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Pump up your purchasing prowess

Armed with the right research and information on your buying and selling performance, you are in a powerful position to locate and retain the top and most reliable suppliers. Make sure you negotiate the best prices, stock and payment terms from suppliers to optimise cash flow and return on investment. When you’ve nailed your purchasing technique, you’ll get a great choice of suppliers as well as better prices. 

Answer the questions below to see if you’re commanding the best prices, and find out how you can distribute to customers quickly and efficiently…

1. How do you negotiate a deal with a supplier?
Incorrect
I ask them for their cheapest price
or
Correct
I do my research on price and product quality
Answer

Although asking suppliers for pricing isn’t a bad way to start, why not research the product and its market selling price, the varying levels of quality out there and any common substitutions for materials (if this applies). You should know everything you can about the product before making a deal. It's also vital that you think like a supplier. They have the product and want to sell as much of it as possible, so present yourself as a resource with a proven track record of selling to the target market. The trust and credibility you build will determine the terms of your partnership and favourable rates. It’s not just about price though, there are other factors you can stipulate such as delivery time, payment terms, quality of goods, value for money, after-sales service and guaranteeing product costs for a lifetime.

In order to get what you want, be open and honest with vendors about the priorities for your business – for example, if lower cost trumps speedy delivery, ask if they can flex to your needs and consolidate shipments. But be realistic; if you’re not prepared to compromise, the negotiations won’t get very far. You should also consider what offer the supplier is likely to make and how you’ll respond. If you want to do more business with a vendor in the future, you should be striking a deal that works for both parties. Information is the most powerful indicator of their performance – they should be willing to provide you with a reference list of customers you can speak to. You should ask them which items are selling well, how quickly those items are selling and what the lead times are for getting more in so you don’t run out. You also need to know which items are not selling, where the dead stock is and how long items have languished without moving. Ask what percentage of items are being returned because they are faulty, not performing as advertised or are the wrong item. If they guard any of this information, ask yourself what are they trying to hide.

2. How do you manage the purchasing process?
Correct
I’ve got everything under control
or
Incorrect
It’s a bit messy
Answer

Purchasing is an industry in its own right. It covers a multitude of areas of the business; from sourcing through to procurement, purchase order management, contract management and supplier management. With all this complexity you need to balance the tricky task of efficiently managing your stock levels, getting lead times under control, managing cash flow, and keeping all marketplaces competitive. You don’t want to lose control and have no stock to sell or over-sell items which then threatens your seller rating and status on key marketplaces.

Having a strategy adds an extra dimension to purchasing, and when you are busy running day-to-day operations it helps you carve out important time you need to spend on making the best orders. There are lots of business strategies you can choose to adopt depending on your customer base. Drop shipping is a popular arrangement because the supplier fulfils and dispatches on your behalf so you have more time to focus on broadening your product offerings. Back ordering (aka the just in time approach) brings in stock to fulfil orders as they come in to minimise the amount of stock stored, however this does add to the pressure of purchasing.

3. Are you keeping a digital record of all your purchasing?
Incorrect
No I just freestyle it
or
Correct
I’m meticulous
Answer

Although there is an art to selecting hot and trending products before the market realises these products are in vogue, purchasing is more of a science. Being able to monitor how products are working for the business will also help you spot opportunities to increase profit, earn higher margins, increase sales velocity, and reduce product outages. Keeping a digital record of all your purchasing activities, the performance of your sales and when you have to re-stock will give you a good picture of what’s working and what isn’t. It also helps you make better purchasing decisions around the reliability of suppliers, their products and how profitable different products are. Streamlining your reporting will help paint a clear picture of what products you need, how much you need to re-order, and when.

It’s also critical that you can show transparency for your purchases so you comply with relevant policies and regulations around procurement. Having an intelligent reporting system that can easily identify profitable products and items that are sitting in your warehouse tying up your money, will help improve your cash flow.

