Using Expert Suppliers to Increase Buying Leverage for Fragmented Niche Products

Open Market Closed Sale - Specialist Sector Buying Advice

One Stop Shops in Specialised Market Sectors can bring tangible administration and supply cost savings by reducing the Buyer’s need to:

  • Find Varied Specialist Suppliers
  • Set-up and Monitor Multiple Purchasing Accounts
  • Pay Multiple Delivery Charges
  • Maintain Multiple Contact Records

Strategic Buying - Price Versus Cost

Price and cost may be related yet are distinctly different. Unfortunately, they are often used in business without distinction and this causes confusion when assessing suppliers leading to wrong decisions based on price-tag and 'false economy'.

Price is just one of the elements that makes up the total cost.

There are so many other aspects worthy of consideration to decide if one supplier is truly better than another or whether hidden administration costs far outweigh initial apparent price savings:-

  • Actual Price inc Delivery
  • Supplier Value
    • Ease of Maintenance
    • Packaging Disposal
    • Environmental Impact
    • Social Responsibility
  • Transaction Cost
    • In-House Acquisition Costs
    • Effort Needed to Find Each Supplier
    • Ease of Ordering
    • Payment Terms
    • Communication/Training - Understanding How To Make Supplier Interactions Run Smoothly

The Transaction Cost is tangible and is the actual cost of your organization doing business with a particular supplier.

Transaction costs are easily overlooked when the price-tag is the primary consideration.
A classic example is the cost of photo-copy paper -
You currently buy photo-copy paper from one of the large stationery suppliers offering free delivery and the price for sake of argument is £2.50 per ream.
A visit to the local hypermarket shows you can buy it for £1.99 per ream; an apparent saving of 51 pence per ream.

Beware of Hidden Costs

In reality, someone has to make the journey to collect the paper, deliver it, fill out a requisition form and maintain stock levels.

Do you have to pay mileage for the collection journey? What about time - Will someone collect the paper in their own time? When you need more; is it easy to repeat buy?

Supplier Convenience

Niche Product Suppliers are often able to offer Corporate Buyers Good Price Savings AND reduce the hidden costs of doing business to providee a true Win-Win situation.

Niche specialists develop expert market knowledge within their chosen business area of expertise, having good business relationships and the buying power to aquire great deals with specialist manufacturers.

They still operate at a profit yet pass on their bulk-buy savings to Business Accounts wanting to buy relatively small quantities of a range of products that would be impossible for one manufacturer to offer.

Leveraging Cost Savings by Switching Buying To Niche Market Specialists

By opening a business account with a Niche Product Specialist it is possible to make significant cost savings.
The human factor cannot be ignored and you will find that by asking for their advice you will tap-into an area of expert knowledge and manufacturer contacts that can help you find and obtain products that may not normally available or difficult to find.

Niche Specialists will also be in a position to examine your needs-wants-desires shopping list and use their time to find the products you want or need with the features you desire at a price you can afford and a cost saving you could never match.

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Sony Ericsson W880i

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