Effective product purchasing

By | February 4, 2010

I’ve been responsible for buying one off products to regularly purchasing large quantities of goods. From being a service provider and wishing to increase profit margins to buying for in-house use, this post should prove helpful to many Small Business Tech readers wanting to get the best price / quote. If you are not following the blog, why not subscribe via email or follow the rss feed before continuing?

Now before I begin this isn’t the ‘definitive’ guide and you use these recommendations at your own risk!

Research, research and research
From wanting a common item like hard drives to more unique units, give yourself the time to do the research. Try and assess pricing before contacting any suppliers.

Who are you buying from?
You can’t buy items without running eventually into an issue. A missing part, a device that doesn’t work, a damaged good. Don’t be scared before you make any purchases to discuss their procedures or look this up on their website. Especially if your buying expensive items or large volumes. Yes I know there are laws for majority of the readers visiting this blog regarding returned goods, but hassle, time and money are factors and you want a smooth process when it occurs.

Now google is your friend. Type in the companies name and do some research. Are they mentioned in forums? Has someone written a blog post? Now always take such entries with a pinch of salt. You are only reading one side of a story, the facts might not be correct. However you could form a picture either negative or positive due to this research and decide to not use that firm.

Confidence, Time and Patience
You might have seen a price on a website for an item. This could be a single unit purchase price or perhaps your interested in buying bulk. Regardless send an email to the sales team and mention you are gathering prices and would like a quote.

Now if you are looking to purchase large volumes, mention this and say you want to try out a company with an initial purchase before purchasing in larger quantity.

This can often be a good idea to help discover any hurdles or issue, before you invest a large sum in their goods. For instance if your going to purchase 1-5 units, but might be purchasing larger volumes in the future, mention this. This could impact negatively on the pricing you are given for the initial purchase, but might prove beneficial later and help you walk away sooner from a supplier. Don’t contact any other sellers, just wait for this first response.

Now the sales team might be keen to speak on the phone. To assess you as a buyer and try and make the whole situation look like they are considering whether they want to actually sell to you! Don’t sound desperate, willing or allow yourself to purchase the item. Play it cool and just get the price and tell them you will get back to them.

Now you’ve got the price contact another seller. Again tell them you are looking to purchase the item(s), but this time say you’ve received quotes already, but looking for a more competitive price. Now it’s up to you whether you reveal your first price, but I wouldn’t reveal the companies name who gave you the quote. That’s poor form and unfair in my opinion.

Now you could decide to go back to the first firm and mention you’ve received a quote at x price and can they beat it? Don’t be scared to negotiate with the suppliers. At the end of the day this is part of business, don’t be scared or ashamed of asking for a better price.

Regardless if your buying in bulk, all firms will probably say they can look at the price later on for later purchases and often send you a list showing quantity pricing such as 1-9, 10+, 50+ etc. Don’t let later pricing deter you from achieving a good price now and you can always look at the pricing later.

Hidden Costs
Look for the hidden costs. Such as postage types. We are all familiar with this on ebay. Sell something for little, but charge expensive postage and delivery. I’ve not experienced this extreme obviously on bulk items, but look at the price of delivery and see if it impacts the purchase costs and thus your margins, especially on small purchases.

Now factor in your earlier research and assess what level of support you can expect from the organisations. It’s not always about price, but making sure the goods are delivered timely and you receive the best follow up support. Why not try an initial smaller purchase as previously mentioned.

A hurdle
If you’re a start up company often there is a hurdle such as filling in forms, giving financial details and having a credit check run against you. Which is tough going for a small firm, especially startups. Don’t despair, explain you’re a new firm and at the end of a day people want business and how you pay for it, either receiving credit or paying beforehand is factor you need to consider if a hurdle appears.

Now this is actually a different ball game , depending on what your firm does. If you are evaluating products, mention you are gathering quotes, product and support details. You could ask for an evaluation unit (or sample depending on the type of good). In one firm I’ve been given evaluation units to keep or for set periods to allow me to assess whether to use the product. Obviously this has other factors, such as how unique the product is among others.

I hope this guide helps and leave feedback with your own advice.