Distributors have distinct sets of shipping and delivery requirements depending on their customer base. Juggling that can be tricky. And it’s become even more complex as more distributors look to do business with or on digital marketplaces (like Amazon Business, or more niche product- or market-focused offerings). Similar to marketplace requirements, big-box retailers have their own sets of rules.
For distributors that have built these two channels into their go-to-market strategy, it’s critical to get things right. After all, B2B buyers are increasingly tapping into these platforms for purchasing. According to DigitalCommerce360, for example, more than a third of respondents said they are doing half their B2B buying through marketplaces.
What to Consider When Selling to Marketplaces and Big-Box Stores
Selling to a mom-and-pop shop on Main Street is very different from selling through a global online retailer or through a marketplace platform like Amazon or Wayfair. The latter often has very specific requirements for distributors to follow if they want access to their markets.
Standards that may not exist with other customer types include:
- Scaling your production to match their demand
- Closely following shipping and handling instructions and shipping timelines
- Submitting shipment information through their online portal
- Specific labeling and packing requirements
- Providing a quick turnaround from order to shipping
- Offering free shipping
- Ensuring total data security
- Promptly processing returns
The penalties and costs for not adhering to these service-level guarantees can be steep.
What Is the Cost of Not Following the “Rules”?
To sell a lot of products, big-box stores and marketplaces require a lot of distributors and vendors. Given this complexity, it’s not unreasonable that these retailers would require distributors to follow stringent guidelines to meet customer-service-level guarantees.
While the exact requirements will vary, distributors face several common penalties if they don’t comply. For example, a big-box customer may decline a distributor’s shipment altogether if it doesn’t meet their standards.
Distributors may also have to repackage the freight if the initial packing and labeling aren’t up to snuff. So, in addition to the inconvenience of repackaging, distributors must take on the accessorial fees as well, which are “additional expenses for shipments that take extra time or effort.”
Perhaps the worst consequence of not following the protocol of a global online retailer or marketplace, however, is lost business. Distribution businesses that fail to adhere to retailers’ requirements unfortunately put the partnership with that retailer at risk.
3 Tips for Hitting Commitments to Marketplaces and Big-Box Retailers
Below, learn three ways distributors can foster lasting relationships with marketplaces and big-box retailers so that each member of the supply chain is happy.
1. Build Smart Partnerships
As tempting as it may be to pursue any marketplace vendor contract you can get your hands on, not all partnerships will be the right fit. In fact, big-box retailers tend to be selective with whom they choose to work, so, it’s important for distributors to also strive for symbiotic relationships.
Distributors’ partnerships with retailers or marketplaces may be short lived if performance standards are not met. In the same way, distributors should also practice discernment to ensure their big-box customers align with their business goals, production capacity, and overall company mission.
2. Prioritize Compliance
Selling to large marketplaces and big-box stores likely won’t follow the same procedures as those for other types of customers. And given the potential costs of not adhering to their guidelines, it’s in distributors’ best interests to make compliance a top priority.
This may involve hiring a part- or full-time team member responsible for ensuring compliance in regard to larger retailers’ packaging, labeling and shipping requirements. This dedicated compliance professional can “examine (their) operational processes and design them with compliance for big-box retailers in mind.”
Compliance may also look like adopting new software or other platforms at a retailer’s request.
3. Build a Strong Tech Infrastructure
As mentioned, many big-box stores and marketplaces have their own digital platforms for managing orders. Distributors that sell to these retailers must use these platforms, either in addition to or integrated with their existing order management system.
This is why it’s so important for distributors to have a strong and modern technology infrastructure. Without it, distributors may have difficulties connecting their ecommerce and enterprise resource planning (ERP) systems to these outside platforms.
A strong digital foundation also makes it possible for distributors to have complete visibility into the supply chain. For example, the Vendor Portal in Microsoft Dynamics 365 for Finance and Supply Chain Management can help distributors get notified of product shortages, delays, and other supply chain issues.
Leverage Technology to Build Lasting Relationships
Microsoft Dynamics 365 Finance and Supply Chain Management provides the capabilities required to manage business with big-box retailers and marketplaces. Relying on a robust platform such as this will help to improve productivity, reduce your workload, and ensure your marketplace and big-box customers are happy.
In a recent project, Sikich helped a distributor simplify vendor transactions with a large online retailer. The result? The organization reduced staffing needs, gained flexibility and scalability, and doubled its revenue.
Want to take the headaches out of working with big-box retailers and marketplaces? Sikich can help. Contact a member of our team to get started.