The prospect of negotiating with wholesale suppliers often intimidates online sellers – and not just the new ones. But it's a critical part of product sourcing, and according to Skip McGrath, author of The Wholesale Buying System (SkipMcGrath.com), it's not as difficult as most people fear. He offers some simple rules to help you get the best deals for your eBiz:
Build a Relationship with Your Supplier.
In an online world, this can seem like a big job; but make it a point to talk to them on the phone, and to establish that there's a human being on the other end of these transactions. You don't want to be 'just another email' if you can help it. If they're located nearby, consider visiting them; if they exhibit at a tradeshow, attend and meet them in person. In the end, negotiating is simply asking for things, and the truth is that we are all more willing to give something to someone we know and like, than to a perfect stranger.
Be the Sort of Buyer that You Want to Serve.
Your wholesalers deal with the same customer service issues that you do – the only difference is that you, the retailer, are their customer. So putting yourself in their position shouldn't be too hard. Think about the type of customers that you prefer to do business with: buyers who aren't rude or demanding... who appreciate your efforts... who follow your policies and procedures... who bring you steady business. You'll get a lot further if, in your supplier communications, you try to be the kind of polite and professional customer that you enjoy serving in your own business.
Pay On Time.
This may seem like an obvious point, but it's an important one. First of all, wholesale suppliers often offer discounts for early payment; and secondly, if you're seen as someone who reliably pays on time, suppliers will want to do business with you. They have bills to pay, payroll to meet, and manufacturers to pay, so they want to work with retailers who will meet the payment terms they've agreed to.
For new sellers, those terms may be cash up-front. Once you've demonstrated that you're a good customer who can consistently move their products, a wholesaler may be more willing to offer you credit. When you do obtain credit terms, it's important to honor them. As you build a history of consistently paying on time or early, you put yourself in a better position to ask for extended terms, etc.
Prepare Your Case.
You spend a lot of time cultivating supplier relationships, and you don't want to damage them with poor negotiating. That's why you need to have your facts ready in advance. For example, don't just tell your supplier that you've provided them with steady business – have the numbers to back it up. This will increase your credibility, and your chances of succeeding with your supplier.
It's also important to present those facts in a way that's both respectful and professional. You can remind your supplier:
• how long you've been with them
• how many orders you've placed and how frequently
• how much those orders have totaled
• that you've always paid on timeThen ask them to consider what you're proposing, whether that's extended credit terms or a per-piece price based on your annual quantity, rather than on the small volume of your individual orders.
When suppliers like you, they'll be more willing to work with you and help you out. Says McGrath, "I once miscounted my inventory and sold more products than I had. Normally, my supplier only offered those items in cases, but they made an exception and drop shipped one directly to my customer. But if I hadn't developed a relationship with them, I don't think they would have been willing to do me that favor." Take the time to build up your supplier relationships and to establish that you're an excellent customer – your efforts will be rewarded.