21st Century Vendor Management Strategies for Smart E-commerce Brands

E-commerce brands that do well have a strong supply chain network and a robust vendor ecosystem. The vendors enable these e-commerce companies to optimize inventory, meet target customers’ demands, fulfill orders on time, and achieve revenue and profit goals. Clearly, the vendors lie at the heart of the e-commerce industry, and that’s why, with every passing day, e-commerce brands analyze the need to effectively manage their vendor relationships.

Brand aggregators realize how vendors can reap benefits by developing good relationships with them. This blog explores four proven strategies to help you (a brand) set up this program and ultimately establish proactive, productive, and profitable vendor partnerships.

Establish Smart Partnership Objectives

The key to a successful e-commerce business is long-term vendor partnerships. However, to set up such partnerships, it’s important to assess what you’re looking to gain from each partnership. For this, you need to set clear objectives, short-term goals or key performance indicators (KPIs), and Service Level Agreements (SLAs) for all vendors. These metrics play a role in ensuring that vendors understand what you expect from them and why.

With the defined objectives, you will help measure the vendor’s performance against your expectations and take action to address any problems. Afterward, you need to communicate these metrics and expectations to all vendors right from the beginning. This ensures that your engagements get off to a good start and strengthen over time. Also, provide regular inputs so if a vendor is falling behind on their performance, they can identify ways to fill gaps without losing out on time, and even forecast your needs and exceed your expectations in the future.

Set Up a Robust Vendor Onboarding Process

The vendor onboarding process is about guiding your vendors into your company’s network, supply chain, and technology stack. Since most e-commerce firms work with multiple vendors, a smooth onboarding process sets the foundation for a strong relationship. 

This onboarding process helps you set goals, and explain what a vendor can expect from you in return. You can also verify their systems and documents against your standards or requirements. For instance, do you require vendors to have strong cybersecurity controls to prevent cyberattacks on your network? You can convey these requirements during the onboarding phase.

Besides, when you introduce a vendor to your company’s systems you ensure that their systems integrate with yours existing workflows without leading to any friction. By spending some time in the onboarding process, you can also understand and adjust to the vendor’s motivations, capacity, and working style. All of this goes a long way toward creating mutually-beneficial partnerships.

Maintain Two-way Communications

Henry Ford said, “Coming together is a beginning, keeping together is progress, working together is a success.” To answer what is the key to all this togetherness? You can turn toward only one activity – Communication! 

Ongoing communication affects many operational aspects for both parties. Poor communication impacts inventory levels and can lead to supply delays, which can then affect the e-commerce company’s business continuity and customer relationships. It can also result in delayed invoices and payments to vendors which will make them less likely to offer beneficial terms or volume discounts.

To avoid these issues, clear, unambiguous communication with vendors is vital. A lot of problems can be easily resolved and prevented, if your company and your vendors communicate with each other regularly, honestly, and clearly. To achieve this clarity, establish communication channels and protocols so your vendors know exactly where they stand and who they should contact in case of a query or problem. A self-service vendor portal is also a useful communications tool. Ideally, the portal should integrate with your payments data and invoice workflows, and provide all the information vendors usually need.

Pay Vendors in Full and On-Time

Many e-commerce companies ignore the role payments play in strengthening vendor relationships. Unless the terms of your contract explicitly state that some payment delays are acceptable to the vendor, you should always pay vendors in full and on time.

Delays can erode trust and faith, especially when that becomes frequent. Conversely, when vendors receive payments on time, they feel motivated to serve you better. They may offer more profitable terms such as longer credit periods or discounts, which can have a positive impact on your finances. Moreover, you can avoid penalties for late payments and again, strengthen your bottom line.

But what if your e-commerce firm is not delaying payments intentionally?

If delays are a chronic problem, you risk losing the support of many vendors. That’s why it’s crucial to analyze the source of these delays. You need to know :

If the poor operational processes are creating bottlenecks and preventing you from making timely payments?

Whether the cash flow problems are forcing you to opt for installments rather than in full?

Perhaps there are too many steps in the invoice approval process?

Or maybe there’s too much interference from top management in the payments workflow?

If you can find and address the root cause of payment delays, it will positively impact your vendor relationships. You will also see an improvement in vendor performance, which will then let you build a trusted network of strategic and reliable vendors who can help take your e-commerce business to the next level.


Your vendors can make or break your e-commerce business. It may sound like a dramatic statement but it’s true. A dedicated vendor management program can help you get the maximum value from each relationship. And if your vendor management program incorporates the strategies discussed above, there’s no reason why your business cannot scale new heights in the e-commerce sector.

As an e-commerce brand aggregator and incubator, Ergode enables e-commerce brands to optimize their vendor management programs and strengthen their vendor relationships. We leverage powerful AI-driven algorithms, big data, and analytics tools that empower companies to do more, get more, and earn more from their vendor partnerships. For more information, contact us.


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