Adapting to New Challenges in the B2B Wholesale Distribution Industry

Faced with increasing competition, new buyer behaviors, and tariffs, wholesalers need to rethink their strategies to stay competitive. Businesses that stick with their legacy processes risk losing market share to more agile competitors, including digital-first B2B marketplaces like Amazon Business.

What we’re seeing in the current market 

At the 2025 National Association of Wholesalers and Distributors (NAW) Executive Summit, speakers addressed critical issues such as: 

• Economic instability
• Technological advancements
• Buyer and workforce changes
• The increasing importance of capital efficiency

Businesses that once relied on personalized field sales, static pricing models, and limited financing options  are feeling the pressure to adopt digital tools and look beyond traditional sales and payment methods.

Changing workforce demographics

Younger generations have started to take the reins in procurement and sales roles, which is changing the way B2B transactions are handled. At the same time, an aging sales workforce is struggling to adapt to modern sales strategies, forcing companies to rethink how they engage with buyers.

Millennials and Gen Z are now the buyers

For decades, B2B purchasing relied heavily on personal relationships, in-person sales meetings, and long negotiation cycles. With tech-savvy Millennials and Gen Z now making up 71% of B2B buyers, these traditional methods are becoming either hybridized or obsolete.

Unlike previous generations, younger buyers prefer speed, convenience, and transparency over face-to-face interactions and negotiations. 63% of sales leaders say that digital buying behaviors will have a significant impact on their organization in the next two years.

Self-service purchasing

Young buyers prefer eCommerce platforms, online portals, and mobile apps for placing orders. Rather than calling a sales rep or waiting for a weekly field visit, they want the ability to browse products, check real-time inventory, and place orders at their own convenience.

Fast checkout

In the current market, speed is everything. Buyers expect a frictionless checkout process, instant order confirmation, and multiple payment options such as credit card, ACH, and Buy Now Pay Later (BNPL). Traditional Net 30 terms are becoming less appealing as buyers look for flexible financing solutions that fit their cash flow needs.

Prioritizing availability and delivery

While older generations focused on price negotiations, today’s buyers are more concerned with whether a product is in stock and how quickly it will ship.

Younger buyers value reliable shipping, real-time order tracking, and fulfillment transparency over small price discounts. This shift means wholesalers need to optimize their inventory management, logistics, and fulfillment processes to meet these expectations.

The aging sales workforce

The sales side of the industry is also changing as Baby Boomers retire and Gen X and Millennials take over. This generational transition presents both challenges and opportunities for wholesale distribution businesses.

Old-school sales tactics are proving less effective, with seasoned sales reps struggling to adapt to the new digital sales environment where buyers expect data-driven recommendations and instant communication. Wholesalers need to think about equipping their teams with digital tools that enable smarter, more efficient selling. 

How businesses can adapt

• Invest in digital sales enablement platforms: AI-powered CRM systems, automation tools, and real-time customer data can help sales teams sell smarter and faster.
  
  
• Combine traditional sales with digital tools: Relationships still matter, but sales reps need to combine these skills with automated outreach, and modern tools for sales, inventory management, and digital engagement.
  
  
• Upskill sales teams: Providing training to sales reps on composable eCommerce tools, new financing options, and AI will ensure they remain successful in the digital marketplace.

The wave of mergers and acquisitions

As companies race to expand their market share and remain competitive, larger distributors and private equity firms are aggressively merging with or acquiring smaller, family-owned businesses, many of which have been passed down for generations.

In some cases, distributors are acquiring 8-10 companies per year, while others are executing even more rapid expansion strategies. One merchant at the NAW Executive Summit reported acquiring 36 companies in just 24 months.

This surge in activity is being driven by several factors:

• Market fragmentation: The wholesale industry has long been dominated by small, independent businesses that operate within regional or niche markets. Larger firms see these businesses as prime acquisition targets, allowing them to consolidate supply chains, expand into new territories, and create economies of scale.
  
  
• Older business owners seeking an exit strategy: Many generational business owners are reaching retirement age, but their successors are often uninterested in taking over. Rather than shutting down, these owners are opting to sell to private equity firms or large distributors who are looking to strengthen their portfolios.
  
