Shifting from being a wholesaler to a retail and wholesale business
Background:
What was once a small wholesale reseller of tyres imported from Europe covering only a narrow territory is now a well-developed chain of stores and service centres with established e-commerce operations specialised in the sale of tyres and additional equipment.
The issue:
The business found itself in difficulty as it wanted to expand but could not achieve further growth organically. It understood the need to transform from a purely wholesale-oriented operation to a combined wholesale and retail operating business in order to fully exploit market potential. Its existing business model was not fully integrated with the B2C segment so the business needed to find ways to get this right.
The solution:
The business decided to hire an external consultant to help establish an effective operating model. It needed help to optimise its business processes, manage the transformation and build an effective management system.
The consultant and the business owner assessed the current situation. They performed AS-IS analysis to determine the company’s current state, after which they were able to identify problem areas and suggested solutions as well as initiatives for improvement. Together they developed a strategy and a transformation plan based on their existing business plan.
As this was a wholesaler business and not one developed in the retail and e-commerce sectors, the first step was to establish traditional retail operations. After choosing the locations and then designing all aspects of the stores, including how they would operate each day and the plans for ordering and inventory control, the business worked with the consultants to create an online presence and an e-commerce platform. They developed a marketing plan and designed retail policies including a returns and refunds policy.
The business put a lot of emphasis on improving merchandising with the help of an inventory management system. The ordering processes were streamlined as inventory control improved and was integrated with sales forecasts to optimise inventory levels. The business had to negotiate with existing suppliers in order to adjust its supply management to fit the new operating model.
Selling online required more than just a sales portal. The business owners had to understand the basics of buying and selling online to ensure their customers’ trust and create a reliable web store. E-payments presented a challenge as the system had to support large volumes of transactions while being flexible enough to provide numerous payment options to serve a variety of customers.
As retail businesses generate a greater proportion of cash and shorter credit terms than wholesale businesses, this required changes to their financial reporting – especially the cash flow statements and cash flow forecasts .
Opening retail stores also entailed hiring new employees to help customers, process point of sale (POS) transactions, handle new shipment arrivals, arrange merchandise and take inventory. Existing employees had to adapt to new business processes and the reskilling of key employees helped to support the transition.
The consultants helped to revise the business structure and to create a clearer distribution of responsibilities. In the past, problems had occurred following the absence or departure of employees. The new structure clarified who would stand in for each role. A communication plan was developed in order to familiarise employees with their new job descriptions.
The business also stopped using paper in favour of electronic document management for corporate communications. This reduced storage space requirements, enabled easier retrieval of documents and provided a wide range of additional benefits including greater collaboration among employees.
The owners also learned how to work with employees using digital tools by accepting the use of messaging applications instead of telephone calls. This significantly sped up work with clients and improved customer service. In general, all processes within the business that do not require the participation of employees were automated, increasing efficiency and security.
Since then, the business has experienced significant sales growth and increase in customer base, while reducing instances of disruption. Improved operations helped the business unlock efficiencies and allowed it to better leverage its resources.
The business has managed to scale up and achieve its goal of becoming a more consumer-oriented, online-enabled business.
