Varied challenges

Varied challenges

The business model is based on facilitating transactions because reselling primarily means ensuring that it is possible to trade goods in the first place. To put it simply, the reseller identifies demand among his potential customers and offers them products that fit. But what does demand mean in this context? Who are the potential customers? And above all: what exactly does the right offering look like and how can it be provided at a reasonable cost? These three questions highlight the fact that what might seem simple in theory is actually a complex process in practice. This can largely be attributed to three factors which can be illustrated clearly using beer as an example.

Increasing pressure on prices is the first factor which contributes to the complexity of reselling. The retail and wholesale sector is hallmarked by intense competition, especially in the industrialised nations. In this environment, it is difficult to pass on the price rises needed to cover soaring costs for wages, raw materials and resources. German consumers are considered particularly cost-conscious. Comparisons show that shoppers in Germany spend much less on food than those in neighbouring countries. Take beer, for example: “Customers can de facto buy a crate containing 20 bottles of premium lager for €9.99,” says Dr Angela Pilkmann, Food Section Head at Real. “That means beer is about as cheap as it was 20 years ago.” The German wholesale drinks industry estimates that almost three quarters of all crates of beer were sold at heavily discounted prices below €12 in 2013. This translates into low margins for resellers. Companies are therefore forced to constantly improve their processes to cut costs.

Secondly, customers’ expectations and shopping habits are forever changing. These days, buying decisions are based on a whole host of factors which are weighted differently depending on the situation. Sometimes the variety of products on offer is key, sometimes it all boils down to pricing, and at other times a seasonal stimulus is what counts. In relation to beer, one of the effects of this change in shopping habits is plummeting sales. According to the "Deutscher Brauer-Bund" (Association of German Brewers), Germans drank just 95 million litres of beer in 2013, the seventh fall in a row. The total stood at 106 million litres in 2004. “This change makes its mark on resellers,” says Angela Pilkmann. “The generation of traditional beer drinkers is growing older and youngsters prefer other drinks. On top of this, beer is increasingly being seen as a luxury item and there is a shift towards light and alcohol-reduced drinks.”