Retail and supplier relations

Suppliers form an important part of any business. They are the very backbone of the business. Only after a supplier supplies the necessary products, the retailer is able is to sell the products and a customer is able to buy them and the entire retail business model works.

But have you ever wondered what the business model of the supplier is?

A supplier buys the product from the company or manufacturer.  Most of the well known brands supply it to the supplier against advance payment. Hence the supplier needs to invest his money to procure supplies but get paid only after specific credit days. Hence the suppliers need to invest during this period which could run into lacs if not crores. Thus a supplier perennially faces cash crunch. One of the retailers has planned his entire business model on this aspect; he pays the supplier in advance or before his credit terms. This enables the retailer to have a new launch product first on his shelves, availability during product shortage, stocks on demand and best in class offers, thereby giving him advantage over competition.

Apart from the money a supplier also needs to have a godown to store the products. Very few suppliers work on just in time model, whereas the goods unloaded from the company’s vehicle is directly transported to the vehicle to be sent to the retailer’s warehouse without being unloaded at the supplier’s point.

Apart from this the supplier also needs to have his own vehicle to transport the goods to the retailer’s point. He needs to have additional manpower part from the loaders, unloaders as certain times retailers have exclusive offers which are banded. This is done at the supplier’s point.

While a retailer business forms a very small part of either the company’s or supplier business due to very large unorganized general trade. But a retailer’s business is a business of the future considering the future potential.

A supplier plays a very crucial role in the retailer’s business. Any chain is as strong as its weakest link. With the supplier being the very backbone of the retailer’s business and a retailer cannot afford its supplier to be its weakest link. Infact a retailer should count his supplier as his strength

Please share your view on the same


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