Before you sign that order
There may be details you are missing
Warning! The suggestions contained in this column are not designed to cause vendors to fall in love with you as an account. It is not the retailer’s version of, ‘how to win friends and influence people’. It part, it is perhaps a way to influence people that are your vendors.
Have you ever written an order and not had it delivered as you had expected? Did you order an assortment that included a display only to have part of the merchandise arrive or not have the display and signage arrive? How about an order that arrived later in the season than you specified? These are but a few examples of problems that can occur.
Of course, the vendor did not fail with the intent of disappointing you. There were circumstances, many of which were beyond the vendor’s control that led to your order not being completed as had been told or was specified in the order. However, an old saying states that ‘your problem is not my problem’.
Each of the ‘challenges’ and solutions with placing and receiving orders that are discussed in the column are the actual experiences of buyers as shared to this writer at the IGC show.
You see a display of merchandise which would represent a new category of products for your business. The show special includes free freight, signage, the display rack, and a specific amount of inventory for each of the items show. Thinking it would allow you additional sales to your existing customers you place an order.
What you want to see in your business is exactly what you are seeing at the show. It is an attractive display with items you know the competition does not have. It affords you a wonderful opportunity to be the first in your community to have the item and, very likely, as you are the only one to have the item, you can extend your margins on the item.
Unfortunately the actual experience of buyers is somewhat different from this plan. Sometimes the inventory arrives in multiple shipments – over multiple months. Sometimes not all of the items ordered arrive at all. There are occasions where the manufacturer has decided to eliminate an item in the selection; it may have been the item that led you to make the purchase. There may have been additional items, or replacement items, added to the display. These other items may not be attractive to you.
The display fixture may be the last to arrive or when it does arrive it is damaged or is a display different from what you saw at the show. The signage and advertising support material that you saw at the show does not arrive as the manufacturer tells you they are having some issues with the printer. Regardless of which, or how many of these ‘issues’ occur with an order you have placed, the opportunity to make a big splash with the new offering is gone. That is not going to happen now because the completeness of the introduction is not going to be present.
Perhaps you were going to have a newspaper ad or direct mail piece to announce the addition of this new category to your business. The manufacturer does not yet have the artwork for the product on their website yet so you are unable to design your advertising pieces.
These situations may sound like a made up nightmare, but as previously mentioned they are all actual experiences of buyers. As a buyer there are challenges everyday; your job is to find ways to get through them. One of the best ways to get through challenges is to be proactive at the beginning of the transaction, spelling out to the manufacturer what your plans are and what your expectations are. In no specific order of importance, here are the suggestions for order placement.
Specify the ship date and cancellation date. On the order form, state when the order is to be shipped with phrasing such as ‘ship as of March 1, 2013. Cancel order if not shipped by April 30, 2013.
Specify ‘ship only complete’. While the above instructions will get the merchandise to you within a specified time it does not solve the issue of a partial shipment. The ‘ship complete’ indicates this is an ‘all or nothing’ proposition. With this phrasing you do have to be very specific of everything that is to be shipped.
Take pictures of displays. With most people traveling with smart phones today you likely have a camera. Take a picture of the display that you can print and attach to the order. This helps with several areas of concern. The first is that you can remember what you saw. A second is that the person assembling the display within your business knows what it is to look like and the third is the photo offers backup if you have to have that discussion with the manufacturer about what you did see at the show.
Keep copies of sales brochures from the manufacturer. This is simply backup information of what the manufacturer was offering at the show. Buyers have reported that the offering, pricing, and terms at one trade show have been different from another show.
Note the sales representative’s name at trade shows. A surprising comment was that sometimes the sales rep is not an employee of the manufacturer; they are not even an independent sales rep. Instead they are sometimes individuals who are hired as additional sales support for the trade show. If you have an issue with an order because of something this individual said, it is likely you are not the only business that had this issue.
Next to the quantity specify the units. You will not be the first person to have placed an order thinking you were ordering ten of something only to find the order was received as ten dozen. The worst experience was the business that in placing an order for six dozen of an item, and someone at the manufacturer did the math to determine that would be 72. Unfortunately, the manufacturer then shipped 72 dozen of the item.
Extend the order at cost. When you total the order at cost this is an additional method of supporting your having stated the quantity ordered. It can potential eliminate that same type of order miscalculation.
Specify the shipping terms. The freight begins with the term ‘fob’ which is an acronym for ‘free on board’. It means how far along between the factory, or warehouse, and your business is the manufacturer paying the shipping charges. ‘FOB factory’ means your business is paying the freight. ‘FOB destination’ means the manufacturer is paying the freight bill to your door.
A simple guide for freight is that if your business has any responsibility for paying the bill you should have input. There may be freight carriers that are problematic for your business and you do not want them used. While the manufacturer is hopefully utilizing a logistics individual who is seeking out the least expensive way of shipping the order, one method of making sure that is happening is your printing on the order form, ‘ship cheapest’.
Push for terms. You do not get terms unless you ask for them; not all terms are ‘net 30’. Understand the language of terms. In addition to ‘FOB’ and ‘net 30’, there is a multitude of variations. ‘Net 30x’ means 60 days as the ‘x’ next to the number doubles the number. ‘ROG’ stands for ‘receipt of goods’ and means the dating terms do not start until the merchandise has been received. ‘EOM’ stands for ‘end of month’ meaning the dating terms do not begin until the end of the month. Put several of these terms together and you have tremendously extended the payment time.
Look at the back of the order form. Before you sign the vendor’s order form, look at the fine print on the back of the form. If you do not understand the terms, do not use the form. Some forms state that all problems with inventory are the responsibility of the person ordering the merchandise. Another form that was reviewed stated that in the event of a dispute any legal action was to take place in a specific county where the manufacturer was happened to be the major employer of residents. A simple solution is to have your own order form created with terms that are fair to you.
Ordering merchandise at the show should be an enjoyable, and very profitable experience. The situations described in this column are by no means meant to imply that any manufacturer or vendor is attempting to take advantage of you, their customers. While the challenges the manufacturer faces in creating and bringing a new product to market are tremendous, simply said, ‘their problems are not your problems’.