Page 182 - DMGT550_RETAIL_MANAGEMENT

Unit 10: Inventory and Product Availability Levels

Notes
Example: The online toy retailer eToys sold special cabinets and stands for customers to
display their collections of toys under their own brand name. Some experts claim that offering
private-label merchandise gives substance to online brand names and reminds customers of
e-commerce Web sites. Electronic retailers must be careful not to offend big name manufacturers
by copying their products and packaging too closely, however, because they lack the leverage in
the chain of distribution that is enjoyed by regular retail stores.

Did u know? Manufactured private label products are sold to key retailers for distribution
under their store brand names.

10.6 Negotiating with Vendors

When it’s time to negotiate, do it fiercely with a walkaway mentality. Fight for better payment
plans and credit terms, and encourage the vendor to sweeten the pot with steep discounts,
additional services and introductions to potential clients. Basically, request everything you
wouldn’t want for your own clients.
Never accept first-round bids. Haggle and then haggle some more. Play vendors’ bids off one
another. If a vendor doesn’t give you what you want and you believe you’re being absolutely
reasonable, walk away and find somebody else.
Remember, a vendor’s primary goal is to sell you a product or service, not to make your
business a success. Vendors need you more than you need them because without you, they don’t
make money. You have all of the power. In this one instance, abuse that power to the fullest to
get what you want at a price you can afford.
Of course, that’s just my opinion. This cut-throat approach might not work in all situations. And
there are other things to consider besides price, especially if you already have a long-standing
relationship with the vendor.
Scroll through the gallery below for more advice on negotiating with vendors from members of
the Young Entrepreneur Council.
Bargaining is an age-old practice that is still common in the marketplace in many countries
today. In the United States, most consumers want to avoid the haggle and will simply accept the
price on the tag. It is the successful retailer that has learned how to play the game of give and
take with their suppliers. Learn how to negotiate with vendors to receive the best pricing and
terms on products with these negotiation tips.
1. Be Prepared: Being prepared and informed is the greatest advantage a retailer can have
going into vendor negotiations. Learn as much about the supplier and its products as
possible. How do their prices compare to the competition? What level of service do they
provide their customers? Vendor negotiation preparation also includes setting goals to
determine what you want and what you can live with.

2. Always Tell the Truth: Deception tactics, such as bluffing or falsification, may do more
damage than good in the vendor negotiation process. Lying is not only unethical, but it
can be difficult to maintain. While being honest, be careful not to give away your bargaining
power. It’s not necessary to tell everything you know, but when you do tell... tell the truth.
3. Show Your Potential: If you are meeting with a potential vendor for the first time, odds
are he/she may know nothing about your company. Begin the negotiation with some
history about your retail business. Explain any future expansion plans and let the vendor
know how doing business with you will help them.

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