Building Strong Vendor Relationships
Every vendor I ever worked with in my retail career always told me they wanted to be my partner. But few truly acted like it. The best financial success I had, though, was when I truly had a partnership with my vendors. So what was the difference? What were the key items to make it a partnership versus an inventory provider?
Here are five things to develop a strong vendor relationship.
1. Share Your Date.
The truth is, most independent retailers are afraid to share their numbers. But, the more a vendor knows about your business, the better they can support you. In fact, many vendors simply don't trust a retailer who will not share its data. Can you blame them? You are asking for better dating on purchases or a return authorization (RA) on some dead stock. These "asls" cost the vendor money and they need to know it is worth the investment in you.
What types of info should you share? Here is some of the best. Keep in mind, there is no need to show a vendor all of the details from each of your vendors, just show them the category and their numbers. This helps them see where they stand in your store.
- Turn Rates
- Gross Margin
- % of category sales
2. Hold a Business Review.
At least two times per year, sit down with your vendor and review their status in your store. Go over the data from point one above.
Remember, the vendor is trying to be in your store not the other way around. You can do this at market or in your store.
3. Own Your Mistakes.
Do not ask the vendor to pay for you mistakes. If a vendor convinced me to carry stock that they wanted me to put in and it did not sell, then I always asked for an RA.
But, if it was stock that I selected or made a bad call on stocking levels, then I owned it. This showed the vendor that I am a partner.
4. Tap into Co-op Funds.
Every vendor has built into the cost of the merchandise they are selling you co-op funds. These funds are used to help you advertise the product in your store or pay for a promotion or event. But they can also be used for markdowns. For example, get $5 per item as a spiff from the vendor to pay your sales staff.
5. Buy Inventory at the Level of a Partner.
Just because you carry a vendor's merchandise does not make you a partner. Remember, this same salesperson has other accounts and those accounts might by 10 times what you are buying. Give them open-to-buy in your plan. Consider this when asking for a "favor" from your vendor. Yes, his or her job is to support you, but if you only buy a small amount, do not share numbers, and try to get the vendor to cover your mistakes, then you are not being a partner and the vendor has every right to treat you as such.
A vendor who is a partner is a tremendous asset for you. Not every vendor can be a partner. Focus on the vendors how have open stock inventory and can support your fill-in program.
Fast fulfillment with strong dating is much more important than co-op funds. Remember, inventory in your backroom and on your shelves costs you money. Use the vendors warehouse versus yours. A partner would allow to do this and do it willingly.
Bottom line, if you wan to be a partner, you need to act like one yourself. Follow these tips and you will do just that.