How do I choose between different finished OTC goods suppliers for retail pricing, assortment, and availability?

Choosing between finished OTC goods suppliers is mostly about matching supplier strengths to your retail strategy, not just picking the lowest unit cost. The right supplier should support your pricing, assortment, and in-stock performance goals consistently.

1) Start with your retail priorities

Decide which of these matters most for your business:

• Everyday low price: You need the best landed cost and reliable replenishment.
• Wide assortment: You need access to many SKUs, including niche or seasonal items.
• High availability: You need low out-of-stocks, fast fill rates, and stable supply.
• Margin optimization: You want a supplier mix that supports profitable pricing tiers.
• Speed to market: You need fast launch for new OTC items or trend-driven products.

Different suppliers often excel in different areas.

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2) Compare suppliers on the metrics that matter

Use a scorecard. Key criteria:

A. Retail pricing support

Look at:

• Net cost after discounts, rebates, freight, and fees
• Price stability over time
• Promotional support: deals, off-invoice discounts, MDF, or funding
• MOQ and case-pack efficiency
• Landed cost variability

A low list price can still be expensive if freight, short fills, or order minimums hurt your margins.

B. Assortment breadth and depth

Look at:

• SKU count
• Category coverage: pain relief, cold/flu, digestive, first aid, etc.
• Pack-size variety
• Brand mix: national, private label, value tier
• Innovation pipeline: new product launches
• Ability to tailor assortment to your store format and customer profile

A strong assortment supplier helps you avoid gaps and improve basket size.

C. Availability and service levels

Look at:

• Fill rate
• On-time delivery
• Backorder frequency
• Lead time consistency
• Inventory visibility
• Order accuracy
• Allocation during shortages
• Disaster recovery / backup supply

For OTC goods, availability is critical because customers often buy immediately when they need the product.

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3) Evaluate compliance and category risk

OTC products are regulated and quality-sensitive. Check:

• Licensing and regulatory compliance
• Product traceability and lot control
• Expiry-date management
• Recall response process
• Temperature or storage requirements
• Quality certifications and audit history

A supplier with great pricing but weak compliance can create major risk.

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4) Match supplier types to your needs

Often the best strategy is a portfolio of suppliers:

• Primary supplier: Best overall for core high-volume items and stable replenishment
• Secondary supplier: Backup for continuity and shortage protection
• Specialty supplier: For niche or regional assortment
• Value/private-label supplier: For margin and price-led customers

This reduces dependence on one source and improves availability.

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5) Use a weighted scorecard

Assign weights based on your strategy. Example:

• Retail pricing support: 35%
• Availability/service: 35%
• Assortment breadth: 20%
• Compliance/risk: 10%

Then score each supplier from 1–5 on each factor and multiply by weight.

Example:

• Supplier A: strong price, weak assortment
• Supplier B: broad assortment, moderate price
• Supplier C: best availability, slightly higher cost

The “best” supplier is the one that maximizes your overall business result, not just one metric.

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6) Test with a pilot

Before committing:

• Run a pilot order or category test
• Measure fill rate, damages, lead time, and actual margin
• Compare forecasted vs actual inventory turns
• Assess customer impact: sales lift, fewer out-of-stocks, fewer substitutions

A pilot often reveals hidden service or assortment issues.

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7) Consider the total business impact

Don’t just compare purchase price. Include:

• Freight and handling
• Shrink/spoilage/expiry risk
• Stockout cost
• Labor cost to manage complexity
• Returns and chargebacks
• Marketing/promotional support
• Revenue lost from limited assortment

The cheapest supplier can be the most expensive if it causes frequent stockouts or poor turns.

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Practical rule of thumb

Choose:

• The supplier with the best landed cost and service for core movers
• A broader supplier for assortment expansion
• A backup supplier for continuity
• A compliance-vetted supplier only

If you want, I can also give you:

1. a supplier comparison scorecard template, or
2. a simple decision matrix for OTC retail sourcing.