Bargaining TipsGalavante Confidential - Negotiating the Global Markets
Galavante Confidential: Insider Tips and the Latest in Travel News
At Galavante, in addition to providing you with a rock star itinerary and recommendations for global destinations, this 2012 we’re bringing you insider tips and the latest in travel news on the first Wednesday of every month.
For February, we’re starting out with how to negotiate in the global markets, Galavante-style. No, Wall Street – not those markets. We’re talking about the global artisan markets. Negotiating them is like Mergers and Acquisitions, but with better deal toys. Think art, rugs, jewelry, and artifacts from all around the world.
There are basic fundamentals of negotiation, but you’ll soon learn that one size does not fit all when you go global. Also, with these tips, even the negotiation experts agree to disagree. The key is to try out what works best with your natural style and appetite to wheel and deal.
1. Do your research beforehand
Each location you visit has items that best represent the destination culturally, so identify what you’re interested in and do your homework. Research is a two-pronged process. First, check out prices at home. If you live in an international city like New York, you often have access to comparable goods, like Turkish rugs or Asian silk pieces. You should always aim higher for pieces you acquire abroad, to make it worthwhile to schlep home. Also, the Internet is your friend. This will give you a frame of reference for when you negotiate on-site. When you arrive at your destination, take an hour to canvas the market. Gauge general prices, even for items you have no interest in buying, so that you have a barometer of market rates.
2. Set your reserve price in advance
After you’ve done your research, set a firm maximum price in your mind. This is called your reserve price. The negotiation game means trying to pay as far less than this price as you can with your opponent. The yin to your yang is figuring out your opponent’s reserve price, and to get them as close to that as possible. It's game on from here.
3. To anchor or not, that is the question.
Anchoring means making the first offer so that you set an expectation of price with your opponent. This first offer should be nowhere near your reserve. There are some Machiavellian individuals who swear by this technique. Yet, others think your opponent should make the first offer to provide you the chance to gather information. In order to be effective in anchoring, you need to have done your research. From personal experience, it throws your opponent off to anchor, since most artisan vendors are used to throwing out the first offer. When you anchor keep in mind #4 below.
4. Don't be afraid to low-ball
This is another one of those fundamentals where experts have varying opinions. Low-balling also works better in some cultures than others. The low-ball offer strategy is best when you do not expect to do business with the person in the future. If you are negotiating with your spouse, we certainly don’t recommend it. However, in aggressive markets like Morocco and Turkey, this is the way to go. As for delivery: Make your low-ball offers with a smile, and non-aggressively. And then get ready to deal.
5. Don't get emotionally invested
Like Pretty Woman, don’t kiss on the mouth. While that bowl from the Chin Dynasty may be an original, don’t ever show them you love something, and always be ready to walk away. This will keep you objective and give you the upper hand. Also, if you walk away, some shopkeepers will run after you, solidifying your dominance. There are few things in life that you can’t live without, and it’s highly doubtful any of them can be bought in a craft market.
6. Collective bargaining
This is the idea that by give and take, you can create more value for both parties in a multi-factor negotiation than if one person tries to operate under a scorched-earth strategy. We didn’t believe it, but a semester of Negotiations at Columbia Business School showed us that you can both get more value if you operate on the more honest side when discussing priorities. Honestly to a point of course, in not sharing your reserve price. Under collective bargaining, you give up certain points for others that are more important to you. This works best when you are negotiating for multiple items and/or have shipping terms, tax, and other factors on the table.
7. Get creative in finding a solution — it may not be monetary
In a multi-factor negotiation, think creatively about ways to structure your deal. Like deciding whether to do a spin-off or an A-reorg test your counterpart on shipping terms, cash payments, tax, bulk purchases, higher-quality goods, and items that they can throw in as “gifts,” which are nothing to them but yet another notch on your belt.
Now it's time to put it all into practice. Here are a few survival tips for some of the most interesting markets.
What to Buy: Silk carpets, silk bags, Chinese checkers, tailored suits and antiques
China’s markets are where you have to be ready to be accosted; many of the vendors will invade your personal space and try to drag you into shops, as they do in the silk markets of Shanghai and Beijing. The Dong Tai Markets in Shanghai are a little more civilized, but here the stakes are much higher, where there are still a few authentic antique Chin dynasty bowls. Know, though, that these finds are few and far between, so you may have to settle for a Chinese checkers set. In the Chinese markets, they’ll usually negotiate with you down to the penny, trying to extract every last cent out of you. Bargain as much as you can, but if you’re not comfortable, walk out. That will almost always drop the price immediately. The vendors are not the best at hiding their reserve prices, and they are often willing to deal.
