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LYON | SHANGHAI EDUCATING ENTREPRENEURS FOR THE WORLD www.em-lyon.com Wholesale trade in the EU Internal Market: how to be mutually inspiring? Catherine.

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Presentation on theme: "LYON | SHANGHAI EDUCATING ENTREPRENEURS FOR THE WORLD www.em-lyon.com Wholesale trade in the EU Internal Market: how to be mutually inspiring? Catherine."— Presentation transcript:

1 LYON | SHANGHAI EDUCATING ENTREPRENEURS FOR THE WORLD www.em-lyon.com Wholesale trade in the EU Internal Market: how to be mutually inspiring? Catherine Pardo Wholesale Day – 4 November 2013 – Brussels Chaire Intermédiation BtoB – CGI / EMLYON Business School

2 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Agenda Wholesale trade What are we talking about How to talk about it Wholesale trade Importance Dynamics at stake Wholesale trade in the European Union: a potential for mutual inspiration: a French / German illustration

3 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo 1/ Wholesale trade: What are we talking about? How to talk about it?

4 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesaling is involving firms Exclusively or primarily engaged in the resale of goods in their own name to retailers or other wholesalers, to manufacturers and others for further processing, to professional users, including craftsmen, or to other major users. The goods can either be resold in the same condition or after the processing, treatment, packing or repacking usually carried out by the wholesale dealer. (Source : European Commission, 1990; quoted by Quinn & Sparks, 2007) Wholesale: what are we talking about?

5 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: what are we talking about? Wholesale is the resale (sale without transformation) of new and used goods to retailers, industrial, commercial, institutional or professional users, or other wholesalers; alternatively. Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots (for example, pharmaceuticals), store, refrigerate, deliver and install goods, engage in sales promotion or label design for their customers. The principal types of businesses included are merchant wholesalers, in other words, wholesalers who take title to the goods they sell (Source : Eurostat – Statistics explained - 2013)

6 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: what are we talking about? Business to business distribution (or wholesaling) is concerned with all the activities in which goods are bought for business or institutional purposes (as distinguished from personal or ultimate consumption) (Beckman, Engle & Buzzell, 1959, p. 3).

7 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? WHOLESALER CUSTOMER (companies; retailers; other wholesalers; public authorities…) PRODUCER MANUFACTURER

8 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? WHOLESALER CUSTOMER (companies; retailers; other wholesalers; public authorities…) PRODUCER MANUFACTURER Wholesale trade: a specific middle space

9 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesaling activities are necessary… wholesalers are not Wholesalers are unnecessary & costly: disintermediation But wholesalers can do wholesaling better than customers and producers… Wholesale: how to talk about it? Wholesalers are only box- movers No products No direct contact with the end-users But wholesalers are above all service providers and as connectors between two channel levels can play an important role

10 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? WHOLESALER CUSTOMER (companies; retailers; other wholesalers; public authorities…) PRODUCER MANUFACTURER What do they do in the distribution network? What kind of resources do they need? What kind of resources do they have? What can they do with such resources

11 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? WHOLESALER CUSTOMER (companies; retailers; other wholesalers; public authorities…) PRODUCER MANUFACTURER What do they do in the distribution network? What kind of resources do they need? What kind of resources do they have? What can they do with such resources What do they do in the distribution network? What kind of resources do they need? What kind of resources do they have? What can they do with such resources

12 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? WHOLESALER CUSTOMER (companies; retailers; other wholesalers; public authorities…) PRODUCER MANUFACTURER What do they do in the distribution network? What kind of resources do they need? What kind of resources do they have? What can they do with such resources What do they do in the distribution network? What kind of resources do they need? What kind of resources do they have? What can they do with such resources

13 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? THE «TRADER» THE «DISTRIBUTOR» THE «SUPPLIER» MANUFACTURERS PRODUCERS MANUFACTURERS PRODUCERS MANUFACTURERS PRODUCERS CUSTOMERS (Source: adapted from Gadde & Snehota, 2001)

14 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Wholesale: how to talk about it? CUSTOMERSMANUFACTURERS PRODUCERS THE «PARTNER» (Source: adapted from Gadde & Snehota, 2001)

15 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo 2/ Wholesale trade: Importance & dynamics at stake

16 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Importance of wholesale trade In Europe: 1.8 million companies 10.5 million employees More than 5000 billion euro turnover…

17 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Importance of wholesale trade One of the largest sectors within the EU-27 s non financial business economy Wholesale trade turnover was EUR5258 billion in 2010 equivalent to 22.2% of the non-financial business Value added in 2009 was EUR549.9 billion, 10.1% of the non-financial business economy total

