Compete with the Retailing Giants for Survival: A Procurement Alliance Approach Enabled by Internet Technology

Abstract

After China enters WTO, its antique retailing and wholesaling sector is faced with tough competition as the global retailers rush to enter the field. The flea market and independent operators characterize the Chinese retail and wholesale industries. Those pa and ma shops could not compete with their giant counterparts in terms of cost, product quality and consumer convenience. They are faced with a life or death situation in next few years. How to raise the competitiveness of those small shops radically is an urgent problem that has to be addressed quickly.

This study represents the strategy we used to help one Chinese company to create a new business format and to enable small shops to compete with the large chain stores. The strategy we used is to form a procurement alliance of small retailers and wholesalers. The procurement alliance accumulates individual small orders from independent shops into a large order. The large order is sent to direct providers to obtain procurement advantages of low cost and high quality. At the same time, the alliance cuts off any unnecessary intermediate layers and provides an efficient logistics support for goods distribution. In order to implement the procurement alliance, we use the Internet technology to enable the accessibility, manageability and availability of the alliance services from our clients and suppliers all over the world. By using e-commerce solutions, we provide a huge selection of products, excellent convenience and timely service. This demonstrates the power of right technology in doing new business in a creative way in the new age.