Focus on products: selecting suppliers

Making firm decisions about the products you will sell is essential but finding suppliers is also key. Finding out where you can source these products is half the battle. Finding suppliers you can trust and work closely with as you grow your business is the other half.

These suppliers and manufacturers are essentially partners in your business. You need to be comfortable with them as your reputation is often staked on their performance.

In this article we will:

•    Talk about your supply options
•    Show you how to search for suppliers
•    Help you evaluate if a supplier is a good one
•    Teach you how to deal with your suppliers
•    Talk about how many you should have

What are your supply options?

There are a number of options when it comes to getting hold of the products you’d like to sell.

Make the product yourself:

This is certainly not an option for every retailer. There are certain online retailers out there who set up with the intention of selling their own manufactured goods. Creating your own products gives you flexibility with stock and complete control over how the product reaches your customers.

If this is the case for you – you should consider a number of things. How will you get the materials you need and at what cost? What sort of time does it take you to make these items? What kind of packaging will you use? Once you have worked out all of the details and seen that you can make a good profit on your goods – you are free to start selling.

Use Drop Shipping:

Drop Shipping is a popular option when it comes to selling online. It means you list items on your site and when they are ordered you pass this on to your drop shipper who then packages and sends out the item. There are many pros and cons to this method.

For a start it is relatively low risk as you don’t have to invest in an inventory of products, you only buy what you sell. You don’t have to worry about storing or shipping any products and you can offer a wide range.

However drop shipping does take a lot of the control away from you. You have no power over how the product is delivered and you have no idea of the condition it will be in. As the customer has no idea that a drop shipper is involved, the blame of any issues will be laid at your door.

Purchase from a wholesaler or manufacturer:

There are many wholesalers and manufacturers who sell to online retailers and this option gives you more control than drop shipping. When you find one that sells what you want, you can create a relationship with them and buy however much you think your store will need.

Buying in bulk means you can get great discounts but it also means you need to have a decent storage plan such as a warehouse. You also need to be realistic about how much you cam sell – dead stock is a real drag on your profit margins.

How do you find these suppliers?

As we have established if you are not creating the good yourself you need to find someone that is. There are several research methods which should help you to locate your source.

Contact the manufacturer

If you know what you want to sell, find out who manufacturer it and give them a call. They should be able to tell you if they are selling direct to retailers or give you a list of the wholesalers that are.

Use a search engine

Using search engines can be tricky as most wholesalers and drop shippers aren’t too hot on marketing and SEO. If you search for the item you’re looking for you may need to dig a few pages deep into the results before you find what you want.

Get a wholesale directory

These aren’t cheap but if you are serious about finding multiple suppliers it could be worth the investment. There are plenty of option available so do a quick search and pick one you feel happy with. A quick dig into forums should be able to tell you if other retailers have been happy with that choice. Always good to check.

How to pick a good supplier

It’s worth your while checking each possible supplier before you sign any contracts with them. Getting stuck with a bad supplier will cause numerous headaches along the way and potentially do damage to your brand.

Ask for a sample

Having something sent to you will help you to establish a number of things. What is the quality of the product like? How swiftly do they dispatch? If it’s a drop shipper you can check the manner in which it is delivered.

“Unless your products are very high value, a sample is an affordable way to personally test production quality prior to signing a manufacturing agreement,” says James Hardy, Head of Europe, Alibaba.com.

“If you’re ordering a custom product, make sure you’re very clear about the specifications and ask for photos to be e-mailed to you before the samples are sent.

“While you might be wary of committing too much money to samples, bear in mind that the more you order the better a benchmark of quality and consistency they’ll give you—and don’t forget samples are useful when testing the market locally with partners and customers.”

Check out their technology infrastructure

The most professional suppliers will have invested in technology. Automation of sales is an important element in creating a seamless and scalable online business so you need to know your suppliers are up to scratch in tech.

Ask for customer reviews

Most suppliers will have gathered testimonials from their other clients – ask to see some of them and find out what others have to say.

Spend time on the phone to their sales reps

Calling up the sales reps and customer service team will help you to gauge what your service is likely to be like going forward. Spent some time with them on the phone and you can establish how knowledgable and how helpful they are.

Pay them a visit

Visiting your suppliers before you go into business with them is a good way to find out more about them and also to start a personal relationship with them which will be useful if you decide to work with them.

“If the samples are good, you might be ready to place your first order. But before you do, consider first the long-term value of a (tax-deductible) business trip to visit your supplier in person,” says Hardy.

“This is a great time to evaluate your partner’s strengths and weaknesses in terms of order size, stock levels, custom production abilities and so on—all of which have the potential to affect quality as the size and scope of your business evolves.

“If you can’t visit in person try to Skype with the supplier and ask for documentation of their QC process. Just because you’re not getting on a plane doesn’t mean you can’t look your counterpart in the eyes and begin building some trust.

How to deal with your suppliers

Time is poor and every second counts when you are running a business but you need to have open lines of communication with your suppliers if the relationship is going to work.

By checking in with them intermittently you can find out any potential bumps in the road around stock, find out if they have any new products coming up which might be relevant and of course, give personal feedback where necessary.

“If the goods you ordered pass muster with the inspection company but the quality isn’t all you hoped for, let the factory know and gauge their response,” says Hardy.

This is where personal relationships can be very helpful and remember, the factory is a business just like you, so understanding their motivation is the key to working with them to improve quality—or making the call to find a new supplier.”

How many suppliers should you have?

Becoming reliant on just one supplier could cause a legion of issues down the line. They could have stock issues which could directly affect you, they could go out of business or they could even decide to drop you as a customer.

By taking on multiple suppliers you are spreading the risk. You could also consider having suppliers in different geographies to leverage cheaper shipping depending on where the order is form. i.e. If you are experiencing a lot of orders from France, think about finding a supplier there.