Thursday, December 10, 2009

The Vendor Balancing Act

Surreal Retail ParkImage by Ross2085 via Flickr

While most people think that one of their more difficult relations is with customers, in the long run they may find that their most difficult relationships will their vendors. In a perfect world the vendors would treat you like you are truly THEIR customers but in reality many vendors act as though it is the other way around.

Of course some vendors are much better than others and it will take some experience to find out who the better vendors are.

Then there comes the balancing that you will have to perform. If you find that a vendor is taking advantage of you, what do you do? In most cases you would assume that you drop the vendor and find someone that will treat you better. The problem arises when that vendor is the only source of an important product.

Let’s use electronics as an example. Let’s say that you currently stock brand “A” electronics which is one of the more popular brands in the industry. However, “A” products does not allow you to return defective products to them causing you to eat the product. Now you will have to analyze if the amount of sales created by having product “A” in your stores is enough to justify you losing some money on returns.

If the amount of sales justifies you keeping that product then you will want to plan for a certain amount of returns that you will have to mark off. Of course you can probably find a technical school that would love the donations of the defective product in order to let students experiment with them and thus giving you some goodwill.

On the other hand if the amount of sales and the hassles created by them do not justify you taking the losses on their product then dump them and find another vendor. However, I would let the company know why you are going to drop them and see if they will do anything for you.

In addition, vendors used to have reps that would come and visit local stores, building displays and building relationships with the companies that sold their products. However, these days’ vendors have been cut so severely that they may only visit major stores once a month or have cut out some altogether so the chances of them coming to your independent store may be slim and none.

You will defiantly want to cultivate a relationship with any vendor that does take the time to come visit you. They are an excellent source of information and if they take the time to visit you then they are probably a vendor you will want to focus on.

Also, depending on the products you sell; look for smaller vendors that may not have the name but will have the ability to service you better.

Remember, you are the vendor’s customers so find vendors that treat you that way.

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