You are on page 1of 9

RESIDENT BUYING OFFICE

The mass-market's fashion facelift of the past decade has forced volume retailers to
turn to a new support system for a new kind of expertise -- the resident buying offices.
A resident buying office is one that does the buying activities for many big producers
and/or retailers in the same line of business. The buying office provides their clients
with all the markets updates like prices, new products, new technologies etc. The
buying office may also after approval from its clients initiate the procurement process
by placing the order and finally delivering the clients. The buying houses earn a
commission from the clients.
Many firms use the resident buying offices as they have resources that are better
suited for making the purchase as they have long-term relations with the sellers and
can negotiate much more with them because they have several orders from several
clients.
For Example: - Many fashion buying houses operate in India which serve big fashion
brands about the new fashion trends in the market, they also find the fabrics for them
and also do the final procurement process and they earn a commission. The big brands
get the ease by outsourcing their buying and gain from the expertise of the buffing
office.

ORGANIZATION/STRUCTURE OF A RESIDENT BUYING


OFFICE
An organization chart for a resident buying office is dependent upon the clientele it
serves. In a larger office servicing giant stores, there must be many levels of
responsibility and a wide range of buyers and staff because there must be office
coverage for all store personnel. It is easiest to say, that every member of a store has a
counterpart in the RBO and that they consult during market trips, and in the case of
higher store levels, when annual meetings are held.

The line of organization, therefore, of a typical ready-to-wear office operation is:

General Merchandise Manager


Divisional Merchandise Manager
Buyer
Assistant Buyer

1
Follow-up Assistant

In conclusion, the resident buying office is a necessary adjunct of a store, particularly


in fashion merchandising where the roots of its establishment were first planted.

CLASSIFICATION OF RESIDENT BUYING OFFICES

THE INDEPENDENT OFFICE THE STORE OWNED OFFICE

1. Salaried or fixed fee office 1. Private office

2. Merchandise broker or Commission


2. Associated office
office

3. Syndicated or chain owned office

The type of resident buying office a store uses, or can use, is a matter of the need,
size, and nature of the operation. A large store with many departments doing high
volume has different requirements from the specialty store doing a modest volume.

THE INDEPENDENT OFFICE

This is privately owned and operated and continuously seeks stores/ chains/
wholesaler-importers as clients. Some of these independent buying houses represent
large department store, whole others represent small apparel shops, specialty stores
and other types of stores, which, require an interface between them and the Indian
resources. This type of an office serves its clients with similar merchandise lines.
Since non-competing store are members of the some resident office, the merchandiser
has the opportunity to work with each member store to develop private branding and
encourage volume buying. There are two types of independent buying offices:

1. Commission or merchandise broker office: this type of independent office


receives its fee directly from the manufacturers or vendors it represents. The
commission is based on the percentage of orders placed by client stores. The
merchandise broker receives a commission from the vendor rather than from the client
store though they offer similar services to the ones offered by the salaried RBO s. The

2
fee ranges from 3-4 percent of the FOB value of exports.

A major disadvantage of this type of a buying office is that often there is a conflict of
interest between the client stores and the RBO s and extra effort is needed to ensure
continued business.

2. Salaried or fixed fee office: the salaried office is paid a fixed fee directly by the
client stores it represents. Contractual arrangements are made between the salaried
office and the client store. The typical fee ranges from 5 to 7 percent of the value of
merchandise sourced through the buying house, payable in equal monthly
installments. The relationship of the buying office to the client store is that of a
private professional offering service to a client.

THE STORE OWNED OFFICE

Also referred to, in trade parlance, as the dedicated buying office, it is owned by the
store or stores that it represents. It is organized to provide buying services for them.
Their offices generally represent very large department and specialty stores. This type
of an arrangement provides the last conflict of interest. There are three types of store-
owned office:

1. The private office: some large retail organizations maintain their own private
buying offices in major supplier markets. However, due to the large investment
involve and the lack of an opportunity to exchange information with non-competing
stores. This type of RBO doesnt have a striking presence here. The buyers in these
offices perform the some functions as those in the independent offices; in fact, some
stores maintain private offices on the premises of an independent office. This enables
them to have access to all the services of the large RBO and yet to maintain on office
for a market representative who is directly responsible to them.

