What is the supplier locking?

Lock-in supplier concerns practice in which consumers can be forced to stay with a specific seller or face high switching costs. There are cases of supplier locking in almost every industry, such as mobile phones that work with only one provider and software that requires a specific operating system (OS) to operate. In some cases, a low -cost product will be sold, knowing that the consumer will have to buy relatively expensive consumables to continue using it. Businesses can also experience the locking of the supplier, especially with certain technology implementations such as computers, software and networks. Companies often use proprietary parts or components to urge customers or clients to buy them exclusively, so all three terms simply refer to different aspects of the same process. These locking procedures are not usually regulated, but in some cases they may lead to anti-competing behavior. If the companyT uses to lock procedures to enforce competition, this can lead to government intervention in countries that have anti -monopolous legislation.

Often there are several companies in one industry that all use the supplier lock to try to keep customers. Mobile phones industry is one of the examples because of the way carriers tend to subsidize the cost of phones. In this case, the technology can be implemented to prevent customers from taking the phone from one carrier to another. Sometimes it is possible to bypass this type of customer locking, but usually requires the level of technological knowledge that many consumers lack. Cell carriers can also use another type of blocking tactics that include fees for termination of the contract, which can go very expensive to the customer to a competitive provider.

Further locking of the supplier works by selling a product that has PROprietary consumer component. Razor and printer manufacturers use this type of blocking to maintain customers. The product itself is usually sold cheaply, after which the consumer item must be replaced regularly. In this case, the ownership consumables can lock the customer, but there are usually lower switching costs due to originally cheap products.

Many businesses are also engaged in dealers, especially in terms of technology. After the company invests in computer infrastructure, the change may be expensive. This can also apply to proprietary software programs, as the cost of switching to another supplier may be too high. The software that requires a specific operating system can also create a locking situation, as the transition to a competitor would mean losing this program.