SOURCING
Sourcing is the term used to describe the process of determining how and where
merchandise will be procured.
The different sources are:
1. Manufacturers: Offer goods for sale that they have produced. They are also referred
to as vendors, suppliers or resources.
2. Wholesalers: They are the resellers of the merchandise. They buy merchandise in
large quantities to break down and then sell the goods in smaller quantities.
3. Middleman: An agent who processes goods in one way or other from the
manufacturer to the retailers.
a. Drop Shipper: They take title to merchandise, but do not take actual
possession of the goods and just arrange shipment of the goods to the
retailer.
b. Broker: He is a middleman who helps negotiate business between the
buyer (retailer) and seller (manufacturer).
4. Contractor: Is an independent producer who performs aspects of manufacturing,
such as sewing, cutting and finishing.
a. Exclusive Contractor: Is a supplier that only works for a particular company.
5. Cooperatives: When a group of manufacturers or contractors work together for a
company.
Domestic Sourcing: Is the purchasing of the merchandise within the borders of the
country.
Advantages:
1. A faster lead time (it refers to the amount of time that lapses between the placement
of an order and the arrival of the merchandise at the retail establishment) is usually
available.
2. More assurance of getting exactly what was ordered.
Disadvantages:
1. The cost of goods in apparel is often higher due to higher labour cost.
2. Close proximity to the source does not always
International Sourcing: Is the process of buying goods offshore, from other countries.
Buying merchandise offshore and bringing it into another country to sell refers to importing
or purchasing imports.
Types of Orders:
1. Regular Orders: Placed for goods purchased in season as part of a regular line of
manufacturer’s merchandise.
2. Exclusive Orders: Placed for merchandise that can only be sold to one particular
store or buyer. Exclusive merchandise is usually a special arrangement between
vendor and retailer.
3. Off-Price Orders: Placed for merchandise that is purchased at a price that is below
the regular line price. Usually, this is regular merchandise being sold later in the
season, or is surplus merchandise.
4. Job Lots: Are groups of merchandise that are odds and ends of remaining styles,
which a manufacturer wants to sell.
5. Prepacks: Are assortments of merchandise that are chosen according to a
manufacturer’s or retailer’s direction. These predetermined choices direct that a
certain amount of sizes and/or colours of a style are shipped to the retailer.
6. Closeouts: Are an assortment of merchandise that is left over from a seasonal line.
This includes all remaining items and is sold at a discount.
7. Reorders: Placed on merchandise that has been purchased at least once before by
the retailer. It is more common with basic merchandise than with fashion items.
8. Promotional Orders: Placed for goods at a better-than-regular manufacturer’s cost.
These are special purchases from vendors that can be promoted by the retailer at a
savings to the customer.
9. Private-label Orders: Are store brand merchandise that are designed, controlled and
sold by the retailer and are labeled with a store name or brand distinguishing it as its
own. Jobbers: Sell closeouts and job lots and specialises in those kinds of orders.
Centralized Buying: Entails focusing all the purchasing activities in one place, where it is
initiated and overseen by one individual or a group. Many large retailing chains use
centralized buying exclusively.
Decentralized Buying: Centres the purchasing activities at the local or retail outlet level.
Buying Offices:
Resident Buying Office: Is an organisation located in a given fashion market that serves
as a retailer’s market representative for the procurement of merchandise.
1. Store-Owned Buying Office: Owned and operated by a retail firm or group of
retail stores.
2. Independent Buying Office: Owned and operated separately from its client
retailers.
Markets:
Merchandise Marts: Trade Centres built to house manufacturer’s representatives and
provide a centre for retailers and manufacturers to come together to o business.
Trade Shows: A mean for buyer and seller to meet and do business. Existing facilities are
used temporarily to house a trade show and its exhibits.
International Market: Located all over the world.
Domestic Market: Market within the country.
Regional Market: Local Market.
