Manufacturers often set terms that can be challenging for e-commerce platforms and retailers due to their position in the supply chain. These terms can include demanding exclusivity, limiting price adjustments, and controlling the distribution channels. Tight control over MAP (Minimum Advertised Price) policies can restrict discounts and promotions, impacting retailers' competitiveness and sales strategies.
Moreover, manufacturers might impose specific inventory purchase requirements and rigid return policies, increasing the financial risk for retailers. Just-in-time ordering policies favor manufacturers as they pass inventory holding costs onto the platform, while retailers face potential stockouts and customer dissatisfaction.
Manufacturer-imposed terms may also limit the ability of e-commerce platforms to bundle products or offer subscription services, constraining innovation in customer engagement strategies. The negotiation power imbalance often results in procurement at non-negotiable rates or unfavored payment terms, squeezing margin potentials for e-commerce platforms.
Operational coordination becomes complex when manufacturers maintain tight control over logistics and delivery schedules, driving up operational costs and affecting service reliability. Addressing these challenges requires strategic negotiation, forming alliances with alternative suppliers, and leveraging technological advancements to enhance operational efficiency and offer manufacturers data-driven solutions to foster more collaborative agreements.