(Part I) Why don’t middle market retailers use reverse auctions and other e-procurement tools?

August 15th, 2014

This is part one of a two part blog. Part two will be published tomorrow. For the purpose of this blog

Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc.

This is part one of a two part blog. Part two will be published on Monday. For the purpose of this blog, we’ll call middle market retailers, those with sales of less than $2B annually.

Much the same as larger retailers, in the middle market prices are up and consumers are spending less. The impact to retailers in the middle market however may be far worse. So, what have been the roadblocks to middle market retailers using e-procurement tools to help fight competition from national and international chains as well as to insulate their earnings? Why in the world aren’t middle market retailers already running reverse auctions or using other e-procurement tools?

Let’s answer the last question first. Most of the major providers of e-sourcing or e-procurement solutions, particularly reveres auctions have either neglected or avoided the retail middle market. The primary reason for exclusion was that historically these solutions were not hosted and providers generally assumed that companies of this size would not have the infrastructure to support on site installations. As solutions evolved into hosted, on demand and Software as a Service implementations, the major providers could not or would not develop pricing strategies that were attractive to middle market retailers. For the middle market the major players partnered with third parties to deliver the solutions, which juts like the supply chain, the more players involved the more expensive the solution and as a result limited use.

Today there are newer lower cost solutions available to middle market retailers that will let them enjoy the benefits that larger companies have enjoyed for years. But, and it’s a big but. Expect pushback from two sources.

Please join us on Monday to find out where this pushback comes from. If you can’t wait, please contact a SafeSourcing Customer Services Account Manager today.

I look forward to your comments

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