This blog was written by one of our partners, SPS Commerce, experts in EDI solutions.
Retailers wishing to work with larger, big name brands and international suppliers, from Adidas and Bayer to Toshiba and Xerox, may have to put in a lot of effort before they can start negotiations.
With brands so big, retailers large and small may find they have less control in the situation than they may like. While big box retailers like Target and Walmart are calling the shots for vendors, and the vendors must follow the rules if they want to participate, the situation is flipped when a retailer wants to carry a brand like Nike.
Those large retailers like Walmart and Target may have fewer improvements to implement, because they already demand a lot from their current suppliers so they’re in a better position to engage with large brands. However, other retailers that may not be so large will have to do some work to get their ducks in a row and appear enticing to a major or global brand.
Having a reliable Electronic Data Interchange (EDI) solution in place makes a huge difference. Most large vendors – and retailers – have rigid EDI requirements. Without EDI, they won’t even give them the time of day, let alone discuss a business relationship. Such large organizations with huge inventory and vast distribution networks must require EDI, or it would be impossible to accurately track sales, deliveries and other functions.
Choosing an EDI service provider that has previous experience with large suppliers is valuable. They already have an idea of what it’s like for retailers to achieve compliance for the brand’s requirements. Depending on which brand or supplier, the EDI provider may have the requirements for the trading partner pre-mapped, which means they can set up your EDI solution and swiftly connect you to your new vendor.
Having EDI in place, especially with an EDI provider with which the brand is familiar, could push a smaller retailer higher up in the priority list to connect with. When a retailer makes it extremely easy for 3M or P&G to quickly connect via EDI, the brand may be more willing to move that retailer ahead of others waiting to come online. It has also helped retailers to reduce their costs because they’re able to precisely meet the vendor’s requirements.
In some cases, retailers that choose to work with larger suppliers are inviting new competition from branded stores. Manufacturers such as Apple, Bose, Coach, Nike and even Samsung have their own stores, which obviously can compete against retailers that carry the same products. Working with large names is still rewarding, though, especially if they fit your retail business strategy, so it’s worth being aware of it.
Marketing plans and promotions to encourage sales of the product can draw new customers to your stores to check out what other products that you might have. Such large brands may negotiate with retailers for placement of products on the sales floor and provide planograms. They often want to know what products will likely do well on your shelves and what purchasing commitment you’ll make.
Finally, once a retailer has jumped through all the hoops to begin working with a big brand, you may be disappointed to find you’re not as high up on their priority list as you’d like. One way to possibly gain traction is to incorporate data analytics into your processes in order to identify trends and other observations. The information you gather and the advice you’d potentially be able to offer could lead to beneficial opportunities for the supplier. If you’re the one to tell them where to look, it could be an incentive to them to form a more strategic partnership with you.
Retailers that want to work with larger suppliers and brands will need an EDI solution ready to go, though there may be additional technology needs as well. Before reaching out for a trading relationship, retailers should gather as much information as possible to discover what the brand expects.