Small- to mid-size enterprises that work with large wholesalers often prefer to leave the process of haggling off the deal table. Businesses may feel intimidated by wholesalers that work with hundreds of other companies, thinking that because their orders are small or not as frequent, suppliers won’t care to talk about better terms or a lower price. But smaller businesses should embrace negotiating as a valuable part of the process when working with wholesalers. Here’s how you can negotiate your way to a better relationship with your wholesalers, and maybe even save a few bucks along the way.
Create a Strong Relationship
The ability to negotiate with a wholesaler starts with a strong relationship. Some view wholesalers as an inevitable factor in getting business done, but you won’t get far in the process if you view a wholesaler interaction as another transaction. Instead, create a business relationship with your wholesalers by taking the time to understand their model, their needs, and who they are as a business. This means communicating with them outside of the buying process alone, being courteous in each interaction, and taking proactive steps to get to know the people with whom you work. If the wholesaler can see you and your business as more than just another customer, you’re far more likely to open the door to negotiations for your next buy.
One of the smartest steps you can take when negotiating with wholesalers is preparing before you begin the process. That starts with having a solid track record of on-time payment and being a loyal customer who brings repeat orders to the wholesaler over time. But preparation also means that you have a deep understanding of your own business needs. Know your unique sales cycle and how that impacts your timeline for paying. It is also necessary that you understand your customers inside and out, such as how they buy and in what quantity, so you can bring those critical details to the negotiation table.
Negotiation preparation also comes by way of understanding the wholesaler’s business and its products, how well and how quickly those products sell through, and the other retailers that partner with that wholesaler. Take the time to get to know the wholesaler’s costs for products and its pricing structure relating to volume. When you’re ready to have the discussion, don’t be shy about asking questions regarding minimum price, discounts you can offer on products, or when discounting can be done to move products. Understand that you have more leverage in negotiations based on the popularity of the product you plan to buy and resell, so get to know a product’s demand before walking into negotiations with your wholesaler.
Understand It’s More Than Pricing
There’s nothing wrong with getting creative in wholesaler negotiations, but the tactic requires you to look beyond pricing alone. Think about the payment terms that work best for your business; if you have a seasonal boom, ask the wholesaler if there is an opportunity to pay outside the normal terms. When you’re buying a smaller quantity, and don’t qualify for a volume discount, consider negotiating a lower overall price by offering an advance payment that works for your business. You may also negotiate an advance payment down if no discount is available.
Wholesalers may also be willing to whittle away expenses not included in the purchase price, like shipping costs or speed, which helps bring down the total cost of the transaction for your business. Extended payment terms can be a point for negotiation as well, and securing a net-60 as opposed to net-30 can seriously improve your cash flow over time.
Think Long Term
Wholesalers want loyal customers who bring repeat business, so strategize ways for your business to fit the bill easily. For instance, offer to take on certain marketing tasks in exchange for a discount on your order, like adding the wholesaler’s information to your website for a period. Co-op agreements go far with some wholesalers as they help with sell-through and reaping more orders in the future. Offer to buy a point-of-sale product along with your initial order in return for a small discount, or consider bringing more product orders to a particular wholesaler if they can offer better pricing or payment terms. Having a long-term perspective on wholesaler partnerships can pay off tremendously for your business.
Don’t avoid negotiating with wholesalers because you think your business is too small to warrant a discussion. Start by establishing strong business relationships with wholesalers, and think hard about how that relationship has the potential to benefit both parties in the immediate and long term. Get creative if you must in your negotiations, and be confident in asking for what fits your business needs best.