  
• Increased competition: With Amazon Business, Alibaba, and other online B2B platforms and marketplaces gaining traction, traditional wholesalers are under pressure to modernize their operations. Acquiring smaller companies allows them to quickly add new product lines, digital tools, and customer bases without having to build from scratch.

Why this is important for smaller wholesale distributors

While the merger and acquisition trend can create opportunities for industry growth, it also comes with its own set of challenges, particularly for smaller wholesalers that are already struggling to compete.

Independent wholesalers often lack the resources, technology, and financial backing of large competitors. As the big players grow through acquisitions, smaller businesses may find it even harder to match their prices, logistics, and digital capabilities.

On the flip side, being acquired comes with significant disruptions. Acquired companies need to integrate into the parent company’s supply chain, IT infrastructure, and operational model, which can create delays, inconsistencies, and supplier renegotiations. Many small businesses being acquired are still running legacy systems, making the integration into larger, tech-driven organizations more complex.

Businesses relying on these distributors can face uncertainty with pricing, inventory availability, and delivery timelines during the acquisition and merger processes.

How businesses can adapt

Acquisition is not the only path forward. Independent wholesalers can strengthen their position by focusing on digital innovation, customer service, and niche market expertise.

• Invest in new technology: Wholesalers that embrace AI-driven analytics, automated order processing, and self-service eCommerce platforms will be better positioned to compete with larger players that prioritize efficiency. Offering digital-first solutions that simplify purchasing and financing will help maintain the loyalty of younger buyers.
  
  
• Focus on the customer experience: Instead of competing solely on price, wholesalers can differentiate by offering specialized expertise, value-added services, and amazing customer support. Offering customized procurement solutions, personalized pricing, and flexible fulfillment options can also retain customers.
  
  
• Modernize financing: With capital efficiency becoming increasingly important (as we’ll discuss below), wholesalers should explore more flexible financing solutions for their customers. Buy Now, Pay Later (BNPL), outsourced accounts receivables, and AI-powered credit assessments can all give buyers the speed and flexibility they need to manage cash flow.

Navigating tariffs and economic uncertainty

With supply chain disruptions, rising operational costs, and the on-and-off tariff situation, wholesalers are being forced to rethink how they manage risk, pricing, and financial strategies. These challenges can make it difficult to maintain strong profit margins.

Tariffs have introduced a new level of complexity for wholesalers who rely on global supply chains. Fluctuations in trade regulations mean that companies must be prepared for sudden cost increases that can directly impact their bottom line.

Without a clear strategy to manage this, businesses may find themselves absorbing additional costs, struggling with inventory shortages, or losing customers to competitors that can offer more stable pricing and reliable fulfillment.

How businesses can adapt

• Diversify supplier networks: Relying too heavily on a single supplier or region can leave companies vulnerable to trade restrictions, tariffs, or unexpected stock shortages. By expanding supplier networks and sourcing materials from multiple regions, businesses can reduce their dependency on any one market and create a more stable procurement process. This enables companies to act quickly when disruptions occur, minimizing the impact of sudden cost increases or import restrictions.
  
  
• Dynamic pricing: Real-time pricing driven by AI can help businesses adapt quickly to market fluctuations.
  
  
• Flexible financing: Economic instability can lead to rising prices, leaving many customers with cash flow challenges that make it harder for them to place large orders or commit to bulk purchases. Instead of losing business, wholesalers can implement flexible payment solutions (like BNPL) that allow buyers to spread costs out over several months to manage costs more effectively.

Taking a digital-first approach to B2B transactions

Modern buyers now expect the same level of speed, convenience, and transparency in B2B purchasing that they experience in B2C retail. This means that wholesalers who don’t invest in digital eCommerce platforms risk losing customers to more agile competitors.

Modern eCommerce platforms and marketplaces offer an effortless buying experience with instant pricing, real-time inventory updates, and automated order fulfillment, making it difficult for wholesalers to compete using outdated systems.

The benefits of a digital-first sales model

Millennials and Gen Z B2B buyers expect the companies they purchase from to have deep insights into their purchasing behavior. By taking a digital-first approach, wholesalers can gain data-driven insights that help them understand individual customer needs, and target specific customers with personalized offers. AI tools can also provide analytics which can be used to identify opportunities for cross-selling and upselling.

