Retailers vs. Vendors

1. Retailers vs. Vendors Torrey Jacobson

2. Terms of sale in B2B transactions are usually more flexible than with consumer purchases • Most retailers will bargain with vendors for the lowest price possible • This often includes one or several discounts

3. Discounts can be granted for a variety of conditions • Examples include quantity and prompt payment

4. Normally, bargaining for (and even demanding) discounts is an accepted practice • However, some retailers seem to be abusing the practice • This often takes place in the clothing industry

5. In this sector, retailers are usually large chain stores • These chains tend to have much more power in the channel than their suppliers • Some of these companies are accused of unethically (and illegally?) taking discounts beyond those agreed upon

6. Stores use a wide range of criteria for “deductions”, including poor sales of the item in question • In some cases the deductions come to more than 50% of the sale price • Is this hard bargaining or theft?

7. Historically, vendors have been reluctant to take action against important customers • Most disputes have been settled out of court, with the stipulation that vendors cannot discuss the case • Several of these cases are currently being investigated by the SEC and US Attorney’s office • Dillard and Saks are among the defendants

8. What will be the outcome of these cases? • How will it affect industry procurement processes?

9. Source • http://www.nytimes.com