Stop Buying the Deal

A good deal on the wrong product is still the wrong product.

Merchandising Solves This | Week 13

The deal arrives and the math looks great.

Extra margin points. Free freight. A prebook incentive. Maybe a volume discount that makes the cost per unit almost impossible to turn down.

So you buy a little deeper.

Six months later, the product is still sitting there. On the floor. In the backroom. In the warehouse.

Turns out, you bought the deal, not the right product.

The Question the Deal Never Answers

Before saying yes to the deal, there is one question worth asking first.

Would I buy this product at this depth if the deal didn't exist?

If the answer is no, stop there.

Because a deal can improve the economics of a good buy. It cannot turn a bad buy into a good one.

The deals come after the product earns its place. And earning its place means being able to answer yes to all of these:

Is there demonstrated demand for this on the retail floor?

Does it fill a real assortment need?

Is the price point working?

Do I already have something serving the same customer?

Can I realistically sell the quantity required to earn the deal?

Know Where Your Customers Actually Spend

One of the best defenses against buying the deal is understanding where demand already exists in your assortment.

Do not just look at which products sold. Look at where customers are consistently spending within the category.

Maybe your $200 to $250 helmets consistently sell through at full price while $300 to $350 helmets need markdowns to move. That matters when a vendor walks in with an incredible offer on a $329 helmet.

The margin might be better. The demand didn't suddenly change.

Price bands will vary by category. A $50 range may be useful for helmets, footwear, and apparel. Bikes require much broader bands, somewhere between $500 and $1,000 depending on your price points. The exact range matters less than understanding where your customers consistently buy, where they hesitate, and where markdowns begin to appear.

That knowledge gives you knowledge when the deal arrives.

Sometimes, Buy the Deal

There are absolutely times when the deal is worth taking.

You know the category. You know the price point. Sell-through is strong with similar products. Inventory is healthy. The product has a clear role in the assortment.

Then the vendor offers better margin, free freight, or favorable terms?

Take the win.

That is not buying the deal. That is using a deal to improve the economics of a decision that already made sense.

The difference is simple: did the deal improve the decision, or create the decision?

Where to Start

When a vendor deal arrives, pull your data from that category. Look at sell-through, price band sales, margin, inventory depth, and SKU overlap.

Know where your customers are buying, where you are already over-assorted, and where inventory consistently ends up on markdown.

Then when the deal shows up, ask one question.

Would I make this buy without the incentive?

If yes, better terms can make a good decision even better. If no, free freight isn't going to save you.

The deal should confirm a good decision. It should never be the reason for one.

The Outdoor Merchant is a product merchandising consultancy specializing in outdoor, cycling, and snowsport industries. Each week in this series, we explore a real business problem that smart merchandising was built to solve.

Follow along for Week 14, and reach out to sarah@theoutdoormerchant.com if any of this is hitting close to home.