Small Purchase Government Market Segment

In this installment we talk about small purchases, defined here as government buys in the $2,500 to $25,000 range. We've touched on this subject in past installments. This time we devote an entire installment to it, and get into a bit more detail.

The Market Segment Features

Here are some of the key features of the small purchase market segment:
  • Like under-$2,500 procurements (or micropurchases), small procurements tend to be "hidden" from the public. Generally, small procurements are not publicly advertised. Some exceptions: when a buyer is looking to increase competition or a particular product/service is difficult to find.
  • Size ranges from $250 to $280 billion of the total federal, state, and local $700-billion market.
  • Purchases are made with three informal quotes obtained by telephone, fax, email or regular mail.
  • Payment is made with a credit card or purchase order.
  • Quotes make up the purchase documentation so a buyer can act quickly and efficiently.
  • Official buyers perform small purchases for end-users. (Note the distinction here: in the under-$2,500 micropurchase segment, end-users, using their own government-issued credit cards, often buy for themselves). As we discussed in a prior installment, end-users may or may not provide buyers with preferred suppliers. They might for a scientific instrument, for example, but not for items like office supplies.
Special Opportunities for Small Businesses

Here are two principle reasons the small purchase market segment is ideal for small businesses:
  • Small business preference procedures vary, but as a general rule most small purchases are set aside for small and small disadvantaged businesses, unless this type of company cannot be found to satisfy the requirement.
  • Buyers like to keep their small purchases local, buying from businesses that are part of the community they live in.
Selling in the Small Purchase Market Segment

Buyers making small purchases use various methods to find the right vendors for their three-or-more quotes. At all levels of government, buyers will often rely on one or more of the following sources:
  • Their own vendor files and personal knowledge. (Hopefully, your sales visits and/or telephone calls have made a difference in this regard.)
  • Their own manual or electronic bidders' lists.
  • Agency- or government-wide vendor directories like the federal Central Contractor Registration and PRO-Net databases. (Most states have a central vendor directory.)
  • Industry directories like Thomas Register.
  • Government e-procurement systems. Most large states have them and the federal government has several. Some of these systems are catalog-based, some are RFQ-based, and some are both.
  • Commercial business-to-government e-procurement systems
Become a part of the above resources, but remember: focus. Don't scatter your company information around in various directories just for the heck of it. Concentrate on those locations that matter to your target agencies.

Buyers typically rotate companies they contact for a quote: often the last supplier plus two new sources. As we've emphasized over and over, your company will not be contacted if buyers don't know you exist. Get out there and sell!

If you have a technical or complex product or service, sell the end-user. If you're successful, the end-user will let the buyer know that your company is a preferred source for the required product or service. If you sell common commodities, focus on the buyer.

Finding Buyers

Here are some tips on becoming known to buyers:
  • First, define your geographic area: How far away can services be performed effectively? How far can products be shipped without excessive shipping costs?
  • Second, find the buying offices and official buyers within your geographic area. We have some products that can help in this regard:
    1. At  Fedmarket we sell a CD-Rom of Federal, State, and Local Buyers.
    2. Subscribe to our brand new online buyer information service, FedBuying Intelligence. FedBuying Intelligence tells you: what federal buyers bought; when they bought it; how much they paid; which agency the buyers work for; how to contact the buyers.
  • Third, target mail and e-mail brochures, catalogs, and company Web site addresses to buyers when personal sales calls are not practical. This should be done in conjunction with getting on buying office bidders' lists.
  • Finally, follow up with telephone sales calls to the targeted buyers.
Conclusion

To sell in the under-$25,000 market, a business must generally be more diligent in becoming known to government buyers. Because the buyer is relatively free to pick and choose as he wishes, vendors need to make sure their companies come to mind when the buyer is ready to seek his three quotes.

Like the commercial market, sales are made most effectively through one-on-one personal contact. Sell government buyers like the commercial customer down the street: let them know who you are and what you have to offer.
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