What’s Coming in the Electrical Wholesale Industry

05/03/2017
by Elber Gamboa

North American has a booming construction and housing market, which is expected to keep growing. There is also a big demand for energy-efficient electricity products in the market. Combined with innovative technologies those in the electrical wholesale industry can expect customers’ demands to grow and change as well.

SNAPSHOP OF NORTH AMERICAN INDUSTRY

According to IBIS World the Electrical Equipment Wholesaling Industry is focused in the southeast United States. This area accounts for over 26 per cent of all operators for 2017. There is also a high concentration of wholesalers in the west, Great-Lakes and Mid-Atlantic regions, which account for over 18 per cent, 14.2 per cent and 14.2 per cent respectively.

Meanwhile, in Canada the provinces that have the strongest wholesale merchant sales numbers, according to Statistics Canada, are Ontario, Quebec and Alberta, respectively. Within Canada wholesale trade fell 0.2 per cent between the first months of 2017. Yet, there was a six per cent increase over last year, Statistics Canada data shows.

In particular, electrical, plumbing, heating and air-conditioning equipment and supplies merchant wholesalers subcategory increased 2.6 per cent between January and February and 16.9 per cent over last year. In 2016, the industry made $28.8 million in sales, up over $26 in 2013. Sales fell between 2015 and 2016 but not by much. In 2015 industry sales totaled $28.9 million while in 2016 they were at 28.8 million.

LOOKING AHEAD

A presentation by Paul Melville, of Grant Thornton’s Corporate Advisory & Restructuring Services (CARS), stated electrical wholesaler industry players will be successful if they are able to adapt to new technologies quickly, they offer superior customer service even after the purchase has been completed, if they have links with suppliers and an ability to control stock on hand.

Thus the ability of electrical wholesalers to adjust to new ways of doing business and the disruption that modern technologies have brought into the market will be a determining factor of their future success.

These are the top reasons that Supply Expert’s marketplace for electrical wholesaling has been using innovative e-commerce techniques proven to meet the demands of consumers. The team has been looking ahead and has been quick in adapting to the changes.

In a recent report by Facing the Forces of Change series author Guy Blissett stated that wholesaler-distributors are in a time of transformation and businesses need to be ready to respond to the changes in order to survive.

“Adjusting to these changes and capitalizing on new opportunities will be essential for survival in this new business climate,” Blissett wrote in his executive summary.

Blissett also said that those companies that are not able to focus on enhancing their service to the customers will find that they are missing out on a source of revenue growth.

“Distributors unable to achieve the required level of mastery may well still be profitable, but their ability to influence those profits will likely diminish. In such cases, the distributor’s customers and suppliers will largely dictate profitability,” he wrote.

E-COMMERCE AND MORE

One particular area that has not been largely explored by those in the electrical wholesale industry is online sales or e-commerce.

A recent forecast predicts that e-commerce is one area that most electrical distribution companies will be making a 46 per cent investment. This is over the 34 per cent expected to be spent on expanding facilities or the 34 per cent to be spent on employee compensation or training.

These numbers match the concerns expressed by industry leaders in the NAED State of the Electrical Distribution Industry survey, which saw e-commerce, hiring and training and processes and facilities as the top concerns.

As well, there was an prediction last year that companies will be spending more money on e-commerce in the coming years.

However, as important as e-commerce is, many companies have also been advised to invest in business activities over and above online shopping. Content marketing, virtual showrooms and local advertising were among the activities that were expected to rise.

Another area that electrical wholesale companies need to focus on is better data collection to track their customers and shopping habits. This information will help businesses better cater their services and products to customers needs.

Over the year the business model of electrical wholesalers has been changing. There are now hybrid and niche distributors, according to a piece by Paul Eitmant of Electrical Wholesaler. The hybrid model is one where the electrical products are just one facet of the larger business. The niche model is one that sells to a very specific consumer, such as residential lighting fixtures or wire and cable.

Supply Expert has focused on the electrical supply niche and caters to customers looking for a more specialized item.

GOING GREEN

Experts have also said there will be a drive for more eco-friendly products that will help reduce power usage and be more in line with green initiatives.

Blissett said in his report that the green trend will be relevant to wholesalers as challenges but they also present opportunities.

“Capitalizing on these trends now can help distributors gain a substantial competitive advantage down the road,” he wrote.

The Supply Expert marketplace has responded to consumers desire for more green electrical products in their Alternative Energy category as well as their lighting options.

CONCLUSION

Revenue for the electrical equipment wholesaling industry is expected to continue to increase between 2017 and 2021, IBIS World reports. However, most experts have warned that only those companies will to adapt to technologies and to accommodate changing consumer wants will succeed in the market.

It is companies like Supply Expert, which have been adapting to business disruption that is a result of new, modern technologies and capabilities, that will be able to survive in the changing marketplace. Those that are able to adapt while meeting the changing needs of customers will be the companies that will see the most growth.

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