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Do you want to "supersize" that early buy?

November 8, 2007

I got to thinking after a recent visit by a manufacturer’s national sales manager We]e haven’t done business with this supplier for many years. So, it was an an appointment of reconciliation I guess. When we were doing business with them, they had a $25,000 early buy minimum. They stuck to this minimum like glue. . . no exceptions no matter how much you did with them throughout the year.

As I said, it was an apointment of reconciliation. The company has begun to realize that much of their business is from special orders. This had always been the case in our store, but they are just starting to react to that. They have improved their lead time to just three weeks. And, instead of requiring a large early buy, they just want product placement on my floor. As it was explained to me, by lowering the buy in for their stocking dealer program, they are giving relief to retailers who are "undercapitalized" (their words, not mine).

Pretty big hearted of them, if you ask me. That is until the sales manager threw in this caveat, "Of course, if we do this and the retailer takes the capital we have saved them and invests it in containers from another vendor, then we would have to reconsider our position with that retailer." To me that seems threatening and not an enlightened approach to the market.

As an example, we have agonized about our Brown Jordan early buy for years. We feel consumers won’t consider us a credible outdoor specialist if we can’t offer Brown Jordan to them. But Brown Jordan is a difficult line for us to  buy. Much of it is contemporary which doesn’t sell well in my area. We don’t do their outdoor wicker or teak. . . they are not a good value compared to the outdoor wicker and teak lines we carry. So, we are limited in what we can show and even more limited in what we can warehouse. However, we do a lot of Brown Jordan special orders each of which can easily run $15,000 or more.

Brown Jordan understands our problem and realizes we are not the only retailer trying to find a solution. So, they came up with a solution. If we give them slots on the floor, they give us a good early buy and reorder discount. They are betting that I will give them significant business because of my special order business. Slotting them on the floor is their only requirement; they don’t imply that they will lower my discounts if I use the capital I didn’t spend with them on other lines. They are taking a leap of faith that if they help me, I will sell their product. It is a leap of faith that has paid off.

In a recent blog, I wrote about a manufacturer who pooh poohed industry partnerships as old fashioned. Well, call me old fashioned but I know these strong relationships are keeping me and my vendors in business. These partnerships are based on trust and the desire to help each other grow and be profitable. Retailers and manufacturers form these partnerships for the good of the industry and the consumer. So offer me a realistic early buy and reorder plan, and I will consider doing business with you. And, by the way, I understand I have to produce for you; that is implicit in our deal.

Yours in confused retailing, Bruce