12 Tips for Negotiating with Suppliers
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1 12 Tips for Negotiating with Suppliers Written by: Lisa Suttora This workbook is not a free ebook. If you would like to recommend this product to others, please do so at Reproduction or translation of any part of this work by any means, electronic or mechanical, including photocopying, beyond that permitted by the Copyright Law is unlawful.
2 12 Tips for Negotiating with Suppliers You've found a great product to sell and contacted your supplier. Your hopes are high that this is going to be an excellent product for you to sell on ebay - but the wholesale price is not low enough to make the profit margin you need on this item. What do you do now? Abandon this product idea? Look somewhere else? Not yet! Not until you have employed some negotiation techniques with your supplier. Here's the #1 rule of thumb when dealing with a wholesaler, manufacturer, liquidator or even your local retail store... The price first presented to you is ALMOST always negotiable. A supplier will rarely volunteer lower prices, better terms or smaller minimum order quantities to a new account. YOU must ask for them! However, ebay sellers who have established a good existing relationship with their suppliers will often be the beneficiary of finding out FIRST about the best deals before anyone else does. But no matter where you buy your inventory, it s in your best interest to master some supplier negotiation skills. Remember, every dollar that you can cut when purchasing you inventory impacts the bottom line. $1000 saved on any purchase from a supplier automatically translates into $1000 increased profit.
3 For example, Jaycie recently purchased a costly lot of espresso machines from a national supplier. She called and spoke at length with their sales rep. She had purchased her first lot of inventory from a trade show several months prior at an excellent price. She wanted to get that price again. This time the answer was no. At this point Jaycie figured she had nothing to loose- she knew she wasn't going to pay the wholesale price he was currently asking. She started asking the supplier several questions - When will the next trade show promo take place? Are there any FREE shipping promos coming up? Would it be possible to lower the minimum quantity & still get the volume discount? Jaycie told the rep that she was willing to wait to make this purchase until they had a sales promotion that was right for her company. At that point the rep asked Jaycie to hold so he could talk to his manager. Upon his return he told Jaycie about a special deal that was ending in two days which reduced the unit cost of the merchandise by $25 per unit. This price was exactly the price that Jaycie had been looking for. She placed the order, quite satisfied with the price she had negotiated. Did the national sales manager just "happen" to remember about this price break? Absolutely not! He knew all along he had a margin with which he could work. But his main goal was to get as much for his product as possible. A supplier s job is to move the most amount of product at the best price. Enter the art of negotiation. Your job is to get the best deal on your inventory. What follows are 12 negotiation skills that will enable you to get the best prices on your inventory:
4 1. Move past the fear of asking. Many of us have a fear of asking a supplier for a better deal because we are afraid they will say no. You MUST be able to move beyond this barrier or you will end up paying the highest price for your inventory. Getting a good deal is a numbers game. Some suppliers will say no. Many will say yes. Consider negotiation a part of your inventory purchasing process! 2. Be clear on the suppliers stated terms before you ever begin your negotiations. Make sure you read the fine print before you present your offer. 3. Decide WHAT it is you want to negotiate. A lot of sellers skip entirely over this step, thinking that it is only a low price that would benefit them. The lowest price may not always be your main goal. Maybe you want deferred payment, a smaller minimum quantity, or the ability to reorder with no minimum. Be clear on what terms will work to your best advantage. If it is a lower price, figure out what the BEST deal would be for you. Don't make it ridiculous (the supplier won't take you seriously, but don't be shy about asking for the deal you need. 4. When asking for a price reduction, first ask for a price that is lower than what you would ultimately settle for. The supplier will present you with a price higher than he is willing to accept. Asking for a price lower than what you really want presents the chance that the supplier will simply agree straightaway to the price you suggest. This is a best-case scenario, because without negotiating you ll have received a price that is lower than what you had hoped for. But even if the supplier does decide to negotiate, and counters with a price that is slightly higher than what you want, you can make a counter-offer and begin moving downward into the price range you initially decided on. 5) If the supplier will not negotiate, thank them for their time, leave your business name and number and ask that they contact you if a better price becomes available. The supplier may call you back and offer to match the price you requested. If the supplier doesn't call back, you can call them after a week, saying that you wanted to check with them one final time before beginning to contact other suppliers.
5 This could motivate them to meet your price. (If it doesn't however, you must be prepared to move on.) 6) Get prices from multiple suppliers (three others is preferable). If there is a particular vendor you want to deal with, but they are not meeting the price you need, let them know that you do want to do business with them and ask them if they can match the price at supplier "B". Letting your supplier know that you value what they have to offer and that you want to come to a mutual agreement can motivate them to move their price. 7) Ask for a pre-paid discount. Many suppliers will readily grant a discount if you pay in full up front. 8) Build a relationship with your supplier. If there is a product that you REALLY want to sell on ebay, but your supplier won't budge on price, consider paying the asking price the first time around Then begin building a relationship with your supplier. Once your supplier gets more familiar with you, sees that you are bringing them consistent business and sees that you pay for their products on time, they ll be much more likely to work with you on price. "Favors" are a big thing in this industry. Whether spoken or unspoken, a supplier who knows you on a "first name basis" is much more likely to cut you a deal than someone who they only know "on paper". 9) Explain your position clearly to the vendor. Vendors are willing to work with you if they see that you have a reason behind your request. For example, If you want to get the volume discount pricing but can't make the initial large purchase up front, you can tell the vendor that your company expects to move a high volume of their product but is not in a position to invest a large sum upfront for the market evaluation. Would they be willing to sell you a smaller quantity of their product at the volume discount price so that you can test the market and then re-order? 10) Remember that the best pricing wasn't always obtained in a day. A lot of the ebay PowerSellers buy in large volume quantities. Almost NONE of them started out this way. They started out by purchasing small quantities at slightly higher prices in order to get a foothold in the market. As their sales grew so did their volume of purchases and consequently their price per unit dropped.
6 Anyone can work a deal like this, but it does take some time. However, if you keep in mind that you make your money when you buy, this will be your driving strategy when sourcing products. 11. Don't get greedy. While there is always the tendency to back off from asking for substantial price reduction, some people go overboard in the opposite direction. Once you have received what you consider a great price, don't push it too far. After negotiations are concluded, you'll begin an ongoing relationship with your vendor, and you'll want to make sure that good feelings are retained. 12. Know when to walk away. Sometimes a supplier just won t budge. If you ve tried every strategy possible to negotiate a better deal, then it s either time to make the purchase at the given price or move on. Above all, when negotiating with suppliers, remain flexible and don t hurry your decision. If you are not sure about making an inventory purchase, take some time to think about and call the supplier back in a few days. Learning to negotiate with suppliers is a skill that is developed over time. However, talk to any successful PowerSeller and you will find that this is one of the skills that they have learned to master.
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