On Amazon and in other eCommerce marketplaces, you’re only as successful as your suppliers are affordable and reliable. You can’t deliver quality products at competitive prices to your customers on the promised delivery dates unless your suppliers deliver low-cost, high-quality products to you according to the agreed-upon schedule.
Finding and negotiating with top-notch suppliers is one of the keys to building a successful Amazon business. Your success hinges on your suppliers’ ability to manufacture or procure quality merchandise at affordable prices and replenish inventory quickly. A Fulfillment-by-Amazon-friendly supplier is an added benefit.
To optimize your success as an eCommerce retailer, you need to choose suppliers who share your commitment to customer satisfaction, then work closely together to meet or exceed your customers’ expectations. In this article, we explain how to do just that.
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Where to Find Wholesale Suppliers
When looking for a supplier, you have three main options: Supplier Directories, Google, and Alibaba.
1. Supplier Directories
Short and sweet – do not waste your time with the paid supplier directories that you will come across. From my experience, these are all full of poor quality manufactures.
Google is one of the best ways to find suppliers anywhere in the world. However, you don’t want to end up trawling through hundreds of pages to find manufacturers for each niche.
An effective tip is to always search for the exact keyword for your niche. You can do this by putting quotation marks around your product niche.
For example, searching for “jump ropes”. This needs to be combined with the correct terminology (e.g. “jump ropes private label”, “jump ropes supplier”, “jump ropes wholesale”). This allows you to efficiently find suppliers that produce your product. Make sure you look through up to 10 pages.
This is the route I almost always take. It’s the most popular place to find overseas manufacturers and will allow you to find a product at a very low price. All you need to do is create a free account, enter your keywords in the search bar, and you will be able to contact suppliers directly.
For best results, I strongly recommend that you use the following filters when making a search:
- Gold Suppliers: These suppliers have been authenticated by a third party.
- On Site Check: All business licenses and contact information has been fully verified by Alibaba.
- Supplier Assessment: This is an assessment report that has been created by a third party.
By finding suppliers that meet these criteria, you will know that you are working with trustworthy manufacturers. You will be completely safe placing large orders with these suppliers.
When you click through to a product page it will give you all the information, pricing, and contact information to reach out to the supplier.
Here is an example of a jump rope supplier listing. You will see the price ‘per piece’ and a minimum order quantity. You can actually disregard the minimum order in many cases, as suppliers often make this up.
In this case, the minimum is low, but sometimes listings have much higher minimums. This usually isn’t actually true, and I will later be showing you how you can order fewer than the minimum quantity stated.
The supply ability is very important. You need this to be high enough to satisfy your potential sales volumes on Amazon.
You don’t want to run out of inventory! If this supply level can’t keep up with your sales, this will be likely to negatively impact your progress.
You are also given payment terms, and below that, you will be given delivery information. Make sure you check this and make sure that it is not over 15 days to have your items shipped out.
To ease you through the process, here is an explanation of the different terminology used.
- FOB price – This is the Freight On Board price – the cost to manufacture your product. Shipping, taxes, customs costs are not included.
- Minimum Order Quantity -This can be negotiated!
- Supply ability – The number of products a supplier is able to manufacture each month.
- Port – Where the manufacture is shipping from.
- Payment terms – How you can pay the supplier. I usually use bank transfers, but PayPal and Western Union can be used. I also usually pay 1/3 of the cost upfront, and then pay the remaining 2/3 once the products are ready to ship.
Learn more about the best ways to source products to sell on Amazon.
Key Criteria to Consider When Finding Suppliers
When it comes to selecting suppliers, whether domestic or foreign, it’s crucial to carefully evaluate each option to ensure they can meet your expectations and deliver excellent customer service. Don’t fall into the trap of basing your decision solely on price. Instead, focus on these key criteria to find the right suppliers:
1. Experience and Expertise
Look for suppliers with extensive experience and expertise in the specific product or product line you require. Manufacturers specializing in a single product are preferred, as they are more likely to offer higher quality goods without unnecessary markups. Ask the following questions:
- What products do you manufacture at your facilities? Choose suppliers that produce the items they offer to avoid quality issues and price hikes from middlemen.
- Which markets/countries do you export to the most? This question reveals the supplier’s experience in doing business in your country without disclosing your location. Ensure they are familiar with relevant compliance issues.
