Worried about making a mistake in your order placement? Here are some of the common mistakes you must avoid to maintain a smooth process.
Mistake 1: Oops, the Wrong Product arrived!
If the supplier is not clear about your required specification or quotation, there is a good chance you will not receive what you ordered. It is essential in writing your exact specs and work with the supplier to create exact standards which they can use to confirm that their product meets your requirement. Double-check your request for quotation (RFQ) and clarify their responses. Here are some of the most common misunderstandings we’ve seen:
- Sizes – for example, 60 x 12g or 12 x 60g?
- Timing – for example, 5 days or 5 business days – do you count Sat and Sun? by the way, Middle eastern countries weekdays start on Sundays.
- Delivery – for example, total time is actually = production lead time + packing + delivery time + unforeseen circumstances. Simply counting delivery time is a big mistake.
- Packaging – Often times this isn’t stated and thats a mistake, if you expected an external and internal packaging, it should be stated upfront.
- Pricing – to be honest, this is where most buyers are very particular about and usually don’t cause problems. Perhaps the only thing to watch out for are the warrantees on the products!
Mistake 2: This Deal is Amazing! I Need to Buy Now!
If a deal is too good to be true, it usually is! If you are sourcing from a supplier for the first time, and you receive prices lower than 30% of SRP, then its a red flag. Unless you are buying volumes similar to that of major hypermarkets and supermarkets, it’s very likely that you are encountering the following:
- A Scam – this is horrible and once identified, reported and stay away.
- Counterfeit – Fake goods, and customers will always find out and be very very angry about it! stay away!
- Almost Expiring – this is actually not a bad thing. If your supplier is upfront and honest about it, you can use this as an opportunity to create floor-low prices that could be used to attract customers to buy other products!
Mistake 3: MOQs Are Not Deal-Breakers
Many small or medium buyers envision their store filled with a wide range of products. It is often surprising for them when they see the supplier’s MOQ (Minimum Order Quantity). It is up to you to work around the MOQ. Firstly, you have to think like the manufacturer and depict how they came to state the certain MOQ provided. Buyers must be aware that MOQ is not just a number provided but rather as a negotiation tool. Try these tips:
- Allow you to have a smaller first order.
- Negotiate for 5% lower than your target price, then accept +5% for lower MOQ
- Flexible ordering schedules, to allow a quick replenishment of stock that reduces overall cost.
Mistake 4: Win-Win Negotations
Here are some of our greatest tips interviewing suppliers and buyers, on where they were willing to give-in and give concessions during negotiations!
- Breaking into new markets – Most suppliers would be willing to drop the prices for access!
- In exchange for referrals – If you are buying restaurant supplies and you want 5% off your price tag, refer another restaurant and you deserve way more than just 5%!
- In exchange for marketing – Most brand owners would be willing to let you take their stock for reduced prices if you are willing to demonstrate some form of marketing specially for them!
- Promotion periods – If you are launching a promo, most suppliers will be willing to work with you on reduced prices during the period.
Mistake 5: Oh no! I’ve bought too much!
Suppliers always tend to have a responsibility to set terms, and buyers must respect it. More than often, it turns out buyers overbuy due to MOQ set by suppliers. Depending on your store size, the standard terms of a particular seller simply may not be ideal for your store or business. Here are some better ways to manage quantity
- Every time a stock sells more than half, you re-order 1.5x
- Every time a stock sells less than half, you re-order 0.5x
- Every time a stock oversells, you re-order 2x
What this formula does, is allows you to estimate your quantities necessary over time. This is not a quick formula but could take 3 months worth of data to be useful. But after that, you will reap the benefits of knowing exactly how much to buy.
Blog credits to SocialWalk