Positive retail vendor relationships have a bearing on whether a store or retail chain survives in today’s competitive business environment. In today’s customer-centric retail climate, retailers are especially aware of the importance of building customer relationships, but retail vendor relationships — which have a major impact on your business — are also worth nurturing.
What Retailers Can Bring to the Relationship
The best, most beneficial retail vendor relationships are built on:
1. Convenient, timely payments.
Paying invoices on time increases vendors’ willingness to support their merchant customers by extending flexible payment terms. Keep in mind that misunderstandings about payment terms can put a real damper on retail vendor relationships. For example, while some vendors may expect payments within 30 days of issuing an invoice, but you may operate on a net-60-days basis and, unknowingly, delay payments for a few weeks. Discussing payment terms with vendors before placing your first order with them will prevent these misunderstandings.
2. Market knowledge.
Understanding the marketplace for vendors’ goods and services helps determine whether you have leeway to negotiate better deals or service from your vendors. For example, suppose most vendors that serve your retail vertical offer two-day turnaround from order receipt to shipping, but one company provides four-day turnaround. That company might be inclined to ship faster if informed of its competitors’ practice. However, if all vendors in the market adhere to the same shipping schedule, attempting to negotiate might interfere with otherwise strong retail vendor relationships.
3. Respect ordering quantities.
Retailers should expect the convenience of multiple ordering options, including online and Web-based. Choose vendors that offer minimum order quantities that are realistic for your business and are clearly spelled out. You should minimize requests for exceptions to ordering policies to maintain a good relationship.
4. Respect vendor schedules.
Different vendors have different schedules for fulfillment. For instance, some vendors may need several days’ notice to ship or change an order, while others only require a few hours. The greater your understanding of (and respect for) how your vendors do business, the more likely you are to form and maintain beneficial relationships.
What Vendors Can Do for You
A relationship is a two-way street, and retailers that work to build good relationships with their vendors will benefit from their partnerships. Two examples are:
1. Early access to new products.
Accessing and showcasing new products before other merchants is a great way for you to sharpen your competitive edge. The better the retail vendor relationships you maintain, the better your chance for early access to new products.
2. Hassle-free return policies.
The need to return merchandise to vendors is inevitable; sometimes, products are damaged and at other times, you may simply be overstocked on certain items. When relationships are strong, vendors readily accept item returns and are willing to negotiate favorable re-stocking fees.
Your relationships with vendors probably run the gamut, from harmonious to rocky. It’s worth paying attention to these relationships and working to make them as good as possible to help your business run smoothly and to maintain a competitive edge.
