Negotiate A Vendor Agreement

Even after a product review, there’s still a chance products won’t pan out with customers. Before investing in new products, distributors must ensure that they are aligning themselves with vendors who can offer an insurance policy that states if a particular product doesn’t sell, it can be returned at little or no cost.

“With new stock items, you really should negotiate a guaranteed sell-through and a guaranteed buyback from the manufacturer,” says Bader. “If they’re not willing to give you a guaranteed no-penalty restock on the product, maybe you shouldn’t invest.”

Without establishing prior agreements with vendors, distributors will find it difficult to return dead items.

Wholesalers are a great resource for purchasing specialty items or products requested by only a handful of customers. Manufacturers often have high order minimums and, with only a few customers needing it, the rest turns to dead stock. Wholesalers allow distributors to keep their inventory levels down by buying a few weeks’ worth of inventory. That means distributors also don’t have to carry as many SKUs in their warehouses.

Once a new item is brought in, Schreibfeder recommends distributors provide their sales staff with a weekly report on new stock products that help show their progress. These reports should include information such as: the item and description, sales projections, actual sales, actual profits, current quantity available, minimum/maximum parameters, value of available quantity and the person requesting that the product be stocked. If a product is underperforming, the distributor can act quickly to correct their purchasing decision.