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As an eCommerce business owner you might have several tasks to bring the different parts together to create a smooth-flowing workflow. One of the most important parts of a potential well-oiled eCommerce machine is the supplier.
Choosing and striking a deal with a supplier can be complex. You need to be well-informed about their operations and the kind of experience they provide. Besides these, you must also sharpen your negotiation skills before entering any meeting environment. This article is exactly about that. A quick handbook on how to prepare for a supplier meeting and how to get a good deal that helps you grow your business.
This article already assumes you have found a few great suppliers and now would like to meet them to understand more about how they operate and their product range. However, if you're still looking for new suppliers you can find some of the best ones online in the ecommerce supplier directory.
Supplier Criteria Scorecard
The following is a list of supplier-specific criteria and topics to discuss with your potential new supplier. Keep them handy and score the following from 1-10 based on how well you think this supplier will perform in these areas (based on your own assumptions and their feedback to the questions you ask in the meeting). These are ranked by importance from high to low.
- Product selection → target market fit: you want a product selection that fits in with your target audience.
- Wholesale and dropshipping: This gives you flexibility in how you sell your products.
- Accurate and up-to-date stock sheets: This is essential for avoiding stockouts and overselling.
- Credit terms: If you're able to get net 30 or even net 60 terms from your supplier, this can free up your cash flow and help you grow your business.
- Shipping costs and speeds: You want to be able to offer your customers competitive shipping rates and delivery times.
- Customer service: You want to be able to rely on your supplier to provide you with excellent customer service, in case there are any problems with your orders.
- Product assets: High-quality product descriptions, images, and videos are essential for selling online. If they are able to provide these, it will save a huge amount of time by gathering these all yourself or by your team.
- Quality control: You need to be confident that your supplier is providing you with high-quality products.
- Return policy: A good return policy is important for customer satisfaction. You want your customers to feel confident that they can return their products if they're not satisfied.
- Online ordering system: Online ordering is more efficient and less error-prone than email ordering. It also allows you to track your orders and inventory more easily. Medium
- Sustainability practices: Many consumers are now choosing to support businesses that are committed to sustainability. If it's important to you, you may want to consider your supplier's sustainability practices when making your decision.
Once you have your supplier scorecard ready the next step is to prepare for the meeting.
How to Prepare for an E-Commerce Supplier Meeting?
The first and foremost step is to define your goals. What do you want to accomplish with the supplier? Ask yourself:
- Do I want a wholesale supplier?
- Do I want to opt for the drop-shipping model, where the supplier handles order fulfillment?
- Do I want to use a third-party fulfillment service?
- Do I want a supplier who can help me with marketing and advertising efforts?
Ask yourself different questions relating to different facets of your eCommerce business model and determine exactly what you want. Once you do, you’ll know exactly what criteria to set for the supplier that you will work with.
Do your homework and learn as much as possible about the supplier. Start by going through their website, their LinkedIn profile, social media profiles, and looking at user reviews on different forums. Look at review sites like TrustPilot and their Google reviews to see how they are rated.
Remember that you're not only researching them as a supplier but how their brands and products are enjoyed by the end-user, who is ultimately going to be your customer. So carefully look at the online reviews of the brands and products they carry.
Understand the kind of products they supply, the demand for them, who else is selling them (ie the competition), what an eCommerce business’ journey with them looks like, and the kind of experience they offer.
You can also network with other eCommerce business owners through different connections and try to learn about the supplier. While you might not have answers for everything, you can build an overall perception of the supplier and how they function.
Don't be put off by a supplier's website. Some of the best suppliers I've worked with had very basic websites and provided stock sheets in spreadsheet format.
After your research, you will have several unanswered questions. Create a list and ask the supplier during your meeting with them.
Here are a few important ones:
Focus on a single product or range for this question. This will help you understand whether a product has good sales. Furthermore, based on the trends, you can also understand what seasons the supplier gets maximum demand, the reason behind it, and what the sales drivers are.
Also find out which product lines are more seasonal than others.
This will vary across all product line but getting a general overview of the margins will help you understand how much profit you can make while selling a product or a specific range of products. Comparing this with other similar suppliers will also help you understand if the margins are high, low, or overage.
Once you have an idea of prices and profit margins you can begin to price their products and get a feel for how competitive they are. See this article on ecommerce price strategies » for how to do it.
This will become a part of your expenditure, and you need to ensure that the costs of shipping and order fulfillment do not eat too much of your profits.
Utilising your supplier's shipping company can sometimes be cheaper than using your own. Get an idea of shipping, by asking them to quote shipping costs for a planned opening order or a replenishment order.
This will give you an idea of the kind of customer support they provide. While some might have return policies and some might not, here’s where your goals come into play.
You must know what kind of service you want to provide the customers and whether the return policies align with those goals. Your own return policy is closely linked to that of your supplier so make sure they're aren't going to "wash their hands clean of you" once they ship your purchase order.
