How To Build a Value Chain for the Retail Industry – Example and Guide

I have been working on a value chain for the retail industry for several years now. We are still working on this and continue to improve the system. Nevertheless, in this article I want to give this platform as an example of a value chain for the retail industry.

Maybe it will give you ideas and help you set up your own network. The aim is for retailers to save as much time as possible. We can accomplish this to collaborate as a chain in the areas of inventory management, sales and marketing.

An interesting example of a value chain for retail industry is the concept of Retailgear. This provides retailers a total solution to automate their business from webshop, CRM, cash register system and stock management. In addition, it has a standard integration with suppliers and everyone works in a shared product database.

You can read more on the website of the value network. We also offer a white label solution if you want to apply this same concept in your own industry. It is also possible to integrate your own software, such as a cash register system.

A brief summary of what it contains:

The strength of the concept is that every user works with the same product ID. This makes it possible to work together in the field of marketing and sales. This may need some explanation.

It is important for suppliers to work with retailers to provide the best customer experience. Collaboration can also be beneficial for both parties as it allows them to create better products and services.

By working with the same product ID, the sales of all retail stores from the entire industry are linked to the same product. This makes it easier for the system to recommend to retailers and suppliers which products you should purchase or sell.

Especially if (anonymously) the customer data is also compared. This allows the system to estimate more quickly which customers will be interested in which products.

Furthermore, by measuring the visitors on the product page of the websites, it is easier to estimate how well a product will sell. This reduces the marketing costs to realize a sale.

An extra big advantage for the retailer is that he can offer a supplier the opportunity to invest in its brand awareness through the retail store.

Many of the current software systems are focused on the company and not on the entire retail industry and its value chain. All systems work independently of each other.

This shows that many retailers have to do the same work. For example, entering product information in their system or manually linking their webshop with their cash register system. By working in one system, it only has to be done once.

Therefore, as you can imagine, the current software of retailers is often not suitable for this. Systems must be linked together, which leads to a lot of customization costs. By all working in the same product database, only one link per supplier has to be made. Everyone then has access to the same general product information.

With the example above I try to indicate the importance of a value chain for the retail industry. Now let’s see how to implement a value network, like Retailgear, yourself.

In order to create a good value chain for the retail industry, it is important to list the interests of all parties. The common goal of retailers and suppliers should be to provide the best possible service to consumers.

Nevertheless, there are also different interests between the two parties. For example, a supplier would prefer to have as many products as possible in the store, but a retailer would rather not have the risk of high stock.

Personally, I have also noticed that many wholesalers are mainly specialized in distributing the products. They have much less knowledge of branding and promoting a product to consumers. Yet many retailers have also become dependent on the supplier and other parties for this. They are already busy in the store and often have little experience with online promotion.

People will only want to join a value chain if they benefit from it. That is why it is important to list the current challenges and wishes of various parties.

For example, for a supplier this means further integration with its dealer network. This gives them a stronger position and competitors are less likely to take their place. Sharing real-time data on stock and sales at the store is therefore very valuable for these parties. For example, this allows them to immediately create a new order without having to visit a representative.

Not all parties want to join your value chain for the retail industry directly. This could be because they don’t want to invest in a link or pay for your services.

We found it was easier to connect retailers than suppliers. Of course, it was a ‘chicken and the egg’ story, because both sides need each other in the value chain. However, there were more reasons for the retailer to join than for suppliers.

Therefore, it is wise not to immediately offer the system for free in order to win customers. It is better to look for customers who are willing to pay. During the development of the system, we had to give the system free of charge to five starters for six months. This was mainly because the system was not working properly yet. Moreover, we received a lot of input from these first users.

On the other hand, I thought it was wise at first to give the system to all retailers for free. We could then connect retailers faster and earn money setting up marketing activities. Fortunately, we didn’t, because it’s essential that money is already coming in during the first phase of your business. In addition, companies are ultimately fine with paying for a service they need. The first customers ensure that you know which functions to make. Today we get more revenue from retailers than from suppliers.

After the first companies have been connected, you will discover the essentials that are necessary for the project to succeed. In the example of the value chain for the retail industry, it is especially important that the database with product information is in order. Of course, the other features that companies pay for must also work.

However, sharing product information is a unique advantage that customers can get excited about and which attracts new customers. That is why it is wise to make the data available to retailers, if necessary, without support from suppliers. For our concept, we let the retailer collect the information and use it for them.

Solving the key elements can cost extra money and time for which you cannot immediately ask an investment from current customers. Nevertheless, it will give your value chain a head start if you get it right.

I hope this example of a retail value chain gives you more insight and knowledge of the possibilities for your company. With Retailgear Whitelabel you do not have to make large investments in technology and development, but you can immediately start linking your own systems and users.