It is all too common for retailers to choose suppliers solely based on “a look” they believe will sell well. It is true style that creates excitement on sales floors is critical, however, there are other key criteria that should be considered, and questions that should be asked of potential suppliers. Considering these will lead to higher profitability and inventory turns which is ultimately what businesses need if they want to outperform their competition.
- The Right Look. Will the look improve your selection and increase excitement on your floor, given the likely fact that existing product may need to be removed?
- Quality. Does it meet your standards for where you wish to place the product in your line-up?
- Saleability. Without looking at cost, would the product fetch a price point within your line-up that fills a need?
- Raw Cost. Does the cost before freight make sense based on what you believe you can sell it for?
- Landed Cost and Freight. Does the cost after freight make sense for your operation?
- Online pricing. What is the range and degree to which the product is priced by others online?
- Required investment. What are the requirements for the initial investment in terms of floor space, number of SKUs and dollars.
- Reorder quantity. What are the options with reorders? Are there discounts or surcharges depending on order size?
—-“Even if you don’t do the math and just think about the list of selection criteria you are likely to make better choices.”
These 8 main supplier selection criteria and related questions should be weighted depending on their importance to the individual retail business model. First, choose which of these are more and less important by assigning a percentage weight. When all the criteria are added, the total should be 100 percent .
Once this is accomplished, you can rank suppliers under consideration on each of your chosen criteria on a scale of one to five, with one being poor and five being excellent.