10 Ways Dealers Play The Bidding Game
Friday, March 1 2002
Published on AllBusiness.com
These are some real-life examples ? not all endorsed by reputable dealers ? taken from interviews with team dealers (not necessarily the ones mentioned in this article) of how some dealers deal with the bidding process.
1. Substitution play ? Say you bid on 1000 pairs of X, but you know you have a less expensive source of Y, which is the same quality and meets the specs in everything but name. So you bid with the X number and then, right before delivery, blame the vendor for failing to deliver but offer to bail the customer out by supplying Y at the same price. "They'll go for it every time," says one dealer.
2. Never bid an even number ? Figure out your margin and what your bid would be, then lower it by, say two or three cents. So instead of $10 a unit, your price is $9.97, thereby beating out all those $10 bids out there at the cost of only a few cents.
3. Ship direct ? After your numbers are worked up, contact the vendor and ask them to help out with free shipping. Your margins just went up considerably by just placing an order and handling the invoice.
4. The buddy system ? More than one retailer admits to directing his established client towards his "friendly" competition in order to get the required three bids. A gray area, perhaps; done all the time, definitely. One dealer admitted to writing the bids in his cross-state "competitor's" name and then calling him to let him in on the fact that he bid on a contract, but lost.
5. Split personality ? Lots of dealers run their screenprinting or embroidery businesses under a different name and bid on the same contract under two names, with the tacit agreement of an administrator or coach who just needs to file some paperwork before getting to buy what he wants.
6. The military approach ? Our Armed Forces follow their bids to a T, even if they are wrong. Smart dealers look for obscure, unattractive bid requests ? say, one basketball or a strange color uniform ? and bid high on it, betting that no one else will get in the game. They will award you the bid and then you are in line for subsequent orders at the same rate.
7. Bulk up ? While vendors aren't keen on the practice, many dealers over-order on bid items to get them at the bulk price, filling up their inventory with excess for future sales at non-bid prices.
8. Add-on business ? When you go through the bidding process with a customer you become a part of their team. So if non-bid situations come up, especially when clients are spending their end-of-the-year budget excess, there's some good add-on business to be found.
9. Spec it ? There's no better way to make sure you get the bid than to help the school write the specifications. There's no law against favoring the product lines you supply through manipulation of these specs. Common wisdom is that a dealer wins a bid 65% of the time he helps write the specs.
10. Obscurity ? Look for obscure markets where there aren't dozens of players. One dealer recommends selling to correctional institutions. Prisons aren't going out of business. As a matter of fact, last we heard they were building more of them.
1. Substitution play ? Say you bid on 1000 pairs of X, but you know you have a less expensive source of Y, which is the same quality and meets the specs in everything but name. So you bid with the X number and then, right before delivery, blame the vendor for failing to deliver but offer to bail the customer out by supplying Y at the same price. "They'll go for it every time," says one dealer.
2. Never bid an even number ? Figure out your margin and what your bid would be, then lower it by, say two or three cents. So instead of $10 a unit, your price is $9.97, thereby beating out all those $10 bids out there at the cost of only a few cents.
3. Ship direct ? After your numbers are worked up, contact the vendor and ask them to help out with free shipping. Your margins just went up considerably by just placing an order and handling the invoice.
4. The buddy system ? More than one retailer admits to directing his established client towards his "friendly" competition in order to get the required three bids. A gray area, perhaps; done all the time, definitely. One dealer admitted to writing the bids in his cross-state "competitor's" name and then calling him to let him in on the fact that he bid on a contract, but lost.
5. Split personality ? Lots of dealers run their screenprinting or embroidery businesses under a different name and bid on the same contract under two names, with the tacit agreement of an administrator or coach who just needs to file some paperwork before getting to buy what he wants.
6. The military approach ? Our Armed Forces follow their bids to a T, even if they are wrong. Smart dealers look for obscure, unattractive bid requests ? say, one basketball or a strange color uniform ? and bid high on it, betting that no one else will get in the game. They will award you the bid and then you are in line for subsequent orders at the same rate.
7. Bulk up ? While vendors aren't keen on the practice, many dealers over-order on bid items to get them at the bulk price, filling up their inventory with excess for future sales at non-bid prices.
8. Add-on business ? When you go through the bidding process with a customer you become a part of their team. So if non-bid situations come up, especially when clients are spending their end-of-the-year budget excess, there's some good add-on business to be found.
9. Spec it ? There's no better way to make sure you get the bid than to help the school write the specifications. There's no law against favoring the product lines you supply through manipulation of these specs. Common wisdom is that a dealer wins a bid 65% of the time he helps write the specs.
10. Obscurity ? Look for obscure markets where there aren't dozens of players. One dealer recommends selling to correctional institutions. Prisons aren't going out of business. As a matter of fact, last we heard they were building more of them.
