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VENDORCOMPLIANCE.INFO

Specializing in EDI and vendor compliance for manufacturers, distributors, &  retailers.

BENEFIT - Anti-Competitive Strategy

As mentioned in the Avoiding Charge-backs benefit review, vendors who consistently fail their customer's vendor audits may get dropped by that customer.  What's worse, your products may be replaced by a competitor's brand, probably making it even more difficult to try and re-establish a foothold for your products with that customer.

Thus, vendor compliance becomes an anti-competitive strategy.  Some examples follow:

1. Several companies offer similar competing products to a customer, but the customer can only pick one or two of the vendors.  (This may be due to a lack of floor space or the customer's policy to limit the number of similar brands and products to a reasonable number.)  If a vendor can show established vendor compliance to the requirements of a competitor of the customer (i.e. another similar retailer) or a similar non-competitive company (i.e. another retailer that carries a more expensive or less expensive line of the vendor's goods), than the customer may be more likely to go with a vendor who has vendor compliance already established.  The customer will wish to invest the least time and trouble in getting a vendor established with their vendor compliance rules, as it reduces their overhead cost of dealing with vendors, especially in their distribution centers and stores.

2. A company is already selling their products to a customer and a competitor is trying to replace them.  A good track record of vendor compliance may help tip the scales in the established vendor's favor.

3. Several vendors are selling to a customer and none have vendor compliance capabilities.  Suddenly, one vendor establishes vendor compliance, possibly by introducing barcode and/or EDI capabilities.  This vendor is likely to be able to get more business from the customer as the customer will be likely to take business away from non-compliant vendors and give this business to compliant vendors.

The reality of many (similar) goods sold to retailers is that companies (vendors) tend to copy ideas from their competitors into their own products.  As such, there can be little difference between two vendor's products except the competitive prices and co-op marketing dollars offered by the vendors.  Any advantage a vendor can have in getting their products in a customer's doors or retaining their position on the customer's shelves and floors should be used to its fullest capabilities, and vendor compliance (including EDI and barcoding) is one possible advantage.