We are the #1 Group Procurement & Production Organisation (GPO1) that consists of independent retailers (offline Direct-To-Retail and online Direct-To-Consumer2) with own staff / offices / warehouses / training premises/ points of sale in 75 countries and purchasing volume over EUR 368 million a year. We buy only retail brands in industries such as Beauty/Wellness/Anti-Aging/Clean Food with 100% clear USP and a “blue ocean"3 approach. We pay only cash up front. GPO members united to leverage purchasing power, obtain better discounts from vendors, secure the exclusive distribution rights on the brands, extend the portfolio of unique products, speed up all the processes and make them time, resources and costs effective. In case of urgent need in non-existent product with a great potential demand that fills a certain gap on the market, GPO can develop own brand from the scratch.
What is GPO and its main benefits?
Group Procurement Organization (Einkaufsgemeinschaft4 in German) is a model of procurement, known in the German industry since the end of the 19th century, where the members are independent businesses that act as a group with the collective buying power to get various benefits through a common purchase.
GPO provides its members (DTR/DTC retailers):
- Turnkey portfolio and it’s constant updating with unique high margin retail brands (hereinafter RB);
- Access to deeply discounted, pre-negotiated contracts;
- 100% distribution exclusivity for each particular market;
- Diluting of risks and marketing expenses between all members;
- Improving a part of the procurement chain;
- Increasing speed to market and speed to profit;
- DTC/DTR process house coordination and support if needed;
- Benchmarking, audit and analysis of similar activities within the GPO structure to identify errors and to avoid the principle “learning by doing”;
- Multiple compensations in case of the independent RB exit;
- Centralized advanced group training, offline and online seminars, open tables etc.;
- Support with logistics by importing/exporting good within the EU;
- Just in time (JIT) deliveries directly across the EU;
- Save money on freezing VAT and make.
GPO provides suppliers (brand owners):
- Big volumes of purchase;
- Contract-guaranteed projected demand;
- General conditions and discounts for all GPO members;
- Protection against cross-border selling and clients poaching;
- Reduction of operational costs on the search of potential distributors in each market separately;
- Real customer checks and charge-free market assessment, competitors and pricing evaluation from 75 markets within BRAND LAB;
- Zero time to market;
- Dynamic growth and a rapid increase in cash flow.
GPO terms and conditions for procurement
All GPO members buy ready-to-market and already existing products by independent RB at the same purchasing price with cash up front adhering common distribution terms and sell in their markets. Despite the fact that the volume of purchases and discounts, based on total purchases by all GPO members, are negotiated, the procurement contracts are concluded with each individual member of the group for each separate market. RB mandatory concludes a five-year exclusive distribution agreement with each interested member for his core market with the possibility of prolongation for at least five years, subject to the fulfilment of the agreed annual purchase volumes by GPO member. Accordingly, the retailer pays to the supplier and receives the products directly according to the terms of the contract. Such a contractual division allows simplifying the procurement procedure and proper build financial relationships between the parties.
We are the first worldwide who were forced to introduce such GPO extension. Only if GPO sees an urgent need or unrealized product gap in the market, it can enter into a deep collaboration with an independent manufacturer (not MNC) and, respectively, create own private label from scratch to fulfil the demand and fill in the gap on the market. GPO is guided by the fact that there are already own customers who need this product in all markets of operation and ready to buy it. It is very important that GPO does not consider the subject of copycats. Representing the interests of the market directly, GPO develops the products only after careful market assessments by all members within the framework of BRAND LAB thorough market testing and surveys of all GPO members.
The new brand evaluation process consists of:
- Feedbacks from all GPO members;
- Careful evaluation for such a demand;
- In-depth analysis of all GPO markets and assessment of all conditions;
- Product validation checks and concept marketability in all GPO markets.
The new brand production process consists of:
- Very generation and selection of ideas;
- Concept development and verification;
- Marketing and sales strategy development;
- Business analysis;
- Product development;
- Trial marketing;
- Full-scale commercial production;
- International certification, marketing, logistics and sales.
GPO members who have developed the brand share all marketing costs and additional expenses on the development of such brand among the participants. In such a case, all rights on this brand 100% belong to the GPO members who participated in brand development and sales. In case of deep integration into product development, the right may be also shared with the manufacturer/brand owner.
How does GPO secure the rights for own and co-owned brands?
