It’s an usual scenario: Nowadays, many buyers gather themselves together to save money in the procurement of most varied items, and then join their needs to achieve volume discounts. It’s the so-called wholetail. Supermarkets like ASSAI, Sam’s Club and Makro, for instance, operate in this way and manage to offer much more competitive prices to the market. This occurs because high-volume procurement enables higher discounts and, consequently, end consumers get more advantages.
It’s no wonder that, among large retailers, stores of this kind are showing a significant growth. Recently, Abad (National Association of Wholesalers and Distributors) indicated an increase around 7% in the activity of this sector, in opposition to the economic crisis faced by the country.
We are now seeing some economic recovery and, according to the experts, we’ll have a better business scenario in Brazil from the second half of the year onwards. Therefore, gathering buyers in function of the need of common procurement makes more and more sense. With such facts – and with emphasis on the corporate universe – we can perceive a very similar trend, leveraged by business networks, buyer communities, or even GPOs (Group Purchasing Organizations), as they are known in the USA.
If the B2C market’s rule is the search of lower prices by people, in the B2B market this isn’t the only decision factor. To buy routine items – that is, low cost products that require more negotiation time – it’s better to look for volume discounts, and also appraise factors such as delivery times of suppliers and quality, for instance. For businesses, expertise in procurement and methodologies, according to the best practices in the matter, has Strategic Sourcing as its key tool.
Such model is used to optimize and improve the procurement process of businesses, taking into account everything that has been addressed to this moment. It’s worth stressing that, when we add this concept to the technology of the B2B marketplaces, capable of gathering thousands of buying and supplying companies, we can expand the joint purchase behavior to a much higher scale.
A “Shopping Club for Businesses” goes well beyond offering instant gain to companies that share their expense history, and have access to catalogs and price lists that are previously negotiated with certified suppliers. Each new demand shared with the Club will generate a quicksourcing – a scalable way of doing Strategic Sourcing –, in addition to new catalogs and price lists, updated with mutual gains.
One of the benefits of Shopping Clubs is cost reduction, which varies according to the item and the quantity of purchased products. There are cases of companies that saved as much as 15% when buying products electronically with the Club – not to mention higher agility in the procurement process, better cost-effectiveness analysis and optimized negotiation of several product categories.
And there is more: the buyers can appraise all proposals received from suppliers in an assertive and fast way, can be transparent about their purchase decisions and can provide constructive feedbacks for those who answered the quotation requests. In other words, every company that buys products and/or services will also contribute to better supplier offers in the future – which, on its turn, will feed a network of faster and more efficient decisions. In a highly competitive world, this is a feature that really must be taken into account.
Therefore, we must have in mind that, when the procurement area aligns its goals with other areas of the company (mainly the financial one), overcoming the constant challenge of making the sector more efficient will become a reality. Additionally, it’s still possible to render the sector even more productive and, consequently, more profitable – considering that when you get purchase discounts, the reduction value will impact company results directly.
I would like to stress again that aligning strategies and doing good business is a feasible reality. And, in my view, the Shopping Club concept is the better way to achieve that goal. Cost reduction and process optimization are only some of its benefits. Do yourself an analysis of when you will be able to enjoy such benefits, as a contribution to your company. Keep on doing good business!
Find also how to have more visibility in B2B business.