For New Buyers #4

The art of negotiation is an acquired one. Of course, some individual personality plays a part; so does the relative size of the dealer's ability to order merchandise, the power of the ‘P.O.'; relationships may have a bearing. To a great degree, though, a buyer can learn many of the skills involved in becoming an effective and successful negotiator. There are indeed, many components that play a part. As a furniture buyer it is important to understand that, especially in the upholstery arena, the cost of an item quoted by the sales rep is not always as firmly established as one might be led to believe. There may be room to negotiate the price downward; or other terms or conditions may be granted. This leads to one of the most critical concepts for a new buyer to understand. That is....

Always have a Reason

Negotiating with a vendor is somewhat of a balancing act. The buyer needs to acquire the concession that has been targeted while knowing that he/she can still walk into the showroom at the next market and negotiate again in a positive atmosphere. More about this in a later post. One of the crucial concepts to accept is that negotiating for a price for the purpose of increasing profitability on that item at the expense of the resource is an anathema to that vendor. For this reason a buyer should ALWAYS HAVE A REASON to negotiate a lower price for an item. The reason should never be to increase his/her own company's profitability.

To be sure, the vendor has the same motivation as the dealer; that is, to sell more merchandise. The reason submitted should, if possible, play to this vendor's objective in some way. For example, assume an average mark up of 50% (100% on cost) for this dealer. To simply ask for the resource to lower the cost of an item from $450 to $415 has little impact and no reasoning as to why the vendor should agree. Certainly, asking for the concession in order to generate a greater profit will almost certainly be met with a negative response. However, to ask for a concession that would lower the cost from $450 to $415 so that the dealer can lower the retail price from $899 to $799 during promotions greatly increases the motivation for the vendor to agree. First, the resource will believe that in doing so many more of that item will be sold by the retailer and consequently, more will be ordered and reordered. Secondly, the vendor will realize that the dealer is also taking a shorter margin in order to do this. Finally, the item will be promoted more often and consequently more of the item will be sold.

If your company has new buyers or buyers that you would like to see become more effective negotiators, I can help. Email me at jim@furnitureindustry101.com or call me at 727 347-1201.

Next Post: Know What You Want, Know What You'll Give!