Spend Management in the Home: Appliance Sourcing 101

We're getting ready to put our Chicago condo on the market in the next six to twelve months, and thought it would be a good time to upgrade our old appliances (by the way, if any Spend Matters readers are interested in a three bedroom, three bath pre-war partially overlooking the lake in one of the best K-6 school districts in the city, drop me a line!) We came to this "upgrade" decision when we realized that our twenty year-old Sub Zero that leaks about half a gallon of water a day and whose interior temperature fluctuates a good twenty degrees would not be the best for resale value (as charming as its quirks are).

But since Sub-Zero has such great control over its distribution channel -- who will not discount their items by even a nickel -- we decided it would make sense to upgrade many of our appliances, and negotiate a market basket price rather than try to pick off single items, like a new stainless and glass fridge. What we learned is that by asking retailers to consider all of the items together, we were in essence able to get certain items for virtually nothing. These were the items whose pricing was not tightly controlled by the manufacturer. We also got the retailers to quote a landed price, including delivery, installation, and removal.

From a sourcing and negotiation standpoint, we decided not to whip out our e-sourcing tool (as fun as that might have been). Rather, we relied on a multiple round email / fax sealed-bid approach. So what results did we get in the end? Ultimately, our efforts resulted in double digit savings off of the market basket of appliances on a total landed cost basis. Not bad for a few hours of negotiation!

Jason Busch

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