Choosing the Right Suppliers
VALUABLE TIPS FOR RETAILERS - CHAPTER #2
We like to assist our customer base with potentially useful information based on our market experience and feedback received via our dealer network. This is the second publication from a total of 8 chapters in which we aim to assist you in growing your business, whether you are established, or a startup. Last time we looked at setting targets and parameters for margin and turnover to keep you in line with your operating expenses. We also questioned criteria for Brand Selection related to those ratios of income and cost. This time we're going to examine some more important aspects of supplier and product selection.
And, therefore, what kind of turnover and margins do I need to cover my expenses? (Use an Operating Expenses spreadsheet to keep track). The answers to your margin question will determine what products you then choose to specialist in and focus stock investment on.
How well are you researching your suppliers' track records? Do they deliver on time? Each day of order delay is a day's opportunity missed to sell. Ask for references and contact details of other B2B clients so you can ask their other customers what you can expect in terms of service.
For perspective, considering a 6-month season with consistent levels of walk-in clients, 1 month's delay means they have cost you 1/6th, or 16% of your opportunity to actually sell the product. If you are a purist and only want the latest 'boutique' brands, or those that drive demand with great marketing image, what is the point of investing in them if they do not deliver on time to satisfy that demand and feed your cashflow?
Product Life cycle
Annually-changing products Vs. regular collection brands: It's key to understand the risk of stock: Products that change anually can be compared to food products with an expiry date. The risk of stocking these products are extremely high, while stocking regular collection products allows you to spread risk and protect your return on investment.
History and experience proves that even if items with a longer lifecycle do not turn around as fast as some, they are the perfect 'hedge' against yearly inflational pressure and exchange rate.
Even just a change of 'lipstick' on an otherwise unchanged board for example pins it to year X or Season Y - and therefore costs you money.
- Research supplier reliability to protect profit opportunities, satisfy demand and maintain cashflow
- Focus on products and brands with longer shelf-life for less risk and stock security