The National Association of Wholesalers and Distributors (NAW) Executive Summit is a cornerstone event for the wholesale distribution industry. Each year, NAW brings together the most influential leaders, decision-makers, and innovators to discuss the challenges and opportunities shaping the future of wholesale distribution. The goal is to give businesses new insights to help them develop winning strategies and differentiate their business.
This year’s summit, held in Washington, DC, was particularly insightful. It addressed critical issues such as economic instability, digital transformation, workforce and buyer changes, and the increasing importance of capital efficiency.
As a long-time participant and sponsor of the event, Credit Key is at the forefront of these industry discussions. Attending the summit provides us with an opportunity to engage with key stakeholders, understand emerging trends, and reinforce our role as a thought leader in B2B financing and digital commerce.
By understanding these market shifts, we can help our merchant partners to better position themselves for long-term success.
Tariffs and economic uncertainty
The global trade environment is always highly unpredictable, but there’s now an added layer of uncertainty with tariffs in progress and economic policies in flux under the new US administration.
This is creating significant challenges for wholesalers and distributors, particularly when it comes to their pricing strategies, supply chain management, and long-term financial planning.
How tariffs affect wholesale and distribution
Tariffs directly impact the cost of wholesale goods, squeezing down profit margins and forcing businesses to make tough decisions.
Many wholesalers are addressing this by:
- Absorbing increased costs to maintain customer relationships, but reducing profitability
- Passing costs to customers, but potentially damaging customer loyalty
- Seeking alternative manufacturers and suppliers to avoid tariff-heavy imports
The uncertainty surrounding tariffs right now means that companies must stay agile, and be prepared for multiple scenarios to play out.
Distributors at the NAW Summit expressed concern about how to protect their bottom line while still offering competitive pricing. Supply chain disruptions are already an issue due to global market shifts, but tariffs now add an extra layer of unpredictability.
Strategies for managing tariff risks
Diversifying supplier networks is a good first step to staying ahead of tariffs. By reducing reliance on specific countries for imports, businesses can help mitigate risks and create more flexibility around purchasing.
Optimizing pricing strategies using data-driven pricing models can also help businesses stay competitive, without sacrificing profitability. Instead of relying on static pricing structures or reactive cost adjustments, businesses can lean into AI-powered analytics, historical sales data, and real-time market insights to dynamically optimize their prices.
Flexible financing, such as pay over time solutions, are emerging as another key strategy for mitigating tariff costs, helping businesses to navigate cost spikes without disrupting operations. Third party financing options can help reduce exposure and accounts receivable admin for merchants, while enabling their customers to establish a buffer against sudden cost increases.
As 2025 progresses, tariffs and economic instability will be top of mind for wholesalers. Businesses that can find ways to proactively manage supply chain risks, pricing, and capital efficiency will be better equipped to navigate this.
Mergers, acquisitions, and industry consolidation
A wave of mergers and acquisitions (M&A) is reshaping the wholesale distribution industry, as companies look for new growth opportunities and competitive advantages. M&A are still prevalent as a vital strategy for growth and consolidation in an industry with so many privately held generational businesses.
Executives attending NAW shared insights into how they are using M&A to scale quickly, improve operational efficiency, and expand into new markets.
Why mergers and acquisitions are accelerating:
- Market fragmentation - Many wholesale businesses are family-owned, making them prime targets for acquisition when owners decide to retire. Succession planning is on the rise, where the Baby Boomers that own these businesses are wanting to pass down to children, sell to Private Equity partners, or investigate the employee-owned route.
- Competitive pressure - Larger players are consolidating to gain market share and improve operational efficiencies.
- Private equity interest - Investment firms see wholesale distribution as a lucrative sector and are actively acquiring businesses.
One standout example from the NAW Summit was a merchant who had acquired 36 companies in just 24 months. Other holding companies and Private Equity partners stated that it was very common to average 8-10 acquisitions per year.
This level of consolidation highlights how scale and efficiency are becoming critical survival factors in the wholesale distribution industry.
Alternatives to Private Equity buyouts
While private equity remains a dominant force in industry acquisitions, some businesses are choosing alternative paths to maintain independence.
Generational businesses are looking to thrive while still protecting their family legacies. We are starting to see even large distributors execute strategies other than Private Equity, such as converting to 100% employee owned.
Employee ownership models (ESOPs) allow companies to transition ownership while preserving company culture, while strategic partnerships and alliances enable companies to expand without a full acquisition.
As consolidation begins to reshape the industry, wholesalers need to consider whether to scale through acquisitions, partner with larger players, or develop alternative exit strategies like employee ownership.
