Vendors: What Are They Good For?
Before you break into song and say “absolutely nothing,” perhaps vendors are good for more than you are getting from them. Sure, we know vendors are important for providing us with needed supplies, quality mouldings, and new items that inspire sales. But they can be a very important relationship for a healthy business. They can provide much more than the basics that most of us settle for.
Years ago, I owned a business that was serviced by over 250 vendors. Most were very average, providing above 85% fill rates on orders, shipping within a reasonable time period and providing some help with damaged merchandise. Some vendors were terrible, notorious for out-of stock items, long delays in shipping and full of excuses about defective merchandise.
Then there were the exceptional vendors. Out of the total of 250 I’m talking about maybe five that stood out from the others. How? First they excelled at the basics- excellent in stock position, fast and accurate shipping, and full support for their product.
Framers need as much help as possible, and you can get a lot of help from a great vendor.
They went way beyond these important cornerstones of business to other levels. First and most importantly, they communicated very well. It was almost as if they anticipated our needs and questions, providing the answers before we asked. Next, they physically serviced their accounts, helping with displays, asking questions and solving problems on a regular basis. Finally, they educated our staff about their product and trained us on how to sell it properly.
This second level of personalized service often led to huge growth in sales with these companies because they made us experts in growing relationships with our customers and fully supported our efforts to sell their product. I learned that some of the other store owners buying from these companies didn’t get as much help from them as we did and as a result didn’t have the sales growth we experienced. Talking to these owners, I realized why this was happening. These store owners didn’t get the same service levels and sales results because they didn’t have the same commitment to the relationship that the other stores did. I learned that even though a vendor may have the capability of really helping a company, it didn’t happen if the company didn’t cultivate that help. It is a two way street, just like any other relationship, it only grows and becomes valuable if BOTH parties are committed.
How can we apply this to the picture framing industry? How can you develop relationships with your vendors that grow business?
First, stop dealing with so many vendors, especially the bad ones. I am constantly amazed by the number of moulding suppliers that framers place on their walls. Doing so doesn’t put you in the position to build strong relationships with vendors. Why? Offering products from many suppliers makes it impossible to do a lot of business with any one supplier.
I’ve heard all the arguments: “I want my shop to have unique moulding choices,” “I need a huge selection to be creative,” and so on. The real truth is that you are only selling 20% of what is on your wall 80% of the time. Some of those “must have” vendors haven’t sold a piece of moulding to you since 2004.
Our galleries have about 50 feet of moulding samples that run in 7 foot rows. We support five vendors. One vendor receives 70% of all our wall space. When designers leave other local framers to work at Framing Concepts they often comment that they were used to more choices. After 3 months with our clients, I never hear that comment again.
Why do we narrow our vendor selection so much? It allows us to build better relationships. We become a bigger fish in the vendor’s pond instead of being a little fish in many small ponds. What advantages can you get by going so far as to give one vendor 70% of your wall space? First, be sure that vendor is worth it. Be sure they have the ability and the desire to go above and beyond to help you grow your business. If you believe one of your vendors has the company culture to provide this, think about making a commitment to them. Become a bigger fish in their pond and it could help you in many ways.
If you decide to do this, the first step is to meet with that company and discuss deepening the relationship. It’s amazing what you can bargain for, especially in economic times like this. Try committing a large portion of your business in exchange for things like additional discounts, more favorable payment schedules, increased deliveries, more service and training, and maybe even some exclusivity in your local market to keep this relationship unique. Before you sit down to negotiate pick 2 or 3 improvements you need the most and focus on getting those. Of course get the agreement in writing. Remember it is absolutely critical that you keep your commitment. This is the key to building the relationship.
Building stronger relationships with great companies pays off in many ways. You’ll get to know many people in the company, including knowing top executives. This is invaluable for knowing who to contact when you really need something. These companies might even come to rely on you for testing product and services that they are experimenting, giving you access to the latest products. Keep a regular flow of communication open with your contacts. Providing consistent feedback and gallery information increases your value in the relationship.
Another advantage of narrowing suppliers is reducing the cost of carrying inventory. A good example would be mat board. If you carry more than one or two suppliers of mat board you are duplicating stock and investing in way too much inventory. Other than certain categories of specialty boards, the basic lines of mat board are virtually the same from one company to another. Pick one and get rid of the samples from the other suppliers. Every dollar invested in something that doesn’t sell makes you less profitable.
Reducing suppliers means shipping costs of materials are lowered or perhaps even eliminated. With the rising costs of transportation, this can have a very favorable impact on your profit.
In economic times like this we all need as much help as possible. You can get a lot of help from a great vendor. Find one, commit to them and negotiate what you need to become more profitable. Then do everything possible to make yourself more valuable to the relationship. Just like in real life, it pays off far beyond what you can imagine.