Supplier payment terms are crucial when it comes to managing cashflow. It's not a good idea to spend a big portion of your capital on stock and then you have nothing left for marketing or other revenue driving activities.
Aim for Net 30 days or more. But remember to factor in shipping times because if your stock takes 2 weeks to arrive at your warehouse, then you effectively only have 15 day credit terms.
This is perhaps one of the most important questions you must ask. The quality of their customer service will ensure the kind of brand perception you want to build. Also, find out the available times, the communication channels they use for customer interaction, their turnaround time, and more.
Match their answer to this with how your researched actual customer ratings of them and the products they carry.
This is another important question. Although everyone might not be comfortable providing referrals, it is important to see how they answer the question. If they provide referrals that check out, it’s a good sign. However, if they don’t provide referrals, they must have a valid response for not doing so.
#4. Having Answers for Questions
While you might have questions for the supplier, the latter will also have some fundamental questions for you. Keep your answers crisp, useful, and confident. This will form a positive impression on the supplier as they’ll understand that you know exactly what you have to offer.
If you want to sell a range of products, it is good to see a few samples at any meeting. It gives the supplier an opportunity to showcase their range, and you to feel and see the quality of the product and packaging up close.
Understand that negotiating is an elemental part of striking any deal. So follow three rules:
- Never take the first number as the final number. Be it for shipping, price, payment terms, or anything else.
- Listen carefully and try to understand the intent behind the offers or counter-offers, as it will help you negotiate better.
- Always think of solutions or options that are mutually beneficial and highlight the supplier’s benefits.
Overall, with these few steps, you can prepare for any supplier meeting effectively. You will have a greater chance of striking a good deal for yourself. But here’s a pro tip that can come in handy when nothing else works. Don’t be afraid to say no and walk away in a polite, respectful, but confident manner. Highlight your reasons as to why the terms wouldn’t work out and why your products deserve the terms. If your deal is indeed good, the supplier will likely not take no for an answer and might settle at the terms you set.
But What Does the Perfect Product Look Like?
Congratulations on finding a potential new supplier and setting up a meeting with them. But how will you know what product(s) could be the perfect one for you?
Below is a list of product criteria that I've consistently found in great selling products, and hopefully it could help you narrow down your product search too.
- In-Demand & Popular - that's not to say it's a "trending product" but one that has seen consistent demand and could be considered "evergreen", which means that it will have demand for years to come.
- Solves a Problem - products that solve problems will always be successful, plus it's always easier to create marketing campaigns and content around these types of products.
- The Marketing is Built in - this follows on from the previous point. Products that allow you to expand on their use, showcasing the problem they solve and how it could improve your customer's life are going to be a hit, and allow you to get creative and run some effective marketing campaigns around.
- Healthy Product Margins (and economical to import) - Products with good profit margins (or that don't attract high import duties or special handling charges) allow much more freedom to run marketing, social ads and discounting campaigns.
- Repeat Purchase Products - products that "run out" or that you can create subscriptions from (like consumables, creams, refills, disposables etc) are key for repeat business. The “replen strategy” is a well known one centered around replenishable products. Creating email automations to remind customers when they are running low, and offering a discounts, can drive traffic and sales back to your website automatically.
- Lightweight to Ship and store at a Warehouse - products that are lightweight to ship to you from your suppliers, and also when you send out to your customers, are winners. It'll also mean cheaper warehouse and handling costs. Big bulky products can be complicated and timely to ship. While this is a higher barrier to entry and you may enjoy less competition from such products, the logistical aspects of this can make them costly and complicated to stock. But don't rule them out completely because if the margins are good and you only need to sell a few a month or quarter to earn a decent profit then it could be worthwhile and you'll have a unique product that fewer competitors will consider.
- Customisation & Branding Potential - ie can it be branded (private label /white label) ensures that you are the only brand for that product.
- Multiple Suppliers or Manufacturers - there's nothing more frustrating for an ecommerce seller than finding a winning product, putting some marketing behind it, getting traction and traffic only to find out that your supplier has run out of stock and won't be replenishing it. Aargh! This happens frequently. So a good idea when you start to see good sales coming in for a product is to move quickly to find alternative suppliers or manufacturers so you have a backup.
This is tactic I used frequently to gauge a product's potential as a private or white label product before investing in branding, packaging, marketing and large order quantities.
With 18 years of experience in the eCommerce industry, I have successfully launched and grown multiple e-commerce businesses, the 2nd one hit 7-figures in revenue within its first year. In 2022, I joined a European food technology equipment and IT service provider as their Head of E-commerce, overseeing 14 eshops across Europe and South Africa. Selljam is where I share all those ecommerce tips, tricks and hacks learned along the way that I hope will also help you on your journey to success.