Digital transformation
Unlike B2C (which embraced eCommerce decades ago), B2B has been slower to adopt digital innovation.
The gap between early adopters of B2B eCommerce and the laggards is now widening at an accelerating pace. Early and late majority adopters have moved to a B2C-style model where they create a portal online for customers to place orders. These gated sites give businesses the ability to show customer-specific pricing, terms, and assortments which are a core requirement in B2B.
This eCommerce model can free up sales teams to spend more time selling and providing consultation instead of placing recurring orders. It also gives a company more control over pricing and basket margins to help them stay competitive in a given market. This will be essential to improve margins, while not losing market share to B2B marketplaces which have grown exponentially in the last 5 years.
The shift towards digital-first B2B sales
The vast majority of B2B transactions are still from existing customers, and happen offline. Orders are typically placed through field sales teams that have managed relationships with key customers for decades. However, younger buyers in the Millennial and Gen Z age bracket expect a digital-first experience, and distributors must adapt or risk losing business.
Very few distributors view their eCommerce channel as a new customer acquisition tool, and are investing in next generation platforms. This is where the innovators and early adopters are pulling far ahead of everyone else.
Factors like new account opening, pricing, credit and terms approvals, visibility into available inventory and shipment dates are all filled with friction and do not serve the interests of next generation buyers whose primary concerns are product availability, compatibility, and fast delivery.
Younger buyers want their purchases to have the same convenience as ordering an Uber. They prioritize having a fast and simple checkout process.
Smart distributors are:
- Developing robust eCommerce platforms with customer-specific pricing, real-time inventory updates, and self-service ordering
- Leveraging AI-powered customer insights to optimize sales strategies
- Offering seamless financing options to make transactions faster and more flexible
A digital-first approach is no longer a “nice to have”. This is likely to be a key divider between who wins and who loses in B2B distribution over the next 4 years. Businesses that fail to invest in digital transformation will struggle to compete against growing B2B marketplaces and tech-savvy competitors.
AI and automations are a growing opportunity for the wholesale distribution industry
Artificial intelligence (AI) in wholesale is still in its early stages, but forward-thinking companies are using it to drive efficiency and improve company-wide decision-making.
Where AI is delivering value for wholesalers and distributors:
- Data cleansing and management - AI can process large volumes of data, fixing errors and improving inventory accuracy
- Predictive analytics - AI-driven forecasting can help businesses to make smarter purchasing and pricing decisions
- Automated customer support: Chatbots and AI-powered helpdesks enhance customer service without increasing headcount or overheads
AI is fast becoming an essential tool for B2B efficiency. Distributors that are adopting AI will have a competitive edge in managing data, inventory, and customer relationships.
Changing workforce and buyer expectations
The wholesale workforce is undergoing a major shift as Baby Boomers retire and their Millennial and Gen Z counterparts take over. This shift is affecting both internal operations and customer expectations.
Younger buyers are shaping the B2B purchasing process:
- They prefer self-service portals over interacting with sales reps
- They value speed and availability over price negotiations
- They expect seamless online purchasing experiences similar to B2C
Many traditional wholesalers are struggling to meet these demands, leading younger buyers to seek alternative suppliers. This includes buying from digital-first competitors like Amazon B2B who can also offer a line of credit and extended financing terms.
Wholesalers absolutely need to modernize their sales channels to align with the buying preferences of younger generations.
Capital efficiency
With rising costs and economic uncertainty, capital efficiency has become a top priority. Many wholesalers are reassessing their financing strategies to ensure they can maintain steady cash flow while still offering competitive payment terms.
The shift away from traditional Net 30 terms
Historically, B2B transactions relied on Net 30 or Net 60 terms, allowing buyers to pay over time after receiving goods. In this market, rising interest rates and economic pressures mean that businesses can no longer afford to extend long credit terms without impacting their cash flow. This means that more companies are turning to outsourced accounts receivables and flexible credit solutions to help manage payments and improve liquidity. Cash flow is still king.
Wholesalers need to explore and implement alternative financing models to reduce risk and maintain financial flexibility going forward.
What’s next for the wholesale distribution industry?
The industry is at a critical inflection point. Faced with shifting and unstable market conditions, digital disruption, and new buyer expectations, companies need to adapt to a new way of doing business, or risk becoming obsolete.
While traditional wholesale models have relied on manual processes and legacy financing structures, the future of wholesale demands more innovation and agility, as well as a digital-first mindset.
Companies that implement AI-powered operations, keep pace with the changing needs of buyers, and manage their capital efficiently will emerge as industry leaders.
Topics from this blog: Wholesale E-commerce