This article is the second in a series designed to help eCommerce sellers navigate one of the most important decisions in the business cycle – finding reliable suppliers and vendors for your eCommerce business. The first article on how to find suppliers and vendors can be found here.
Selecting the best vendors is an important process. You want to be sure to do your homework, because selecting the wrong one can be a painful and costly mistake. A vendor’s poor performance can reflect poorly on you and harm your reputation in the eyes of your customers. What you consider when selecting a vendor will partly depend on your particular needs. These considerations include:
- Minimum order requirements and Price – These two really go hand-in-hand. A good way to inquire about this is to ask for price breaks up through a certain quantity. This will provide you with pricing and reveal minimum order quantities at the same time.
- Total costs – Be sure to find out what your total cost will be so that you’re aware of any additional fees that the supplier automatically includes on invoices. You don’t want any unpleasant surprises and you want to be sure that you are comparing “apples to apples” when looking at vendor pricing.
- Payment terms – Although net 30 is the most common of payment terms, this is often negotiable up front. Sometimes there may be a discount applied when paying in advance too.
- Quality – Always look at samples to evaluate quality. You can do this either at a trade show or by having them shipped to you. Keep in mind that not all suppliers will provide samples. If they won’t provide a sample and you aren’t able to go see one in person, it’s advisable to move on to one where you can actually see a sample. Receiving samples allows you to not only see the quality but confirm that the product works as it should. Plus, trying out the product allows you to communicate that knowledge to prospective buyers.
- Reliability – Good suppliers will ship the right number of items, as promised, and on time, so that they arrive in good shape.
- Stability – Find out how long they’ve been in business. You’ll want to sign up with vendors who have been in business for a while and have done so without changing businesses every few years. A company that has long-tenured senior executives is another good sign, and a solid reputation with other customers is a promising indicator that a company is stable. Be aware that a vendor that’s short on orders and is trying to accelerate cash receipts, may start sending you shipments that arrive earlier than you requested. This is not the type of vendor that you are looking for.
- Accessibility – The vendor you select should be easy to reach and responsive to requests for information or assistance.
- Location – Merchandise ordered from a distant supplier can take a long time to get to you and generate added freight charges. Be sure to ask how long a shipment will take to arrive at your loading dock. If you need to be able to receive shipments faster, consider a closer supplier.
- Freight policies – Be sure to ask about these policies so you are aware, for example, of order quantities that might result in free shipping. There could also be other ways to reduce shipping costs that you’ll want to be aware of such as the ability to combine the orders of two different products.
- Drop shipping capabilities – Drop shipping means that the supplier takes care of everything including storage, packaging, and shipping to the customer. All you need to do is sell the products, take orders, and communicate them to your supplier. There are many pros and cons related to this topic that you need to consider.
In part one of this series, we explored walked through how to find reputable suppliers and vendors for your Amazon, eBay and Walmart inventory. This second part provides an outline of the most important business issues to consider when evaluating vendors. Next, we’ll look at the technical considerations that are crucial to understand before you make a choice of partner for your inventory management.