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Negotiation Process

The negotiation process involves the mutual discussion


and agreement between the retail buyer and
merchandise resources so as to the terms of various
business transaction.
Negotiation Process
A variety of activities involved in this process :
Buying Authority
Security Discounts and Allowance
Arranging Transportation and Distributions
Establishing the terms of sale
Seeking Price Guarantee

Buying Authority
When buyer is employed by the retail store , he or she
is given the authority to act on behalf of that store as a
duly authorized agent and will represent the firm in
dealing with merchandise resources.
Securing Discounts and Allowance
A discount or allowance may be defined as any
reduction in the lost or quoted price given to the
retailer by merchandise resource. There are four kinds
of discounts and allowances available to the retail
buyer :-
1. Quantity Discount
2. Seasonal Discount
3. Cash Discount
Arranging Transportation and
Distribution
Arranging transportation and distribution is a third
important negotiating activity.
Cost
Carriage
Insurance
Loading and unloading
Custom clearance
Duty.

Establishing the terms of sale
The terms of sale are often offered to the retail buyer in
the form of vendor service.
Basically it involved when the payment will be made
EOM ( End of the month)
ROG ( Receipt of goods)
COD ( Cash on delivery)
Cash Discount ( On prompt Payment )
Consignment ( Unsold goods are returned back)

Seeking Price Guarantee
Price guarantee is fairly common for seasonal
merchandise , vendor is eager to encourage the buyer
to place early orders or the vendors may use the price
guarantee along with the quantity discount to
encourage buyers to place large orders.
Causes of friction between vendor
and Buyers
Return and Adjustments
Cancellation
Shipping Problems
Special orders and Minimum orders
Selling competitors and Exclusives
Fashion Piracy
Advancing seasons
Failure to follow instruction.
Return and adjustment
Unsold garments.
Incorrect Forecasting.
Quality concern

Cancellation
A cancellation policy should be agreed on between
vendors and buyer : Following is the list of conditions
under which the order can be cancelled
1. Final ship cancel date is passed.
2. Major Quality concerns
3. When the vendor or manufacturer receives a
cancellation notice from the buyer.
4. Buyer and vendor mutually agreed upon the
cancellation
Shipping Problems
Early shipment.
Late shipment.
Split shipment.
Late Shipment

15 oct
ETA 22
nd

NoV
10 nov
ETA 20
NOV
By Sea Mode at 6 FOB $
By AIR mode CFR or CNF
Late Shipment
In the previous case buyer cant change the Incoterms
to CIF
At the same vendor can ask the sea freight to be
credited into his account.
Split Shipments

60% Shipment on
time
40% delayed by 1
month due to
fabric rejection
Buyer own decision to take the
complete shipment together
with discount or change in
Incoterms or to take the split
shipment
Special Orders and Minimum
orders
Early Delivery
Small Quantity
Extra Charges
Selling Competitors and Exclusives
Vendor selling same line to competitors buyers
Exclusive agreements may be arranged between
vendors and buyers. The purpose of exclusive
agreement is primarily to protect the buyers from
having the same goods offered for sale to his her
competition.
Fashion Piracy
Buyers and vendors must establish policies prohibiting
fashion piracy at both ends.
Substitutions
Any kind of substitution used by vendors in terms of
the fabric/ artwork or trim
Substitutions

Label from nominated
Supplier
Label from Local Supplier
( Same quality )
0.175$
0.05$
Subsitution
Any kind of substitution need to be approved from
buyer before using the same in bulk shipment.
Failure to Follow Instructions
Failure to follow instruction will add to the cost and
buyer will charge back to the vendor the added cost
caused by failure to follow the instruction provided.
Failure to Follow Instructions

Attaching Spare button at
Inside placket In India
Attaching Spare button at
Inside placket In America
0.1 $/shirt
0.01 $/shirt
Establishing Good Vendor- Buyer
Relations
The vendor and buyer must remember that each other
is responsible for actively promoting and protecting a
companys image. Problems and complaints that
reflect on the image of the vendors or buyers
company will eventually prove costly and lead to a
serious loss of business. It is important to both parties
that mutual confidence and respect become more
evident than distrust or disrespect.
Establishing Good Vendor- Buyer
Relations
Be as loyal to a good vendor as the vendor is expected
to be to the buyer
Never discontinues business without sufficient cause
and only when mutual discussion and criticism have
failed to produce the desired result.
Be fair and honest when considering one anothers
offering.
Make all commitments definite and precise

Establishing Good Vendor- Buyer
Relations
Do not partake in commercial bribery , that is accept
or offer gifts, rewards and commissions.
Continuously improve trade relations through
education, self regulation and government regulation.
Represent the best interest of the company at all times
Establishing Good Vendor- Buyer
Relations
Do not take unfair advantage of one another.
Become thoroughly knowledgeable of the
merchandise line you represent.
Work hard to establish and maintain a good working
relationship.
Reference
Apparel Merchandising by Rosenau and Wilson 2
nd

Edition
Merchandising Buying by M. S. Bohlinger 5
th
Edition
Thank you
Saurabh Chaturvedi