“All suppliers have a discount system,” says Alexey Baranov, and there is no reason not to believe him. For over 3,5 years, Alexey served as Nike's Executive Commercial Director in Siberia and the Far East Region. In this article, he gives valuable advice on building an effective policy for the long-term cooperation of your company with suppliers. So, what discounts can I get from a supplier?
Discount No. 1: For the volume of production. At first glance, everything is simple: the larger the volume of products purchased by you from the supplier, the higher the discount you are given. Such a scheme for obtaining discounts is popular with many market players - it is beneficial for both parties. It is important that the discount is estimated based on annual income: almost every large wholesale company can provide the customer with a scale with the amount of goods (implying your pre-order for the year) and the corresponding discounts. In this vein, there are two types of discounts that need to be distinguished.
Discount from a free warehouse. Fundamental point: this discount is traditionally two, or even three times less than the discount from pre-order. And that's why. Imagine that you are a supplier company and observe a sharp increase in demand for certain products. Naturally, when you pre-order this product, you include your personal order there so that the popular assortment is always available at your free warehouse. You pay money to factories, deliver the goods at your own expense to Russia, and spend some time storing products in a warehouse. Accordingly, the company incurs certain costs for maintaining a free warehouse - and all operating expenses are taken into account in the discount, so it is much less than the next discount.
Pre-order discount. In other words, this is a discount for special conditions. It can be quite large for two reasons. Firstly, the supplier company does not bear any additional costs for storing the goods you ordered - you immediately take it to your places of sale. Secondly, when discussing the strategic conditions for working with each particular supplier, you have the right to negotiate various terms of cooperation with him, and, reaching a commercial consensus, you get the opportunity to receive and sum up discounts for observing various clauses of agreements. What may be included in these points will be discussed later.
Discount # 2: For supporting the brand corner in the store. A brand corner is a separate section of a store, allocated only for one specific brand with its symbols, advertising posters, images, graphics and slogans. Consider the situation in which you are the owner of a multi-brand store that wants to allocate part of its retail space to a specific brand. In this case, the supplier company not only undertakes to decorate this corner with the symbols of its own brand, but also makes an additional discount for the fact that you are presenting the brand to potential buyers with high-quality merchandising, helping the brand develop.
Discount # 3: For using seasonal branded initiative graphics. Each company has its own mission - this is the necessary channel through which information is transmitted to the buyer that he is not just acquiring a thing, he is acquiring a new quality of life. Accordingly, any brand is extremely interested in having its story told in as many stores as possible. In order to demonstrate not just a product, but brand values and ideology, you must order a certain amount of products. As a rule, part of the ordered goods will settle in your warehouse, but for this, the supplier company gives you, in addition to discounts, advertising support: hangs up graphics with enticing posters, puts up a demonstration stand with products, - in general, actively attracts buyers, and they Do not take long.
Discount # 4: For no rejection of the goods. Often this situation happens: you order goods from a supplier company, counting on very good sales, but there is another wave of crisis, and you are forced to cut your order by 15-30 percent. This trend is spreading throughout the whole country. In such harsh conditions, the supplier company loses its money, because the goods in which it has already invested are not needed by anyone, and will be sold at a discount of about 30 percent - such costs are not covered. Therefore, it is more profitable for the supplier company to give you a discount for no failure: the discount will be 1-2 percent of total annual sales, and the company reduces the risk of losing large amounts on failures. Use this when discussing cooperation with suppliers - an additional discount will never bother you.
Discount # 5: For timely payments. As a rule, if you have a certain payment history with some supplier company, then, if necessary, this company will give you a commodity loan. Suppose a supplier gives you a delay of 60 days, but for various reasons (you ordered the wrong product; the products did not arrive on time for logistical reasons), you pay not on the 60th, but on the 90th, than you set the supplier company in an extremely difficult financial situation. The fact is that the vast majority of businesses are credited to banks, and therefore they borrowed the money for which you received a loan at interest. Your non-payment has entailed a bank debt of the supplier. It is in order to encourage you to make all payments on time, the company is ready to give you a discount.
Discount # 6: For brand promotions. Mutually beneficial cooperation on the face: the store openly advertises brand products, attracts loyal potential buyers, thereby promoting the brand. Suppliers, of course, will do their best to encourage this, and there is no reason for discounts.
Discount No. 7: For branded clothing for staff. Let's say you have 6 sellers working in your store, who every season should be dressed in initiative goods. You prepare analytical information with how much it will all cost, and the supplier gives you a discount on this.
Discount # 8: For marriage. It is no secret that marriage is present everywhere. And if the marriage is not serial (in this case it is 0,7 - 0,8 percent of the lot), then most Russian distributors give a discount, as a rule, up to one percent. That is, you consent to the adoption of the marriage, if it will be - which is not necessary at all - and the supplier company puts you one percent of each batch in your basket. It happens that the company is faced with brands where the marriage is serial. In this case, the company can apply to the Commission for the Protection of Consumer Rights as a retail operator, and this will bring the customer and supplier to a new level of resolution of the differences. In Nike, in such cases, they act in a very interesting way: they ask to burn the defective goods and send them a photo, after which the company compensates for losses in the payment.
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