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The food and beverage distribution industry is ripe for digital transformation, and distributors themselves can be on the front lines of change by launching a food and beverage distributor marketplace.
Major ecommerce companies like Amazon, Alibaba, and eBay have shown how marketplaces — which bring together multiple merchants and vendors in a single digital space — aren’t just for business-to consumer (B2C) sales. For example, Amazon Business, Amazon’s business-to-business (B2B) sales channel, is expected to see its gross merchandise volume soar 31.7% this year, accounting for one-in-three transactions between businesses.
While some distributors are still receiving orders by fax machine, they’re nonetheless uniquely positioned to play a big part in the shift of B2B sales from offline to online — even as players like Amazon encroach on the business-facing market. Distributors are already serving the function of a marketplace by connecting buyers and sellers. As intermediaries between manufacturers and B2C retailers, they’ve spent years developing personal relationships on either end of the supply chain.
Distributors have done all the legwork to build the trust needed to make sales over phone calls and emails. Now, the multi-vendor marketplace model presents an opportunity for them to serve existing clients even better than before while also expanding into new markets.
Launching a food and beverage distributor marketplace presents multiple opportunities. Here are five main benefits:
Anyone operating a food and beverage distributor marketplace can expand their product offerings by including other vendors’ catalogs. For example, a dietary supplement distributor could add an organic produce supplier to their B2B marketplace to attract more retailers (buyers) from a previously untapped industry segment.
In a traditional distribution model, distributors purchase products from suppliers. Then they’re on the hook for warehousing the new inventory until it makes its way to retailers. In a marketplace, however, operators provide a platform that facilitates transactions and can outsource shipping and warehousing to vendors. At a time when there’s an acute shortage of warehouse space in the United States, an asset-light ecommerce model is particularly significant.
Another benefit of a food and beverage distributor marketplace is the speed with which operators can change their catalogs to respond to emerging trends. As the operator isn’t burdened with purchasing and warehousing all of their inventory, they can quickly — and frequently — experiment with new products without having to worry about overhead.
Distributors have long kept wholesale pricing under wraps, fearing they’ll undercut partners or see lower profit margins themselves. However, the world’s biggest marketplaces are known, in part, for the ease with which buyers can shop around — and more B2B buyers want an Amazon-like experience. In fact, 62% of distributors say posting all pricing online improves their close rate for B2B sales, according to one industry survey.
In the wake of Covid-19 and other ongoing disruptions like geopolitical conflict, supply-chain challenges have come to the forefront for food and beverage distributors. By working with a wider network of fellow distributors, as well as retailers and manufacturers, by becoming a food and beverage distributor marketplace, you’re cushioning your business against the impacts of supply-chain disruptions. Marketplace operators have a plan B, C — and beyond.
Early online marketplace adopters have arrived in the food and beverage distribution industry. In fact, the first crop of them dates back as far as several years. From industrial kitchen supplies to craft libations, multiple food and beverage distributors have already carved out their own niches with marketplaces.
Here are five examples of the creative ways you can use a food and beverage distributor marketplace:
1. UNFI Easy Options: In 2021, United Natural Foods, Inc., a long-running — and pre-internet — distributor of health and specialty food, established its digital Community Marketplace. “Access to the largest assortment of available items is an area of increasing importance to our customers, and Community Marketplace delivers on this need while giving brands an easy-to-use platform to gain the speed, scale, and agility to win in today’s marketplace,” says UNFI’s VP of ecommerce, Tom Kraus, in a news release.
2. Food Service Exchange: FSX Launched in 2020 and is a marketplace where restaurants, hotels, and other service-industry businesses can purchase discounted equipment from manufacturers and dealers. The items are overstock, discontinued, or have light dings and dents from being displayed in showrooms, allowing the marketplace to offer competitive pricing and attract a large buyer pool. Available items run the gamut from kitchen and bar equipment to furniture and even janitorial supplies.
3. Provi: A self-described “all-in-one alcohol marketplace,” Provi pairs bars and restaurants with distributors, suppliers, sales reps, and brands. The platform is said to save buyers 20 staff hours a month as it enables them to stock their entire bar in one place. Provi, founded in 2016, also claims it’s serving 10% of licensed US alcohol retailers — and it isn’t showing signs of stopping. In late 2021, the marketplace announced an additional $75 million in funding from investors on the heels of a strong valuation.
4. Agorara: Spanning the entire food-supply chain, Agorara helps farmers, food manufacturers, wholesalers, and importers sell food and beverage products to buyers including retailers and distributors (as well as other wholesalers and distributors). Agorara also provides specialized marketing services for sellers, demonstrating just one of many additional revenue streams that food and beverage distributor marketplace operators can tap into.
5. Notch Marketplace: Upwards of 1,500 restaurants use Notch Marketplace to source food and beverage products and ingredients from wholesalers. The marketplace is just part of the digital Notch platform, which was launched in 2015 as ChefHero and also includes other revenue streams like inventory-management services and more. Like Agorara, Notch illustrates different paths to marketplace monetization.
Across industries, marketplace operators are capitalizing on advantages like the potential for larger product catalogs and lower overhead. However, thanks to their existing networks, few are as well positioned as distributors are to profit from the marketplace model — for now.
New food and beverage distributor marketplaces are constantly joining the fray, and existing ones, like Provi and Notch, are flourishing.
With competition mounting, you can’t afford to delay the launch of your food and beverage distributor marketplace. Consider a purpose-built marketplace platform like Nautical, which lets you launch a marketplace in 60 to 90 days. Otherwise, your company’s food and beverage distributor marketplace runs the risk of being stale on arrival.
🔵 Keep reading about how food and beverage distributors are leveraging digital marketplaces 🔵
