Retail compliance may be intimidating to growing brands looking for placement in brick and mortar stores, but with the right partnerships, merchants of all sizes can grow their customer base through traditional retail channels.
Big box stores expect suppliers to adhere to retail compliance procedures that certify the product is fulfilled and shipped based on their distribution infrastructure standards.
For growing merchants who wanting to reach new shoppers through traditional brick and mortar channels, and for Amazon sellers looking for support for FBA prep, long-lasting business partnership hinges on following these processes precisely.
While meeting retailers’ retail compliance demands may seem daunting, it’s doable. Fast growing Hungry Harry’s, a producer of allergy friendly baking mixes, also faced this challenge as they scaled beyond fulfilling small parcel direct-to-consumer orders to shipping full pallets and truckloads to meet vendor compliance stipulations.
Below we dive deeper into retail compliance and provide 5 tips and tricks to help small-and-medium-sized businesses (SMBs) make the best of their relationships with key retail partners.
What is retail compliance?
Also known as vendor compliance, retail compliance is following a retailer’s specific guidelines for suppliers. These requirements can run the range from warehouse technology implementation to electronic data interchange (EDI) connectors to pallet procedures to packaging requirements like labelling.
Follow the rules and everyone is happy and thriving, as Hungry Harry’s has been growing their retail and distribution partnerships. Break the retailer’s rules and risk damaging the partnership long-term and paying chargebacks, which are fines for each occurrence of non-compliance. These penalties are deducted from payments to the supplier and can add up quickly.
5 Retail Compliance Tips and Tricks
- Understand the Metrics that Matter – As a quote cited often in management circles goes, “you can’t manage what you don’t measure. What gets measured gets done.” Accordingly, fueled by big data, retailers increasingly use key performance indicators (KPIs) to measure vendor success and dispense fines for poor performance. Popular KPIs include on-time shipping, inventory accuracy, fill rate, and on-time final delivery. Suppliers must know which KPIs are important to each retail customer and ensure their teams operate with those performance indicators in mind.
- Audit Existing Procedures – Conducting regular site audits and process inspections, in tandem with preventative maintenance, will mitigate the risk of retail non-compliance while improving safety and profitability. Incorporating a high level of consistency into this process improves efficiency and reduces the likelihood of incurring expensive, repeated chargebacks for retail non-compliance.
- Rely on Amazon FBM and SFP over FBA – Too often, sellers are enticed by the promise of Prime’s 2-day fulfillment into utilizing Fulfillment by Amazon (FBA) without understanding how reliance on FBA could be limiting their business. For example, FBA costs rise during the holidays, and penalties can be steep for storing slow-moving inventory. Further, as experienced by HyVIDA, the world’s first and only hydrogen-infused carbonated beverage, the Prime badge comes with unforeseen costs like lack of brand control and custom pack out needs that FBA is unwilling to meet.
This is why more fast growing eCommerce shops are turning to Amazon’s two other fulfillment options: Fulfilled by Merchant (FBM) and, until it stopped accepting new registrations, Seller-Fulfilled Prime (SFP). In both scenarios, sellers handle logistics in-house or through an outsourced order fulfillment partner – and can still promote and meet 2-day shipping guarantees without Prime status.
- Improve Efficiency by Relying on one Fulfillment Partner – Many fast growing small-and-medium-sized businesses (SMBs) already outsource warehousing and fulfillment to third-party logistics (3PL) providers. These supply chain partners are maniacally focused on quality control. Plus, due to their many retail relationships, they’re extremely familiar with big box stores’ KPI updates and will make sure shippers always remain retail compliant. Additionally, having only one provider accountable for the fulfillment process creates greater transparency and visibility across the entire direct-to-consumer (D2C) supply chain. Put another way, as multichannel fulfillment makes selling increasingly complex, a cloud-based based warehouse management system (WMS) integrated with other business systems gives much needed visibility into daily operations and real-time logistics conditions.
- Outsource retail compliance to a fourth-party logistics (4PL) provider – By leaving vendor compliance to the experts, sellers will save time and money to invest back into the business. Aligning with a 4PL is frequently a better option because they negotiate the best service level agreements (SLAs) and rates with regional 3PLs to create a single nationwide warehouse network. Moreover, they integrate with the most popular eCommerce platforms and their in-house IT teams seamlessly connects vendors’ systems with retailers’ systems. This optimizes every aspect of suppliers’ retail relationships, such as speeding up the onboarding process and maintaining retail compliance as KPIs and other directives change.
The Bottom Line
Considering the high price of non-compliance – declining productivity, business disruptions, and fines – more merchants expanding into new sales channels are following in the footsteps of Hungry Harry’s and aligning with fourth-party logistics (4PL) providers.
Specifically, Hungry Harry’s chose to work with 4PL Ware2Go to accommodate their B2B demands and expanding B2C shipments. Created by UPS to help eCommerce stores of all sizes guarantee nationwide 2-day delivery, Ware2Go also ensures that Hungry Harry’s meets retail compliance agreements.
This gives Sarah and Rob, Hungry Harry’s co-founders, the confidence to pursue new retail and distribution partnerships and capitalize on growing consumer direct sales.
To learn more about how Ware2Go can help you remain retail compliant, please reach out to one of our fulfillment experts.
