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Case study | Trading company quote VS Factory quote
Every salesperson of a foreign trade company faces such a problem…
What if the factory directly quotes the buyer? What if the price is lower?
Here is a real case from my friend Mandy:
1. Customer Alex sent Mandy an inquiry for product X and specified to purchase from factory H. Mandy contacted the factory’s salesperson Jack according to the phone number on the website. After the quotation counter-offer, the deal was quickly made at $5.2 and the first order was made. Production and delivery are all done step-by-step and shipped smoothly.
Some people may wonder why the buyer does not directly cooperate with the factory H? Alex’s reason is that he doesn’t want his products to be known by many competitors before the product out of China. Sometimes customers are reluctant to let the factory know where the product is going. Of course, this should be a very professional customer who knows the industry very well. He doesn’t need the factory to give him advice on that market.
2. When the ship was approaching port one month later, Alex received an email from a supplier who claimed to be a product X supplier. The email stated that he hope to contact the person in charge of purchasing. The signature was signed with another name John, and a mobile phone number. There was no website or any company information on the email.
Generally, after a trading company places an order, the factory clerk will rack his brains trying to cross the trading company and directly contact the buyer. In order to show their sincerity, sometimes they offer the customers even lower quotations than the trading companies.
Alex forwarded this email to Mandy and asked if she knew John? Mandy checked and found that the phone number was the same as Jack she contacted and concluded that John and Jack were the same people. Mandy gave Alex a detailed reply and told the client that she would pretend not to know until the client instructed her what to do.
The customer responded as follows:
Ok. Thank You for info. We will think about it and I will put You in hide CC to reply to John.
Why doesn’t Mandy negotiate with Jack because the customer already knows about factory H, if he wants to talk to the factory directly, Mandy has nothing to do. It’s better to do her duty well and treat it with her heart.
3. Next, Alex and John went back and forth to start quotations for some other products, including the product X that had been ordered before, and the customer copied the email to Mandy every time. Mandy has no idea about whether the following orders will be given to her or John directly. She can’t do anything anyway, so she is very calm. Just browse the email content to know what they are talking about.
After another 3 or 4 months, the customer returned the order and sent an email to let Mandy purchase (without copying to John). It was still product X. The target price was $5, which was 4% lower than the first order. (At that time, when factory H quoted the price, the CNY price was 2% higher than the USD price, considering the protection of customer information, Mandy decided to pay CNY and arrange customs declaration by herself.)
The customer asked for $5, and Mandy also knew that he contacted the factory directly. Of course, there was no room to negotiate the price with the customer, so he could only negotiate with the factory. Mandy called Jack and excitedly said that Alex was going to return the order, but the he said that he had received a lower offer from other suppliers and asked for a deal at a unit price of $4.5. Two days later, the price dropped directly to $4.75.
Generally speaking, Mandy will not force the factory very much in terms of price, as long as she has a profit and customers accept it.
Here also declare the following: small factories may not be suitable for this method, pressing too tightly may affect the product quality. This factory is very formal, so Mandy is not worried.
Of course, the customer will not refuse the direct quotation from the factory. It is certainly good for him to obtain the most realistic quote from the factory. At least he can know the profit margin of the trading company. But not every customer will give the order to whomever the price is low. The relationship and trust between customers and trading companies have an unexpected impact on orders.
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