Future of the 1099 Model in Wholesale, & Distribution

Introduction

Over the past couple of years, I have had the good fortune to speak with hundreds of manufacturers, wholesalers, and distributors. One common theme I like to discuss is the 1099 model. When I first started WizCommerce, the idea of sales representatives was not intuitive to me. Why would you need someone to visit an independent store to make a sale in the 21st century when everything is online?

Make 1099 Reps Awesome Again

Current scenario in the B2B industry

Today, more and more wholesalers, manufacturers, and distributors are embracing technology. B2B websites are no longer a novelty, making it seamless for customers to access product information, inventory levels, pricing, and delivery details.

Moreover, new marketplaces like Faire provide unparalleled distribution to brands and offer lenient Net 60 payment terms and return policies, presenting an unmatched value proposition.

In recent months, I've been hearing about companies successfully moving away from the 1099 model by establishing an in-house team for customer service and inside sales, along with a few full-time representatives to manage relationships with large customers. Having an in-house team offers numerous advantages, including superior control over input metrics, higher Net Promoter Scores (NPS) by ensuring standard operating procedures (SOPs) are followed, and better customer retention. In another article, I will share the ROI of this transition and a framework to help you decide if it's right for you.

However, in this article, I want to focus on what 1099 representatives can do to remain relevant 10, 15, or 20 years from now.

What 1099 representatives can do to remain relevant?

1. Become Experts:

While online platforms make product discovery easy, they also lead to information overload. Customers rely on their representatives for expertise, not just to process orders. Representatives need to become experts in their categories and should be able to help customers in the following ways:

Stay updated on recent trends:

Customers often know what's selling in their stores, but they seldom know statewide, regional, or nationwide trends. As a representative working for a national wholesaler, you have access to data and insights from thousands of stores across cities. Utilize this data to help customers make informed decisions that lead to sales. Surprisingly, in a recent survey conducted at WizCommerce, less than 10% of the representatives we interviewed knew the best sellers in their cities, which is the most basic data you would expect anyone to have.

Assist in curation:

Most customers aren't looking to buy a single piece, especially in fashion and lifestyle categories. They aim to put together a complete look. By leveraging data, such as frequently bought together products, combined with your visual memory from visiting hundreds of stores, representatives can help customers by recommending complete looks instead of individual products, simplifying the decision-making process. The best representatives do this regularly as new products are launched. You might think this is time-consuming, but with the right analytics tools, it can be a breeze.

Be proactive:

Procurement is just one aspect of your customer's business, and most of their time is spent managing other aspects. It's not always possible for them to stay updated on what's new in-store or the best deals that can help optimize their margins. As a representative, you can proactively share curated collections and discounts that your customers might find valuable. I don't mean sharing every discount, but when an item that has performed well for your customer goes on discount or an item your customer liked but didn't buy due to its price being discounted, be proactive in sharing these deals.

2. Deliver Exceptional Customer Service:

For most customers, the representative is the face of the company. People still prefer to buy from a person rather than solely online because they believe this person will ensure excellent service and will be there in case things go wrong. Approximately 50% or more of a representative's time is dedicated to customer service. However, often representatives lack the necessary data to provide effective service, which can lead to customer frustration. As a representative, you should have access to the customer's entire order history and delivery status at any given time. Additionally, you must be knowledgeable about company policies regarding damages or claims and have the necessary documents readily available to assist your customers. In the event of an order discrepancy, you should be prepared with replacement recommendations. However, all of this is still reactive. The best representatives are proactive in notifying their customers of any delays or changes.

3. Adopt Technology:

While I have emphasized the importance of analytics and data in the points above, it is essential to mention the overall significance of technology. To compete in the 21st century, representatives must embrace technologies such as Customer Relationship Management (CRM) systems to record customer conversations and inquiries, order-taking apps for seamless order processing, and analytics tools to gain valuable insights. I plan to delve into more detail about these technologies in upcoming blog posts.

Conclusion

By focusing on the right input metrics and adopting technology, I believe 1099 representatives can remain relevant in the ever-changing world of wholesale, manufacturing, and distribution. As the world becomes increasingly digitized, we all crave more human connection. By incorporating some of the strategies mentioned above, representatives can not only offer that human connection but also add real $$ value to their customers.

As you navigate the future, remember that being an expert, delivering exceptional customer service, and leveraging technology will be critical factors in sustaining success as a 1099 representative. Embrace these opportunities and stay adaptable to the evolving landscape of wholesale and distribution.

Article published by
Divyaanshu Makakr
CEO - WizCommerce
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