Editor’s Note: In the context of suppliers having to pay eCommerce Network fees, the reference to my Walmart article is both interesting and applicable.
The fact is that fees in and of themselves are not a problem. The real issue as cloudBuy’s Duncan points out is whether or not the bottom line result in terms of what return suppliers realize on your business is the key.
All you need to do to validate this point is to look at successful programs such as Virginia’s eVA.
Even though Virginia charges fees, the number of suppliers pursuing Commonwealth opportunities has grown exponentially due to factors such as expanded contract distribution over the supply base.
I will continue to follow this story as I believe that network fees are going to be an area of interesting development in 2014.
In reading Duncan Jones’ recent Procurement Leaders article Are eCommerce Network Fees For Suppliers A Barrier Too Far?, his reference to pricing model penalization reminded me of a 2007 article I read by Jon Hansen titled Public Sector Procurement and the Walmart Effect.
Even though the Jones article had made reference to two other key elements of the pay-to-play debate, including suppliers passing network costs back to the buyer through higher prices and the utilization of multiple networks, I believe that the first point warrants greater discussion. This is because it speaks directly to the value and benefits your suppliers derive from their relationship with you.
This of course is where the Hansen article comes into play.
In discussing what he referred to as the predatory practices of Walmart in terms of supplier engagement, Hansen provided some startling statistics that reflect the once adversarial nature of buyer-seller relations. …
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