Turnover per employee in B2B wholesalers in Germany – When does it get dangerous?
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How fast is the clock ticking for German B2B wholesalers?
The wholesale market in Germany is highly competitive. Technological progress, the rise of e-commerce, and increasing price pressure put enormous pressure on medium-sized B2B wholesalers.
The figures speak for themselves: margins are falling, customers are migrating, and new competitors, often more digitally savvy, are gaining ground. Against this backdrop, one key figure is becoming increasingly important: turnover per employee. But when does it become critically low? And how can technical wholesalers take countermeasures at an early stage?
For B2B wholesalers in Germany, who handle millions in sales with thousands of customers and tens of thousands of products every year, the correct use of ERP data mining and artificial intelligence (AI) can become a decisive competitive advantage. These technologies allow them to increase sales per employee and achieve efficiency gains simultaneously.
In this article, we will show when turnover per employee becomes too low and how AI can help optimize this key figure.
What is a “good” turnover per employee in wholesale?
Three hundred and forty employees fear for their jobs because turnover in 2023 was projected to be less than 60 million euros, compared to around double that a few years ago. Production is ongoing, but the long-established company from Baden-Württemberg had to file for insolvency under self-administration. This turnover corresponds to less than 200,000 euros per employee, a mark from which recovery is almost impossible. This is what happened to a mechanical engineering company. In wholesale, the warning mark is somewhat higher, isn’t it higher?
In wholesale, however, turnover per employee is always a key indicator for measuring productivity. It indicates how much turnover an employee generates on average and is an essential measure of efficiency and competitiveness. Studies show that wholesalers, especially in specialized niches such as technical wholesale, find it increasingly difficult to remain competitive when turnover per employee falls below a certain threshold. So, where is this warning threshold?
According to the Federal Statistical Office, the average turnover per employee in German wholesale is around 550,000 to 650,000 euros. The values below this should be seen as warning signals, indicating low efficiency or untapped sales potential. In the EU-28, the value in 2022 was 546,000 euros, with average personnel costs per employee of 34,497 euros. But the average is not yet an alarm signal, is it?
Alarm signal: Less than 500,000 euros turnover per employee
Of course, the figures above are averages; someone must be in the middle. Every company is different, including yours. But let’s do a very simple calculation. One employee generates a turnover of 500,000 euros with a margin of 20%. That leaves a margin of 100,000 euros. Suppose you have to pay the average salary of a well-trained technical sales employee, logistics costs, your warehouse, etc.; from this, you are approaching a dangerous limit.
If turnover per employee falls below 500,000 euros, companies come under increasing pressure. This is because fixed costs per employee generally remain stable while the margin shrinks due to increasing competition. This figure is particularly dangerous when there is also a lack of process automation and insufficient use of customer data to improve efficiency. This risk threatens medium-sized wholesalers, in particular, who do not digitize themselves sufficiently.
Oh, did you see what I just did up there? I assumed that your trading margin was 20%. Of course, that may be true in some cases; in others, it could be completely wrong. The point is, as you know, you only earn the difference between the purchase price and the selling price. The margin is your lifeline. And for some, it erodes very quickly.
E-commerce and digitalization increase the pressure.
What is the biggest challenge for B2B wholesalers? Online trade—straightforward, efficient, and transparent. Pressure from Amazon Business and other digital platforms is increasing. While many traditional wholesalers still rely on manual pricing and personal customer relationships, competitors have already invested in automated systems and AI-supported sales analyses. These systems allow prices to be set dynamically and customer behavior to be analyzed in real time. As a result, wholesale is becoming more efficient, and companies that do not use these technologies risk being left behind.
And don’t just blame your competition. Your most loyal customers are younger people who search for a product online before they pick up the phone and call you. And your sales staff? They never forget an A customer. But what about 500 smaller ones?
Successful wholesalers, with 100,000 items in their range and thousands of customers are now investing in AI-supported systems to increase sales per employee and protect their margins. Companies that invest in predictive analytics have been proven to achieve higher margins and sustainably improve efficiency.
Benchmarking: comparison of turnover per employee
How do you compare? This is one of the first questions wholesalers should ask themselves. Here are some benchmarks:
Top performers: Turnover per employee over 750,000 euros. Companies that exceed this threshold generally have highly automated processes, high customer satisfaction levels, and robust data-based sales systems. They benefit from stable margins and are better equipped to deal with market fluctuations. They can invest in new technologies and hire the most capable employees.
In 2023, the Würth companies in Germany generated sales of EUR 8.3 billion, with a sales growth of 5.6 percent. With over 8,000 employees, Adolf Würth GmbH & Co. KG in Künzelsau is the largest single company in the Würth Group. Of these, 3,200 work in sales in Germany. The turnover per employee is around EUR 1 million. Not bad!
Average: Turnover per employee between 550,000 and 750,000 euros. Wholesale companies in this range align with market averages but could tap into further potential by using their sales data more efficiently. They are also slowly moving into risk areas or could fall victim to a takeover.
