In today’s marketplace, supply-chain issues are one of the biggest challenges facing emerging brands. Brands in all categories have encountered stock shortages, fulfillment delays and backorders on some of their most popular SKUs because of difficulty procuring packaging and ingredients.
Some companies are turning to Group Purchasing Organizations (GPOs) to help them navigate the current environment. A GPO leverages the purchasing power of collective businesses to negotiate better pricing, service and account representation from suppliers. It often can increase buying power while simplifying the buying process.
To better understood GPOs, we spoke to SKU partner Enterprise Purchasing Group (EPG). EPG is one of the largest eCommerce and logistics GPO, with a mission to reduce costs and create supply-chain efficiencies. With solutions that range from shipping and logistics to business banking and corporate cash back cards. EPG’s customers include such brands as Birdy Grey, Son Fish Sauce and SKU Dallas ’22 brand OMNI Bev.
OMNI Bev was looking for ways to manage costs the company grew.
“As a small business, we didn’t yet have the shipping volume needed to negotiate competitive rates,” says Tony Lam, chief sales officer at OMNI Bev. “The cost of shipping perishable goods was extremely high. EPG’s discounts helped us reduce costs while offering a premium express service to our customers. We were able to link our discounts in Shopify and take advantage of savings on every order. EPG is now reviewing other areas of our business for potential savings and I can’t wait to see how they can help us in the future.”
SKU:. Can you explain how GPO works?
EPG: GPO’s are designed to help businesses in search of supply- chain consistency and savings. A GPO aggregates the purchasing volume of thousands of businesses to negotiate best-in-class pricing with suppliers, allowing members to access pricing beyond what they could negotiate on their own. Through pre-negotiated pricing and custom RFP’s, a GPO can deliver predictability and control over price.
SKU: Is there a cost to use a GPO?
EPG: Some GPOs require membership fees and have a minimum purchasing volume to obtain the best possible pricing, while some GPO’s provide open access to their savings programs. It is important to evaluate this distinction when choosing a GPO partner.
SKU: What types of brands can benefit most from a GPO?
Brands of all sizes can benefit from the increased purchasing power provided by GPOs. Even larger brands that have achieved volume discounts can further increase profitability by leveraging additional purchasing power, or by capturing savings in areas they haven’t yet focused on.