When buying for your store or distribution company, you’ll occasionally be offered special merchandise at special prices. To buy or not to buy—that is the question. Your manufacturer or supplier may have incorrectly estimated the market and overproduced or overstocked certain items. They need to turn their inventory into cash, so they may offer it at cost or below.
You have to make a decision about whether you can move the merchandise to your customers without a long shelf life. The price will be tempting and the sales pitch strong, but don’t let that determine your buying decision. It may be a great deal if you can offer it on a special display at a reduced price. If you advertise, can you highlight it in your ad? Will your supplier assist you in the cost of promoting the merchandise?
Above all, you must decide whether your customers and prospects want to own the merchandise. If you can’t create interest or there is no perceived need for the product, it doesn’t matter how low the price, it won’t sell well.
If at all possible, try to get a return clause that allows you to return any unsold product for a refund after 60 or 90 days. This may be hard to get because of the low price, but it never hurts to ask.
Another low-risk option for retailers is selling products on consignment. The retailer receives a supply of products for display or to include in a catalog, without paying for them upfront. There can be a prearranged time period after which the retailer pays only for the number sold and can return the goods or extend the time for the balance. If the product is a good seller, you can restock or enlarge the display area. If it’s a poor seller, return what’s left, and you owe nothing for the unsold product.
This is a good method for testing a new or unproven product with little risk. The retailer or cataloger gives up selling space and hopes to get a profitable return. The one risk you take is that if you decide to no longer sell the items, you may get a couple delayed returns. You give the refunds to keep the customers happy, but now you’re stuck with a couple of the products back. You already paid for them, so you need to resell them. But if the products were damaged when the customer received them, you should be able to get a refund from the original vendor—put that in your agreement
Always be on the lookout for and open to special offers and deals from which you can make a quick or additional profit. You never know when they will come along, so keep a little reserve available so you can take advantage of them. Sometimes the unexpected or unusual situations can really add to the bottom line. But make a decision based only on the probability of moving the product quickly.