Negotiation. Did you immediately break into a sweat or is it just me?

The truth is that all we really do is sales. It’s a very odd form of sales as we’re selling someone on allowing us to give them money… SO strange.

A key variable in your wholesale success is being able to successfully get new suppliers. In order to do that, you’ll need to get good at negotiating with suppliers, both to get the account and to get better pricing.

Luckily for you, it really isn’t that difficult.

 

It’s all about positioning and setting successful goals

 

Let’s start with square one – positioning. Positioning is how you approach a conversation. Think social dynamics.

Positioning is mainly about how you say something and at what time.

As an example, instead of calling yourself a “seller”, you’re an “eCommerce owner who sells on Amazon because it frees up more capital to spend with your suppliers”.

Either way, you’re saying that you sell on Amazon, but one positions you higher than the other.

As another example and something that I routinely use, “If I can spend $20,000 a month with you I will.” It’s true. If I can spend $50,000 a month with a supplier I will because it’s profitable. By making this simple statement I let the supplier know that I’m not a small fish and that I can actually add a ton of revenue to their business each month. Now I’m in the power seat, instead of them.

Although each of these examples is incredibly simple, they directly answer common concerns that suppliers have – bad communication, small order amounts, don’t follow MAP policies, ect…

Once you know these common issues, you can better craft each conversation to immediately target these common problems and ensure that each supplier you talk with knows that those problems don’t apply to you, making you a clear winner.

This brings me to the next point – have very clear goals. Although I’m going to try my hardest to negotiate for 40%+ margin, I’m still going to be very happy at 30% margin because that’s my minimum. I didn’t fail in this case, I just didn’t succeed as much as I would have liked.

 

It’s all situational though

 

Although there are many commonalities, each conversation can be different. The way I approach these conversations is using if/then logic.

Example – IF a supplier says they are not currently accepting any new Amazon sellers, THEN say x. 

IF a supplier asks if you sell on Amazon, THEN you say, “Although we do sell on Amazon, we’re not ‘sellers’. We’re a real eCommerce company who sells on Amazon because it allows us to spend more capital with each of our suppliers.”

Ect…

Just keep this in mind while having a conversation with a new supplier.

 

What do I need to do to get to x %? 

 

Similar to positioning is how you make the ask for a better price or larger margin. Instead of simply asking for a price break, ask what you can do to go from 30% to 40% as an example.

By making the ask in this way, you show your willingness to give something up to make the gain. This evens the equation in your supplier’s eyes. Maybe they will give you another 10% margin if you carry another 100 units a month. If that works for you, do it. Sometimes, they give the 10% without you having to give anything up. This is all thanks to proper positioning early in the conversation.

Here are some examples of what I’ll use as my give to gain that extra discount or margin – offering to increase order volume, shipping to a closer warehouse (read: prep center) to potentially lower freight costs, using the extra margin to effectively grow sales volume using PPC within 30-60 days or hitting a dollar amount per order (eg. instead of a $4,000 order, could I take on a $5,000 order instead?).

It’s important to note here that we’re not expecting either ourselves or our suppliers to compromise, but to find an advantageous solution that provides enough value for us both. If we can do that, we’ve demonstrated another key skill set that our suppliers will value – effective deal-making.

Remember, we’re not placing an eCommerce order to buy new shoes here, we’re making a deal that makes both our supplier and our selves more money. Make it worth both of your time!

With proper positioning and using IF/THEN logic you will put yourself in a position where the supplier actually wants to start working with you.

A video will be a much better medium to teach negotiation and positioning, but for now, this is enough to really get your head moving and some new suppliers added.