Today Nils will answer Anton’s question from EasyPeasySource.com/ask. If you also have a question, go to that site and submit a comment or voice message.
Anton asks about a supplier who wants to raise the price and refuses to work with him any further until he complies. Is this normal, and what should he do?
(01:00) If you are in China, invite the boss or salespeople to a restaurant for dinner and secretly pay the bill. He will become angry with you and want to make up for it to continue with the original terms. However, this is risky.
(01:40) If you’re not in China, you have two options: one safe, one risky. Safe option: you could accept the new terms and look for a new supplier for your next order. You’re paying more money this time around, but this buys you time. You’ll be starting from scratch but without the higher prices or new terms.
(02:15) Every time you place a new order, you have the option to negotiate. If your supplier doesn’t want to work with you unless you accept new terms, there’s very little path to negotiation.
Get a Chinese local sourcing agent and find episode 1 where we discuss this. Have your agent reach out to the factory under his name to get a quotation. Usually, their price is cheaper than yours, and you can take that new quotation to the factory and ask how they can increase your prices when they are offering it cheaper to others. This is risky and can make your supplier even angrier, and not want to work with you at all.
(03:20) Go both ways. First, use the safe way. Agree for now for more money, but look for a new supplier. That way you don’t run out of inventory and your sales don’t stop. Look for a new supplier, get an agent, and develop your product again, so you now have a backup.
Once this is done and it’s time to order again, you have a different viewpoint going into negotiations. Get the quote for your first supplier and confront them. Tell them they’re selling the same product for a cheaper price to others. If they choose to stop working with you, that’s okay because you have a backup supplier.
(04:20) They might feel guilty and offer you the same lower price they offered your agent. They also might justify why they can’t give you as much of a discount, but you might get a better price. It’s hard and painful but that’s what you should do. For the long term, Nils recommends that anyone sourcing from China has a backup supplier to avoid these cases.
If you have a sourcing question, go to EasyPeasySourcing.com/ask to send a text-based or voice message. You can also go below this episode and post a comment. In the next episode, we’ll talk about how you can save a lot of money on sample shipments. To get a reminder, signup to our email list and we’ll send you a reminder message.
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