How retailers can find, evaluate value-added partners

by | Oct 3, 2017

The idea of the Value-Added Partner comes from the Value-Added Reseller, or VAR. IT companies that package their own services with software or hardware products are an example of a VAR. A men’s clothing company that offers free tailoring can be a VAR, as can a local delivery company that offers to pick up takeout on the way to your office. A wedding planner that partners with a photographer, DJ, and a cake baker to offer a complete VAR package.

Retailers can also find those Value-Added Partners in their stable of suppliers. Rather than just treating each supplier as a transactions-only trading partner, a Value-Added Partner can help retailers identify selling problems, buying trends, and even show them where certain retail territories are clamoring for a particular product while other territories couldn’t care any less.

In a typical value-added partnership, a set of independent companies work closely together to manage the flow of goods along the entire value-added chain. For example, the Menichetti textile company in Italy was facing declining revenues in the 1970s, so new owner Massimo Menichetti broke the large company up into eight smaller companies that could do business with each other, but no company was allowed to get more than half their sales from the other Menichetti companies.

As a result, the smaller companies was forced to not only find new customers, but they found that by working on what they were best at, they were each able to create more sales opportunities for themselves, and share workloads with the other companies and what they were best at.

Similarly, a regional retail chain may realize they don’t want to be in the e-commerce business and maintain a shipping center and staff. So instead, retailers partner with drop ship-capable suppliers who will handle all e-commerce orders on their behalf.

Questions to ask of a VAP

Of course, you can’t enter into these partnerships without answering several questions about these new suppliers of yours. By using our Retail Community network, you can find several new suppliers to meet your particular requirements for your new VAPs.

What is the supplier’s niche? Where does the potential value-added partner excel? How deep is their category? How crowded is it?

What kinds of consumers are attracted to these products? If you sell budget-friendly products to everyday shoppers, but your potential new supplier specializes in high-end, luxury products, will you be able to reach the same audiences?

How do their sales look? Are they reliable and predictable, or do they rise and fall with every fickle new consumer trend? A company’s sales performance and financial health may have a significant bearing on whether you can get products reliably.

Are they reliable communicators? Do they use EDI? Do they have an ERP? You want to be able to reliably receive their information — purchase order acknowledgements, advanced shipping notifications — and you want them to be able to receive yours without any problem.

Are they good at delivering on the products they say they have? Do they offer additional services such as drop shipping? It’s one thing to have a great product selection, but it doesn’t do you any good if you can’t get the products when you need them (or when they promised).

Where are they located? Do they have distribution centers nearby, or will you be looking at long delivery times with every order? Can they deliver to your different retail outlets, or can they only ship to your distribution centers? They should be able to ship where you need them to, even if they’re doing something completely different for other retailers.

If you’d like to learn more about how SPS Commerce can help you find new Value-Added Partners, please visit the SPS website for additional information our Retail Community and other cloud-based services, like our EDI solution.

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Ready to experience infinite retail power?

Learn how SPS solutions support retail and enable a more agile supply chain or contact SPS today for a consultation.

Tony Thrasher

Tony Thrasher

Technical Product Manager at SPS Commerce
As an expert in retail fulfillment, Tony offers a unique viewpoint on using the latest retail technologies, including the SPS Commerce Retail Network, RFID and more to drive innovation and growth. At SPS, he is responsible for using graph-based architecture to drive meaningful insights and expand the value of the SPS Commerce Platform to customers and partners.
Tony Thrasher

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