Posts Tagged negotiate terms

Up to this point, we’ve talked about a hodgepodge of things that you can do when you’re negotiating terms with your wholesale suppliers. Each of these tactics has specific advantages, and while not all of them will pay off they’re all worth noting.

Today, we want to focus in on one important aspect of the negotiation: the salesperson. Understanding how to handle a salesperson will make or break your negotiation process.

Be Friendly

Salespeople have limited parameters in which they can work. If they’re not permitted to offer the discount or the terms that you’re looking for, it can help to be friends. If the salesperson likes you, they’re more likely to go to bat for you to their sales manager.

Being friendly doesn’t just mean being personable, however. It also means being conscious of the salesperson’s needs. If they need to hit a certain target, for example, you need to demonstrate that you’re an important part of meeting that target, and that you want them to succeed.

Conversely, if the salesperson doesn’t like you, you may wind up paying a premium. They see doing business with you as a hassle, and they’re not likely to put themselves out in order to help you, whether its with a better price or even a rush order.

Know Their Weaknesses

If you can find out when your salesperson’s target sales dates are, you might be able to negotiate better in the days leading up to that date. In many cases, a wholesale supplier’s salesperson’s goals are based more on volume or profit. You may be able to squeeze a better discount from your salesperson if they’re close to their deadline.

Learn from Experience

After you finish talking to a salesperson, make some notes. Note what their approach is, and think about how best to approach them during the process the next time around. Rehearse the arguments you want to use the next time, and use the figures they provide to you today for ammunition tomorrow.

At the same time, you can change your approach occasionally. Keeping the salesperson on her toes means that she can’t develop a strategy to use with you over and over again.

Ultimately, the process of negotiating with your wholesale suppliers can be draining, but the potential payoffs can definitely be worth it. Take the time and effor to do it right, and it will absolutely pay off for you in the long run.

Today, we continue our series on negotiating terms with your wholesale suppliers. In previous posts, we’ve covered being prepared, knowing the payoff, asking for better terms, flaunting your potential and being realistic in your expectations. Here are some more things to keep in mind during the negotiation process:

Be Aware of Alternatives

Switching wholesale suppliers is a hassle, to be sure. Using your existing supplier is comfortable, and finding a new supplier can be a real pain. Once you’ve found a new supplier, you still have that initial period where you aren’t entirely sure of their product or service, and you have to constantly watch to see how they’ll perform.

Still, sometimes it needs to happen. You need to be aware of your supplier’s competition. Check a drop ship wholesale supplier directory, and maybe even contact some other suppliers just to open the lines of communication. If you threaten to leave your current supplier during the negotiation process, be prepared to follow through and do it.

Knowing the competition also offers you another advantage. You can drop the name of other suppliers right into the conversation with your supplier. Know what the competition offers in terms of price or other terms, and then ask your current supplier if they’re willing to meet the same conditions.

Price Isn’t the Only Consideration

There are things other than price that can matter to you. Before you even begin talking about price, find out what else the supplier can do for you. Perhaps your wholesale supplier can offer you expedited shipping or processing at a discount rate, or maybe you can even negotiate extended payment terms.

There may be other benefits a supplier can offer, as well. Maybe they can help you add value for your customers. Perhaps they can give you an extended warranty to your customers, or even put up a prize for a competition or a bonus for a certain sales volume. Explore all of these kinds of options before you talk price.

Consider Pooling

Don’t try to negotiate terms with your wholesale supplier based just on your own sales volume for a single month. See if you can pool requirements on a quarterly basis, or on the basis of your annual purchases.

You might also consider pooling with other retailers. If you have a colleague in a similar niche, see if they would be willing to go in with you to help get a better price for the both of you.

Next time, we’ll take a final look at negotiating terms with your wholesale suppliers.

Last time, we talked about some things you can do to successfully negotiate terms with your wholesale suppliers. We talked about being prepared for the negotiations, and we talked about knowing the potential pay-off so that you can stay focused and motivated during the process. Today, we’ll look at some additional things to keep in mind when negotiating terms with wholesale suppliers:

Ask for Better Terms

Once you’ve done the prep work, know what you’re asking for and why, it’s time to ask. In fact, the most overlooked yet most obvious way to get a better price is just to ask.

How you ask isn’t always really as important as the fact that you ask. Obviously you don’t want to be rude, but asking for a better price in a friendly way will go a long way. You can ask the supplier, “What’s your best price?” or “What kind of a discount can you give me?”

Asking for better terms from your wholesale suppliers doesn’t harm you in the least. In a worst case scenario, the supplier might say “I can’t give you a better price.” If that’s the case, you’re no worse off than you were before you started negotiating.

Flaunt Your Potential

It’s easy to get into the mindset that, just because you run a small business, that your business is insignificant to your wholesale supplier. In the grand scheme of things, this might be true. However, your salesperson probably makes a commission on your business. You’re not insignificant to him, or to his paycheck.
Demonstrate that you’re a good customer. Show your professionalism. Be easy to do business with. Pay promptly, and show your suppliers that you have plenty of potential to grow. If the supplier believes you will be ordering 10,000 units a month next year, they may be able to give you the same price on 5,000 units a month this year.

Be Realistic in Your Expectations

You do have to understand that your salesperson has limitations. You’re not going to get a 50% discount off the bat just because you asked. If the salesperson thinks that you are wasting their time, they’ll walk away. Have a specific and realistic figure in mind. Shoot for the moon, to be sure, but don’t ask for the stars, as well.
Next time, we will continue our series on negotiating terms with your wholesale suppliers.

In the drop ship business, your profit margins are directly related to the terms offered by your wholesale suppliers. If your wholesale suppliers give you a lower price, or charge you less for the drop shipping services, you make more money. Any way you can go about reducing your costs, from choosing the right supplier to negotiating terms, will improve your bottom line.

Keep in mind, first of all, that you’re going to be dealing with trained salespeople who work hard to get what they want form you. They’re not going to just make you their best offer out of the gate, in many cases. Having said that, many wholesale suppliers are open to negotiation and may be willing to work with you to create a better deal.

Here are some things you can do to get more from your wholesale suppliers:

Be Prepared

It’s not just the scouting motto, it’s a good idea in business. Every salesperson worth her paycheck knows what it is she wants from a customer meeting long before she opens the doors or picks up the phone. She knows what she wants to achieve, and knows how short of the goal she is willing to accept. In contrast, buyers often don’t even start to think about what they want prior to going into a meeting or answering a phone, and they’re unprepared to get the best terms.

So, what can you do to be prepared? For starters, you can study a price list. Run the numbers, and see exactly how much you need the wholesale supplier to come down on the price. Think about ways you can convince the supplier. What areas are you willing to compromise in? What ancillary offerings or services can you consider buying from the supplier, or what extras can you forego for a better price? Even spending just 15 or 20 minutes preparing can make the difference in your negotiations.

Know the Rewards

Part of that preparation is more about you and your motivation than it is about convincing your supplier. Look at specific details, such as credit terms. If your credit terms are currently 30 days, could you benefit from a 60 day credit term? If you could get your product for 3% under the current cost, how much additional profit would that mean in a given month?

Knowing the benefits you hope to receive helps keep you motivated during the negotiation process. Negotiating for a 3% reduction in cost in itself isn’t particularly motivating. However, negotiating for an additional $10,000 per month in sales can be extremely motivating.

Next time, we’ll take a look at some more techniques you can use in the negotiation process.