Compared to large corporations with more resources, SMBs are being left behind, deprioritized and dropped by vendors altogether.
The current supply chain inventory crisis has impacted small and midsize retail businesses (SMBs) at a disproportionately higher rate than larger enterprises, according to Software Advice’s new SMB Retail Supply Chain Survey. Nearly half (46%) of retail SMBs say they have had at least one vendor drop them for reasons specifically related to them being a small business. These challenges are further exacerbated by current events as 86% of SMB supply chains have already been impacted or expect to be impacted by the war in Ukraine.
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“If you don’t have a strong relationship with your suppliers, you risk being deprioritized”
Several key factors give larger organizations a leg up in the procurement process. Most notably, 50% of retail SMBs report that they lack priority vendor status, which comes from having a long, good-standing relationship with suppliers and meeting their minimum order requirements.
However, 42% of retail SMBs say they aren’t able to meet minimum order sizes and 41% say they’re unable to pay premium prices. Smaller businesses facing these challenges should consider openly discussing their goals and obstacles with current vendors and collaborating with other nearby SMBs that purchase from the same vendor or products.
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“If you don’t have a strong relationship with your suppliers, you risk being deprioritized,” says Olivia Montgomery, associate principal analyst at Software Advice. “That’s why it’s important to check in with your current vendors and discuss ways to improve your relationship with them, but also take the time to find at least one backup vendor.”
Smaller retailers aren’t the only ones affected by the supply chain crisis – their customers are feeling it too. Unlike larger companies, SMBs cannot easily change prices and absorb increased costs without disrupting their customer base. Half of SMBs say they’ve had to raise retail prices to offset increased supply chain costs. Of this, 35% of SMBs plan to increase retail prices again if costs continue to rise.
With the global supply chain constantly changing, it’s important that SMBs optimize vendor relations and prepare for future disruption.
