Suppliers overcharging small businesses by £3.6 billion

If you’re an online retail start-up, establishing a good relationship with your suppliers early on is key. A good supplier can often become more like a partner, advising on the services best suited to your needs and helping out when you need it most. You may not have the clout of Amazon or Tesco, but you should still demand a stellar service from all your vendors.

Not all suppliers, it seems, have their clients’ best interests at heart. Small businesses are being overcharged by more than £3.6 billion by “greedy suppliers”, according to a survey produced by b-to-b group-buying website Huddlebuy.co.uk.

The research found that businesses with fewer than 10 staff are paying up to three times more for goods and services than larger companies.

Huddlebuy found that small firms ranging from information and communication firms to construction companies are spending £1,285 more than they need to, with some spending up to £4,000 too much.

Small businesses are paying more than double what they should on a range of everyday services and in some cases are missing out on discounts of 70 percent, according to the study, which also highlighted sole traders, freelancers and consultants are being overcharged £2.17 billion a year, which is an average of £969 each per year.

Businesses in the London and South East best beware, as the study shows they are being overcharged by £1.3 billion a year, with other businesses in the East of England (£390 million) and the North West (£368 million) also being rip-off hotspots.

The Huddlebuy survey says that the professional business services sector is the worst culprit for overcharging small companies (£1.4 billion annually), while the property sector overcharged small companies the least (£120 million annually).

Saurav Chopra, chief executive at Huddlebuy, says, “The results of this research are simply shocking. Small businesses fighting desperately to survive in harsh economic times are being ripped off by greedy suppliers, whilst big businesses enjoy huge savings from their favoured suppliers.”

This doesn’t have to be the case. Direct Commerce is once again proud to support the ECMOD Supplier of the Year Awards. These awards, held annually during the ECMOD Direct Commerce Show (30th November to 1st December), recognise the hard work and effort suppliers to the direct commerce sector put into securing the success of their clients. This year, cataloguers and online retailers are invited to nominate those suppliers who have gone the extra mile in up to 14 categories, including a new Lifetime Achievement Award.

The beauty of these awards is that the winners are chosen by their clients, not by a judging panel far removed from the coalface. Show your support by voting. It's absolutely free to nominate your chosen suppliers; all you need to do is download the official form (http://bit.ly/SOYA11), complete it and return it by Friday, 7th October 2011--JD