Home News Five Key Negotiating Tactics
2012/12/7 10:10:16
Five Key Negotiating Tactics

To help Alibaba.com users improve their international trading skills, we asked sourcing agent Jasmine Lin, owner of Sellwell Trading Co. in Shantou, China, to outline some of the basic communication tactics she has come to view as essential in her eight years representing overseas buyers on the mainland. Here is her report.

Many buyers have experienced the headaches, the delays or the sheer frustration of discussing pricing and commercial terms with suppliers. While this can be viewed as just a normal phase in developing a relationship in order to get to that elusive equilibrium called "doing a deal," there are some fundamental things you can think about when trying to smooth the ride to agreement:

1) Inform the supplier in detail what you require from them.

From the first inquiry to the supplier, you should introduce your company’s business so they will understand what products you deal in and how they can help you. You have to also inform them of your purchasing plan in detail. For example, you should inform them of the models you like, as well as the quantity required for each model you will ordering. Do not forget to prepare all the questions you want to ask them (and record the answers) concerning sizes, materials, packaging, safety certificates, etc. If you simply ask for a quotation sheet for all models, or ask them to send a catalogue, they will not treat you as a potential buyer. Take your order seriously, and hopefully they will as well--from day one.

2) Select the proper suppliers from among all the quotations.

What do I mean by “proper?" A proper supplier will:

•  Reply within a reasonable period of time
•  Introduce their company
•  Respond to all your questions clearly
•  Be professional and helpful

The supplier should sound sincere and serious, not only in the first e-mail, but also maintain a good attitude/manner throughout the negotiation process.

If a supplier only replies with one sentence (e.g. “yes, we can do that product for you”), or sounds impolite, impatient or passive, I don’t think this can lead to a good cooperative relationship. Remember, attitude is key.

3) Discuss the price and other terms with your suppliers honestly and sincerely.
When you accept the supplier’s pricing and would like to proceed further, you should discuss your trade terms. Some ideas for negotiating the first order:

•  See if the supplier will accept placing a 20% deposit before production and the 80% balance before shipment instead of the normal 30% and 70%.
•  Start with a small order quantity, and see if the supplier can be helpful or not. If a supplier is small or in a busy season, and if they think you are serious and sincere, they won’t insist on their MOQ (Minimum Order Quantity)

Sincere and frank communication can lead to a successful and smooth business relationship.

4) Ask for samples to further evaluate the supplier.

When pricing and other trade terms have been agreed upon by both sides, ask your supplier for samples or to make samples based on your designs. If you receive samples which are unsatisfactory, discuss with your supplier and ask them if they can improve on them and make new samples.

The supplier must offer the right samples before you place an order, as you need to evaluate their products’ quality, as well as their ability to be open-minded about criticism and their desire to improve their products in order to do business.

5) Finalize terms clearly with the supplier and formulate the documentation.

If you would like to proceed with placing an order, you should discuss the details of the sales contract. For example, you can inform your suppliers of your expectations regarding the quality standard of the mass production run. You should also ask a third-party inspection company to check the products before paying the balance. You can also discuss the penalty terms with the supplier, determining, for example, how long delivery can be delayed without penalty if something goes awry with the manufacturing of the order.

By thoroughly discussing the terms, expectations and contingencies prior to paying the deposit and the commencement of production, you can greatly reduce the risk that mistakes will emerge after it is too late or too expensive to fix them.

Jasmine Lin is the owner of Sellwell Trading Co.,Ltd, which specializes in business trip assistance, sourcing, order supervision, coordination, warehousing, pre-inspection, consolidation, shipping assistance and project management. Learn more at www.jasmineservice.org.