18 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo What is at stake in wholesale trade? Offering adaptation Specialisation Consolidation Internationalisation IT use Organizational transformations To be thought of in terms of value proposition As a consequence of the growing complexity of products As a support to offering adaptation & customization As a result of customers sourcing strategies Because of the amount of resources needed (critical size) As a result of customers & suppliers' international strategies In contradiction with the traditional local image of W. For e-business As a tool for a wholesaler as an infomediary New organizational capabilities: strategic vision; customers & suppliers linking; market intelligence; offering solutions ; organizational response…

19 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo 3/ Wholesale trade in the European Union: A potential for mutual inspiration a French / German illustration

20 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Methodology 10 face to face in-depth interviews have been carried out in Germany – summer/autumn 2013 Wholesalers, associations of wholesalers, consultants Industrial distribution: wholesale of electrical products, chemical products, HVAC… Interview guide + Interview audio-recorded Transcripts and content analysis

21 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Main findings Wholesalers do not tell a radically different story… A « middle space » position between producers/manufacturers and customers (companies, retailers, distributors, public authorities…) Classical « wholesaling missions » evolving toward more services Growing complexity of products Necessity to change and adapt organizations as a result The issue of IT

22 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Main findings But, sensitivities & behaviours toward different wholesaling issues display differences How to position oneself in the distribution value chain How to deal with the consolidation challenge Maturity about IT use Emphasis put on employee level of qualification Sensitivity of customers to environmental issues, rules & regulations Qualification / expertise level of installers (as direct customers)

23 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Main findings 1.Position in the distribution value chain 2.Consolidation challenge Wholesalers in both countries may differ in the way they give account of their position in the distribution value chain: providing services to customers or being a partner for both customers AND suppliers (manufacturers, producers…). This may have consequences on how activities can be redistributed along the distribution value chain… Wholesalers in both countries may appear more or less sensitive to the notion of critical size and above all may display different visions of how to achieve it: organic growth, acquisitions or… associative/collaborative networks. This may have consequences on the ability of a wholesaler to access resources needed to meet upcoming challenges

24 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Main findings 3.Maturity in IT use 4.Employee level of qualification Wholesalers in both countries may be more or less mature in the use of IT: is IT still a problem or a means? and they may have a more or less enlarged view of IT as a resource to support wholesale activities: not only e-business, but also e- procurement, EDI, XML, SFA, RFID,.. Wholesalers in both countries put more or less emphasis on the need to upgrade employees qualifications as a means to deal with the growing complexity of products distributed, the nature of customers demands and wholesalers changes. All of this may have consequences on the ability of wholesaling firms to evolve…

25 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo A potential for mutual inspiration Main findings 5.Customers sensitivity to environmental issues, rules, regulations 6.Installers (as direct customers) qualification levels Wholesalers in both countries account for important differences in terms of installers (electricians, plumbers,…) qualifications which may result in more or less difficulties in transferring complex offering and have consequences on information and training roles to be taken over by wholesalers Wholesalers in both countries mention important differences in their customers sensitivity to environmental issues (and more generally rules and regulations) which may result in different roles for wholesalers: educating customers or simply relaying manufacturers offerings

26 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Conclusion

27 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo Conclusion Wholesale occupies a specific position in the distribution channels. Trends toward more complex products, greater actor specialisation will have to be balanced by more coordination The specific position of wholesalers may be used as a relay, a propagator of value creation within distribution channels: they will become coordinating actors. In order to do that better specific attention must be given to the activities and actors of wholesaling

28 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo References quoted

29 BtoB intermediation Chaire – CGI / EMLYON Business School – Wholesale Day – November, 4, 2013 – Brussels – C. Pardo References Eurostat http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Whol esale_trade_statistics_-_NACE_Rev._2 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Whol esale_trade_statistics_-_NACE_Rev._2 Gadde, Lars-Erik & Snehota, Ivan (2001), Rethinking the Role of Middlemen, paper presented at the 17th annual IMP conference in Oslo, Norway. http://www.impgroup.org/paper_view.php?viewPaper=182 Quinn, Jim & Sparks, Leigh (2007). Editorial: Research Frontiers in Wholesale Distribution. International Review of Retail, Distribution & Consumer Research, 17 (4), 303-311.

30 LYON | SHANGHAI EDUCATING ENTREPRENEURS FOR THE WORLD www.em-lyon.com © EMLYON 2008


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