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Growth Drivers: Prospects for Increasing Wholesale Sales
30.10.2014 13867

Growth Drivers: Prospects for Increasing Wholesale Sales


How to achieve increased sales in the b2b segment amid falling demand and where to find the cherished growth drivers? The answers to these questions are known by market expert Nikolai Ignatov, a strategic marketing consultant.

First of all, one should not consider the issue of quantitative, but qualitative increase in sales. Business owners, whom the sale of last year’s collections and an empty warehouse cannot but rejoice, at the end of the year may be surprised to find that the gross proceeds did not cover the financial obligations of the company. In this situation, management inefficiencies are usually attributed to sales and marketing departments. When a managerial change as a result of unsatisfactory sales, the situation repeats exactly after six months.

Most of the problems can already be attributed to falling demand and, as a result, to a natural decrease in revenue.

Strong ties

It should be noted here that what we used to call falling demand is nothing more than deferred demand. In a crisis, the total money supply in the market does not decrease, it is only redistributed between commodity-distributing structures.

As far as the structure of the company adequately predicts and timely responds to changes in the preferences of its target audience, to the creation and constant addition of the value of the goods and services sold, it is possible to predict the growth of financial indicators.

If we consider the standard approach to the shoe sales scheme, then the chain of movement of goods can be represented as follows

way: Shoe b2b-segment is characterized by what is commonly called extreme volatility. That is, a situation in which the risks of non-sale are almost impossible to calculate and mathematically simulate.

Temporary satisfaction here is caused by timely deliveries in the season and guessing the collection by the buyer. But this does not always happen. The wholesaler is, as it were, between a rock and a hard place. On the one hand, he completely depends on the manufacturer, which he does not control in any way, and on the other, on his customers, who can be represented as follows:

1. Trading organizations and wholesale companies, which are the link between manufacturers and end customers:

- companies engaged in the sale of no name products;

- companies selling branded products (mono-brand, multi-brand);

2. Individual entrepreneurs with their own outlets.

At the same time, the manufacturer is also not interested in receiving second-hand information about sales and the market situation, and reacts extremely negatively to any increase in wholesale selling prices. The manufacturer perceives the increase in costs in the wholesale segment as the threat of losing its own business and seeks to engage in sales directly through its own sales department. This inevitably leads to the loss of trust in the wholesaler and the breakdown of business relations with him on the part of individual entrepreneurs.

The manufacturer, in turn, depends on suppliers of equipment and raw materials.

A supplier of equipment depends on suppliers of components. That is, with

the obvious division of labor in the shoe market, there are clear, interdependent relationships in the supply chain.

The market is about risks. Obviously, the retailer of the shoe carries its own specific risks. But the shoe manufacturer also carries them, as does the manufacturer of equipment for shoe factories. Risks

fully covered only when the shoes are sold to the final consumer, that is, the sale act took place.

Thus, among the priorities facing the wholesaler, we can distinguish cluster business structuring.

The market is characterized by the main property that it is implemented in the structure,

built on the principles of self-regulation. The structure should allow optimizing managerial decisions in terms of the feasibility of production, procurement and customer satisfaction. Buyers

legal entities and individuals are speaking out, but at the same time, in the end, the whole system will be viable only if the final goals are satisfied. Despite the fact that independent decisions are made at each level, in general, these decisions must be agreed upon.

All subjects of the cluster have one task, namely, the best satisfaction of the requirements and wishes of those who consume the final product. Consequently, the creation of such a structure where this task will be solved at the lowest cost is the most important driver of sustainable growth in wholesale sales. Without structural minimization of risks at every stage of bringing a product or service to the consumer, the ability to stay in the market in the medium term and receive stable profits becomes very uncertain.

It is necessary to draw up a clear development strategy, divided into three time perspectives, and a matrix of goals and tactical tasks to implement this strategy. Strategy, in short, is a description of what you don't need to do. And tactics describe exactly how not to do this. For example, a wholesaler can influence purchase prices for a shoe manufacturer by simply purchasing raw materials and placing on

enterprise on much better financial conditions than the manufacturer himself does. Thus, you can increase the profitability of your own wholesale business by 10%, only by reducing the cost

procurement (entry).

Effective sales and investment activities in a crisis cannot be established if there is no sufficiently complex and coordinated structure of corporate relations within the framework of a common long-term development strategy. Any structure is cemented by those sectors of the economy that are not directly involved in the production of goods. So, in the shoe cluster, fashion is created and dictated not by the manufacturer, but by companies, which then place orders for production. Therefore, it is with b2b that the movement begins to develop joint investment, production and marketing activities.

The second driver of growth may be assortment policy change, which is based not on the principle of “let them trade and make money,” but on the principle of value marketing, when the product being sold carries a value that is significantly higher than its nominal value. Production

footwear "with a secret", that is, footwear, consumer properties that are revealed during wearing, and not trying on, are hardly available to the technologist, since he simply does not have proper feedback with the retail link.

This is where b2b marketing comes in. In the shoe industry there are at least 12 technological chains, in each of which you can add value for the buyer. For example, on molded soles - frost-resistant

TEP, when assembling the workpieces - antibacterial impregnation, when cutting the workpiece - using one layer of leather for a perfect match of sizes, and not ten layers at the same time, as is done in China, etc.

Third driver - involving small wholesale in the value chain for end customers and focused work aimed at generating targeted traffic at points of sale in which

wholesale deliveries go. Under the next, fourth growth driver, we propose to consider andchange loyalty programs, related sales and strategy to increase the average check... Nowadays shoe sales are like selling milk on a shelf in a convenience store. That is, as such, the sale is not carried out, there is a simple sale of the goods to the buyer, while the implementation is one-time, without after-sales service and additional bonuses. In this regard, special attention should be paid to building a chain of "benefits - properties", which will answer the simple question "why should you buy from us." In conclusion, it should be noted that at present, almost all components of the cluster structure in the footwear market exist.

It remains only to coordinate the actions of each individual participant in the process and determine the sequence of implementation of the steps for closing financial and information flows in the common interests in a single cluster system. The beneficiaries will be those market participants who will be the first to outline common development paths and implement them jointly, distributing the areas of responsibility and interests among themselves.

How to achieve increased sales in the b2b segment amid falling demand and where to find the cherished growth drivers? The answers to these questions are known by market expert Nikolai Ignatov, consultant on ...
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