What to Buy: Rugs, tagine, Moroccan slippers, Argan oil, silver and spices
This is one aggressive place to negotiate because it’s ingrained in the culture. We are quite polite in the Western world, but in Morocco, it’s impolite not to bargain. Once you do start to negotiate, though, there’s an understanding that if you come to a fair price, you’re ready and able to buy. Bring lots of cash to the souks in Morocco. They have some of the most beautiful pottery, pashminas, antiques, and rugs in the world. A few will take your Amex, but have those dirhams ready.
The key here is to take our research tips and anchor a low-ball price with a smile. Be ready to walk out if they aren’t giving you more latitude. If they let you go, this will be a benchmark that you hit below their reserve price. But it’s likely that once you’ve politely said your “merci” and moved for the door, they’ll try to make a deal. This is a place where it pays to have a partner, so you can play “good cop, bad cop.”
What to Buy: Antiques at the Clignancourt, books from the outdoor vendors and art
In France, bring your refined A-game. Your low-ball tactics and theatrical temper tantrums will be met with the steely, unamused gaze that the French have perfected. In any French business dealings, trust and relationship-building are paramount. This motivates them; it’s not always about the money. The French have a great pride in their culture, history, and language. If you can convey this same respect and deference for that Louis XV chair, they’ll be more open to working with you. Approach your negotiations elegantly and demonstrate your knowledge of the piece. This, of course, doesn’t mean conceding that you’re willing to pay whatever they dictate. Explain to them that you have a budget, and very politely ask if they can do a certain price for you and go from there.
What to Buy: Hand-painted plates, jewelry, spices
We don’t know why we’re even giving you advice here, because we so overpaid for our rug that the owner visited us in New York with gifts of pashminas and Turkish delights. But, if you’re willing to learn from our mistakes, get ready to deal. Everyone and their brother will try to sell you a carpet. And we think you should buy one, but even locals will tell you that unless you know what you’re doing, you can easily walk away with a lemon: A lot of the rugs are dyed and made of synthetic materials. If you just want to experience the process, pick up a moderately priced piece. Otherwise, bring an expert if you’re looking to purchase one of those $10K handmade rugs.
The best items to buy in Turkey are jewelry, plates, and spices. When negotiating here, aggressively nice is the way to go. You can feel confident politely low-balling, and wheeling and dealing – they won’t be offended in the least.
What to Buy: Moai statues, or a little Hami for him – you’ll know what we mean when you get there.
Now, this is one obscure place, but we’ve included it to show how interesting it is to negotiate here. This is one of the few places in the world where money doesn’t seem to motivate the people. For the true Rapa Nui – there are about 4,000 of them – it’s all about the appreciation of their spiritual island and culture. Most Rapa Nui are allotted a parcel of land by the government, and there’s no homelessness on the island. People have what they need to live simple lives. When we started on the task of buying replicas of the famed Moai statutes, we witnessed many unsuccessful transactions. Throngs of other tourists walked dejectedly away from vendors because of the prices – hundreds of dollars – that were quoted. The vendors weren’t willing to wheel and deal, either; many of them adopted a “take it or leave it” approach.
I went to the best – and, yes, the most expensive – artisan of Moai statues. Louis’ work is stunning – intricate handmade carvings in the finest wood available on the island. I didn’t approach him about buying, but rather about learning. We engaged in deep conversation for almost an hour, touring his shop of $10,000 statues. I explained my situation as a humble writer, and how much I really loved – yes, I used the word “loved” – his craft. He asked me to pick what I wanted, which turned out to be a $500 perfect replica, where he explained every symbol and carving. He asked if I could pay $250, and with that, I took my little guy (the statue – not Louis) home. My travel companions were successful at another shop, where in addition to the statues, one brave soul scored a tattoo, but that’s another story.
In the end, while you can take the person out of Wall Street, you can’t take the Wall Street out of the person. With your financial acumen and our insider tips, you’ll be navigating the global markets with the same confidence you have in closing a deal. And yes, negotiating for that carpet will be just as intense. But a lot more fun.