Before co-founding Fresho, I spent many years running a large fresh food wholesale business. During that journey, I came to understand the importance of providing quality produce and service to customers, often on a tight margin. Today, I want to address an important aspect of our platform that stems from what I learned and also reflects our commitment to the industry: our decision from day one to operate a Fresho closed marketplace.
What is a Closed Marketplace in Fresh Food Wholesale?
Suppliers looking at options to automate order processing and operations can sometimes dive into feature comparisons between platforms, often skipping over the important distinction between open and closed marketplaces.
- An open marketplace allows unrestricted access to suppliers and buyers, fostering intense price competition that leads to diminished margins and lower quality and service. It’s a race to the bottom with limited collaboration between venues and suppliers.
- In comparison, a closed marketplace operates ‘by invitation only’, emphasising long-term relationships, stock availability, quality and consistency. Venues and suppliers are aligned in that they communicate effectively and understand each other’s needs.
Why is the Fresho Closed Marketplace Better for Suppliers?
Margin Protection
One of the key reasons we maintain a closed marketplace at Fresho is to protect the margins of our suppliers. Margins are crucial as they enable suppliers to maintain the product quality and service levels their customers expect, which is the very essence of a sustainable food industry.
Open marketplaces often result in a “race to the bottom,” where suppliers are forced to compete on price alone. This is detrimental, driving down margins and ultimately impacting the quality of service and products, and consistency of supply. Relationships are damaged and suppliers are not incentivised to go “above and beyond” for their customers.
By operating a closed marketplace, we ensure that our suppliers can maintain fair pricing, which allows them to maintain high service standards and deliver top-quality produce consistently.
Efficiency and Profitability
Our mission at Fresho is to help suppliers to operate efficiently so they can provide outstanding service to their customers. Open market systems often fail to support this goal. Instead, they can create a chaotic environment where short-term battles over price and market share take precedence over sustainable growth.
By contrast, a closed marketplace provides a platform where suppliers and their customers can optimise their operations, focus on quality, service and dependability, and achieve long-term success together.
Relationship and Trust
In fresh food, long-term relationships built on trust, quality, and personal service are invaluable. Open marketplaces undermine these relationships by encouraging frequent switching based purely on price. At Fresho, we value the deep connections and understanding between suppliers and customers.
Our closed marketplace fosters an environment where these relationships can flourish, ensuring that both suppliers and their customers benefit.
The View of the Chef or Venue
Quality Over Price
Interestingly, surveys and feedback from venues consistently show that quality, service, range and consistency are valued much higher than price. This preference underscores why open marketplaces have seen limited success. Customers look for reliability and excellence from their suppliers, knowing that quality produce and dependable service are critical to their own success.
Service Expectations
In times of challenge, reliable communication and service from suppliers become even more crucial. Venues appreciate suppliers who can provide consistent quality and dependable support, even if it comes at a slightly higher price. The cost of not having these fundamentals in place can far outweigh the price saving on paper. This expectation reinforces the value of a closed marketplace, where long-term relationships and high standards are prioritised.
Fresho’s Industry Commitment
Our closed marketplace is not just a business model; it is a commitment to our suppliers and their customers to provide a platform that values quality, efficiency, and lasting relationships.
We have always stood firm against the short term allure of open marketplaces. They disrupt essential long-term relationships and lead to a fragmented and less reliable supply chain.
At Fresho, we are dedicated to upholding this principle, knowing that our approach serves the best interests of suppliers and their customers.
