Are the wholesale items you need to purchase beyond your budget? If so, you’ve probably found a way to pass your extra cost onto your customers or clients. Maybe you charge an additional 15% markup and absorb the rest of the cost.
This strategy makes sense when you don’t have other options. However, you’ll be happy to know there are several ways to buy your products at wholesale prices without breaking your budget.
1. Join a group purchasing organization (GPO).
Depending on how long you’ve been in business, you may have heard about group purchasing organizations (GPOs). GPOs are platforms that allow businesses to join forces to buy the same products and services in order to secure competitive pricing. As more businesses join your group, your buying power increases.
You can join a GPO to leverage buying power for goods your company plans to resell, or you can use a GPO to buy supplies your company uses (like office supplies and shipping supplies). By joining a GPO, you’ll get access to large discounts without having to purchase more than you need.
What does it cost to join a GPO?
Some GPOs charge their members a monthly or yearly fee, but many are completely free to join. GPOs that don’t charge members are paid directly by the suppliers because they’re guaranteeing purchases.
2. Join forces with other small businesses.
The ultimate solution is joining a GPO, but if you can’t do that for some reason, try to find other small businesses that need the same supplies. You might not be able to buy in the large quantities you’d have access to through a GPO, but any money saved is worth the effort.
3. Hire an expert supply negotiator.
There are people who make a living as expert negotiators. These people can save you a ton of money if you find someone with experience negotiating with wholesalers.
An expert negotiator won’t be likely to get you the most amazing deal on the planet if you’re not able to buy in bulk, but they can negotiate some serious price savings on your behalf. Just make sure their fees don’t exceed the savings you’ll get.
If you employ this strategy, make sure you secure a purchase agreement for a set period of time so it’s not just a one-time purchase. You might need to make multiple purchases over time to justify the fee to your negotiator.
4. Try negotiating with suppliers personally.
When a GPO or expert negotiator isn’t possible, it’s time to do your own negotiations. If you’re new to negotiating, there is a steep learning curve that requires plenty of direct experience to get through.
Before negotiating with suppliers, practice negotiating with other businesses first. Go to the flea market or farmer’s market and practice. It might sound silly to practice negotiating for vegetables, but if you can’t get a better deal on corn and avocados, you’ll never get a better deal on goods and services.
Tips for negotiating with suppliers.
Learning to negotiate takes time and practice, however, having knowledge is essential. Check out these negotiation tips from 13 successful, young entrepreneurs for some excellent advice. For example, one entrepreneur suggests researching the actual costs to know how much wiggle room you have in your negotiations.
Another entrepreneur suggests pitching the supplier’s dream. Your supplier will want to sell as much of their product as possible, so presenting yourself as a resource with a track record of sales will go a long way.
It’s also recommended to be ready to put down a 50-70% deposit. Being able to put down a higher deposit will give you more negotiating power.
When all else fails, narrow your niche .
If none of these strategies work for you, consider narrowing down your niche to reach a smaller portion of your target market. Narrowing your niche could be as simple as marketing to a smaller niche. Or, it might require you to make improvements or adjustments to the products and services you sell.
The benefits of marketing to a smaller niche are vast. By reaching people with a specific marketing message, you’ll get more sales and repeat customers. Increasing your volume of business will eventually translate to an ability to buy in bulk to get better prices.
Besides, you need to embrace a niche market to scale your business. Since you’ll need to do it eventually, why not start now? In a few months, you’ll be glad you didn’t wait.