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EDUCATING ENTREPRENEURS FOR THE WORLD

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• Wholesale trade in the EU Internal Market: how to be mutually inspiring?

Catherine Pardo

Wholesale Day – 4 November 2013 – Brussels

Chaire Intermédiation BtoB – CGI / EMLYON Business School

BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo

Agenda

Wholesale trade • What are we talking about• How to talk about it

Wholesale trade • Importance • Dynamics at stake

Wholesale trade in the European Union: a potential for mutual inspiration: a French / German illustration


1/ Wholesale trade:

What are we talking about?How to talk about it?


Wholesaling is involving firms “Exclusively or primarily engaged in the resale of goods in

their own name to retailers or other wholesalers, to manufacturers and others for further processing, to professional users, including craftsmen, or to other major users.

The goods can either be resold in the same condition or after the processing, treatment, packing or repacking usually carried out by the wholesale dealer.

(Source : European Commission, 1990; quoted by Quinn & Sparks, 2007)

Wholesale: what are we talking about?



Wholesale is the resale (sale without transformation) of new and used goods to retailers, industrial, commercial, institutional or professional users, or other wholesalers; alternatively.

Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots (for example, pharmaceuticals), store, refrigerate, deliver and install goods, engage in sales promotion or label design for their customers.

The principal types of businesses included are merchant wholesalers, in other words, wholesalers who take title to the goods they sell

(Source : Eurostat – Statistics explained - 2013)



Business to business distribution (or wholesaling) is concerned with

all the activities in which “goods are bought for business or

institutional purposes (as distinguished from personal or ultimate

consumption)” (Beckman, Engle & Buzzell, 1959, p. 3).


Wholesale: how to talk about it?

WHOLESALER

CUSTOMER(companies;

retailers; other wholesalers;

public authorities…)

PRODUCERMANUFACTURER



WHOLESALER

CUSTOMER(companies;

retailers; other wholesalers;

public authorities…)


Wholesale trade: a specific middle space


Wholesaling activities are necessary…

wholesalers are not

Wholesalers are unnecessary &

costly: disintermediation

But wholesalers can do wholesaling better than customers and

producers…


Wholesalers are only “box-movers”

No productsNo direct

contact with the end-users

But wholesalers are above all service providers and as

connectors between two channel levels can play an important role



WHOLESALER

CUSTOMER(companies; retailers;

other wholesalers; public authorities…)


What do they do in the distribution

network?

What kind of resources do they need? What kind

of resources do they have?

What can they do with such resources



WHOLESALER

CUSTOMER(companies; retailers;

other wholesalers; public authorities…)



network?





network?






THE«TRADER»

THE«DISTRIBUTOR»

THE«SUPPLIER»

MANUFACTURERS PRODUCERS



CUSTOMERS

CUSTOMERS

CUSTOMERS

(Source: adapted from Gadde & Snehota, 2001)



CUSTOMERSMANUFACTURERS PRODUCERS

THE «PARTNER»

(Source: adapted from Gadde & Snehota, 2001)


2/ Wholesale trade:

Importance & dynamics at stake


Importance of wholesale trade

In Europe: • 1.8 million companies• 10.5 million employees

• More than 5000 billion euro turnover…


Importance of wholesale trade

One of the largest sectors within the EU-27 ’s non financial business economy

Wholesale trade turnover was

EUR5258 billion in 2010

equivalent to 22.2% of the non-financial

business

Value added in 2009 was EUR549.9

billion,

10.1% of the non-financial

business economy total


What is at stake in wholesale trade?

Offering adaptation

Specialisation

Consolidation

Internationalisation

IT use

Organizational transformations

To be thought of in terms of value proposition

As a consequence of the growing complexity of productsAs a support to offering adaptation & customization

As a result of customers’ sourcing strategiesBecause of the amount of resources needed (critical size)

As a result of customers’ & suppliers' international strategies

In contradiction with the traditional “local” image of W.