Since GPO develops private label from A to Z completely at own expenses and independently from the manufacturer, it retains full rights to the trademark, as well as intellectual property rights and remains unbound to the location of the production facilities. In case of exit of such private brand, the GPO receives an entire 100% compensation, that is distributed among the members who sold the product. If the manufacturer partially obtains certain rights for the private brand, investing in the brand's production, he gets the share in accordance with his participation in the event of the exit. The rest of the shares are divided between GPO members who were involved in its sales, in the percent ratio tied to purchasing volume.
Which brands does GPO work with?
The main focus of GPO are products by independent RB that improve human health and wellbeing inside and outside, lengthen the lifespan and help people “feel better - look better - live better”. Such brands could be literary divided into two main groups. The first group of brands includes deep tech healthy and wellness dietary and sports nutrition, supplements, clean organic food (incl. snacks, desserts and diabetic food) and drinks. The second group includes deep tech personal care and beauty products. GPO works ONLY with privately-owned RB and doesn’t consider any corporate brands since all MNCs, as a rule, sooner or later deprive independent distributors of their rights to trade brand’s products.
MUST HAVE FOR THE BRAND:
- Privately owned;
- A clear focus on best-aging and well-being;
- 100% clear Technological USP;
- High margin;
- Big potential market;
- "Blue ocean" strategy;
- The brand owner is ready for aggressive S&M strategy;
- The brand owner doesn’t plan to sell the brand at least within 24 months.
All GPO brands could be downloaded in the form of a convenient PDF Best-Aging Report with one click on this link
How does GPO work with retail brands?
GPO has a very simple procurement chain, where there is an independent RB from one side and there is a GPO member (offline DTR and online DTC) from the other. In the middle of this chain, there is a centralized office with an in-house international team for the effective GPO process house. The centralized team searches for the new RB into the portfolio, applying online and offline channels (member’s recommendations, mass media, social media, exhibitions, etc.) and selects the best brands according to generally accepted requirements as stated above. We start with markets assessment and at the request of the RB, we excluded the markets where the brand is already being sold or has an exclusivity. After the market assessment GPO tests the products for short, middle and long term performance within the BRAND LAB by a group of professional medical doctors and technologists, who either own retail companies or work for them and have the necessary experience and competence.
After the assessment of the products, the centralized team personally informs GPO members in 75 markets about new potential RB in the portfolio and updates with all news with the help of special personal notifications. Based on the GPO members request and feedbacks, the team arranges online conference calls between the parties. At the final stage, after the presentation and warm introduction by the team, all communication is transferred to GPO member for further direct interaction. Also, in some cases, the team helps with the provision of business samples to GPO members, at their request, as well as with certification, sales and marketing and international go-to-market strategy, customers check and product demand in all markets. Usually, after the preliminary online conferences and meetings between the interested parties, if the situation permits, GPO members hold a personal centralized meeting with RB where it is more convenient for everyone, to define all the conditions and sign RB-GPO member direct contracts.
SPINOFF.COM PROCUREMENT PLATFORM
As a standard, for the convenience of GPO members and RB, we developed the Spinoff.com platform (word "spinoff" was chosen for the title, since GPO members spinoff their tasks of the procurement to the centralized team, as well as because most of the brands in our portfolio were spun off by doctors or professionals), that works as a modern assessment tool to secure time and resources. The team compiles dossiers using the information provided by RB, that is shared among GPO members in a convenient electronic form with the well-remembered perpetual link by any modern means of communication. The platform has 10% of visible information, available to all, and 90% of invisible information, secured under the password and available only to GPO members. This detailed information allows GPO members to make own assessment of RB in the GPO portfolio and also to observe the assessment of others, as well as work with RB directly in the "all in one place" format, or work as a group on solving some problems or within the framework of best practices discussion.
The platform has a highly reliable level of protection since all information is located on our own physical secured servers based in Germany. Spinoff.com has its own video streaming. Tailored smart software ensures high-speed uploading/downloading unlimited number documents, including videos, to any device, with any operating system, in the highest resolution without the risk of viruses. It also allows tracking all viewed /downloaded information flow based on IP address, which gives the opportunity to secure all sensitive information.
How the GPO is financed?
