7 Powerful Negotiation Tips for Retailers to Push Up Profits

The goal of all retailers is to make profits. In other words, their principal motive is to attract more and more customers to increase sales.

If you are a retailer and suppose I ask you to mention the parameters that can help you push up your bottom line, what will you say?

You are most likely to say that selling high-quality products, running effective advertisement campaigns, selecting the proper suppliers, maintaining good customer relationships, and recruiting efficient employees.

Again, if I further ask you if there is anything more, you might say no. But, it is not so because the list has not yet ended.

Yes, the parameters you mentioned are all correct. But you have missed out on a crucial criterion — negotiating the price with the manufacturer or supplier.

You might not have known that proper price negotiation with the manufacturer or supplier can play a significant role in pushing up your profit levels. And not all retailers are experts in that essential skill.

Price Negotiation is Not a Layman’s Game

Negotiating the price is not a straightforward affair. It calls for a high degree of expertise and substantial experience.

Challenges will prevail at every stage of a negotiation process that can clinch the deal from your hands. For example, it can so happen that you might not like to bargain further during a negotiation for lowering the prices in fear of offending the manufacturer, who might say no to the deal as a result.

7 Impactful Negotiating Tips

It is possible to do away with the challenges involved in the process to negotiate the price to the lowest possible extent with the manufacturer.

If you negotiate tactfully, you can turn the tables in your favour. Here are seven proven successful negotiation tips for you to actuate during a negotiation process:

1. Establish a Relationship with the Manufacturer

It is the first step in the negotiation process. So, do not undermine it.

Before entering into the negotiation phase, try to build a relationship with the manufacturer. The underlying idea is that a relationship can prompt the manufacturer to view you as a friend or even a favorite customer instead of another customer.

An excellent trick to strike a relationship is to speak with the manufacturer over the phone instead of communicating only through emails. Make sure to maintain a friendly tone while speaking with the manufacturer during your phone communication. And, do not restrict your conversation only to business. Instead, ask things, like how are they doing, or was there any family event recently — that will bring a friendly element in your conversation. It will help significantly to cement a good relationship between both parties.

Maintaining a good relationship with suppliers can prompt them to say yes to your price bargaining. And that will help you to get better prices from them.

2. Maintain Truthfulness

You must have heard of the adage — honesty is the best policy. It applies to business as well. Therefore, ensure you speak the truth and refrain from telling lies.

If you pose yourself as an intelligent businessman and speak lies to manipulate the manufacturer, you will likely see things slipping out of your hands. Such deceptions can damage the deal and strain the relationship with the manufacturer, who will never trust you in the future.

But, being truthful does not also mean that you should disclose everything about your business or give away your benefits. Instead, you should tactfully negotiate to get the best deal.

3. Speak About Your Business

When you meet the supplier for the first time, likely, the supplier might not know anything about your business.

As such, it is a good idea to speak about your retail business to the supplier. During the conversation, explain to the supplier what values you create and your expansion plans, if you have any. And make the vendor know how a business relationship will benefit them. It can prompt the supplier to agree to your deal at a competitive price.

4. Focus on Mutual Benefits

Research the prospective supplier to find their goals, past deals, customers, target markets etc. The study will help you to find the areas of mutual interests that you can leverage during price negotiation to turn the table in your favor.

For example, if the supplier does not agree to your price, you can bring up other things in the conversation, like giving a discount for bulk purchases or other aspects that can benefit both parties.

Before negotiating with suppliers, make sure you research their domestic and overseas prices.

5. Short-list Multiple Suppliers

Short-listing a single vendor is not a good idea. Instead, it is a discreet strategy to select at least three suppliers and get their price quotes. Subsequently, go for the best quote, and negotiate to bring it further down.

6. Research the Manufacturing Costs

You can negotiate better if you somehow know the manufacturing cost of your prospective supplier. So, research to figure out how much money the manufacturer is spending on manufacturing products.

When you know the manufacturing cost, you can get a fair idea of the room for bargaining during the negotiating process.

7. Play the Going to the Competitor Game

First, analyze the market scenario and then fix a price you will pay for sourcing your stock. Subsequently, get the price quote from the manufacturer you selected. Finally, when you start negotiating, ask how much the manufacturer will lower the price.

If you find that the lower price is higher than what you have fixed to pay, tell the manufacturer that you are getting a much lower price from their competitor.

On hearing that, the manufacturer is likely to bring down the price further.

Conclusion

Tactful negotiation with suppliers can help retailers significantly push up their profit margins. When the retailers procure their stocks at lower prices, they can also offer discounts to their customers while maintaining profits. So, they can create stronger relationships with customers.

Therefore, do not fail to negotiate until you get the best deal.