Countless entrepreneurs keep their entrepreneurship dreams on hold because they’re unsure of how to deal with suppliers.
If you are just about to start your
In truth, suppliers are business owners like yourself. They want the same things as all businesses do: more sales, less risk, and reliable payments.
The risk appetite for suppliers depends on four things:
- The size of the order in dollar terms
- The past relationship with the buyer
- The payment terms for the order (upfront payment equals lower risk)
- The size, reputation, and seriousness of the buyer
For new businesses, getting suppliers on board is simply a matter of reducing their exposure to risk. The easiest way to do this is by offering to pay upfront. Suppliers won’t care about the size or age of your business as long as they’re getting paid.
Besides upfront payments, you can also show your legitimacy by:
- Using a company email address (“yourname@website.com” instead of “yourname@yahoo.com”)
- Having a website. Even a simple free Instant Site will help.
- Incorporating your business and getting necessary tax numbers
- Using a professional, serious tone in your emails
- Knowing what you want. Being clueless is a clear sign of an amateur business owner.
Below, we’ll show you how to deal with different suppliers based on your business model.
Related: Should You Make, Manufacture, Wholesale or Dropship Your Product?
How to Approach Wholesalers
In the wholesale model, you buy products from a large supplier at low rates. You then sell them to customers at retail rates. Wholesalers might carry a single
Since you are paying upfront for the product, the wholesaler’s risk is almost
It doesn’t matter whether you have a great website or no website. As long as the seller gets paid, he’ll be happy to work with you.
In fact, a number of wholesalers even operate online stores. You can buy from these stores just as you would buy from Amazon.
This wholesale supplier sells on Ecwid Instant Site
The shopping process is the same as any
However, not every wholesaler operates the same way. Some operate a
At DyeMurex.com, you have to create a wholesale account to get wholesale prices. You can also buy smaller quantities, but you’ll have to pay retail prices for it.
DyeMurex, a
To create a wholesale account at Dyemurex, you need a US tax number. If you are outside the US, you have to have a valid website and/or social media presence. This requirement will vary from supplier to supplier and country to country. Consult your country’s local tax laws on how to get a tax number.
Not every wholesaler maintains websites where you can order products. And few wholesalers offer their best possible rates and sales terms through their websites. In such cases, you have to communicate with wholesalers directly and strike a deal. Here’s how to do it.
1. Find a sufficient number of wholesalers
Step one is to find a number of target wholesalers. In the US, you can use websites like WholesaleCentral.com and TopTenWholesale.com to find wholesalers for your product. You can also use TSNN’s search to find trade shows and visit suppliers in person.
2. Filter the reliable ones
Before you spend any time communicating with wholesalers, evaluate whether they fit your requirements and standards:
- Check whether they carry the exact products you want.
- Check if they have stated their minimum order quantities (MOQ) and prices. This is usually negotiable, however.
- Check their reviews on Better Business Bureau by searching for the company name (for US, Canada or Mexico based businesses).
- Google their company name to check for fraud reports, reviews and comments from existing customers.
Once you are fairly certain that you’re dealing with a reputable company, proceed to the next step.
3. Communicate your requirements
This is the part where most new entrepreneurs hesitate, especially if they don’t have a website or store.
The trick is to portray confidence. You don’t have to lie, but it doesn’t hurt to project an image of being slightly bigger than you are. Your objective is to get the best possible deal, after all.
This confidence is conveyed in the length, tone, and content of your communication. Be concise and exact in your messages. Make it clear that you know what you want.
This template works because it is clear and professional
There are a few tactics you can use to make your emails more persuasive:
- Order volume: Wholesalers are a volume business. The higher volume you buy, the more negotiating power you have. Lure them in by asking for prices for a range of order quantities (say,
100-10,000). - Don’t email yourself: Most larger retail businesses have purchasing agents to handle procurement. In your email, identify yourself as “purchase manager” or “purchase agent” instead of “founder/CEO”.
- Use a company email address: Even if you don’t have a website, you can still get an email address at your own domain (like “firstName@company.com”) using services like Google Apps.
Once you have the information you need, you can negotiate for better terms such as
Wholesalers sometimes offer drop shipping services as well. We’ll show you how to deal with them in the next section.
How to Approach Dropshippers
Dropshipping is when you act as the retail arm of a manufacturer or wholesaler. Instead of buying and stocking products yourself, you only sell the product to customers. Your drop shipping partner takes care of fulfilling the order, usually under your own brand name.
On paper, the higher involvement of drop shippers means higher requirements from retailers as well. In reality, the intense competition among drop shippers means that drop shippers have to fight hard to win over retailers.
This intense competition has led to the fragmentation of the market into two categories. This brings us to the first tip.
1. Understand who you’re dealing with
The options include drop shipping aggregators and wholesale drop shippers.
Dropshipping aggregators are websites that give you access to hundreds of drop shipping suppliers from a single platform. Examples include Syncee, Spocket, Sup Dropshipping, Doba, SaleHoo, etc. These aggregators usually charge an upfront fee to access the suppliers. They also offer plugins and APIs to easily import products into your store.
