March 18, 2013 Business

Buyer Beware

Let me start off this column by clearly stating most vendors are honest and they want to have a good business relationship that will be a win for you and a win for them but with that being said – Have you ever been burned by a vendor? It could be software, equipment or retail products. Over the years we have worked with many clients who have been burned by their vendors that I would be willing to bet that almost every retailer reading this article can think of at least one time that it happened to them. Examples of some of these situations include:

• Software that did not have the functions you wanted and needed and that was far harder to use on a daily basis then you were promised?
• Purchase, set up and support costs that exceeded the price quote and ended up greatly inflating the overall price tag of software, hardware or other equipment?
• Promotional discounts or rebates based on purchases or product mixes that you never received or were under paid on?
• Expected marketing dollars, point of sale materials and other such campaigns to promote a product that never materialized?
• Guaranteed returns with full refund that suddenly were no longer the case?
• Sales people who made all sorts of promises but then did not live up to them?

Here are some tips on how to best protect your business and have a better relationship with your vendors and avoid any hard feelings or misunderstandings:

1. Always ask questions never just assume – Too often we are presented with a one page overview or sell sheet with all the “necessary” information and because we are so busy we just accept it. Here are some basic questions to start with:

• What are the payment terms
• What is the return policy
• What are the promotions both for the retailer and the consumer that will be offered over the next year and how exactly do they work and how will they be promoted
• Will there be any cost to me for these promotions in either hard dollars, minimum purchase of product or in higher product cost or lower margin

2. Get it in writing – It is not legally binding or enforceable unless you have it in writing – remember just because the salesperson or customer service person told you something does not guarantee it – you must have everything in writing.

3. Make sure the contract is executed by the other company and you have a signed copy in your possession – on many occasions we have seen where the retailer signed it but if it was not executed by the other party and therefore it is not valid and cannot be enforced. Once we ran into a situation where a retailer had purchased scanning and back office software and while they had executed the deal the person who signed for the software company was the salesperson and when certain expectations were not met the software company claimed they could not be held liable because the salesperson was not authorized to make certain promises nor execute the agreement.

4. Make sure any contract is written in clear English and there is an out clause for non performance that is simple to prove as much as possible with no room for misunderstanding – If something does not make sense or is not clear then ask because finding out down the road that you are on the hook because you did not realize the meaning of something in the contract is not a pleasant experience.

5. Ask for references – For some reason retailers seem to be ok getting two or three references that are located half way across the country – from my perspective if a vendor can’t give you at least ten references and in particular ones that are in your area and whom you share similarities with (same POS equipment, similar number of stores, etc) then there is an issue you don’t want to get the three people who get a free product or are friends and relatives of the vendor do you?

You should not expect to be burned all the time or even that frequently but it is something that happens every now and then if you don’t look to protect yourself it can be a very painful experience and please do not fall into the trap of believing that it is just part of doing business. Remember while the company may be a great company all it takes is one bad apple to cause you a lot of problems. Maybe a salesperson is not hitting their numbers and is fearful of losing their job or maybe a customer service person is planning on quitting soon and just does not care anymore. In the end the more questions you ask, getting everything in writing, and talking with references will help both you and the vendor have a longer and better business relationship.

 

Click here to download a pdf copy of the article.

Mark Lotstein

Mark Lotstein President, ROG Consulting Retail Optimization Group LLC mark@retailgroup.com

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