This first quarter of the year marks a new chapter for everyone to start a new project, a new resolution to dwell [and act upon], and new ways to earn money. One of them is getting into e-commerce or putting up social media with the intent to sell.
Can you really control the prices of supplies? Well, there are uncontrollable factors that affect supplies cost but there are also ways to curb down these costs when you perform them in the right way. You have 11 steps to negotiate prices from suppliers that affect the product itself and its costs to sell them.
Beside maximizing factory clearance sales or online clearance sales to your benefit there are other overhead expenses to consider such as:
- Shipping Costs – your costs to procure the products and the cost to deliver them to your clients
- Packaging, this is your costs to prepare the quality and security of goods while in transit.
- Marketing Expenses – these are not limited to your online ads but also your promotional sales or sponsorship to an influencer.
- Exchange Rates – your costs when your supplier is outside the country and they only accept international currencies like USD, EUR, GBP etc. Costs happen when local currency exchange rate becomes weaker and these international currencies stay put or become stronger [i.e. more Rand to a dollar], therefore, you need to spend more to procure the same quantity of products.
Here are 11 Steps in order to lessen the cost to procure supplies. These steps are both congruent and significant to increase your chances of negotiating properly with your potential suppliers and for existing ones.
The first step, build a reputation. You need to have an online footprint such as the domain of your online store or social media validation. If you do not have a budget for a domain and hosting then a good way to establish reputation if your social media page is verified, have a legitimate way to establish communication such as official email address,
business address, contact number and owner of the social media account.
To build a reputation is to establish your store and register them online. This way you have branding and you have official registration and business identification.
This is important when speaking to potential suppliers in a way that you mean business and you are not there to waste time. There is a sense of legitimacy in your dealings and transactions during networking events such as entrepreneur or business conventions.
The second step, reach out to past managers in LinkedIn ask for referrals and discuss pricing structures and investigate trends and business health. This tactic will allow you to get historical transactions for the supplier you are eyeing. When connecting with these individuals chances are you can build a network with them and get actual referrals to your supplier in these way you can negotiate better on pricing, delivery, and lateral savings that you can tap.
The third step is by referrals. Through these referrals, you can target actual decision makers and ask historical information on your referrer to the supplier and be better equipped if you are being offered at a price level that is business as usual or if they are offering you above industry pricing.
Through referrals (i.e. you referring a potential customer to the same supplier) chances are suppliers will provide you with better pricing options since you are bringing extra to their business. This is evident no matter how big or small your transactions are.
Fourth step. You investigate the supplier’s clearance sale calendar. Ask the clerks or managers when do they change their collection or new batch of products, this way their existing line of products are up for the taking on clearances you can validate these dates by talking to the managers and do the groundwork. Your reputation and business identity will come in handy on these occasions (plus your business cards.)
You need to be aware of these times so you will know when do they most likely have lean business to get better buying price (and stick to your budget) before they even offer discounted pricing to their stores. When you are repeat customer chances are, they will contact you in advance before they perform their sale clearances.
Fifth Step. You need to record the usual trends from past sale promotions. This is common especially for clothing, shoes, and other apparels. Example, you failed to negotiate buying price before the goods come out in a clearance sale. Then by knowing their sale trends, you will get to buy in bulk at a price. This way when you plan your budget you will be able to align your timeline too.
The Sixth step is you need to engage in Bulk Purchases; partner with other vendors or complementary products. This might be unconventional but you and another bulk buyer or three of you have a bargaining power when buying in bulk as long as you have prior arrangements and fulfill these arrangements when negotiation completes. The bigger the bulk the more you can stretch the price in your favor as long as you do not send them unethical low offers.
The Seventh step. When it comes with Online suppliers; Sellers from Rakuten, Aliexpress, Alibaba, Amazon, takealot, eresources.co.uk these names may be familiar to you but do you know how to negotiate to the suppliers or dropship suppliers? A scam is a number one concern on these suppliers since they can change their e-commerce profile quickly.
So in order to filter these suppliers to get better pricing, you need to screen out according to rating, number of actual buyers, existing reviews positive or negative reviews. These suppliers also entertain bulk orders but they require a minimum amount of units in order for these suppliers to even start negotiating.
So to avoid under or oversupply your inventory, you need to manage the actual number of supply you need in order to compute for pricing. Some of these suppliers like in Alibaba, Aliexpress, and esources.co.uk, they do require you to send them an email first or use their chat services in order to establish your identity, overview of your inquiry.
Some of them are communicating in grammatically incorrect statements so be patient and use simple words to express your intent. Make short and simple words and make use of more numbers so they can picture the whole transaction. If you have been rejected by one supplier, proceed with caution to the next candidate and use the same filter the one with high rating, more positive reviews, posts actual product pictures, has refund policies and return policies for damaged or incorrect product delivered.
Eight step is to negotiate for lower lateral costs. You may fail to get pricing at the level you want, there is still a chance to lower the cost of your supplies when your supplier shoulders the packaging of your products in such a way you lower costs of labor in preparing them or lower overhead expense for packaging and branding.
The Ninth step is to continue evaluating suppliers and connect with new or undiscovered suppliers. You need to ask yourself this – are you sure that there is only one supplier for your product? Chances are there are more potential suppliers that were overlooked.
One technique you can use: When negotiating and reached your final level of negotiation in pricing prior to committing with supplier number one (1), reach out to supplier number two (2) and show them the offer of supplier number one see if they can offer better pricing and lateral savings (than that of supplier one) they can offer before committing to an agreement or closing a sale.
Tenth step. You should visit factory shops especially if your product is traditional or does not have internet footing where transactions are being handled straight from the source – mano y mano. You need to visit these areas see if you can scout other suppliers as well as negotiate directly to main sellers – the decision makers.
The Eleventh step – lastly, if you fail to arrive at pricing that is within your budget that will yield you better profits, please do not be discouraged. If you build good standing to suppliers and consistent orders, you will have a bargaining chip in order to request price cuts at a later time.
Refer other buyers to your main supplier, in that way you may build stronger ties and improve your pricing rules to your benefit.
So, having equipped with these ways to negotiate better with your suppliers, do you think you have other ways to negotiate better and the pricing you want for your business? Share them in the comments section below or send us via Contact Us and we will feature them in future posts.