The Idea Of A Sales Cooperative
For decades, Purchasing Cooperatives have flourished, giving independent businesses economies of scale to get lower costs from suppliers. In a traditional Purchasing Cooperative, independent businesses, who might otherwise be competitors, agree to negotiate together with their suppliers to achieve better terms, lower costs of goods and higher rebates.
Over time, some Purchasing Cooperatives have expanded to provide additional services, such as centralized billing, marketing, private label products, product training, and a host of other services or functions too cumbersome or expensive for an individual business to do on their own.
One Member, One Vote
The cornerstone of Purchasing Cooperatives is the idea of “one member, one vote”. Each individual business, or member, that belongs to the cooperative shares equal ownership of that cooperative. Regardless of how big or small a business may be, they only have a single share and a single vote. This ownership model provides a uniquely democratic foundation for doing business.
Ultimately, the goal of Purchasing Cooperatives is to help independent businesses survive in an age of “big box” corporates, private equity buy-outs, and online giants. Traditionally, they do this by focusing on cost savings within procurement and operations.
But What About Selling?
In a recent article, MDM’s Ian Heller speculated on the creation of a joint B2B e-commerce platform to rival Amazon Business. He proposed that if the distributors in various industries joined together in some form of jointly funded initiative, they could not only rival but outdo Amazon at the B2B game. Independent businesses could leverage their strengths – services, customer support, and product knowledge – in a way that Amazon could not.
The main questions are: who would take the lead? What kind of ownership model would be used? How would decisions get made? How would it get funded?
Where “Sales Co-operative” Comes In
Why not adopt the model of a Purchasing Cooperative be altered and adopted to fit this need? Independent businesses joining together under the idea of “one member, one vote” to build a new B2B platform. Let the seven cooperative principles act as a guideline for running the joint business. Individual members of the new Sales Cooperative could still compete against each other based on their own strengths but on a level playing field provided by a common B2B platform.
Most importantly, a Sales Cooperative, like its Purchasing cousin, would help independent businesses survive by leveraging their collective strength. As Benjamin Franklin once said, “If we do not hang together, we will all hang separately.”
Written by Steve Seguin
LBMX offers a business-to-business marketplace platform, helping independent businesses, their buying groups, and suppliers buy better and sell more. Its Private Group Marketplace for Groups has transformed billing and ordering, rebate management, real-time analytics, e-commerce and product information management across the building materials, HVAC, plumbing, sporting goods, industrial supply, manufacturing, and agricultural industries. Its LBMX Supply Cloud platform allows suppliers to look at their industrial distribution customers through one lens, offering full EDI, PIM, Analytics and Payments.