For e-businessAs a tool for a wholesaler as an “infomediary”

New organizational capabilities: strategic vision; customers & suppliers linking; market intelligence;

offering solutions ; organizational response…


3/ Wholesale trade in the European Union:

A potential for mutual inspiration a French / German illustration


A potential for mutual inspiration Methodology

10 face to face in-depth interviews have been carried out in Germany – summer/autumn 2013

Wholesalers, associations of wholesalers, consultants

Industrial distribution: wholesale of electrical products, chemical products, HVAC…

Interview guide + Interview audio-recorded

Transcripts and content analysis


A potential for mutual inspiration Main findings

Wholesalers do not tell a radically different story…

• A « middle space » position between producers/manufacturers and customers (companies,

retailers, distributors, public authorities…)• Classical « wholesaling missions » evolving toward more

services • Growing complexity of products

• Necessity to change and adapt organizations as a result• The issue of IT



But, sensitivities & behaviours toward different wholesaling issues display differences

• How to position oneself in the distribution value chain• How to deal with the consolidation challenge• Maturity about IT use• Emphasis put on employee level of qualification• Sensitivity of customers to environmental issues, rules &

regulations• Qualification / expertise level of installers (as direct customers)



1. Position in the distribution value chain

2. Consolidation challenge

Wholesalers in both countries may differ in the way they give account of their position in the distribution value chain:

providing services to customers or being a partner for both customers AND suppliers (manufacturers, producers…). This

may have consequences on how activities can be redistributed along the distribution value chain…

Wholesalers in both countries may appear more or lesssensitive to the notion of “critical size” and above all may display

different visions of how to achieve it: organic growth, acquisitions or… associative/collaborative networks. This may

have consequences on the ability of a wholesaler to access resources needed to meet upcoming challenges



3. Maturity in IT use

4. Employee level of qualification

Wholesalers in both countries may be more or less mature in the use of IT: is IT still a problem or a means? and they may have a

more or less enlarged view of IT as a resource to support wholesale activities: not only e-business, but also e-

procurement, EDI, XML, SFA, RFID,..

Wholesalers in both countries put more or less emphasis on the need to upgrade employees’ qualifications as a means to deal

with the growing complexity of products distributed, the nature of customers’ demands and wholesalers’ changes. All of this

may have consequences on the ability of wholesaling firms to evolve…



5. Customers’ sensitivity to environmental issues, rules, regulations

6. Installers’ (as direct customers) qualification levels

Wholesalers in both countries account for important differences in terms of installers’ (electricians, plumbers,

…) qualifications which may result in more or less difficulties in transferring complex offering and have

consequences on information and training roles to be taken over by wholesalers

Wholesalers in both countries mention important differences in their customers’ sensitivity to environmental

issues (and more generally rules and regulations) which may result in different roles for wholesalers: educating

customers or “simply” relaying manufacturers’ offerings


Conclusion


Conclusion

Wholesale occupies a specific position in the distribution channels.

Trends toward more complex products, greater actor specialisation will have to be balanced by more coordination

The specific position of wholesalers may be used as a relay, a propagator of value creation within distribution channels: they will become coordinating actors.

In order to do that better specific attention must be given to the activities and actors of wholesaling


References quoted


References

Eurostat http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Wholesale_trade_statistics_-_NACE_Rev._2

Gadde, Lars-Erik & Snehota, Ivan (2001), “Rethinking the Role of Middlemen”, paper presented at the 17th annual IMP conference in Oslo, Norway.

http://www.impgroup.org/paper_view.php?viewPaper=182

Quinn, Jim & Sparks, Leigh (2007). Editorial: Research Frontiers in Wholesale Distribution. International Review of Retail, Distribution & Consumer Research, 17 (4), 303-311.

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Wholesale_trade_statistics_-_NACE_Rev._2






lyon | shanghai educating entrepreneurs for the world wholesale trade in the eu internal market:...

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