How are you my friend? I hope you had a great day. I know sourcing could be challenging. Sometimes it adds so much stress to us.
If you're feeling a tiny bit stressed, just make sure you reassure yourself you are strong and powerful. Today I'm going to add more power to you. I'm going to share some tips to help you prepare the negotiation. After this video, I can guarantee you, you are going to feel a lot more organized, a lot more confident and prepared going into the negotiation.
So let's get started. When you're ready to negotiate, a lot of times we don't know how to ask the questions. Is it simple as, can you just give me a better price?
I need a better price. No, it's not that simple. We have to know how to ask questions. Layer.
Buy layer, we're going to continue to drill the question. A lot of times it is during the drilling process we find and discover the opportunities to ask for a better price. So the tip number one is your buying power.
You need to know how much power your currency worth against the Chinese yuan. You need to pull out the currency chart. Understand the trend. If the trend is going up, up the currency is in favor to you you need to make sure you ask this question by the way miss what is change rate you are using do you know that the currency is appreciating against the Chinese yuan by the time I make my deposit you're going to get more Chinese yuan that is this is a great question to ask if the currency is going downhill against you you know what your position is so don't ask this question. Tip number two, pull off at least two or three comparable products of 1688 website, the Chinese version of Alibaba.
You're just going to have a screenshot of the product image and the Chinese RMB yuan and then show it to your supplier. I know you're using this exchange rate remember you talk to her what exchange rate you are using if you convert the chinese money into usd or your currency if it's still cheaper then you need to use it as a leverage you can tell her look this item is selling on 1688 for this price even if i have to pay the commission to my sourcing agent i would still be better off buying from this factory on 1688 would you be able to match this price or at least lower the price because we really wanted to do business with you she might tell you something about their item is going to be different from the items you saw on 1688 you can listen but she know that you have done your homework and you're holding your position strong and firm until she make some concession If the supplier doesn't buy your 1688 pictures at all and they have a legitimate reason to explain why their item is different, now you have to use the tip number three to continue to drill. And the tip number three is the cost drivers. You need to understand your cost driver for your product. Your supplier need to explain to you the cost drivers.
So you're going to ask her, how me understand? What material you use for this product? Help me understand.
How do you produce this product? How do you produce this product? Help me understand it. Describe it.
What machine do you use and the process you use? So you are basically asking her to educate you how they make this product. So you can discover if they are a very good factory, if they have any leverage on the material. if their labor cost is very high you will be educated if there's an opportunity to negotiate after you have used the tip number one the currency tip number two one six eight eight comparison and the tip number three using the five m factors to drill your cost driver factors out if you still need help let me share with you the tip number four which is to use your suppliers competitors data to do that you need to put together an excel sheet prior to your conversation with your supplier and you're gonna show her during the call look i have done the analysis you have two companies two competitors of yours that are lower than your price and one that is higher than your price we are most interested in doing business with you are you sure You cannot lower your price to move us forward because we are ready if you are ready. Well, when you are preparing your Excel sheet, do you actually have two other suppliers that are lower than the one that you're talking?
Maybe not, but that is the number you can plug in into your Excel, right? Be sure to do the Excel, not just by verbal conversation because you need to show her that... excel sheet because it's much more convincing it shows that you have the data