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Adopting e-commerce and omnichannel retail in the wholesale club industry

5 min read

Restaurant and Foodservice

(Photo: Flickr user Rosa Say)

E-commerce is rapidly emerging in the food and beverage industry, whether you’re talking about restaurants adopting mobile payments or online grocery delivery services that will bring food right to your doorstep, but wholesale club retailing is one category that has not been so quick to adopt e-commerce and digital technology. While retailers like Costco and Sam’s Club are well-established in the retail industry, shoppers don’t often associate them with online shopping. But is that changing?

It very well should, according Tim Reay, head of grocery at e-commerce digital agency Salmon.

“[Omnichannel retailing] is currently an area which we believe is underexploited by the wholesale industry and we believe that it’s ripe for expansion,” he said. “Those who don’t adapt to this growing trend in the industry risk losing out to digital-savvy competitors and an ever-growing army of suppliers who are looking to supply goods direct to consumer through e-commerce.”

One reason wholesale retailers are well-positioned to adopt e-commerce and omnichannel retailing, Reay said, is because their customers are already online. People are spending more time and money online, and incorporating e-commerce efforts would be a way for wholesale retailers to reach existing shoppers where they prefer to spend their time.

“They do this in their daily lives for the ease, convenience and for the level of customer service it can offer them. It is inevitable that these consumers will seek the same advantages in their business transactions,” Reay said.

Another advantage of e-commerce for wholesale retailers is that it could help draw in new customers, he said. Currently, the typical shopper at wholesale clubs is the parent of millennials, but more robust e-commerce and omnichannel efforts would draw in millennial shoppers, according to Reay. Typically, millennials either live with their parents or live in urban areas without cars where they shop online and take advantage of home delivery options. In its present state, wholesale club retailing does not lend itself very well to that lifestyle, but adopting an omnichannel strategy would help change that, he said.

For Boxed Founder CED Chieh Huang, that was precisely the problem he was trying to solve with his one-year-old e-commerce startup. Boxed’s mobile application allows users to shop for items in bulk right from their smartphones for at-home delivery in two days or less without membership fees. Huang said he had grown up shopping at wholesale clubs with his parents, but found that that kind of shopping didn’t fit his lifestyle when he moved to New York City as a young professional.

Huang said he saw a huge opportunity for applying e-commerce to wholesale retail, especially as consumers who grew up in the digital era get older. He said what appealed to him about the market was that online wholesale retail hadn’t really been done, and he saw consumer packaged goods as the last e-commerce frontier.

“Our goal is to transform mobile commerce,” he said. “I think it’s the right time for us.”

Boxed was started with young professionals living in urban areas in mind, but its target customer has turned out to be a bit different, according to Huang. He said the typical Boxed shopper is female, has one child and is between the ages of 25 and 44. And the customer base has steered Boxed’s merchandising to be atypical for the wholesale retail space. According to Huang, Boxed stocks a lot of ethical cleaning products and organic and gluten-free items because that is what its shoppers are looking for.

In the end, Huang said Boxed is all about creating a personal mobile shopping experience that meets customers’ needs.

“I think we’re onto something, and it’s resonating,” he said.

In reality, Reay said the wholesale industry as a whole is well-positioned to incorporate a shopping experience similar to what Boxed offers. Wholesale’s large product ranges and complex pricing models make it a good fit for e-commerce, where retailers could target customers with personalized deals and offer them products in addition to the items they regularly purchase, he said.

But for wholesale retailers looking to take enter the e-commerce game, there are some important things to keep in mind, according to Reay. He said wholesale club retailers should take time to understand their customers, keep the basics of retail in mind, emphasize a good user experience and have a firm hold on current and future business strategies in order to successfully incorporate e-commerce and omnichannel efforts.

“In truth, the most important thing for wholesale retailers to consider with multichannel commerce is to apply it to the basics of their business,” he said.

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