2. Syndicated or chain owned office: These are divisions of a corporation that owns
a chain of department stores. Therefore, most chain stores have central buyers in the
stores as well as resident buyers in the principal supplier markets. The syndicate
office is able to maintain a dominant position and can force adoption of its

3
recommendations on stores because of common ownership. Examples of the
syndicate BOs are Macys, May & JC Penney. Once the central buyers have
determined the needs of their individual stores, they request the resident buyer to line
up the arrangements with the vendors/ resources. A major advantage of such an
affiliation is the assured source of supplier market feedback. Since the central buyers
handle large volumes of merchandise, they require fast, accurate, information on
fashion trends, market conditions, prices etc. a central buyer may ask the resident
buyer to place orders, follow up on deliveries, and handle special orders, adjustments,
claims and complaints.

3. Associated office: These are owned and operated by a group of stores. They are
also called co-operative offices, since their expenses are distributed among the
member stores. Fees are based upon the size of each store and the purchases made.
The commissionaire then follows up to make certain that the deliveries of ordered
merchandise are made in time.

Commissionaire offices are locally owned and the staffs are all usually from the local
area. Because of their contact with the supplier market, the market representatives in
these offices are able to direct their buyers to the best resources for their needs. They
develop and maintain resource relationship, assist office and store personnel on
overseas trips, set up meetings, and follow through on orders after the buyers have left
the foreign country. Many of these offices have product development and testing
facilities that help to ensure that the garments are sized and constructed to the
importing market s specifications and that, where necessary, the safety and labelll9ng
regulations are met.

IMPORTANCE OF A RESIDENT BUYING OFFICE


Among their strengths is the ability to interpret current upstairs fashions for a mass
market
Some big cities serve as central markets for many types of retail goods. Accordingly, a
number of resident buying offices have been established in these cities in order to
facilitate the purchase and inventory planning decisions of retailers located in distant
communities.

4
Regardless of who owns them, their primary function is to provide retailers with
enough information that they can make intelligent purchase decisions.
Once an order has been placed, the resident buying office monitors, delivers, and
processes adjustments for the retailer
-Coordinating and assisting retail store buyers
-Research fashion trends
-Accompany retail buyers
-Make buying selections for other member stores
-Handle re- orders and adjustments.

OFFICE FUNCTIONS AND SERVICES

MARKET COVERAGE

Market representatives (sometimes referred to as "buyers") are the "eyes and ears" of
the store buyer. They gather pertinent information, which is relayed by bulletins;
individual letters, in some cases telephone calls, and less frequently wires to all
member stores.

Some RBO bulletin types (the titles will vary with the offices)

Merchandise News Special Attention Reorder

Immediate Action Fashion Activity

SEASONAL PREVIEW CLINICS

In a seasonal preview clinic, the buyer can review the merchandise selected by the
representative to illustrate trends of the selling season. It can be held in the resident
buying office if space is available, or at a nearby hotel.

During the meeting, recommendations are made regarding such subjects as:
classification strengths, depth of purchases, stock peak dates, colors, and resources.

BUYING SERVICES

5
As previously discussed, the store buyer has the responsibility for buying
merchandise. However, there are instances when the buyer cannot be in the market to
place an order advantageously.

There are several different kinds of orders that a store buyer can instruct the resident
office representative to place.

1. Special Order a commitment for a special customer that requires a personal visit to
the manufacturer to insure required delivery.

2. Reorders an additional order to replace merchandise that sold well. The RBO
representative may be in a position to secure preferential or fast delivery, or place the
order with another manufacturer making similar goods (with store buyer permission).