At Volo, we want to help you understand your customers better so your business can take off. Start your ecommerce adventure today.
Contact us
Go back

Pump up your purchasing prowess

Armed with the right research and information on your buying and selling performance, you are in a powerful position to locate and retain the top and most reliable suppliers. Make sure you negotiate the best prices, stock and payment terms from suppliers to optimize cash flow and return on investment. When you’ve nailed your purchasing technique, you’ll get a great choice of suppliers as well as better prices. 

Answer the questions below to see if you’re commanding the best prices, and find out how you can distribute to customers quickly and efficiently…

1. How do you negotiate a deal with a supplier?
Incorrect
I ask them for their cheapest price
or
Correct
I do my research on price and product quality
Answer

Although asking suppliers for pricing isn’t a bad way to start, why not research the product and its market selling price, the varying levels of quality out there and any common substitutions for materials (if this applies). You should know everything you can about the product before making a deal. It's also vital that you think like a supplier. They have the product and want to sell as much of it as possible, so present yourself as a resource with a proven track record of selling to the target market. The trust and credibility you build will determine the terms of your partnership and favourable rates. It’s not just about price though, there are other factors you can stipulate such as delivery time, payment terms, quality of goods, value for money, after-sales service and guaranteeing product costs for a lifetime.

In order to get what you want, be open and honest with vendors about the priorities for your business – for example, if lower cost trumps speedy delivery, ask if they can flex to your needs and consolidate shipments. But be realistic; if you’re not prepared to compromise, the negotiations won’t get very far. You should also consider what offer the supplier is likely to make and how you’ll respond. If you want to do more business with a vendor in the future, you should be striking a deal that works for both parties. Information is the most powerful indicator of their performance – they should be willing to provide you with a reference list of customers you can speak to. You should ask them which items are selling well, how quickly those items are selling and what the lead times are for getting more in so you don’t run out. You also need to know which items are not selling, where the dead stock is and how long items have languished without moving. Ask what percentage of items are being returned because they are faulty, not performing as advertized or are the wrong item. If they guard any of this information, ask yourself what are they trying to hide.

2. How do you manage the purchasing process?
Correct
I’ve got everything under control
or
Incorrect
It’s a bit messy
Answer

Purchasing is an industry in its own right. It covers a multitude of areas of the business; from sourcing through to procurement, purchase order management, contract management and supplier management. With all this complexity you need to balance the tricky task of efficiently managing your stock levels, getting lead times under control, managing cash flow, and keeping all marketplaces competitive. You don’t want to lose control and have no stock to sell or over-sell items which then threatens your seller rating and status on key marketplaces.

Having a strategy adds an extra dimension to purchasing, and when you are busy running day-to-day operations it helps you carve out important time you need to spend on making the best orders. There are lots of business strategies you can choose to adopt depending on your customer base. Drop shipping is a popular arrangement because the supplier fulfils and dispatches on your behalf so you have more time to focus on broadening your product offerings. Back ordering (aka the just in time approach) brings in stock to fulfil orders as they come in to minimize the amount of stock stored, however this does add to the pressure of purchasing.

3. Are you keeping a digital record of all your purchasing?
Incorrect
No I just freestyle it
or
Correct
I’m meticulous
Answer

Although there is an art to selecting hot and trending products before the market realizes these products are in vogue, purchasing is more of a science. Being able to monitor how products are working for the business will also help you spot opportunities to increase profit, earn higher margins, increase sales velocity, and reduce product outages. Keeping a digital record of all your purchasing activities, the performance of your sales and when you have to re-stock will give you a good picture of what’s working and what isn’t. It also helps you make better purchasing decisions around the reliability of suppliers, their products and how profitable different products are. Streamlining your reporting will help paint a clear picture of what products you need, how much you need to re-order, and when.

It’s also critical that you can show transparency for your purchases so you comply with relevant policies and regulations around procurement. Having an intelligent reporting system that can easily identify profitable products and items that are sitting in your warehouse tying up your money, will help improve your cash flow.

At Volo, we want to help you understand your customers better so your business can take off. Start your ecommerce adventure today.
Contact us