long after the invention of the forklift, hoping the whole ‘forklift trend’ will just blow over.
Instead, you can adapt to change alongside your daily operations, making the change feel more gradual and safe, and less like being run over by a delivery truck.
And most importantly: You don’t have to quit your day job to do it.
5 steps for adapting to digital-driven change
If youʼve never heard the term ‘digital transformation’, donʼt bother looking it up. I wrote a book called Digital Transformation, and the first thing I tell business owners is to stop using the term.
Few people know what it really means, and the people who use it most frequently are using it as pitch fodder to sell you software.
Instead, the goal (and the real definition of digital transformation) is to make your business more adaptive to change itself.
This way you aren’t just adapting to the changes that have already happened, you’re also building the capability to spot new, early signs of change when it’s small and easier to react to.
Step 1: Bridge the gaps
Let’s start by getting something straight: Your company does not exist to sell wholesale goods.
It exists to make the lives of your retailers easier, their businesses more efficient, and their customers happy because they got what they wanted at the right price and at the right time.
Your company exists to meet the needs of those retailers, and you built and scaled your business off the back of understanding those needs better than the competition.
But as any company grows, it also becomes more insular.
You standardize, you create hierarchies, and you establish processes backed by policies.
These extra layers often mean the people who have the most contact with the customers — for example, your sales reps — are also the most far removed from any decision making.
Meanwhile, the decision makers haven’t been keeping up with the world beyond their immediate network or their quarterly sales figures.
The first step to closing these gaps is to get back into the founder’s mindset.
Entrepreneurs need to form ideas to build their business, which means getting out of the office and into the world to:
- Meet potential customers
- Scope out the competition
- Explore potentially helpful tech
- Consult with industry experts
- Attend events and network
Like an entrepreneur, the goal of Step 1 is to get inspired and develop ideas for ways you can innovate your business.
It’s not a full-time job but it’s also not something you only do once.
Adopting just a few of these behaviours on a regular basis will help you close the gaps that have formed between your company and the retailers it’s meant to serve.
Step 2: Uncover the barriers
Following Step 1, you now have an innovation idea you’d like to explore.
Beware! There are barriers lurking in your business that will prevent you from doing it.
How do I know? Because if there weren’t barriers and the innovation is truly a valuable one, it would have started organically a long time ago.
Barriers can take all forms, but the usual culprits are:
- Outdated processes and policies that add layers of painful and unnecessary work
- Lack of resources and in-house expertise
- Middle-level managers who block innovations they think might put them out of a job
Mitigating barriers is the most tedious part of innovation, but without it they will undermine the people tasked with the project, and undercut its effectiveness at every step.
Work your way through the most obvious ones that stand in the way of your innovation idea, but also keep your eyes and ears open for signs of others as you go.
Step 3: Iterate, collaborate and gather real results
The way to proceed with your idea is to test it in a way that limits risk, facilitates collaboration, and most importantly, produces meaningful results to help you decide if the idea is worth pursuing further.
To illustrate Step 3, imagine your innovation idea is to try a new AI-driven order management system.
To minimise risk, it can be trialed with just a few retailers to get their feedback, and it doesn’t even need to be taking real orders yet.
The retailers agree to take part in the trial because if it’s successful, they’ll benefit from being first on the system. The company selling the software agrees to run the trial at no cost, on the basis you sign up for a contract following a successful trial.
The key to success in this scenario is getting the right people from your business, the AI company selling the software, and your retail customers all directly involved in the trial.
Getting people’s input early will anticipate and prevent future barriers, and it also kicks off the acceptance and training period.
Measure the early results and if it seems successful, you can plan the next level of the trial by adding more retailers, testing integration capabilities, or both.
Step 4: Leverage
Once you’ve got early results from your first foray into innovation, Step 4 is about sharing these results in ways that makes it easier to scale the innovation and new ways of working.
For example, as your innovation idea proves successful and you want to expand the trial, there may be people in your business who are nervous about the technology side of it.
You need them to get onboard, and they’ll have a much easier time understanding its value if it’s presented as metrics they already know and care about (e.g. retailer feedback and sales figures) — instead of a bunch of confusing information about AI computing.
As you leverage success inside the company, you can also share innovation successes externally to attract new customers and new types of job applicants.
Step 5: Disseminate
The true secret to being adaptive to change is that it’s everyone’s job.
There’s no such thing as being able to know everything, see everything, and call all the shots anymore. The industry has just become too big, and the world too complex.
The final step is therefore, getting the first four steps to spread as new ways of working across the company.
A key part of this is helping people across the company join new innovation initiatives, so they can learn from others and gain new skills.
This starts with empowering your people to spot opportunities for improvements (or challenges that need solving) by providing basic guidelines and support mechanisms for ways to do it.
For example, delivery drivers can be armed with a mobile app to help them report problems, gather suggestions from retailers, and play a role in a trial when something they’ve reported through the app turns into a new innovation idea.
This is especially important if customer facing employees like your delivery drivers are currently just trying to get by day-to-day.
It can be a gruelling job, and to see no end or improvements in sight, isn’t going to result in brilliant customer service for the retailer waiting on the other end of that long delivery route.
Final advice: Just start Step 1
You shouldn’t try to move five fully loaded pallets with a single forklift, nor should you try to attempt all five steps at once.
Just try one of the suggestions in Step 1 and you’ll be amazed at how much more tangible and practical one of these ‘innovation experiments’ seems when the idea comes from you or one of your own people.
And it’s true that innovating doesn’t require quitting your day job, but you do need to start adapting to change now.