3. Sample Order the placement of an order for new goods. The RBO representative
must obtain permission from the store buyer before placing a commitment for newly
developed styles in minimal quantities to include in stock to determine a rate of sale.
The permission is based on the store buyer's respect for the representative's judgment.

4. Open Order one that is given to the RBO representative with leeway. The store
buyer's instructions may include one, or a combination, of these specifics: price of
merchandise, specific colors, manufacturer, sizes, and delivery. What is detailed is
dependent upon the store's need and the relationship between store buyers and
representative.

WORKING PROCEDURE OF A BUYING HOUSE


Every organization has its own working procedure. Its varies from organization to
organization. Buying house work flow is given below:
1. First of all marketing merchandiser contact with a buyer and collect an order
by showing the garments they made before or directly ask which type of
garments buyer need.
2. Then he /she find out the suitable factory for that specified garments. The
factory must be audited by recognized organization like Oeko-tex, WRAP etc.
(Depends on Buyer).
3. Do consumption & costing and bargaining with factory for cost for the

6
specific product. Finalize cost and send it to buyer.
4. Then development merchandiser develops the product send 1st pattern for any
correction.
5. Usually buyer makes some modification on 1st pattern; so 2nd pattern is
submitted according to 1st pattern comments.
6. Then fit sample is made and QC (Quality Controller) check is it follows the
approved 2nd pattern.
7. Then the Red seal sample is sent for approval, which is also known as buying
sample. And if the red seal sample approved then the order is confirmed.
8. Then production merchandiser starts his work.
9. Production merchandiser basically follows up the total production stage. After
getting approval of red seal sample he has to book the fabric and trims.
10. He has to Follow up the fabric and trim arrived in factory in time or not. After
all approval he does production-planning meeting with factory.
11. QC has to follow the production is running with approved item, fabric and
accessories or not. He helps production merchandiser by giving all production
information.
12. QCs main task is to check all samples (red seal, gold seal, web sample etc.)
sent to buyer, and help factory people if there is any confusion with
production.
13. Fabric, trims accessories are checked in lab in buying house. Its called in-
house test like Bulk fabric hanger, shade variation in shade continuity, lab dip,
fabric quality etc.
14. Different types of inspection also done in lab before ex-factory/shipment.
15. After doing ex-factory showing packing list and some commercial activities
buying house receive their commission.

DAY-TO-DAY JOB RESPONSIBILITIES OF A MERCHANDISER


WORKING IN A BUYING AGENCY

1. There are huge task is done by a buying house which starts with meeting with
buyer and ends with collecting commission from buyer.
2. Communicating with buyers by mail (mostly) for new queries as well as

7
updates
3. Meeting with vendors and explaining new development requirement to vendor
team
4. Planning for new season sampling and production orders
5. Collecting of garment samples, trims and different types of swatches from the
vendors
6. Submission of samples to buyer through courier
7. Follow up with vendors for samples
8. Follow up with buyers for approvals and feedback
9. Giving approval on samples where buyer intervention is not required
10. Updating latest comments on particular styles or order to vendor
representative
11. Update the buyers with the order status at all stages
12. Execution of running orders (production)
13. Visit to vendor site
14. Sourcing of materials for new development
15. Preparation of material requirement
16. Selection and finalizing of vendors for the upcoming orders based on vendors
experience of making similar products
17. Preparing Purchase order
18. Costing and negotiation with trim & accessory suppliers
19. Handle quality issues for sampling as well as production
20. Preparing inspection schedule for shipment and notifying to quality
department in the buying house or third party QA.
21. Maintaining files and Accounts
22. Updating Time and Action calendar

REFERENCES

https://prezi.com/zpnmfvzenovz/resident-buying-ofiices/

https://www.scribd.com/doc/54859690/Types-of-Buying-Houses

http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/16615-
resident-buying-office.html

8
9