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Retail Business Issue

Old 04-05-2012, 11:01 AM
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I have a small retail business that deals with several suppliers. One of my main suppliers has decided to do business with another shop only 1 1/2 blocks away from my location. This is affecting my business as they are selling the same goods as me. I am upset about this situation and think that there should be some sort of protection from this sort of thing but I am learning to live with it. Today, I asked my supplier to waive the delivery fuel fee for the times they deliver to both stores. She said I was being irrational and walked out.

I receive shipments from this supplier every other week, and spend on average about 80k a year with them.
This new account orders about every 6 weeks and is projected to spend about $3,500 this year.

Does anyone else think I'm being irrational? I am trying to let it be known that I am not happy about this threat to my livelihood. Does anyone have any advice about how I should proceed.
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Old 04-05-2012, 11:12 AM
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As a business they're clearly trying to make as much money as possible. But extra 3500 is peanuts compared to your 80k and shouldn't ruin their relationship with you. You'd think they'd protect their bigger client if he (you) made it clear that this current situation is damaging. How much can you pressure them to drop this other guy? Guess it comes down to your clout with them and if you're willing to put their hand to the fire..

Lots of markets have exclusivity contracts, don't know if you're in one though.
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Old 04-05-2012, 11:16 AM
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It depends on what type of goods you are selling, in my opinion.

What is the supplier market like? I would certainly be looking into this if you are not familiar with it already.
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Old 04-05-2012, 11:16 AM
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I can maybe source about 50% of my current buying into my other suppliers who would price match, do you think that would get their attention?
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Old 04-05-2012, 11:24 AM
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Originally Posted by I Love Beer View Post
I can maybe source about 50% of my current buying into my other suppliers who would price match, do you think that would get their attention?
It would certainly get my attention if I was the supplier.

Unless there is something I don't know about this little love triangle, I see it as a supplier loosing $40k gross sales and gaining $3,500.

What kind of merchandise is this?
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Old 04-05-2012, 11:26 AM
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I should mention, that I do not have any sort of exclusivity with any of my suppliers.
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Old 04-05-2012, 11:52 AM
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As a former business owner I have found myself in this same scenario. When you started using this vendor did they pitch it as an exclusive dealer only brand? As much as it sucks it's a fact of life. You almost cannot escape it unless you are buying containers of custom branded product in bulk. One way to overcome would be to differentiate yourself with first class service before and after the sale or something else the competitor is not offering. Also reward programs go a long way. And at only $3500.00 annual how much market could they really be taking?
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Old 04-05-2012, 11:54 AM
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If you can get the same supplies from another supplier at a competitive price or better go for it. The supplier has shown you little loyalty so I think it's time to move on. My .o2 anyway
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Old 04-05-2012, 11:59 AM
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I Love Beer ...Can we assume the product is BEER? I am calculating about 50 plus cases a week - not bad - 10 times more than I drink
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Old 04-05-2012, 12:03 PM
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Originally Posted by LI Sound Grunt View Post
I Love Beer ...Can we assume the product is BEER? I am calculating about 50 plus cases a week - not bad - 10 times more than I drink
Haha, no its dog food. The hardware store down the street does his market research by visiting successful area businesses and stealing their lines. Just want to protect myself.
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Old 04-05-2012, 12:08 PM
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Drop your prices under his.
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Old 04-05-2012, 12:32 PM
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A lot of your customers will be loyal to the brand of food they are giving their dog. You may lose many of them if you switch brands.

Good Luck,
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Old 04-05-2012, 01:00 PM
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Put yourself in your suppliers shoes, isn't he entitled to get new accounts and make more money also? Has he done a good job in servicing you up until this point? If so I would not complain. I like the idea about under pricing your competitor.
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Old 04-05-2012, 01:33 PM
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Fuel surchages are BS to begin with. WhyTF should I subsidize your business transportation costs? I'd rather see it built into the cost of the product quite frankly. When vendors try to do that to me it's usually $ 12-15.00 fee. How much are they charging you...full freight of transportation on common carrier?? I would give it to them straight: you can buy the same product elsewhere w/o the BS and they WILL lose as much as 50% of your business.
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Old 04-05-2012, 01:37 PM
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Unfortunately unless you signed some sort of contract with the supplier that says they can't sell to competitors within a certain distance of your store then they aren't doing anything unethical. In business it's all about making money. The sales rep for the supplier is making commission on that new retail distributor. Certainly not as much as they make from you but in this economy nobody is going to turn away money even if it's just an extra few hundred a year.

When I was young I worked for a small local pet shop. (the boss/owner is now my best friend) At the time this was the only pet shop within 15 miles so the store did really well. Before we knew it there was a Pet Supermarket a mile one way down the road and a Pet Smart a mile in the other direction. Long story short these stores put our little pet shop out of business within a few years.

We kept the doors open by specializing in what we knew best. Salt water aquariums. So the pet shop became an aquarium shop. We downsized to a much smaller retail location and got rid of all the birds, reptiles and pet supplies. We never sold cats or dogs, just the food and supplies.

The vendor that sold us the pet supplies and foods is the same guy that stocked the Pet Supermarket and Pet Smart that put us nearly out of business.
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Old 04-05-2012, 01:56 PM
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Originally Posted by NJFISH View Post
Fuel surchages are BS to begin with. WhyTF should I subsidize your business transportation costs? I'd rather see it built into the cost of the product quite frankly. When vendors try to do that to me it's usually $ 12-15.00 fee. How much are they charging you...full freight of transportation on common carrier?? I would give it to them straight: you can buy the same product elsewhere w/o the BS and they WILL lose as much as 50% of your business.
I agree, she stormed out over a request to waive a $17 fee every 6 weeks!!!
WTF??
The hardware store owes back rent and is only doing this because he is desperate, unfortunately I watched him put a well established gift shop out of business due to grabbing straws. I just hope his deep pockets are getting lighter and I can hold out. I tried telling this to my supplier, I am an account that is growing 20% per year, why be a whore? just help me be successful and we both can continue to benefit. (btw, I didn't call her a whore)
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Old 04-05-2012, 02:14 PM
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can you negotiate a better price by buying in bulk due to your volume as compared to the newcomer, and discount the product to undercut him and us it as a loss leader? develop rewards programs to your customers etc But 10 get 1 free or something like that to keep them loyal.

if not look to potential new suppliers, unless that product is just that good
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Old 04-05-2012, 02:26 PM
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Originally Posted by Spooled View Post
can you negotiate a better price by buying in bulk due to your volume as compared to the newcomer, and discount the product to undercut him and us it as a loss leader? develop rewards programs to your customers etc But 10 get 1 free or something like that to keep them loyal.

if not look to potential new suppliers, unless that product is just that good
Yes I can do that, but I don't want him to respond by bringing in more brands, I would rather punish the distributor. So far he only sells one brand that I sell and its not a very good one.
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Old 04-05-2012, 03:05 PM
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Either compete on price or compete on service. Most people only care about price -- so there is your answer. Good luck if you think you'll "punish" the supplier -- you can try going up the food chain, but I doubt anyone will care.
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Old 04-05-2012, 03:07 PM
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P.S. The fuel surcharge is BS. I get it too from our packaging company. It's $5 - it only serves to piss me off. But if they make 10,000 a year, they've found an extra $50k a year. Probably pays for a driver.
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