The negotiation process involves the mutual discussion
and agreement between the retail buyer and merchandise resources so as to the terms of various business transaction. Negotiation Process A variety of activities involved in this process : Buying Authority Security Discounts and Allowance Arranging Transportation and Distributions Establishing the terms of sale Seeking Price Guarantee
Buying Authority When buyer is employed by the retail store , he or she is given the authority to act on behalf of that store as a duly authorized agent and will represent the firm in dealing with merchandise resources. Securing Discounts and Allowance A discount or allowance may be defined as any reduction in the lost or quoted price given to the retailer by merchandise resource. There are four kinds of discounts and allowances available to the retail buyer :- 1. Quantity Discount 2. Seasonal Discount 3. Cash Discount Arranging Transportation and Distribution Arranging transportation and distribution is a third important negotiating activity. Cost Carriage Insurance Loading and unloading Custom clearance Duty.
Establishing the terms of sale The terms of sale are often offered to the retail buyer in the form of vendor service. Basically it involved when the payment will be made EOM ( End of the month) ROG ( Receipt of goods) COD ( Cash on delivery) Cash Discount ( On prompt Payment ) Consignment ( Unsold goods are returned back)
Seeking Price Guarantee Price guarantee is fairly common for seasonal merchandise , vendor is eager to encourage the buyer to place early orders or the vendors may use the price guarantee along with the quantity discount to encourage buyers to place large orders. Causes of friction between vendor and Buyers Return and Adjustments Cancellation Shipping Problems Special orders and Minimum orders Selling competitors and Exclusives Fashion Piracy Advancing seasons Failure to follow instruction. Return and adjustment Unsold garments. Incorrect Forecasting. Quality concern
Cancellation A cancellation policy should be agreed on between vendors and buyer : Following is the list of conditions under which the order can be cancelled 1. Final ship cancel date is passed. 2. Major Quality concerns 3. When the vendor or manufacturer receives a cancellation notice from the buyer. 4. Buyer and vendor mutually agreed upon the cancellation Shipping Problems Early shipment. Late shipment. Split shipment. Late Shipment
15 oct ETA 22 nd
NoV 10 nov ETA 20 NOV By Sea Mode at 6 FOB $ By AIR mode CFR or CNF Late Shipment In the previous case buyer cant change the Incoterms to CIF At the same vendor can ask the sea freight to be credited into his account. Split Shipments
60% Shipment on time 40% delayed by 1 month due to fabric rejection Buyer own decision to take the complete shipment together with discount or change in Incoterms or to take the split shipment Special Orders and Minimum orders Early Delivery Small Quantity Extra Charges Selling Competitors and Exclusives Vendor selling same line to competitors buyers Exclusive agreements may be arranged between vendors and buyers. The purpose of exclusive agreement is primarily to protect the buyers from having the same goods offered for sale to his her competition. Fashion Piracy Buyers and vendors must establish policies prohibiting fashion piracy at both ends. Substitutions Any kind of substitution used by vendors in terms of the fabric/ artwork or trim Substitutions
Label from nominated Supplier Label from Local Supplier ( Same quality ) 0.175$ 0.05$ Subsitution Any kind of substitution need to be approved from buyer before using the same in bulk shipment. Failure to Follow Instructions Failure to follow instruction will add to the cost and buyer will charge back to the vendor the added cost caused by failure to follow the instruction provided. Failure to Follow Instructions
Attaching Spare button at Inside placket In India Attaching Spare button at Inside placket In America 0.1 $/shirt 0.01 $/shirt Establishing Good Vendor- Buyer Relations The vendor and buyer must remember that each other is responsible for actively promoting and protecting a companys image. Problems and complaints that reflect on the image of the vendors or buyers company will eventually prove costly and lead to a serious loss of business. It is important to both parties that mutual confidence and respect become more evident than distrust or disrespect. Establishing Good Vendor- Buyer Relations Be as loyal to a good vendor as the vendor is expected to be to the buyer Never discontinues business without sufficient cause and only when mutual discussion and criticism have failed to produce the desired result. Be fair and honest when considering one anothers offering. Make all commitments definite and precise
Establishing Good Vendor- Buyer Relations Do not partake in commercial bribery , that is accept or offer gifts, rewards and commissions. Continuously improve trade relations through education, self regulation and government regulation. Represent the best interest of the company at all times Establishing Good Vendor- Buyer Relations Do not take unfair advantage of one another. Become thoroughly knowledgeable of the merchandise line you represent. Work hard to establish and maintain a good working relationship. Reference Apparel Merchandising by Rosenau and Wilson 2 nd
Edition Merchandising Buying by M. S. Bohlinger 5 th Edition Thank you Saurabh Chaturvedi