By digitizing the ordering and checkout process, wholesalers can offer customers a seamless and efficient experience, allowing buyers to place orders instantly, re-order with a single click, and receive real-time notifications about their order.

A well-designed B2B eCommerce platform eliminates the need for email-based quote requests and manual order processing, replacing them with a self-service system that speeds up transactions and reduces errors. For buyers who frequently place recurring orders, features like saved order templates, subscription-based purchasing, and automated reordering further simplify the process, leading to greater customer satisfaction and loyalty.

How businesses can adapt

• Invest in a comprehensive eCommerce platform: Creating a B2C experience for B2B buyers gives customers self-service purchasing, real-time inventory tracking, and seamless order management.
  
  
• Integrate AI-driven tools: Pricing, analytics, and automation tools enhance operational efficiency decision-making.
  
  
• Include flexible financing solutions: Digital-first payment options such as automated credit approvals, BNPL options, and embedded payments remove financial barriers for buyers, and drive higher sales volumes.
  
  
• Optimize the customer experience: Focus on speed, transparency, personalization, and ease of use, ensuring B2B buyers can complete transactions effortlessly.

Implementing AI and automations for efficiency

According to recent SAP research, the wholesale distribution industry is moving quickly toward AI. 54.8% of midmarket companies are adopting business AI applications, and 53.3% say that adopting generative AI is a high priority.

Artificial intelligence and automation are no longer futuristic concepts reserved for tech giants. They have become essential tools for wholesalers looking to improve efficiency, reduce costs, and improve decision-making. 

As B2B eCommerce grows more competitive, wholesalers are looking for intelligent systems that can streamline existing processes. Companies that are late adopters of new technology risk falling behind as competitors implement AI to automate time-consuming tasks, improve the buyer experience, and increase profits.

How businesses can adapt

• Start with business goals: Conduct a thorough evaluation of potential AI tools to assess their ROI and ensure they align with long-term goals. AI technologies also need to integrate smoothly with existing ERP, CRM, and eCommerce tools.
  
  
• Identify key areas where AI can drive efficiency: This might include inventory management, chatbots for customer support, and pricing optimization.
  
  
• Explore dynamic pricing models: Pricing has always been a delicate balancing act for wholesale distributors. Too high, and customers turn to competitors. Too low, and profit margins suffer. Traditional pricing models often fail to account for things like real-time market changes, cost fluctuations, and competitor strategies, which is where AI-powered dynamic pricing models shine. With the ability to analyze vast amounts of data on the fly, AI can adjust prices in real time based on demand, inventory levels, and market trends, as well as personalizing prices for customers.
  
  
• Provide training: Your teams should be given adequate training on any new AI systems to ensure adoption.

Improving capital efficiency

One of the biggest challenges wholesalers face is ensuring that customers continue to make purchases without defaulting on payments or delaying orders due to financial constraints. With the current economic fluctuations, it’s risky for wholesalers to rely solely on traditional financing solutions.

How businesses can adapt

• Offer flexible financing: Solutions such as Buy Now, Pay Later (B2B BNPL) provide an ideal solution for managing risk and cash flow. BNPL shifts the financial risk away from the wholesaler by partnering with third-party lenders or fintech providers.
  
  
• Outsource accounts receivable: Instead of carrying this burden alone, wholesalers can improve liquidity by outsourcing receivables management to third-party firms. This reduces the risk of non-payment, and frees up internal resources to focus on core business activities rather than chasing down payments.
  
  
• Use AI to streamline approvals: AI-driven credit assessment tools can automate approval processes, reduce wait times for customers and expedite order fulfillment. With this technology, businesses can offer more flexible financing options while reducing their exposure to high-risk buyers.
  
  

As a next step, consider exploring how to implement flexible financing solutions, AI tools for sales and inventory management, and eCommerce portals for seamless purchasing. These strategies can give you a solid foundation and competitive edge as the wholesale distribution industry continues to change. Credit Key is the only solution on the market providing flexible payment terms at the point of sale across all B2B sales channels. We can provide your SMB and enterprise customers with the same flexibility and convenience they enjoy in B2C transactions. Learn more here.