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Unit 10: Purchasing in the Domestic and Foreign Marketplace

times are tough. Margins are tight and competition is fierce. Low consumer confidence, the Notes
absence of economic stimulus, and consecutive rises in interest rates did not help Christmas
sales figures, resulting in shoppers spending less than the year before.
Purchasing did not get us the right product/right prices” while buyers blame “operations are
not capable of selling our wonderful products”. There are many reasons why this conflict is
always bubbling over. It has to do with organizational culture, with the strong ego of company
leaders, with the lack clear management accountability, etc. The one keyword, actually the one
key-action everyone forgets about is cooperation.
In this unit, we will discuss purchasing in the domestic market. We will also focus on purchasing
in the foreign marketplace.

10.1 Purchasing in the Domestic Market

Three major concerns regarding order placement
 Geographic location of vendors

 Appropriate timing
 Personal market trips or Internet resources
Why the domestic market is important:
 Delivery reliability

 Price guarantee
 Chargeback adjustments
 Economic advantage
 Reliability of ‘fit’

10.1.1 Five Essentials Should be Considered before Purchasing a
Retail System

Following are the major essentials :

Has it been Designed for Retail?

Retail has many unique characteristics. A retailer needs to know what stock it has available, the
size, colour and location of its products and which ones are selling and where, so it can plan
future marketing campaigns or sales. It is important therefore to consider whether the new IT
system has been designed specifically for the retail industry.
Does it provide Value for Money?

An obvious point, especially in these challenging economic times, but some of the larger software
companies would have you believe that you need to spend millions to get the retail systems you
need. The truth is that you don’t. Some of the retail systems available today are too expensive
and too complicated. The question of on going operating costs is also critically important.
Ultimately, a company should look to have one IT person for every 100 shops it operates to
handle end-to-end retail functionality. Such ratios are easily achievable if the right technology
is used.

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