Expand Your Supplier Offering Without Taking on New Inventory

It’s no secret that large e-commerce companies like Amazon.com thrived over the past two years. In a time of high demand and short supply, Amazon was able to provide what people wanted, when they wanted it. The secret is in how it was able to do that when supply chain problems were hitting all companies. The answer is in the diversity and breadth of suppliers large marketplaces can offer.

But there are lessons from the past two years for e-commerce merchants of all sizes. With a limited number of suppliers, problems hit some retailers doubly hard. Amazon’s success should be a wakeup call to merchants of all sizes. By all accounts, supply chain disruptions are sadly not going away anytime soon, and retailers need to prepare by diversifying their supply chain. Doing so has benefits well beyond being able to stay afloat during a crisis.

Fortunately, it’s easier than ever now to compete on a more even playing field with large marketplaces. Perhaps there’s even a chance to compete on a more advantageous playing field by expanding supplier networks, therefore extending product range, boosting customer service, and adding new revenue channels. Here are things to consider when implementing a plan to expand your supplier base to make sure the strategy is a success.

Press the Easy Button With the Right Tech

If as a retailer you don’t want to take on additional inventory or complicate current drop-shipping programs, turning to an owned marketplace model brings the best of both worlds. And technology today allows retailers to connect with third-party suppliers without the need for additional capital or inventory space. You can integrate first-party products and offer your customers a curated range extension experience through a marketplace model. To accomplish this, retailers will need to integrate marketplace platforms into their commerce stack — a capability that’s becoming easier and faster to do than ever thanks to major e-commerce platforms such as Shopify, Adobe Commerce, and Salesforce Commerce Cloud working with marketplace tech providers that can be connected with through APIs.

Curate for Customers

When looking at where to start expanding your supplier network, look at your customer base, including their needs and lifestyles. The best place to start is by expanding your product selection in the categories that your customers naturally bundle together. A grocery store marketplace could consider first connecting with suppliers of housewares and home goods. What better place to shop for a Vitamix machine than where you buy your smoothie ingredients?

Go Big or Go Home? Not Anymore

At Shoptalk22, the head of commerce at Huge said of its recent research findings, “Marketplace platforms of tomorrow will bear little resemblance to the legacy experience of a digital marketplace as just one big product catalog.” It turns out bigger isn’t always better when it comes to marketplaces, so you don’t need to boil the ocean when expanding suppliers. Expand your supplier base carefully. Customers want reliable service and quality products. Your expanded supplier network will represent your brand even if you aren't holding their inventory or shipping their products. Therefore, vet potential suppliers in the same way you would any suppliers whose inventory you own.

Location, Location, Location

This old adage works when buying a house as well as when adding suppliers to your e-commerce network. Supply chain problems were in fact a problem of location. When all your suppliers are in China, well, that poses a problem when things get stuck. If you diversify the location and number of your suppliers, with an effort to ensure a range of local suppliers, that will help guard against problems when location-based problems arise. Inspired to highlight and bring prosperity to local creators, Buy from the Bush launched during the pandemic with great success, making it easier for local small businesses to sell their products.

A Win-Win for Retailers and Suppliers

Walmart recently announced new perks for sellers who join its marketplace in a bid to lure them away from exclusively dealing with Amazon. Suppliers are indeed looking for a way to diversify away from Amazon. Many smaller merchants lack the marketing savvy or growth capital to make significant market headway and boost revenue. The opportunity to partner with additional merchants, while controlling inventory and shipping is a win for suppliers … and for merchants who benefit from the added revenue.

With the dramatic changes in retail over the past two years, suppliers are eager and primed to expand their network — and customers are primed to expect more from online merchants in terms of convenience. For retailers that are ready to act on this, technology is inviting you to experiment with no risk.

Brooke Camov is vice president of strategy and operations at Marketplacer, a global technology platform that enables brands, retailers, suppliers, communities and innovators to easily build and grow successful online marketplaces at scale.