Working With Unfamiliar Vendors
In contrast to dropshipping, which does not feature heavily in this article, physical inventory sales do. You may purchase accurate stock instead of digital options due to price and shipping concerns. Finding the most excellent possible price per unit when working with a new supplier is essential. Many wholesalers and distributors do not make their product prices available to the general public through a publicly accessible website. In reality, many of them only list their firm names and some photos of their wares in online directories rather than creating their websites. People interested in their items should approach them directly to request pricing information.
Because they want to quote each customer individually and charge more to merchants who appear “green” and do not know how to haggle, they do not publish their prices online. Some customers are so naive about a business that they assume all providers will offer them the exact pricing when they ask for a quote. These customers may accept a supplier’s initial selection (sometimes an inflated price) because they believe they are receiving a standard market rate. The supplier will earn more money as a result. Typically, Alibaba.com vendors will not list their prices online.
When purchasing goods by the dozen or even the hundred, even a one-dollar variation in unit pricing can significantly influence your bottom line. If the supplier offered you an extra dollar per unit, for instance, and you decide to sell 200 units, the difference in your profit would be $200.
Now, let’s imagine the following:
1. You’ve done your homework on a particular brand of fashionable Korean-made wallets and are confident they’ll succeed.
2. It could be worth seeing how quickly these wallets sell online by purchasing 20. You might decide to stock up on more in the future if they prove to be popular.
3. You’ve done your homework and have located the supplier’s email address. You’re relieved that the vendor only deals with large orders and doesn’t offer wallets for sale singly on the Internet.
Thirdly, if the supplier markets and sells their goods online, consumers can buy directly from them at a lower price. The supplier’s approach is to deal with wholesalers and large retailers like yours exclusively. This makes it more difficult for customers to find your product through online auction sites like eBay by just Googling the brand name.
You have finally decided to commit financially to purchasing goods from this vendor. What would you write in your first email to the supplier if you were contacting them for the first time? You know you would initially purchase around 20 wallets to determine demand. Given your 80% certainty in their marketability, you know you won’t buy fewer than 10. You are a cautious individual. Therefore you won’t make any purchases more significant than 20 just in case you’ve misjudged the demand for the wallets. Thus, 20 is a pleasant and secure choice. Even if they don’t do well at the box office, you only need to sell 8 to make even. You can always place an order for more if they prove to be popular.
The most important thing right now is to negotiate the lowest price per unit with the supplier. This is crucial since most suppliers may offer a higher unit cost to new merchants to test the waters. They will initially propose a high fee, hoping you would negotiate down to a more reasonable amount. They claim that even if they quote a fair price at the outset, stores will try to haggle down the cost to make a profit. They should aim high with their initial quote to account for the inevitable price reduction throughout negotiations.
People might be rushed or clever when writing their initial email to the supplier. One must be crafty to obtain the finest deal.
Keeping in mind that you want to purchase 20 wallets. Typical email content includes the following:
Your wallets are lovely, and I’d like to acquire them since I think they’d do well in the market. I want to buy 20 of them to sell since I think they are fantastic. What is the price per wallet? I would appreciate it if you could provide your best quote and a sample bill.
An individual starting to resell goods would write something like this in an email. STUPID MOVE! That puts the provider in a position to put the initiative back in your court. He can give you a firm price, say $20 per wallet, and it will be challenging to negotiate a lower price. There’s a chance he’d drop it to $19 or perhaps $18. How come he can make decisions like that? You come across as an absolute sucker eager to hand over their cash immediately because you sound desperate, disclosed the amount you want upfront, and specifically asked for an invoice IMMEDIATELY. Imagine you are the supplier for only 15 seconds, and you are reading this email. Do his words resemble those of bait? The point is made. ” Giving me your best price” does not guarantee that the vendor will do so. You’re going to have to coax it out of him.
Here we will examine the second approach to writing your first email, the cautious one:
I’m intrigued by what I’ve read about your wares. Hi, could you tell me the minimum order quantity and price?