Here are a few things you must know about dealing with drop shipping aggregators:
- Easy
sign-up: Aggregators are easy tosign-up with and require only an email. You don’t have to have a store, website or even a business email to get started. - Higher prices: Since you can’t negotiate with individual suppliers, you will have to pay the fixed price offered by the aggregator. This usually means higher prices and thus, lower profit margins.
- Monthly fee: Most aggregators charge a monthly fee. This can eat into your margins if you’re just starting out.
Dropshipping aggregators are an easy way to start selling. However, use them only as a
Wholesale drop shippers are wholesalers who also offer drop shipping services to a select few retailers. A vast majority of drop shippers fall in this category. Usually, they cover a single
To work with these drop shippers, you’ll have to create a wholesale account and provide your business information. You get access to the catalog only after the drop shipper approves your account.
Most
MagnumTuning requires approval for each application to discourage discount shoppers
Many drop shippers will be happy to waive off approval requirements if you place a large initial order or send them deposit money. Having a seller’s permit or sales tax number is also helpful.
While the signup process is harder, you get much better rates than drop shipping aggregators.
In some industries such as
Product types you can drop ship with Ecwid and Printful
Once your business is ready, this is the right way to go if you want to drop ship. If you’re using Ecwid, you can use the WholesaleB2B app to make integration with drop shippers easier.
Also, check out more dropshipping services that can be integrated with your Ecwid store.
2. Ask the right questions
Here are a few questions you can add to the email template shown above if you contact a potential drop shipper:
- What are your shipping costs and policies?
- What kind of payment methods do you accept?
- Do you offer an API or automated method to place new orders?
- What brand name will the order be shipped under?
- Will your (the drop shipper’s) name appear on the packaging?
- How long does it take to process and ship an order to {your primary market}?
- Can I use your product images and descriptions on my website?
- What kind of tax information and permits do you require from retailers?
- What is your policy for damaged and returned products?
Besides wholesalers and drop shippers, you can also source products from manufacturers.
How to Approach Manufacturers
Manufacturers are companies that can:
- Help you make your own products, or
- Sell you their manufactured products at wholesale prices.
Manufacturers are different from wholesalers and drop shippers in that they have high order requirements and significantly lower prices. Since each order is made from scratch, most manufacturers require an upfront payment to cover the manufacturing cost.
The upfront payment means that most manufacturers are very flexible in who they work with. The nature of manufacturing is also such that it attracts a lot of entrepreneurs trying out new ideas who might not have websites or sales.
Consequently, most manufacturers are easy to work with as long as you meet their minimum order requirements.
Related: How To Find a Manufacturer for Your Product Idea
There are a few things you should keep in mind when approaching them.
1. Ask about minimum order quantity (MOQ) and deposit
Manufacturing costs go down as the volume increases. Consequently, MOQ is one of the most important metrics when dealing with manufacturers.
Ask about the manufacturer’s MOQ in the first email you send them. Don’t waste time dealing with a manufacturer who has higher MOQ than your requirements.
If you’re taking the Alibaba route, most manufacturers would list their MOQ on their profile itself.
Most manufacturers on AliBaba will show their MOQ on the product page itself
Some manufacturers might be wary of dealing with new businesses who are only interested in the minimum possible order volume. To get around this problem, ask for prices for a range of order volumes (say, MOQ to 50,000 units).
Also, ask what kind of upfront deposit will the manufacturer require to kick start production (and the refund process in case of a dispute).
Related: Checklist: How to Find the Right Supplier on AliExpress
2. Ask about manufacturing capacity, shipping, and packaging
The manufacturing capacity and shipping time are two important factors in choosing a manufacturing partner. Not asking about these might set off red flags for the manufacturer.
So in your email, ask about the following:
- The number of pieces they can manufacture in a day
- Where the products will be shipped from/shipped to
- Expected shipping time and carriers used
- What kind of packaging will they use
- Any customization (on packaging or product) offered
- Extra value added services (such as Amazon FBA selling) offered
3. Ask for samples
No serious business will choose a manufacturer without asking for product samples.
Manufacturers expect this. In your email, make sure that you ask for a product sample. This will not only help you evaluate the manufacturer, but it will also show that you are serious about the business.
4. Ask more about the company and the factory
This includes:
- The age of the company
- The number of employees
- The size of the factory and its location
- Pictures of the factory
If possible, ask for a Skype tour of the factory. Again, most legitimate manufacturers will be happy to provide this information.
To Sum Up
Whether you are looking for a wholesaler, drop shipper or manufacturer, remember to do the following:
- Get a free Instant Site.
- Do not make a deal with the first supplier you find.
- Portray confidence and professionalism.
- Ask a lot of questions.
- Negotiate to get the best deals.
- How to Find Distributors for Your Product
- How To Find a Manufacturer for Your Product Idea
- Where to Find a Wholesale Supplier for Your Online Store
- The Science of Contacting Suppliers When You’re Starting a Business
- How to Find the Right Supplier on AliExpress
- How to Choose a Clothing Manufacturer
- Finding the Right Furniture Manufacturer
- How to Choose Plastic Suppliers
- Connecting With Cosmetics Manufacturers
- How to Find the Best Toy Manufacturers
- What Are Private Label Manufacturers
- How to Get Companies to Send You Tools (Samples) for Free
- Understanding Supplier Code of Conduct
- How to Evaluate Supplier Performance
- Strategies for Managing Supplier Relations
