Distributors Business Model Innovations: Where the Wins Are

Distributors are increasingly bullish on business model innovation. The latest MDM research on this topic finds wholesale distributors are prioritizing investments in new innovations that fundamentally redefine where they play and how they win, developing significant new revenue streams while doing so.

We’ll tackle this topic in MDM’s latest free webcast, to be held this Thursday, May 2, at 1 pm ET. The 60-minute program will unveil the findings of MDM’s months-long study with nearly 100 executive participants. We’re excited to share some of the incredible insights that have emerged, which cover the following observations:

Business Model Innovation is a Top 3 Priority for Most Distributors

Our survey shows that business model innovation is a climbing priority for distributors. 63% of survey respondents agree or strongly agree that innovating their business model(s) has become more important for their companies over the past year, and a striking 77% ranked the issue as a top three priority overall in their company. It is no surprise that nearly three-quarters of distributors told us they were increasing their investment in business model innovation activities in the coming year. 

More than a One-and-Done Initiative 

60% of distributors shared with us that they’ve attempted at least 3 business model innovation initiatives and have plans to keep going. A superstar group — 13% of distributors — have pursued 6 or more, and in some cases, 10 business model attempts. To date, distributors have been most interested in pursuing data analytics/AI offerings and digital retail models. Over the next 5 years, though, we see 30% and 50% increases in the number of distributors pursuing AI and IoT offerings – signaling growing confidence in those capabilities and market adoption. 

New Revenue is Being Generated, and Distributors are Hungry for More

Over half of distributors report that 10% or more of their revenue generated today can be attributed to business model innovation pursued within the last 5 years, with 15% reporting numbers as high as 20-40%+. It’s no wonder that 83% report that their innovation efforts have met or exceeded their expectations and, as a result, are gearing up to generate an even greater share of revenue for new innovations in the next 5 years. We’ll share these 5-year ambitions in the webcast and forthcoming report. 

What Separates the Revenue-Generating Innovators from the Rest? Systems, Sensing and Senior Executive Leadership

The highest-performing business model innovators have pursued more initiatives than others; are 3x more likely to have a dedicated innovation executive in place; are twice as likely to have dedicated funding for innovation; and a whopping 4x more likely to have a process for sensing future trends and opportunities. In other words, they’ve systemized their approach to building new revenue streams, which is why they’re also 50% less likely to report “Lack of capacity” as a barrier to innovation (the single most common barrier reported across the board). 

We hope you’ll join us on our Thursday webcast, where I will join Tom Gale in conversation as we share and discuss the findings and what they mean for innovation in distribution. Register here!