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Merchandise Buying

Merchandise Buying is a four step process. 1. Identifying the Sources of Supply. 2. Contracting the sources of Supply. 3. Evaluating the Sources of Supply. 4. Negotiating with the sources of Supply.

Identifying the Sources of Supply 1.Global Sourcing .Domestic Sourcing 2.

Low cost and good quality are also factors which could affect this decision. .Identifying the Sources of Supply The prime reasons for looking an International Sourcing could be the uniqueness of the merchandise. or the unavailability of the merchandise in the domestic market.

Costs and Managerial Issues Associated with Global Sourcing 1. Foreign Trade Zones 5. Transportation Costs . Tariffs 4. Foreign Currency Fluctuations 3. Country of Origin 2.

Evaluating Sources of Supply Following things should be considered: • The target market for whom the merchandise is being purchased. • The merchandise and prices offered. • The image of the retail organization and the fit between the product and the image of the retail organization. • Terms and services offered by the vendor. • The vendor’s reputation and reliability. .

. • Participation in store promotions. • Adherence to quality procedures. Factors to be considered while selecting a vendor: • Ability to meet the delivery schedules.Evaluating Sources of Supply Vendor Selection: The merchandise offered by the vendor should be compatible with the needs and wants of the customer. • Return or exchange privileges. • Willingness to use the relevant technology. • Cooperative advertising.

• Chain Discounts: this is the traditional manner of discounting.Evaluating Sources of Supply Types of discounts that could be available to the buyer: • Trade Discounts: these are reductions in the manufacturers’ suggested retail price. where a number of different discounts are taken sequentially. . from the suggested retail price. granted to wholesalers or retailers. Retailers earn quantity discounts by purchasing certain quantities over a specified period of time. • Quantity Discounts: These can be cumulative and non cumulative.

.Evaluating Sources of Supply Types of discounts that could be available to the buyer: 4. prior to the end of the discount period. Seasonal Discount: this is an additional discount offered as an incentive to retailers to order merchandise in advance of the normal buying season. Cash Discount: it is the reduction in the invoice cost for paying the invoice. 5.

Open Communication 3. Mutual Trust. the buyer needs to build on: 1. 2. Credible Commitments. .Establishing Relationships with Vendors To maintain strategic partnerships with vendors. Common Goals 4.

The total returns to the vendor. The total orders placed on the vendor in a year. The initial markup on the products.Analyzing Vendor Performance A factual evaluation of the vendor’s performance can be concluded by listing the following: 1. Participation of the vendor in various schemes and promotions. 3. if any. 4. The markdown. the quality of the merchandise. . 2. 5.

8.Analyzing Vendor Performance 6. . The sales performance of the merchandise. Transportation Expenses. if borne by the Retailer. Cash Discounts offered by the vendor. 7.