For New Buyers #5

You are so right, Heather. I do purchase my Kindle books based on rweievs. Love ya, I have reviewed the entire Big Bad Wolf series on Amazon. I haven't read your other books, yet. I just discovered you a couple of weeks ago. I am saving the other books for this Summer. Keep up the great work.

So you want my bio...no problem. Began as VP Merchandise with Merch., Marketing, Sales responsibility at Kanes Furniture in Florida which was much different company than today. Followed as furniture/bedding merchandise manager at Maas Bros./Jordan Marsh, Florida, then stint with my own furniture retail store, then Highland House on manufacturing side.

Kindly tell us the specific names of the companies and the specific positions you held in both the supply and retail ends of the furniture industry. It would help us to better understand the perspectives you are writing from. Your bio does not mention these particular details. I am particularly interested in knowing if you were entrepreneurial and actually owned your own manufacturing or retail businesses.

Dear Derrik:

Thank you for your comments. The reality is that there are many manufacturers that would reduce margin slightly to gain volume. Obviously, if it not reasonable for the manufacturer to do so, he/she can always say no. As I said, 'The manufacturer can always decline the offer.' In my view, the idea of 'walking away' from a prospective customer simply because he/she asked to alter the terms of the sale seems somewhat counterintuitive. Some manufacturers will negotiate, some won't. As I said, I don't think that asking where it is appropriate is an affront to the manufacturer on the part of the merchant. Thanks for voicing your views, though. I like the discourse.

As a Canadian manufacturer agree with Roger on his comments. I too would walk away from dealers or reps with this mentality. We manufacture and price items with a decent but not excessive margin. It is a margin that we must maintain if we are to stay in business and give our tax paying employees jobs in this economy. We have not sent any components of our products off shore and never will.

Tim:

Again, thanks for your point if view but:

1. I am not suggesting that most manufacturers try to take advantage with unduly high costs. The market takes care of that. I am suggesting that there are times when a retailer may wish to promote an item at a very low retail price and to do that may go to the manufacturer for help...keeping in mind that the buyer will pay the regular costs on other merchandise so everyone benefits.

2. My background on the manufacturing side was at the better end (not the 'cheaper knock-offs')with sofas at wholesale costs of $600 to $2500. Rarely did I deal with a major retailer that did not try to negotiate advantages, cost and otherwise, with the company.

3. With respect to your points regarding distribution, I could not agree more. I have always been, whether in retail or wholesale, keenly aware of the need for clean territories. I am not sure how this relates except that perhaps you were implying that by negotiating a lower cost, the retailer may try to undercut a competitor on the same item. Not at all what I was saying. I, perhaps naively, am assuming that the same exact item does not exist in the same market place (as you suggested) but may be compared with similar merchandise in other retail stores from other manufacturers.

I think this has been a great dialogue but I don't think I will be able to change your mind. I do appreciate, however, your cogent point of view.

All I can tell you Jim is when you offer a good product, a fair price and one that is different, usually a manufacturer has the upper hand in deciding the best retailers to sell to for honest, clean distribution. A good buyer and good manufacturer usually know what the right price is. If a retailer is lucky enough to carry the product in a truly clean trade area we consider that a win-win situation and always are considered as the business to go to when new, fresh product becomes available from our manufacturers. If a vendor on the other hand sells to everyone up and down the street, (and believe me we know) we stay away from them with a 10 foot pole. Typically, they want us because we pay our bills promptly and we are always first to market with good products. Our reputation to our customers is important.

I think the type of product or business you deal with is probably the cheaper knock offs or more commodity type of furniture, the type of which everyone and his brother is selling. Maybe, I'm just not versed in this kind of category. But, I think you need a word of warning as this can also create serious cash flow problems with this approach if the product is a dog or over saturated in a local market. But, best of luck to your consulting strategies & appreciate you allowing my comments.

Dear Tim:

Please re-read my post. Take note of these comments:
1. "1) What do you want? 2) What are you willing to give?"---The manufacturer can always decline the offer. Then the buyer must decide the value. If I were the manufacturer I would surely want to know if my pricing is perceived as being too high.
2. "Keeping in mind that a good negotiation is one in which both parties win..."- This speaks for itself.
3. "Is it preferable to buy something inferior at the 'ask for' price by the furniture maker to sell for the same retail price to my customer or to pay somewhat less and sell a better product. - The whole idea is to provide the consumer with better merchandise for the same money. Clearly, I did not suggest substituting 'poorly made products'.
4. 'keeping in mind that I pay closer to normal price on other items from the manufacturer so he too can make a living)?' - This is simply to merchandise strategically so everyone makes out; that the merchant should adhere to paying regular price on other merchandise from the line they buy. Obviously, for instance the cost to manufacture a loveseat compared with the sofa is not only $25 or $50 less. The manufacturer is clearly merchandising his/her line to make it competitive and appealing. Why would a retailer not attempt to do the same thing?

Finally, I have not at all suggested that a retailer 'beat up' a manufactuirer. I am simply proposing the notion that being fair to the manufactuurer is not necessarily the same as accepting whatever he/she asks without question; that it is OK to negotiate selectively where it makes sense (and will result in greater sales which benefits both) but allow the manufacturer to make a profit somewhere. Please see my next post 'Never Take the Last Nickel'

Thanks, for your comments Tim, and I appreciate your point of view even if I don't agree.

I don't Roger would be a loser for doing this, I think you would be. This is the kind of thinking that must change. Passing on poorly made products, hurting local producing manufacturers, their families and the economy is how we have landed here. As a buyer, I would not endorse or financially support a company who engages in this. If one of my buyers had this philosophy we would ask them to put their walking shoes on and we certainly don't consider this success.

Roger:

I believe you would be the loser for walking away. This approach is not a personal affront. In my mind it only makes good business sense to test the waters to be certain that I am achieving a what I need for my company. Is it preferable to buy something inferior at the 'ask for' price by the furniture maker to sell for the same retail price to my customer or to pay somewhat less and sell a better product (keeping in mind that I pay closer to normal price on other items from the manufacturer so he too can make a living)? I also know that the thinking of some retailers that all pricing is firm is music to the manufacturer's ears. I do very much appreciate your view, though.

Maybe can use this sort of tactic when dealing with some Asian manufacturer and when all your care about is how cheap you can sell it, never mind about what condition its in before and after the sale. As a US manufacturer I would walk away from any hint of this type of relationship with dealers and any sales reps that would even consider this approach.