Boohoo presses suppliers for discount on current orders
Drapers said it understood the products involved are either in production or have been shipped
Boohoo has reportedly “demanded” a 10% discount on current orders from some suppliers for the second time, as it looks to cut costs across its supply chain, Drapers has reported.
Drapers said it understood the products involved are either in production or have been shipped.
According to an email sent to some suppliers, and seen by Drapers, the retailer said: “Based on significant decreases in freight, cotton and polyester prices year on year, we are rebasing our cost prices to reflect these improvements.
“[In] previous years we absorbed a significant cost inflation across our operations but, as a strategic partner to Boohoo Group, we need to ensure that the savings now being experienced across the industry are in your cost prices.”
This is reportedly the second time in two months Boohoo has asked its suppliers for a discount, having asked for a 10% discount on delivered and undelivered orders back in May.
According to Drapers, one supplier said: “We already work on incredibly tight margins. If we deliver the goods [at discounted prices], we either make a very small margin or possibly make a loss.
“But, if we cancel the orders, we would be left with loads of goods which we have paid for and can’t sell to anybody else. They keep referring to us as being a valuable supplier partner, but it’s not a partnership at all.”
Another source added: “If they had told us beforehand [about the discounted prices], we would’ve said no to the orders because we can’t afford that price. But they gave us orders, and asked for the discounts after we’ve made them. Right now the margin would be 1-2% at most.”
Boohoo has been contacted for comment.