In Italy, for example, Würth Elektrogroßhandel (W.EG) is expanding through a strategic partnership (majority shareholding) with IDG01 S.p.A., the leading electrical wholesaler in Piedmont based in Turin. The company will generate sales of EUR 285 million in 2023, employ more than 580 people, and have 41 stores. This corresponds to an average per capita turnover of around 500,000 euros. Watch out: The company has been acquired.
Critically low: Turnover per employee below 500,000 euros. Companies below this value often struggle with inefficient processes, high staff turnover, or low data usage. Urgent action is required. The aim is to get out of the downward spiral as quickly as possible. Promptly review your margins. If they approach 15%, you will soon be in trouble. You’re already experiencing it, aren’t you?
However, these figures should be viewed with caution. Many service companies thrive on sales of 100,000 euros per employee. However, wholesalers are not service providers. Others outsource expensive processes or invest massively in the future. Sonepar Germany, for example, has stated a turnover of approximately 511 million euros for 2022, with approx. 5,000 employees at approx. 200 locations. Here, we would have a turnover per employee of approx. 100,000 euros. In addition, Sonepar would have reported a net profit of 276 million euros. How does that work?
When does it get really dangerous?
I know what you’re thinking now. This is all very interesting, but what does this have to do with me? I work for a regional wholesaler with a turnover of 67 million euros. We employ 162 people, mainly in sales and logistics. Are we doing well?
This is where it gets complicated because there is very little public information I can use. Our research shows that companies with 67 million euros in turnover and 162 employees average 430,000 euros per employee. You could assume that everything is fine above this figure and that there is a risk below it.
However, we also know that profit margins in wholesale vary greatly depending on the sector. Sanitary and electrical wholesalers generally operate with wholesaler margins below 20%, while beverage wholesalers and electronics wholesalers survive well with margins below 20%. Wholesalers who offer services tend to achieve slightly higher margins.
There are clear signs that turnover per employee could soon become critically low. Companies should take note when the following factors come together:
1. Stagnating or declining sales per employee: a decline in this metric may indicate outdated processes, a lack of automation, or a lack of digital sales strategies. As mentioned above, it is time to act if this situation develops in parallel with a wholesale margin close to 15%.
2. Rising personnel costs: If the fixed costs for employees increase disproportionately without a corresponding increase in sales, profitability will fall. Companies that do not use scalable processes or AI systems to increase revenue per employee run the risk of becoming inefficient. This is often difficult to avoid, especially during skills shortages and generational change. I call this the kiss of death. Personnel costs rise, margins fall, and sales per employee drop significantly.
3. Competitive pressure from online retailers: While traditional wholesalers still rely on personal contact, e-commerce platforms have already implemented data-driven sales processes that allow them to react more quickly and flexibly to market changes. Yes, online is necessary, but it can also destroy your unique advantage: proximity to your customers.
How AI helps to increase revenue per employee
Artificial intelligence will be the decisive factor in increasing turnover per employee. Here are some areas of application:
• Cross-selling and upselling through AI: Predictive sales software recognizes patterns in customer buying behavior and suggests potential cross-selling opportunities. This generates additional sales without needing extra personnel resources—a classic “no-brainer” from the B2C world.
• Suggested prices: what’s the point of recommending the best products at a completely wrong price? How long do your inexperienced employees need to calculate and negotiate prices? And what do they do if they have no or only anecdotal market information? They offer the lowest price. AI systems automatically analyze pricing data and customer behavior to develop optimal pricing strategies that protect margins while not upsetting customers.
• Predictive analytics for customer loyalty: How often do your C-customers call? AI-supported systems can identify the risk of customer churn at an early stage and recommend customer retention measures. This data-based customer retention increases sales stability per employee in the long term. Only the successful combination of all three types of forecasting can ensure success in B2B wholesale.
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B2B wholesalers in Germany: time to act?
Turnover per employee is an essential indicator of a wholesaler’s competitiveness. It can be dangerous if it falls below 500,000 euros, depending on the sector. If it falls even further, it will soon be over. However, there are solutions: Artificial intelligence in B2B sales offers enormous potential for increasing efficiency and operational reliability. As a managing director, you ensure that your company has all the material resources to enable and guarantee smooth, efficient, and profit-oriented operations.
I repeat the warning from earlier: take this figure only as a rough guide. Our experience over the last 10 years has shown that turnover per employee naturally fluctuates depending on the season, the current number of employees, and market conditions. But if you see a medium-term downward trend, combined with lower margins and hard-to-find talent, then things quickly become bleak.
For wholesalers in Germany, the time is ripe for AI. Those who make the decision now can optimize their processes, secure long-term sales per employee, and thus ensure the future viability of their company.
How high is your turnover per employee? Is it increasing? Is it falling? No matter in which direction. A year from now, you’ll wish you had reached out today. Contact us today.
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Further Read:
Interesting facts and statistics about B2B wholesale and manufacturing in Europe