Special buys can be a valuable sales tool for suppliers, allowing them to secure extra volume and gain exposure. But if you’re not careful, these one-time deals can turn into financial headaches. Let’s break down what special buys are, where they come into play, and how to avoid costly pitfalls.
What Are Special Buys?
Retailers use special buys for one-time product purchases to meet specific business needs.
These can include:
New Store Openings – Suppliers may offer a temporary discount (5-10%) to help retailers stock new locations.
Seasonal Inventory Pushes – Extra stock may be needed for peak seasons, like holiday promotions or summer lawn and garden sales.
Packaging Changes – When launching new packaging, suppliers may use special buys to move out old inventory before the transition.
While these opportunities can boost sales and visibility, they also come with risks that suppliers need to manage carefully.
Hidden Risks of Special Buys
1. Price Protection Challenges
Retailers often seek price protection to “buy down” the cost of unsold inventory when a price drops. Special buys complicate this process.
How It Can Hurt Suppliers:
Say you sell a product through a special buy at $1.85 instead of the usual $2. Later, the retailer requests price protection based on the system cost of $2. Since special buys temporarily lower the retailer’s average cost, you could overpay on price protection adjustments.
2. Same-Day Pricing Confusion
Retail auditors look for inconsistencies in pricing. If a retailer places two orders for the same item on the same day—one at the standard price and one at a special buy price—auditors might flag the higher price as incorrect.
What That Means for You:
Retailers may request reimbursements from suppliers due to perceived pricing discrepancies, leading to chargebacks that cut into margins.
3. Return Cost Discrepancies
Seasonal products, like fans or air conditioners, are often sourced differently throughout the season. Retailers may start with lower-cost imports and transition to higher-cost domestic inventory later. When customers return products at the season’s end, the retailer may process returns at the higher domestic cost—even if the original item sold was an import.
How to Avoid Overpaying on Returns:
HRG recommends tracking fulfillment proportions and using a rebill process. This ensures retailers are reimbursed at the correct cost, preventing inflated return deductions.
How Suppliers Can Protect Themselves
1. Keep Pricing Agreements Crystal Clear
Document all special buy details, including which items are part of the deal and any exclusions. Misunderstandings with auditors can cost you.
2. Archive Everything
Save emails, agreements, and pricing discussions. Having a digital paper trail can make all the difference if an audit comes up.
Final Thoughts
Special buys can be a great way to grow sales—but only if you manage the risks. Suppliers can avoid unnecessary deductions and maximize profits by tracking costs, ensuring clear communication, and maintaining detailed records.
At HRG, we help suppliers navigate deduction risks and protect their bottom line. If you’re dealing with challenges around special buys, check out SavvySupplierPodcast.com or visit HRG-Audit.com/50 to connect with our team.
Wiser decisions. Fewer deductions. That’s the goal.