Edge Retail Academy Blog

Negotiating With Vendors

10 Pieces of Information to Prepare prior to Meeting with a Vendor:

  1. Annual purchases last three calendar years
  2. YTD purchases
  3. GMROI for this Vendor for the last three calendar years
  4. Current on-hand Inventory from this vendor (total dollar amount and detail)
  5. Inventory detail listing all items on hand over 365 days
  6. Inventory detail listing all items on hand 180-364 days
  7. List of fast (sold in less than 30 days) sellers that are currently out of stock
  8. List of top 20 sellers from this Vendor (available to members of the Edge Retail Academy through Edge Pulse)
  9. This Vendor’s ranking on the Annual KPI (Key Performance Indicator) Report (available to members of the Edge Retail Academy through Edge Pulse)
  10. An Open-to-Buy Number, based on Autopilot and your knowledge of your current overall inventory and financial position.

Checklist of 16 Potential Offerings to Ask for:

  1. Better Price
  2. Better Terms
  3. Memo
  • To support a new order
  • To support a new category
  • To support an advertising program
  • To support a special event
  1. Advertising Support
  • To support a product launch
  • To support a specific campaign
  • For inclusion into a catalog
  • To support ongoing advertising
  1. Stock Balancing
  • Ongoing
  • One-time help
  1. Exclusivity
  2. Signage
  3. Display allowance
  4. Employee Spiff Program/Contest
  5. Support for a local charity
  6. Product Photos in digital Format
  7. Free Shipping
  8. Staff Training from Vendor’s Rep
  9. Commitment from Vendor to shelf-stock key items
  10. Notification of potential shortages or discontinuations
  11. Trunk Show

10 Rules for Getting Special Treatment:

  1. Always write down your agreement, and have both parties sign or acknowledge the details by email. Confirm with a Vendor manager.
  1. If you are really interested in increasing your volume with the Vendor, try to have someone from their Management team at the meeting, or available by cell phone during the meeting. Realize that sales representatives are not typically empowered to do anything extra.
  1. Ask what Trade Groups the Vendor belongs to, and what extra goodies go with which groups.
  1. Be on time, and treat the Vendor with courtesy. Show through your preparation that you value the Vendor’s time, and insist on reciprocation.
  1. If the meeting will be at a Show, make a specific appointment. It says you mean business.
  1. Tell the vendor on the front end of the discussion that your Open to Buy is X (where X is 20 percent less than you actually intend to spend).
  1. Try to take important Vendors to lunch or dinner. It will provide you with chances during conversation to probe for opportunities (and they will almost always pick up the tab, if you don’t want to). If you have dinner during a Trade Show, make it a point to stop by their booth the following morning to thank them again.
  1. Most Vendors have success stories where their products performed especially well. Ask for their help in replicating the success strategy in your store.
  1. If you are about to exclude a good vendor from a key category, discuss this with them prior to taking action to see if there is a way to identify and resolve the issue.
  1. Commit to prompt replacement of fast sellers- this is your best way to get the best deal.

Ten Leading Questions That Might Get You A Better Deal:

  1. I am interested in increasing our purchases from your Company. What can you do to help me accomplish that objective?
  1. You know I also buy from XYZ Manufacturing. What could you do for me if I agreed to shift my XYZ Open-to-Buy dollars to you?
  1. I have always gotten my (channel bands, diamond studs, plain bands) from XYZ. What could you do to help me switch that category to you?
  1. I’m going to start sending postcards to my customers featuring specific items. Could I get some advertising help if I feature products from you?
  1. I intend to buy less from most of my vendors this fall, as I’m completely over inventoried. If I keep you at last year’s purchase level, can you help me with (pick from the 16 things to ask for)?
  1. We know from historical experience that this Showcase is the best spot in our store. Can you help us with (memo/price break /terms/etc.) if we devote space in that Showcase to your line?
  1. If we place an order for (X Amount), can we receive a corresponding amount on memo for the Holidays?
  1. If I put your key items on (Autopilot/Trickle) so that they are reordered daily, can I get a (price break /terms/shelf-stock guarantee/better stock balancing)?
  1. If I agree to payment upon receipt, can I get a better discount?
  1. I know business is tough. If I agree to place my order today, what can you do for me?

10 Tips to Improve the Outcome of Difficult Negotiations:

  1. Learn to Flinch. You can combine this with “Why so much?”
  2. Ask for more than you expect to get.
  3. Say, “You’ll have to do better than that”, and then stop talking.
  4. Adopt a mindset that you are prepared to walk away.
  5. Take your time. Never rush to buy.
  6. Occasionally mention the name of the Competition, and remind them you know how bad the Economy is.
  7. Talk and Think Long Term, and show your potential.
  8. Always tell the truth.
  9. Remind them that you pay on time.
  10. Have an alternate vendor in mind that might be able to meet your needs.

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