Every few weeks, it seems, there’s a headline about yet another retailer filing for bankruptcy or going out of business. Sports Authority and Sports Chalet are the latest to fall victim to online marketplaces, as customers spend more of their money on the internet and less at brick-and-mortar stores.
While retailers are considered business-to-consumer resellers, business-to-business resellers face some of the same challenges.
B-to-B resellers, or wholesalers, buy goods from manufacturers and then resell them to businesses. So, it makes sense that wholesalers would be concerned about the internet challenging their businesses by, in effect, cutting them out as the middlemen. Technology, after all, can change long-standing business practices seemingly overnight.
But the good news is that many wholesalers have avoided the challenges that retailers face.
“There’s a bit of a lag,” said Carlton O’Neal, clinical professor of marketing at University of San Diego School of Business, regarding the effect of the internet on distributors. “It’s an irony actually.”
Wholesalers have remained relevant largely by providing fast and efficient service. They can often deliver products within hours. And they are offering special services to ensure they stay relevant.
“There are always challenges with new technologies,” said Carlos Becerra, founder, chairman and CEO of WSA Distributing. “But we strive to pivot, change and adapt with the market.”
Founded in 1999, WSA Distributing is one of the fastest growing providers of phones and accessories in North America. The Kearny Mesa-based company handles both business-to-consumer shipments of single devices and shipments of several thousand devices to retailers.
As an authorized distributor for Samsung, Kyocera, LG, Novatel, ZTE, Huawei and more, WSA works with the manufacturers to distribute more than 25,000 handsets a day.
WSA built its business by maintaining close relationships with manufacturers and paying close attention to customer satisfaction.
Among its services, WSA offers warehousing, handset provisioning, activation, branding and customized packaging. Its additional value-added services include forward logistics, reverse logistics and supply chain management.
Sunshine Supply Co., which distributes waterproofing materials, also offers a wide range of customer services that make its business model work.
“We’re doing really well,” said Jim Pyle, who recently acquired the Morena District company from its founder and has expanded to three additional locations in Southern California, as well as operations in Salt Lake City and Denver.
The 42-employee company distributes sealants, deck coatings, glazing accessories and concrete repair materials. Similar products are available on the internet, so Sunshine Supply has to offer more.
While its customers are primarily general contractors and subcontractors, Sunshine Supply also distributes products from manufacturers through dealers to stores and retailers.
Competition is more fierce than in the past, Pyle said, as similar companies mature and grow into Sunshine Supply’s market, and as the popularity of big box stores such as The Home Depot and Lowe’s Home Improvement stays strong.
“How we deal with that is being the experts in what we do,” Pyle said.
A large sales staff can help troubleshoot problems. Many San Diego high–rise projects face waterproofing issues when digging below ground for parking garages and foundations, but Sunshine Supply offers free job-site visits so staff can evaluate waterproofing and glazing needs first hand.
Sunshine Supply also delivers its products locally at no charge, and the company will test products for manufacturers to make sure they’re bonding properly.
Many manufacturers prefer to distribute through wholesalers, rather than through big box stores, because wholesalers often have a better understanding of how the particular products are used, Pyle said.
Big box stores have a different business model that caters to a different customer base.
“Their whole goal is to get someone to pick up a tube of caulking and take it to the register,” Pyle said. “Our goal is to waterproof the whole building.”
And that’s tough to do, even if you Google it.
Meanwhile, WSA has benefited from the move to more internet sales.
“Online sales are having huge impacts on businesses across all markets,” Becerra said. “We do fulfillment for companies that sell B-to-C [business-to-consumer] and those seem to be constantly growing. So, in turn, it’s good for our services side of the business.”