Supplier convergence

Supplier convergence is a business model in which a company offers a combination of services or products that were previously supplied by separate companies. It is not to be confused with product convergence, where one product combines and replaces several others; rather, supplier convergence happens primarily through mergers and acquisitions, or through the expansion of larger companies into areas previously dominated by specialty businesses.

Supplier convergence in the retail industry is often described as the creation and growth of, literally, "one-stop shopping" (Slywotzky et al. 1999), epitomized by retail giants such as Wal-Mart, whose outlets offer a wide range of products in an attempt to make competing specialty stores obsolete. Essentially, each section in large department stores, such as hardware, electronics, and clothing, consequently aims to replace competing businesses specializing in just one of those areas.

While the above example deals with the combining of many different categories of products, supplier convergence can also occur with just one primary product. Examples of this trend would be the growth of book superstores such as Borders and Chapters, who have replaced many independent bookstores not by offering different products, but by offering a greater number of books that only several smaller stores combined could match.

The boom of technology and the internet in recent years has been a key factor behind the trend of supplier convergence. The bundling of products together is a prime example of how a telecom/entertainment company could exploit the convergence pattern to their advantage. By offering triple play discounts to customers who subscribe to a number of services such as land-line telephone, wireless phone, internet, and digital cable, companies are encouraging customers to receive all these services from a single company rather than several different ones. The expansion of wireless networks is also a factor in supplier convergence, as one national or international wireless phone company could replace many localized ones (InterTradeIsland 2002).

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