How do you tackle the issue of buying price?

[Mr D]

A difference of opinion as to what compete means then.

There's an awful lot of 'could be, could have, might be' in some responses so let me nail this down. I know exactly who and what we are dealing with here. I know their overheads, I know their buying habits, I know the sort of volumes they are achieving, I know their track record. The object of my post was not to seek guidance about the circumstances enabling a competitor to 'compete' but to seek a general view as to how you would approach the supplier without appearing bolshy.

And you know the competitor is matching price.
All those other things are meaningless to you. They will mean a lot to him of course but not you.

Lay it out flat for the supplier about how you are such a big customer and would like more discount.
There is no guarantee that if you get a discount and reduce your price that the competitor will not also match you again.

Their business, their choice. Not yours.

Please whatever you do - do not try talking price with competitor. Obvious to most and likely teaching grandma about what to do with eggs. But still do not try it.

 

[Shopclicks]

Pass it on....

Too early to assess...

Several, all lines from the supplier in question...

Of course it's smart to ask for the biggest possible discount .... but why wait til a competitor comes along who can match your buying power. If the supplier gives you an extra 5% discount now, they could have done it previously. But they had/have no reason to. If you pass on the extra discount, you set yourself up for a race to the bottom.

There are two ways to be the biggest player in town. You can build the biggest business, or you can try to tear down your competitors.

I'd be looking at ways to build the bigger business. Both Woolworths and Wilko fell foul to competition.

 

[AlanJ1]

I can only comment on my own business/market, I run a several £M company and have had issues/run ins before with accounts that think their spend with us warrants more than the very good price they've had since day dot. This is prevalent when dealing with micro companies in particular. A £20k spend with my business likely nets me less than £2k by the time it hits the bottom line, of which I pay significant tax on that. Perhaps I'm fortunate but if someone starts making waves over an account that size; that personally enriches me to the tune of not much more than a £1k then it simply isn't worth the bother when I have accounts spending £1M a year. A lot of work may be done for that as well as stock liability etc. And there simply isn't much margin on the table to trade away in my experience, you go in keen for all business these days. Fat margin accounts are few and far between.

I want to echo this from a previous job (albeit one company, but multiple brands all doing several million).

Biggest accounts are normally a yearly (or one off negotiation) on price. Discussion RE new products etc.
Smallest accounts normally the biggest pain (but you get a lot of them(. If we got accounts trying to negotiate on the considerable margin we were giving in the industry we wouldn't play ball, the time you end up spending with them versus spend makes it not worthwhile.

 

[Lucan Unlordly]

Smallest accounts normally the biggest pain (but you get a lot of them(. If we got accounts trying to negotiate on the considerable margin we were giving in the industry we wouldn't play ball, the time you end up spending with them versus spend makes it not worthwhile.

We approach suppliers, tell them we won't be turning over the sort of sums the big boys do, or compromising their position, but will sell more than anyone else within the niche we serve.

 

[Lucan Unlordly]

But they had/have no reason to. If you pass on the extra discount, you set yourself up for a race to the bottom.

We are already at the *bottom. The whole point of the thread is that we now have a competitor offering prices that nobody else has ever chosen to or been able to match.

* with good reason

 

[Shopclicks]

We are already at the *bottom.

Apparently not ... if you get a further discount.

 

[BobzYourUncle]

We've just had some similar experience with a supplier we have used for the last 20 years albeit this supplier has mothballed from being small to fairly big over the years by buying out other suppliers in the area and their books. Meaning they have become somewhat a monopoly on certain items. A year ago 2 major warehouses in the area that also did cash and carry have also gone under they increased even more customer base. But so did their prices which was understandable at the time everything was expensive. However in the last 5 months we had noticed price drops but our supplier could not match. It was through accident that we discovered a new supplier over 80miles away who delivered to our area was charging 15%- 20% cheaper on nearly every item we buy. We switched to them for most of our stuff. That triggered the awkward conversation to why our stock orders were shrinking from a few thousand a week to couple of hundred pounds. They asked us why we was ordering less and was we quiter? Was it because of cost of living etc. We said honestly no. In fact we was alot busier. That we was potentially saving over several thousands over a year with this new supplier. We needed the savings to offset the higher electric and gas prices we was paying. Technically the savings amounted to 4 months of gas and electric bills. Significant for a small business. They made the excuse that obviously our new supply had better bargaining power with importers and supply chains. One week later they price matched majority of items to our new supplier. However, it did kinda made us think that loyalty doesn't amount to anything these days. Just go for a supplier that does the job with price and obviously reputable. Sometime you can be with a company too long one becomes too complacent, from both sides.

 

[MBE2017]

Sometime you can be with a company too long one becomes too complacent, from both sides.

Very true, and one of the major reasons new companies start up.

 

[Lucan Unlordly]

Just go for a supplier that does the job with price and obviously reputable. Sometime you can be with a company too long one becomes too complacent, from both sides.

True.
We don't have the luxury of simply switching suppliers as we are talking about goods manufactured specifically to their own designs.

 

[japancool]

albeit this supplier has mothballed

I think you mean snowballed...