Preparing your wholesale business for the age of AI

Welcome to The Varato Letter, Sponsored by Harris Web Works.

Every Saturday, we share insights with 1,100+ manufacturing, distribution, and wholesale business leaders on modernizing supply chain operations for the digital age. This newsletter will always be free for readers. Enjoy!

To learn more about how Harris Web Works can help you to future proof your manufacturing wholesale or distribution business, click here.

Most wholesalers think digital transformation is just about adopting new tech.

But it's so much more than that.

Here's what digital transformation REALLY means for your wholesaling business:

(You can read the text below. But if you’d prefer video, click here)

1️⃣ Shift from mechanical to digital mindset — Stop thinking about moving physical inventory. Start thinking about nurturing digital supply chains.

Let's break this down:

Mechanical mindset:

"We need to optimize our warehouse space and maximize inventory turnover."

Digital mindset:

"We need to create a flexible digital ecosystem that can predict demand and adapt to changing market needs."

Example:

Instead of focusing solely on physical inventory management, a wholesaler might develop a digital platform that connects suppliers, retailers, and internal teams. This platform becomes a living, evolving system that grows with the business.

2️⃣ Embrace Industry 4.0 — Move beyond cloud and connectivity (3.0) into AI, IoT, and blockchain for wholesaling.

Industry 3.0 vs. 4.0 in wholesaling:

3.0: Cloud-based inventory management, basic automation, and online ordering

4.0: AI-driven demand forecasting, IoT-enabled warehouses, blockchain for supply chain transparency

Real-world application:

A wholesaler might upgrade from using cloud-based inventory tracking (3.0) to implementing IoT sensors in warehouses that predict stock levels, automate reordering, and optimize storage based on demand patterns (4.0).

3️⃣ Change your language — Instead of "stock" and "distribute," think "anticipate," "streamline," and "empower."

Old language:

"We need to stock more products and distribute them faster."

New language:

"Let's anticipate market trends, streamline our supply chain, and empower our retail partners with data-driven insights."

This shift in language reflects a more proactive, value-added approach to wholesaling.

4️⃣ Focus on the journey — It's not about reaching a sales target. It's about constant evolution of your wholesaling model.

Traditional view:

"Once we implement this new ERP system, we'll be set for the next five years."

Digital transformation view:

"Our ERP system will continuously evolve, integrating with AI to provide real-time insights and adapt to changing market dynamics."

Example:

Instead of a one-time overhaul, a wholesaler might adopt agile methodologies, releasing small updates frequently and adjusting based on real-time data from suppliers and retailers.

5️⃣ Think like an octopus — Your wholesaling business is a neurological organism with tentacles, not a warehouse with shelves.

Octopus analogy for wholesaling:

• Central brain: Core business intelligence and data hub

• Tentacles: Various functions (procurement, inventory management, logistics, customer relations, etc.)

• Ability to change color: Adaptability to market trends and disruptions

• Distributed intelligence: Empowered teams making decisions at the "tentacle" level

Example:

A wholesaling company might restructure so that each department (tentacle) has access to central data but can make quick, autonomous decisions based on local market needs, supplier changes, or retailer demands.

The wholesalers that understand this will thrive.

The rest will struggle to keep up in the age of AI and Industry 4.0.

Here's a visual breakdown of the evolution from Industry 1.0 to 4.0 (...can you spot where your wholesaling business is?):

The progression looked like this:

• Industry 1.0 (1784-1840): Manual wholesaling, horse-drawn distribution

• Industry 2.0 (1870-1914): Electrified warehouses, early mass distribution

• Industry 3.0 (1969-2000s): Computerized inventory systems, automated warehouses

• Industry 4.0 (2010-present): AI-driven demand forecasting, IoT-enabled supply chains, blockchain for transparency

Where does your wholesaling business fall on this timeline?

Are you still operating with Industry 2.0 or 3.0 mindsets and technologies?

Want to see a video breakdown of the progression by Matt during a recent talk in Austin — and see where your company fits in?

Watch this:

Whenever you're ready, here's how we can help you:

Harris Web Works is a digital transformation agency that helps supply chain partners (manufacturers, wholesalers & distributors) meet new generational buyer demands & expectations by installing streamlined e-commerce systems.

To learn more about how we can help you future-proof your business, click here.