We spoke this week with Jonathan Webb, Head of Strategy Research at Procurement Leaders on the subject of outsourcing merchandising services. In a research piece done by Procurement Leaders, data shows that a growing number of businesses are outsourcing merchandising. This is good news for third party merchandising firms, but understanding how to approach a growing client pool is becoming an increasingly important skill for these organizations. Webb identified the top values that clients search for in an ideal third party merchandising firm. Learn more about the three values and how firms can provide them to clients.
Jonathan Webb noted that the primary reason businesses consider outsourced merchandising is to cut labor and resource costs. Yet clients are not only looking for a firm that can immediately cut costs, but that will offer meaningful savings into the future. Webb says that third party merchandisers negotiating with a prospective client can show this value by understanding the complexities of the client. By that, he means that beyond showing the client how much money they will save in labor, the merchandising firm needs to be sympathetic to the deeper financial impacts of outsourcing. For example, Webb mentioned the sometimes daunting nature of transition costs can be enough to make a client hesitate. Merchandising firms that show they understand the “end to end” cost of outsourcing merchandising will be better suited to make a good first impression with a prospective client.
Second to sustainable savings, Webb said another value that clients seek out in a merchandising firm is a developed network. One of the key advantages a merchandising firm can offer a client is the opportunity to promote their brand to an existing community of retailers. This is especially true for small or medium-sized businesses who do not have a robust set of retail contacts. Webb said that negotiations with prospective clients need to be as much about cost savings as they are about offering them “a scale to expand operations.” Demonstrating this to a prospective client may mean showing them data on the contacts the firm has within a certain geographic area or demonstrating your ability to negotiate with retail powerhouses like Walmart or Target.
Webb said another main reason businesses seek out third party merchandising firms is to shift the burden of negotiating with retailers to another party. Retailers are beginning to expect more transparency about ingredients and supply chain practices from their suppliers. Some are even performing health and safety audits. This added pressure for transparency involves merchandising firms because the audits may become their responsibility when taking over. This means that clients will be seeking out merchandising firms that have sophisticated tools to quickly gather and share data on health and safety between the client and their retail partners. Tools like Field Activity Management software enable merchandising reps to quickly connect with clients and share data in real-time through the Cloud. To give your third party merchandising firm a competitive edge in this time of a growing client pool remember the three values Jonathan Webb identified: sustainable savings, pre-existing networks, and visibility tools.
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