The store takes safety measures. He doesn’t sound desperate, and instead of saying how much he needs, he inquires about the MOQ (minimum order quantity). Most vendors require a minimum order quantity (MOQ) before making a sale. Most stores won’t sell you just one wallet because doing so would be too costly. Customers need to buy through resellers like you at a marked-up price, so you both benefit. Suppliers might hesitate to “mess” with this retailer because he knows retail phrases like minimum order quantity (MOQ). As a gesture of goodwill,
suppliers are customarily required to offer price breaks on bulk purchases. Rather than asking, “how much is each wallet,” as the sender of the “hurried” email did, this person just inquired, “what is the price,” signaling that he is aware that he should be eligible for a discount if he orders in bigger quantities. Since the retailer hasn’t specified an exact number of wallets, it is up to the supplier to provide either a pricing range or a fixed minimum order quantity (MOQ) price. It is now up to the provider to provide a quote. This could be his possible response:
To the Purchaser,
Please see our quote in the attached document.
Price per Unit: USD 15
Order Minimum: 10 Pieces
Waiting It Out
The minimum order quantity the vendor sets are ten pieces at USD 15 each. Do you recall considering purchasing 20 units? Now is your chance to try to negotiate a lower price. However, you shouldn’t just ask, “If I buy 20 units, can you lower the per-unit price?”The vendor may respond, “Yes, we offer discounts for orders of 20 units or more,” if you request them to carry out your suggestion. The price per unit will be 14 USD. If you agree that for 20 pieces or more, each piece will be 14 USD, ordering 50 or 100 details could eliminate any further opportunities to negotiate even lower costs. My plan right now is to wait things out. Do not rush to respond. Just give it a week or two to pass. The trick is to avoid looking too desperate. I’ve had times when my schedule prevented me from responding to quote requests, and what do you know? The vendor got cold feet and replied something like this:
To the Purchaser,
Where do we stand? No word back from you yet, unfortunately.
Since we don’t need each buffer as an exchange rate, I propose conducting our transaction in Korean won rather than US dollars.
The following can then be purchased for 15,000 KRW. (around 12.8 USD).
He assumed I found his quote too high and was ignoring him simply because I took my time making a decision. Then he told me about this ‘exchange buffer rate,’ and he started quoting in KRW, bringing the price of each wallet down to 12.8 USD WITHOUT ANY BARGAINING ON MY PART. The only thing I did was wait before responding. It appears that the supplier’s standard practice, when approached with a request for the price, is to quote an extremely high amount before waiting for a response. If you get no takers, drop your cost and tell a story about how the ‘exchange buffer rates’ forced you to do it. Since there will inevitably be many customers who accept his first quote without haggling, this tactic will ultimately increase his earnings. His new minimum order quantity is ten units, and each team is $12.8, more than $2 less than he originally quoted. You can then respond with his new preposition in mind, as follows:
Since I was out of town, please excuse my delayed response. I appreciate the price you quoted. Do you offer volume discounts for purchases of 50 or more units?
Discounts for bulk orders can be requested nonchalantly, as seen above, without making you seem like a demanding or rude customer. You were able to reduce the price per item to $12.8. Thus any additional bulk savings are welcome. If you place a larger order, the supplier will likely give you a better deal as a goodwill gesture. For purchases of 50 or more, he lowered the unit price to 14000 KRW (12 USD). Now is the time to move, and the deck is in your hands. Since you haven’t placed your first order yet, it would be best to tone down your aggression. Put an initial order to prove to the vendor that you mean business. As you continue to do business with this provider, your purchasing power will grow with each subsequent order. Because of your standing as a loyal client who consistently brings in new business, he would have difficulty turning down fair requests for discounts from you.
You can see how a different approach to communicating with the supplier via email might drastically reduce the price quoted. Our wallets’ per-unit cost dropped from USD 20 to USD 12 thanks to a quick email and a clever chain of replies. Your margin for profit will increase as a result of this. You can successfully negotiate with your suppliers if you play your cards well.
A word of caution: bargaining is a distinctive process that changes depending on the goods being purchased and the nature of the exchange itself. While the author succeeded with the methods above, you should use your judgment when making business decisions.
Nathan is a prolific writer who covers various themes, including long pants for ladies.