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So You Want to Be a Buyer
How to maximize your time at a trade show
You are getting ready to make your first trip to the SHOT show in Las Vegas. the airline tickets are in hand. You have made your hotel reservations, and your friends have told you where the best restaurants and shows are. All is set, or so you think. As you travel to Las Vegas, we ask; are you going to the show to place orders, or are you going to be a buyer?
There is a difference. This is not just a play on words, but an opportunity to distinguish the two, as a buyer is as rare as is the individual who is a master sales person. Let's jump ahead to the time spent on the show floor to see where our buyer and order placer differ.
Our buyer is first obvious because of the stack of information he is carrying with him. In the weeks before the show, he has gathered reports on his business. He knows what his inventory on hand is, what his sales were for the last year, and what he ordered at the show last year. Armed with this material, he has reviewed the show preview books, mailings from wholesalers and manufacturers, and knows what vendors he needs to see.
The buyer has also come to the show with a budget. Depending on the depth of information he has at his disposal, the buyer will know how much money he will be spending for each product category. And, with each category he has set aside a portion of the budget to allow him to take advantage of new product lines, which we will discuss finding shortly.
Having reviewed the material, he has also spoken with representatives from the manufacturers and wholesalers in the weeks prior to the show, asking questions to help him determine how much time he will need to spend at each booth. Some reps will tell him, they would rather work with the buyer during their next visit to the store. This will allow more time - one on one - as they write the order, and allow the sales rep to have his time at the show available to work with new accounts.
There will be other reps that will want to work with the buyer at the show. This may be because there are more products shown at the show than he can carry samples in his car. There may also be certain items, which will sellout, and the sales rep wants to make sure the buyer has the chance to order. The important part is that they have communicated with each other and know how to work with each other.
As compared to being an order placer, our buyer sees the sales representative as an extension of himself into the marketplace; an extra set of ears and eyes to find new products. The sales rep visits more retailers in a week than you have the chance to see in a year. This exposure to the successful ideas utilized by other retailers can be invaluable. Ask successful buyers to tell you what part of their secret is, and the answer will be utilizing the sales representative.
When our buyer first visits the floor of the SHOT show, he spends several hours walking each aisle twice - once in each direction. During this walk through, he is making note of booths that have caught his attention. If the booth has caught his attention, there is a good chance they have products, or a complete product line which will be attractive to his customers. In the show book, which is now as valuable as his wallet with all of the notes it contains, he makes a distinctive mark for each of these booths.
Our buyer then readies himself for a second round. During this lap through the show, he slows to take a second look at every booth; looking for the new items which can bring extra sales and profits. While this may appear to be just a repeat, the seasoned buyers we interviewed said they had learned that often they found one or two more new lines they needed to add to their list.
By this time, our buyer has probably spent the first day, and during dinner he will do two things. One is to examine the notes he took today, adding the new product lines he has found to the list of vendors he will spend more time with in the succeeding days at the show.
The second thing our buyer will do, is to locate another buyer who has performed the same routine. During this extended dinner, the two buyers will exchange their observations of the show floor. This "tag team" work, which can include more than two buyers, provides you with extra sets of eyes to finding new items, and provides you with new perspectives to current market trends. The item you think is going to be the next "must have" item, may be seen in a different light by your counterparts.
During the second day, our buyer visits the primary vendors, writing the orders he had planned to do. If this vendor has created an attractive display of merchandise, the buyer will pull out his video camera from the backpack and tape the display. He will also ask the sales rep to provide a commentary about the merchandise and display.
When our buyer returns home, this videotape serves two purposes; the first is to remind him how to display the merchandise. The second purpose of the video is to share with the entire staff as they listen to the commentary during a sales meeting to learn how to better close a sale by knowing the features and benefits of the product.
Placing this initial round of orders has taken a good amount of the buyer's time at the show, and most definitely the majority of his budget. At this time, the buyer stops to total his orders, review his open to buy, and makes consideration for any necessary changes in the open to buy. Depending on his feelings about the amount of open to buy remaining, and the secondary list vendors, he will reexamine his open to buy as well as the orders placed to determine the need for the secondary list purchases.
Seeing what is left in the open to buy, our buyer then returns to the show floor to begin visiting the various exhibitors that are on his secondary list. With the time and open to buy remaining, he places orders, and again utilizes the video camera to provide additional information to his staff. Whether in person, or by phone, our buyer again visits with his dinner partner from the previous days to make a final comparison of their efforts. Our buyer returns home to his store at this point, confident in his efforts and skills as a buyer.
Our order placer, on the other hand, has also returned to his store, looking as a list of his achievements, scraps of notes, and is heard to say several times, "I wish you guys had been at the show to see this really neat display this one vendor had. It would look really cool if we could build a display like that".
Having covered the days at the SHOT show with our buyer, there is also a technique of looking at an item that a buyer utilizes. It is an exercise in which the retailer decides how to price the product he is placing an order for.
Too often the procedure is to ask the sales representative what an item costs. If the answer is $2.00, the retailer has a couple of rules, which are quickly applied to determine the retail price. One answer is to simply price the item in the area of $3.39, which will give the store a margin in the area of 40%.
Some retailers will know what their overall margin is, and using that as a multiplier, establish the price. This idea can work, but it does not take into account the various items a retailer has to have a competitive price with. If you have items that have a lower margin because of competition, shouldn't there also be a group of items that have a larger margin to counter balance the first group?
While these strategies have, and continue to work, the retailer too often is missing the opportunity to improve his margins. When the buyer looks at a product, he silently determines what the maximum price can be for the item. IN our example, the answer will be a retail price of $5.99. The buyer will then ask the sales rep what is the cost of the item.
Our example store has an overall gross margin of 40%, and hearing from the rep that the item costs $3.00, we know we have an opportunity to make some extra money. If, however, the rep tells the buyer the cost of the item is $4.00, then he has to decide if this item is important enough to the selection that it will warrant the buyer's accepting a lower margin.
What if the sales rep were to say the item has a cost of only $1.00? Too often, this is where the retailer would say, "I will sell this item for $1.59". If you have already determined the market will allow you to charge the $5.99, shouldn't you take the extra margin to balance out some of the items that you have at a lower margin?
Perhaps you will want to go through an exercise with this item costing $1.00 in which you think about selling the item for $1.99, $2.99, or $3.99. Each time, considering the opportunity of selling an item below market value, and buying a higher quantity so you can utilize the product as a traffic builder.
What is the right answer in this scenario? The only way you will know the answer is to try the event, and then you will only have the answer in hindsight. Do remember the adage that says you can always come down in price, but you cannot go up.
If you were to change jobs today, and become a buyer for another store, surely you would want to consider changing and adding product lines in the new store. These would probably be products, line, and categories with which you have had some prior experience.
After you had been on the job for six months to a year, your employer would expect to see that you had increased the overall store margin, seasonal holdovers had decreased, and gross sales had increased. The combination of these three changes would indicate you were a buyer, and not just an order placer.
It can, and should be the same experience in the business that today you own, manage, or buy for. You can be the order placer, or you can be the buyer. The buyer, just like a master sales person, or the store which has very loyal customers, is a rare treat to watch. The difference her is that the decision to be a buyer is up to you
This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.