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You and Your Vendors: Making the Relationship Work | January 09, 2019 (0 comments)
Omaha, NE—General Douglas McArthur once famously said, “A general is just as good or bad as the troops under his command make him.”
In the same way that a General depends on his soldiers to move forward, a jeweler’s success will rise and fall depending on whom he works with. Aside from staff and customers, the other human resource crucial to a business--often overlooked by many store owners--is the vendor community. After all, without them there is no product to sell.
Vendor relationships are as varied as there are human emotions. Antagonism can often develop, caused by either party, and it is easy to see your vendor as being on the other side of the fence. Yet despite your differences, you share a strong common bond: you both benefit from seeing more of their product being sold to your customers. From this perspective you can see yourself less as friendly adversaries and more as united partners.
So how can you make this relationship stronger?
1. Make a commitment to your vendor. The more you spend with them, the more valuable you become and the more they will do for you in return. You know with your own business that the customers who spend the most with you get the best treatment. If you spend a little each with thirty different suppliers, you can’t expect the same treatment as you would if you spend a lot with ten.
2. Re-order your fast sellers. This is basic common sense for both you and your vendor.
What is the cost of buying a new item? The wholesale price of that item? No! It's so much more. For you, it’s all of these five things:
- The time you spend looking at the vendor’s product range
- The cost of traveling to jewelry shows
- Setting up the item in your computer system
- Your staff’s time with creating a display area when it arrives, and
- Your time to train your team on this new product or collection.
For your vendor, it’s both the design and set up costs, and the travel to retailers or jewelry shows.
What is the cost to you both when you reorder that item? Ignoring freight and restocking, the only cost is an email (free!) and the wholesale price of the goods. The same is true of your vendor. For both of you, the profit comes when that item sells a second, third, fourth and fifth time. What’s more, the chances of an item selling again when it has already sold once is four times as great as a brand new item that you’ve just bought!
3. Pay your bills when they are due. Will a vendor show his best stock to the customer who meets his obligations or the one he has to hound for payment? I know what I would do.
So enough of keeping your end of the bargain. What more do you gain from all of this? This is the best part! A retailer that has a strong relationship with a vendor will often find the other party is able to do the following:
1. Offer you their best price. Doors open when you commit to a vendor. Like anyone, they can do better deals the more you spend, and it need not be an upfront payment. A promise to reach certain buying targets over an extended period will see you get the best price possible.
2. Provide memo inventory. Certain vendors can only provide large quantities of this in a limited capacity, but almost all are able to send you some extra pieces around special promotional periods or to show special customers. Again, the ability to take advantage of this will depend on the level they value your business and the extent to which you are prepared to reorder what sells. It is in both your interests to get good sellers back whether they are items you own or have on memo.
3. Exchange slow moving inventory. Again it’s in the interests of both of you that old items are moved out to make way for product that can sell several times over. The vendor can often on-sell this to another retailer, however there is no point in asking 18 months after you’ve bought it when the market has changed. This product needs to move on while the vendor can still sell it.
4. Exclusivity. You can sometimes find the items you buy can be exclusive to you in your shopping area or town. You can also get first choice in new items when they are introduced to the range.
5. Customer evenings. Your vendors will often provide you with extra product or specials for these events and even attend in-store evenings themselves with their full range of products.
As the good General also said; “we are not retreating – just advancing in a different direction”
The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. 877-569-8657, ext. 1, Becka@EdgeRetailAcademy.com or www.edgeretailacademy.com