Your buying group is sitting on an oil field. In 2006, Clive Humby, architect of the Tesco Clubcard, a supermarket reward program, declared that “data is the new oil”. He went on to say, “it’s valuable, but if unrefined it cannot really be used.”

How valuable is it? According to one study by MarketsandMarkets, the global data monetization market is expected to grow from 2.3 billion USD in 2020 to 6.1 billion USD by 2025.

Data monetization strategies fall into two general categories. Direct revenue – selling direct access to your data to third parties – and indirect revenue – using refined data to improve supply chain performance, understand customer behaviour to drive sales, predict trends, and highlight how to save costs, avoid risk and streamline operations.

So what is your group’s data strategy? Do you even have one?

The first step in any buying group’s data strategy is accumulating the data. A centralized EDI program, such as the one offered by LBMX, allows groups to capture live supply chain data as electronic invoices, purchase orders, purchase order confirmations, and other documents flow through the group’s database. Nightly feeds from member POS systems can provide valuable sales data. Group-sponsored e-commerce sites can supplement sales data while also capturing customer information. Companies like CoMetrics provide tools to survey members on key metrics and provide benchmarking information across groups.

Admittedly, these approaches are simple, but they are not easy. Until they see the benefits, independent members may be reluctant to share their data. Clearly defining your group’s data strategy, including what data you are capturing and how you will use it, will go a long way in reducing member concerns. The key is to get started. As the proverb says, “The best time to plant a tree was 20 years ago. The second best time is now.”

Keep in mind, though, that it isn’t just about collecting information. It’s the ability to do something with it that solves specific problems that is important. It’s critical to really understand the data in order to see potential new opportunities, how to achieve them, and if they’re sustainable and efficient.

Do you even need a data strategy? Organizations that aren’t maximizing the value from enriching data are missing out on opportunities to grow, optimize, and manage risk. Your savviest members will have their own data strategies and will be hungry for the additional data you can provide. Your suppliers are likely doing everything they can to accumulate data within your sector. Competing groups will be employing their own data strategies as a market advantage. Your corporate competitors have been doing this for years. If you don’t begin to make use of your data to help your members, you can guarantee there are others actively using their data against them.

What do you do with the data?

In order to make use of or monetize your data, groups must identify the biggest opportunities your data can provide. For example, a partial list of opportunities for your group include:

  • Refining and enriching your group’s data and providing it to your members, either free or as a paid service
  • Analyzing the performance of specific product categories and suppliers to increase rebate revenues
  • Identifying product demand and analyze supply chain documents to see which suppliers are out of stock in order to make sure members have the stock they need to drive sales
  • Implementing predictive analytics to make intelligent forecasts about geographic market trends, pricing, product demands, and customer behaviour.
  • Providing strategic marketing and loyalty programs within your group.
  • Boosting levels of cooperation between manufacturers, vendors, and your members, resulting in cost savings throughout the entire supply chain.
  • Selling data – with a keen eye towards data security and privacy rights – to other companies.

The data buying groups hold is uniquely valuable, as it provides a holistic view of the market that suppliers, members, and customers do not have. There are challenges around security, privacy, and competitive concerns that need to be addressed before data can be monetized. These challenges are surmountable and can be addressed by developing and communicating a transparent data strategy with your members.

If you don’t begin taking advantage of this growth opportunity, you can guarantee that someone else will.