Leveraging data to reinforce profit margins

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Distributors can leverage data to overcome their biggest pricing-related challenges, improve their profit margins and boost their bottom lines. The right pricing strategy is a critical component that companies can’t afford to overlook and is one of the most important aspects of maintaining profitability in wholesale distribution.

Add the rigours of B2B online selling, the distributor’s role as “middleman” and increased competition to the equation, and the need for a consistent, effective pricing strategy becomes even more mission-critical.

In the manufacturer-distributor-customer value chain, one of the wholesale distributor’s most pressing challenges is being able to mark up prices in a way that helps maintain profitability while not pricing a distributor out of the market.

This balance is getting harder to achieve in the current B2B business environment, where the next competitor, price comparison or huge online retailer is literally one mouse click or screen tap away.

Put simply, staying profitable and competitive isn’t getting any easier for distributors.

The business-to-consumer twist

With B2B buyers acting more and more like B2C customers every day, distributors are sharpening their pricing pencils and finding new ways to position themselves for success in the market.

In its Wholesale Distribution Disrupted report, Deloitte points out that the expectations in B2B commerce are increasingly informed by developments and experiences in B2C, and that customers want experiences like transparent pricing; a rich, tailored user experience; and communities and social connections.

The problem is that B2B pricing has traditionally been highly complex and somewhat opaque.

Deloitte notes, “The growth of B2B eCommerce and the expectation that the ‘price you see is the price you pay,’ along with the ability of buyers to leverage digital tools to quickly price shop, have increased pressure for greater pricing transparency.”

The digital selling world is also driving greater pricing and availability transparency. “Some distributors have thrived in market niches with a certain level of pricing and availability opaqueness,” Deloitte notes.

Amazon, for example, enables B2B buyers to compare their negotiated price for specific items with that of other Amazon sellers, giving the former the chance to buy at a price below their negotiated price. Concurrently, B2B buyers are utilising analytics to research the price they pay for items

How to gain an edge on the competition

Even those distributors that think they have the pricing game under control will surely face a new competitor, get hit with a new market trend or face another economic challenge in the near future.

These forces of change are inevitable, but the good news is that distributors that leverage technology platforms like NetSuite and that take the time to develop viable pricing strategies will be well braced for success in the future.

Distributors of the future will also understand that effectively engaging customers require true innovation in executing the value chain. Traditional approaches to inventory, logistics, pricing and rebates will be reimagined through the application of advanced analytics and technology innovations.

NetSuite’s powerful native capabilities, for example, help distributors establish multiple price levels; customer and currency-specific pricing; dollar and percentage discounts; promotion costs; and transaction-level gross profit analysis for a quick double-check on the effectiveness of a pricing strategy.

Add embedded eCommerce offerings to the equation and distributors can confidently offer website pricing that is updated in real-time, thus ensuring accuracy and avoiding even the slightest of pricing errors that can quickly become a costly problem to overcome.

To find out more about big-data and ERP download our guide here.

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