Negotiating Business Deals/Price

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Question
Mr. Bell

I have a dehydrating business and one of my products is made from Malanga Lila.
I am located in Montreal and i buy from 2 local suppliers, they buy from importers from Toronto. These importers import from costa rica. The local distributors buy other products also.
From what i can see my local distributors sell around 2 pallets of 60 boxes . So the local market is about 4 pallets in total monthly.

I really need to have my raw material at the lowest price. Because i am drying and turned to powder i can stock my end product easily.
I am able to buy one pallet at a time. How can i get rid of the middlemen ?

How can i negociate with the importers from Toronto if i do not know what price i can get and i am buying just  one product? I need informations to be able to negotiate, how can i get the best price possible?
I need leverage and info to be able to have a good deal. How can i get them?

Thank you

Answer
While I can't know much about the products or your process, my EDUCATED guess would be that  buying direct from Costa Rica would NOT LIKELY afford a price reduction. If your Montreal distributor is buying (or consigning) four times what you are, he would have some market leverage to buy at some discount. If the product is sourced elsewhere, perhaps you can find a different distributor. Most manufacturers ONLY sell via distributors, especially if it is a highly specialized product. If you try to go "direct", the manufacturer may advise their distributors of that and your price may rise, while their service declines. So, my advice is to find a way to incorporate the distributors margin into your COGS and make it work. If you decide to attempt a direct buy, despite the risk, I would guess the manufacturer would only sell to you in larger quantities, in order to buy at a discount. "leverage" can only be applied by upping your order.  Perhaps the product is perishable, or, so costly that buying 3-4 pallets is not feasible. In summary, I find it very unlikely that you can buy direct and save much, if anything,

I'm sorry I can't be more definitive.

I wish you all the best!

Gary Bell  

Negotiating Business Deals

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Gary Bell

Expertise

I have an MBA and 35 years of executive business experience. I can answer questions about negotiation tactics, proposals and general business issues. I am particularly interested in small business planning.

Experience

I am a career healthcare business professional with many years of execcutive experience.

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MBA, Finance and Marketing

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