One of the key advantages of Shein and Temu is their ability to maximise Return on Assets (ROA) by maintaining low-cost procurement and minimal asset investment. Which one of the following approaches would be most effective if a South African retailer aims to improve ROA through a more strategic sourcing model?

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Invest in long-term procurement contracts with a few suppliers, even if it results in slightly higher purchase spend.

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Increase the size of procurement warehouses to store larger inventory volumes, ensuring product availability.

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Shift to a decentralised purchasing strategy, allowing each store to manage its inventory independently.

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Reduce raw material costs through supplier consolidation and economies of scale, lowering total asset investment.

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One of the key advantages of Shein and Temu is their ability to maximise Return ...

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