I was in the process of posting about transparency when I noticed a Tweet about an “Exclusive Supplier Scheme,” the antithesis of transparency and its benefits.
In days gone by, professional buyers would sit in ivory towers and in would parade a bunch of professional salespeople whose job it was to become the preferred or exclusive supplier (I understand this to an extent when a partnership approach is needed between companies to enable investment, this is not often the case in markets, especially in indoor play).
Perhaps those days aren’t as distant as I would like, however, the majority of exclusive contracts lead to the following:
· Lack of innovation – Why innovate when you are guaranteed to have no competition for two years? This kind of old world deal is the best way to kill a market, stifle innovation and discourage new suppliers into the ecosystem.
· Poor customer value – I pay £250 p/a for my current account, partly because it allegedly delivers great deals on Home and Car Insurance, better rates on foreign exchange etc. However, the problem is it doesn’t because whenever I comparison shop, I see that I can get far better deals elsewhere on virtually everything.
The same happens with exclusive supplier schemes. Promises are made up front (perhaps with the best of intentions) but Economies of Scale rarely materialise and the supplier has to claw back some of the initial outlay and so value diminishes for the end user.
· Opaque practices – There seems to be something dark about the nature of exclusive supplier deals, as though people sit in an unlit room and decide who to approve because they know better than the market. In a transparent world, at least the criteria of how the decision was reached would be published, as would a report to show why each supplier was determined to offer best value; is it available? Furthermore, if suppliers can pay to gain exclusivity, this should be made absolutely clear as it clearly compromises any perceived independence.
The alternative seems pretty simple and a lot more attractive to me.
Competition increases innovation. Competition increases value. Information and access (transparency) facilitate more effective competition / markets.
The Internet and Social Media enable alternative and more effective methods of achieving best value (e.g. Groupon), encouraging innovation (e.g. innocentive) and better serving the customer (e.g get satisfaction); why do associations instead often insist upon ivory towers, committees and autocracy?
With regard to soft play suppliers, “the PPA recommends using a member of the respective association, as this guarantees the necessary standards are reached.”
Simply not true.
There are some good suppliers that are members of the API (a body that is linked to the PPA) and some not so good. However, there are also some good suppliers who choose for very valid reasons to not participate in a scheme that is achieved virtually nothing for Indoor Play.
The same goes for the PPA; they represent a tiny fraction of play operators, there are some good play centres that are members but there are a lot more that are not. To pretend that membership implies sole conformity to desirable “standards” in either case is at best, misleading.
We started our website because we believe that all companies start equal and the market decides who flourishes, you are now aware of the alternative.
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