How to approach suppliers who marked up their prices by 200%?!!

Discussion in 'International Business' started by Fred Mallah, Aug 12, 2020.

  1. Fred Mallah

    Fred Mallah UKBF Newcomer Free Member

    4 0
    There is a new phenomena on Alibaba, suppliers are marking up their prices by 100-200% and they are doing that for negotiation purposes. For example, a product that was priced for 50-60$ a couple months ago is now priced for 100-200$.

    I think the reason why suppliers are doing this is to have more leverage negotiating with new customers, so if you end up bringing the price down to 100$ you would think you won, but in reality you paid double the original price.

    The suppliers I am talking about are legit factories and not trading companies, so this price-hike was done directly by a manufacturer and not a middle man.



    How would you approach such suppliers and make it clear that the price they're asking for is imaginary and not real at all without putting them off and possibly losing them as a business partner?
     
    Posted: Aug 12, 2020 By: Fred Mallah Member since: Aug 12, 2020
    #1
  2. fisicx

    fisicx It's Major Clanger! Staff Member

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    Find another supplier. They can do what they like with their prices.
     
    Posted: Aug 12, 2020 By: fisicx Member since: Sep 12, 2006
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  3. Mr D

    Mr D UKBF Legend Free Member

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    Either agree a price you are happy with or buy from elsewhere.
    You do not have to accept the price they come up with. They do not have to drop the price to what you want.

    Really this is nothing new. If you do not want to haggle they gain considerably.
     
    Posted: Aug 12, 2020 By: Mr D Member since: Feb 12, 2017
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  4. Fred Mallah

    Fred Mallah UKBF Newcomer Free Member

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    I tried doing that, but the vast majority of suppliers in that category actually marked up their prices. It almost feels like they all conspired together or something!!

    I know for a fact that these marked up prices are not real, the real prices were shown just few months back, they are now doubled.
     
    Posted: Aug 12, 2020 By: Fred Mallah Member since: Aug 12, 2020
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  5. fisicx

    fisicx It's Major Clanger! Staff Member

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    Or....

    They got you hooked on a discount price and now charge you the real price.

    Either way, there is nothing you can do about it. It's your own fault for buying from Alibaba in the first place.
     
    Posted: Aug 12, 2020 By: fisicx Member since: Sep 12, 2006
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  6. Fred Mallah

    Fred Mallah UKBF Newcomer Free Member

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    The real price I was paying few months ago was the standard price actually and not a discounted one at all.

    Where else would you buy? 1688 seems to be identical with Alibaba (price-wise).
     
    Posted: Aug 12, 2020 By: Fred Mallah Member since: Aug 12, 2020
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  7. SillyBill

    SillyBill UKBF Regular Free Member

    248 128
    If the whole market has moved up or down in a price that is typically indicative that feedstock prices have moved or something else (perhaps a regulatory change) that affects manufacturer costs. Seems strange that all would have the exact same strategy at the exact same time unless it is a price fixing conspiracy. Sure one or two may try it and sounds like you may not have many options which suggests manufacturer is playing a good game. They are out to make money too, preferably more, as I am sure you are.

    Not sure what you are buying but as I buy and sell chemicals it isn't unusual to see quite large price swings over short periods of times. Ethanol is just one example this year.
     
    Posted: Aug 12, 2020 By: SillyBill Member since: Dec 11, 2019
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  8. Fred Mallah

    Fred Mallah UKBF Newcomer Free Member

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    If you don't mind me asking, are you a chemical engineer or do you at least have a degree in chemistry? Just out of curiosity, is it at all possible to self-study and enter your field of trade?
     
    Posted: Aug 12, 2020 By: Fred Mallah Member since: Aug 12, 2020
    #8
  9. SillyBill

    SillyBill UKBF Regular Free Member

    248 128
    I'm a chemist by education (as in I have a degree in it) albeit I am not really involved in the technical or product development side of my business (the only bits really requiring a chemist background) to be honest. We're a chemical/liquid contract manufacturer. I personally think it is important to at least have a classical understanding or grounding which is best served through a degree; it is a still a reputable discipline at the end of the day (sorry Media Studies!). For me it is important I can be sat in a meeting either internally within the business or with a client and I can hold my own when chemistry is discussed albeit I may be the least knowledgeable person in the room. I think it would take a lot of effort to self-study a subject at a high level such as Chemistry, a lot of what I learned was in a lab as a undergraduate playing around with stuff, difficult to do that online...
     
    Posted: Aug 12, 2020 By: SillyBill Member since: Dec 11, 2019
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  10. Alan

    Alan UKBF Legend Full Member - Verified Business

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    First there is not such thing as real and imaginary prices, just the price that a deal can be done.

    If you are convinced that the product can be wholesaled to you at $50 and their starting point is $200 - then how you approach it is up to you, but I would suggest opening a negotiation like - e.g. I have substantial demand for your product and can make a viable operating profit when your wholesale price is around $45 - how close can you get?
     
