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Ecwid Ecommerce Glossary

Supplier

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What is a supplier?

A supplier is a person or a company that provides products or services to other businesses or individuals. They are like the “source” of the things you need to run your business or satisfy your needs. For example, in a restaurant, a vegetable supplier delivers fresh vegetables for the chef to use in preparing dishes. A clothing store relies on suppliers to deliver new clothing items that they sell to their customers.

Pros of being a suppliers:

  • You can earn recurring income through repeat orders or service contracts.
  • You do not need to constantly look for new customers, because the base of regular customers is already formed.
  • You can supply goods to different enterprises and industries and thereby distribute business risks.
  • Positive feedback from your regular customers can provide you with new orders from their partners.
  • You can adjust your production costs depending on the volume of products produced.
  • If you offer a unique product or service, then there is a great chance to enter into exclusive contracts with customers.

Cons of being a supplier:

  • You are heavily dependent on your customers for business and could be financially hurt if a major customer cuts their orders or stops working
  • Clients may negotiate prices aggressively in an effort to lower costs and increase their margins, which can reduce your profit margins.
  • Dealing with late or delayed payments from customers can lead to cash flow issues
  • You can face a lot of competition and price dumping if you don’t produce a unique product or service.
  • Some clients may have strict quality and compliance requirements that you must comply with, which may require additional cost and effort to maintain these standards.
  • Long-term contracts with customers may restrict your flexibility to adjust prices, terms, or conditions as market conditions change.

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