GPO is funded by:
- Annual flat rate by the GPO members (only €499);
- 10% equity belongs to the GPO when it creates its private-label brands in case of urgent need;
- Sometimes, there are situations that the brands, that GPO worked with, are bought out by MNCs. Since MNC has its distribution network it will no longer work with GPO, and at the same time taken along with the brand our customers. Therefore, we lose a fairly large part of the client base, the revenue from them and have to start working with a new brand from scratch. Since GPO members have invested in this brand a large amount of financial and other resources for its development and promotion, it can count on some kind of compensation. In case of loss of distribution rights and customers, the member of GPO receives compensation from the brand in the amount of cashflow with the brand for the last 12 to 24 months. We receive 10% of the total amount of compensation to cover all legal, court and other expenses;
- In particular cases, if the young brand doesn’t have enough money to develop international sales, instead of selling a part of the company or attracting other financial means (e.g. from venture funds), GPO ensures cash up front payment with large leverage of up to 3 months and protects the brand owner against company diluting. In this case, GPO can count on a small share of brand equity upon reaching a certain volume of cash upfront purchases. We call this “Sales for Equity” (this definition was introduced for the first time by the Head of the GPO Dr.Alexander Miller).
Who are GPO members?
The members of GPO are only online and offline retailers who work DTC/DTR in each individual home market. Each GPO member out of 75 countries has legal entity/ staff / offices / warehouses / training premises/ budget and have at least one and more point of sales or POS (e.g. own beauty salons, offline and/or online store and do distribution themselves or network with other local retailers). GPO doesn’t cooperate with entities which act only as distributors or agents and do not sell anything directly to customers and do not have direct access to them, as well as with any other forms of the middleman.
Each GPO member is independent of the others and decides on his own whether to work with the RB from the GPO portfolio or not according to his financial sources and capabilities. It is very important that all members of the group have equal rights regardless of any factors. They interact with each other exchanging best practices, new trends, experiences, marketing and sales statistics and feedbacks on brands in the portfolio. These connections have been accumulated over many years in corporate business and operating in the beauty and healthcare industry.
Who can become a GPO member?
- Large-sized online/offline retailers with a big amount of own POS who do not have time for scouting t new independent RB and who also want to protect their rights in front of the MNCs;
- Middle-sized online and offline retailers with own POS that do distribution themselves or with other local retailers, who want to scale sales to be able to compete with big wholesalers/MNCs on more favourable terms due to larger volumes of sales in more markets. GPO can provide economies of scale due to a large volume of production and purchasing and immediately come to savings and low cost from a large volume of production; GPO can also control the contract production, support with certification and logistics locally;
- Small-sized companies that just started DTC/DTR business in such industries as Beauty/Anti-Aging/Wellness/Clean Food Business and have enough financial resources, but don’t have a proper brand portfolio, it is not balanced or have a gap in it; feel lack of the competence to properly built DTC sales. For such companies GPO can prepare a turnkey portfolio from the scratch or audit the existing one and fill in the identified gaps, as well as build all parts of the DTC Process House completing the competence gap e.g. in product manufacturing, logistics, marketing and sales, contracting, work with suppliers etc.;
- In exceptional cases, private individuals who have a certain fundamental competence or a number of competencies (for example, MD or cosmetologists) and the financial resources to start own DTC/DTR business in given areas, but have a certain gap in other competencies as well as product’s portfolio. In this case, GPO can help to build DTC/DTR business and portfolio on a turnkey basis, to train, support with all its aspects and help to complete the lack of competence, in turn, enriching the GPO with other existing competencies.
For effective interaction between all members in 75 markets and global RB, GPO has several offices with warehouses in Europe. There is a head office in Nuremberg, Germany that coordinates all strategic, marketing, legal and financial work between the brand owners and GPO members and is engaged in the BRAND LAB, production and procurement projects in 24/7 mode. There is a logistics and certification centre in Burgas port, Bulgaria that supports GPO members, if needed, with import-export, logistics, customs clearance and certification (e.g. CPNP) within the European Union. There is an office in Kharkiv, Ukraine that covers CIS and Eastern Europe with an in-house team and salespeople that deal with all aspects of e-commerce, communication, marketing and PR. There is also medical, scientific, and training center in Madrid, Spain which helps GPO with the development and testing of new products.
We would like to stipulate that the Group Procurement & Production Organization consists of and regulates by its independent members that represent single buying power. We are not any kind of agency or consultants, since all members BUY products from independent retail brands CASH UP FRONT and SELL in up to 75 markets, respectively risk with own money and reputation the same as the owners of independent retail brands. We are open to discuss any possible forms of cooperation and partnership. Please, send your inquiry to the following email firstname.lastname@example.org, give us a call to +49 911 919 44 378 or chat online with our specialist right away.
You will find more detailed answers to all questions in the FAQ section.