    Posted: Aug 12, 2020 By: Alan Member since: Aug 16, 2011
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  11. Mr D

    Mr D UKBF Legend Free Member

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    Then look for different suppliers.

    Or different products.

    Its quite likely that some prices will have gone up for raw materials at any one time - in which case you should see pretty much all suppliers put their prices up by similar level.
     
    Posted: Aug 12, 2020 By: Mr D Member since: Feb 12, 2017
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  12. Mr D

    Mr D UKBF Legend Free Member

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    Am guessing that ethanol was responsible for the wholesale price change in certain popular products a little earlier this year?
    A bunch of wholesalers got slammed by a politician for price gouging - when their cost to purchase went up!
     
    Posted: Aug 12, 2020 By: Mr D Member since: Feb 12, 2017
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  13. paulears

    paulears UKBF Big Shot Full Member

    4,477 1,176
    Yes - I've noticed the same thing on established regular products on alibaba. However, they are not really very good at it. I use the same tactic every time, I thank them for their past services and tell them the products are not viable at the new price and I won't sadly, be able to buy them at a more expensive price. Next day you get a small reduction offered. I do nothing. A few days later, they offer the original price. I thank them for the offer but tell them that in the current economic situation, now is the time to stop selling this kind of product. You will then (well, in 4 of the 5 cases I've done it) get a small extra reduction - or for smaller weight/size consignments a better shipping rate. If they don't offer it, I find an alternate supplier. Mine are not mega size orders - perhaps 4-6 grand typically, but it works.
     
    Posted: Aug 12, 2020 By: paulears Member since: Jan 7, 2015
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  14. MY OFFICE IN CHINA

    MY OFFICE IN CHINA UKBF Legend Full Member

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    Ignore the sellers that have hiked their prices by 200%.

    Either they are scamming you, or the product has no retail value for a 'newcomer' under the current conditions.
     
    Posted: Aug 13, 2020 By: MY OFFICE IN CHINA Member since: Nov 16, 2011
    #14
  15. paulears

    paulears UKBF Big Shot Full Member

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    Ironically I just went to place a repeat order And the DHL charge has doubled since April. Eats into the margins!
     
    Posted: Aug 13, 2020 By: paulears Member since: Jan 7, 2015
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  16. SillyBill

    SillyBill UKBF Regular Free Member

    248 128
    Quite possibly, not sure what you are buying but alcohol is used in dozens of applications, perfumes, disinfectants, fuel additives, paints, food etc.

    The whole year has been chaotic pricing in chemicals in my experience. Crude oil is a obviously a consumer staple in so many products (that people wouldn't quite believe) and that crashed so that had a deflationary affect whereas other prices shot up (ethanol being just one example). Certain sectors shut down, certain companies shut down, certain companies stayed open, countries locked down at different times...so raw chemical prices have been up one minute down the next and everything in between. Usually this industry like a lot of others operates on a very formulaic supply and demand models and once that is upset the rulebook on price goes out the window.
     
    Posted: Aug 14, 2020 By: SillyBill Member since: Dec 11, 2019
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  17. Naheed Mir

    Naheed Mir UKBF Contributor Free Member

    54 5
    You can negotiate with them to bring the price lower. However, if the whole market has moved up, then it means the cost of raw materials has gone up so, it will be difficult to find the product at a lower price.
     
    Posted: Aug 18, 2020 By: Naheed Mir Member since: Aug 10, 2020
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  18. getitstraight

    getitstraight UKBF Regular Free Member

    116 7
    Might it be that some genuine reason for the overall price increase (spiked demand, spiked cost of materials etc)?
     
    Posted: Aug 18, 2020 By: getitstraight Member since: Sep 5, 2009
    #18
  19. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    How do you know you are dealing with the manufacturer and not the middle man, thats a big problem with Alibaba, The manufacturer may be happy for others to sell there overseas orders whilst they have a massive home market without the alibaba charges etc
     
    Posted: Aug 19, 2020 By: Chris Ashdown Member since: Dec 7, 2003
    #19
  20. Kevin Joseph

    Kevin Joseph UKBF Newcomer Free Member

    1 0
    This is a problem typical to Alibaba, I had faced this issue with them similar suppliers as well.

    Two things to consider. Often times, especially when it comes China, the haggling does work and the manufacturers do drop the prices, especially when you mention that you found an alternative at 1/2 the price, or less. But this drop also comes with a compromise in quality. So I would watch out for that.

    I'm Indian, so when I visited along with a couple of my colleagues, to source machinery for working plywood, I couldn't get a sweet deal, but the next time when I took a local with me, it worked like a charm.

    It's worth investing in a local translator, It's not just the language that will be sorted out, but they do understand the cultures thoroughly. Chinese manufacturers & suppliers expect their potential customers to haggle, which is why they mark it up in the first place.
     
    Posted: Sep 1, 2020 By: Kevin Joseph Member since: Sep 1, 2020
    #20