How To Negotiate With Manufacturers and Distributors

When you run a home-based business centered around eBay or another online auction site, one of the most important things you can do to ensure your business’ success is to secure a consistent source of quality products.  Finding a reliable manufacturer or distributor to work with is challenging enough, but once you do that you need to actually convince them to enter into a partnership with you and to give you a great price on the products that you want to sell.  That’s where good negotiation skills come in.

Negotiation tactics are truly some of the hardest to master, and that is especially true when negotiating your terms with a manufacturer or distributor.  However, I’ve drawn from my own years of experience and summarized the art of negotiation down to two main points for you.  Before you enter into a negotiation, be prepared to:

1. Know everything there is to know about your product, your market, your partner, etc.  The more you know, the less likely it is that you’ll make a wrong decision or agree to a poor deal.
2. Tell your partner what’s in it for them when it comes to doing business with you.  This benefit may not be huge profits, but there is some stake in entering into a partnership with you, so make sure it is known.

Preparation is key to coming out on the right side of a business negotiation, and you should give yourself plenty of time to study before your meeting takes place.  You must know what to ask your distributor and when to ask it in order to achieve the best results.

As you can imagine, these types of companies are never going to give you the low prices that you want right off the bat, so you’re going to have to do a bit of pushing and prodding before they are willing to take their prices down to where you need them to be in order to make the best profits.

Don’t be afraid to be aggressive or to ask the uncomfortable questions, either.  Sometimes you need to catch your opponent off guard and surprise them a bit in order to get them to a place where they simply can’t tell you no.  While trying to process your requests and questions, it’s likely that your distributor will lose their ground, and, therefore, become more apt to ease up on their terms and prices.

So, before you get into a negotiation, be sure that you know more than the average distributor expects you to know about their business.  Research past deals that they have given to other businesses like yours and explain that you’d like to achieve the same terms and prices, if not better.  Your knowledge of these situations in and of itself will be enough to take your opponent by surprise, if even for just a few moments.

Study your distributor’s catalog, pricing structures, policies, and past history.  Perhaps you’ll discover that their sales have gone down in the last year or so, which means that the distributor will be more willing to negotiate a deal in order to secure your business.  You could mention that you know this throughout the course of your conversation, in hopes that the distributor will give you what you want in order to keep you on board, despite their falling sales.

But don’t leave your distributor hanging in terms of what you want; in fact, be sure to spell this out in nothing less than the clearest terms.  If you want a smaller order, say so, instead of just sighing when the distributor first quotes you.  Negotiating is about being honest and direct about your needs, and your distributor will appreciate it if you get straight to the point.

However, be sure that you do not act condescendingly towards your prospective distributor.  Be polite, and ask for what you want, rather than simply telling your distributor what to do for you.  Recognize that this would be cutting you a deal, and be appreciative of that—but don’t sacrifice holding your ground for the sake of manners.

Be confident, but not cocky.  Be firm, but not overbearing.  Just be honest with your potential partner, and allow them to feel like they’re doing you a big favor that you will return by committing to doing business with them for the long haul.  If you can manage these tactics, you will undoubtedly master the art of negotiation with your distributor.