- What are the common quality control concerns raised by your customers? Transparent answers here indicate the supplier’s willingness to address and resolve issues. Request customer references to gain further insights into their performance.
2. Clear Communication
Effective communication is vital for a smooth supplier-buyer relationship, regardless of their location. To ensure seamless coordination and problem-solving, consider suppliers who meet the following communication criteria:
- Language proficiency: Choose suppliers who can communicate with you in your preferred language, both verbally and in writing.
- Availability: Suppliers should be reachable during regular business hours and respond within 24 hours (preferably sooner) via email, text, or phone calls.
- Transparency: Work with suppliers who are honest, admit mistakes, and take responsibility instead of blaming others.
3. Past Performance and Reputation
A supplier’s track record and reputation are strong indicators of their reliability and potential as a long-term partner. While a website can provide information, it’s crucial to verify references and consider the following factors:
- Longevity: Inquire about the supplier’s years in business, especially their experience in manufacturing the products you need.
- Ethical considerations: Investigate the supplier’s ethical practices, such as labor conditions, to avoid potential backlash from customers and regulatory agencies.
- Regulatory compliance: Ensure the supplier adheres to all relevant laws in their home country and the countries they operate in.
Having a responsive supplier is essential for addressing any issues promptly. Seek suppliers who exhibit the following traits:
- Ease of contact: Suppliers should be easily reachable via phone, email, or text.
- Quick response time: Suppliers should respond within minutes or hours, not days or weeks, to resolve any concerns efficiently.
- Problem-solving ability: Look for suppliers who actively listen and collaborate to find the best solutions for you and your customers.
Price is undoubtedly a crucial consideration, but it’s essential to assess it comprehensively to make informed decisions:
- Product and production costs: Understand the reasons behind price differences among suppliers, such as raw material sourcing and manufacturing efficiency.
- Shipping and related fees: Consider all costs involved in transporting the items to you or Amazon fulfillment centers and determine who bears these costs.
- FBA fees: Suppliers who offer to ship directly to Amazon fulfillment centers can save you time and costs, but ensure they have a reliable track record with FBA.
By thoroughly evaluating potential suppliers based on these key criteria, you can make well-informed decisions that foster strong and successful partnerships in your supply chain. Avoid rushing into choices solely based on price and prioritize the long-term benefits of working with reputable and experienced suppliers.
How To Negotiate Prices and Terms
Before finalizing any agreement with a supplier, it’s essential to negotiate the pricing and terms to ensure a mutually beneficial deal. Suppliers are often open to negotiation, as they prefer it over losing potential business. Here’s a reader-friendly guide on how to negotiate effectively:
1. Preparing for Negotiation
- Make a list of key points for discussion, including price, quality expectations, shipping costs, and FBA fees. If you’re working with a manufacturer for a unique product, consider intellectual property rights and non-disclosure agreements.
- Prioritize your list from most to least important to guide your trade-off decisions during negotiations.
- List your strengths as a buyer, such as high-volume orders and plans for expansion, to strengthen your negotiating position.
Remember, price shouldn’t be the sole focus of negotiation. Consider the total value of the deal and important terms like product quality, shipping, and payment.
2. Effective Negotiating Tactics
- Always counteroffer rather than accepting the supplier’s initial offer.
- Be cautious of unbelievably low prices; inquire about the reasons behind them to avoid potential quality compromises.
- If a price seems high, provide concrete reasons for lowering it, such as market demand or competitor pricing.
- Be willing to compromise on less important terms for you in exchange for more crucial terms.
- Explore cost-saving options like removing unnecessary product features that your customers don’t need.
- Inquire about discounts for high-volume or repeat orders.
Strike a balance during negotiation; avoid pushing the supplier too hard, as it may lead to hidden compromises or poor customer service.
3. Secure a Purchase Order Contract
After successful negotiations, create a purchase order contract with the help of your attorney. The contract should include:
- Product specifications and inspection/testing requirements, if applicable.
- Confidentiality and intellectual property agreements to protect branding and trademarks.
- Detailed pricing structure, including quantity-based discounts.
- Deposit and payment terms, with consideration for using escrow services.
- Packaging, labeling, and FBA requirements, if applicable.
- Shipping and delivery terms, including costs and responsibilities.
- Manufacturer warranty, if applicable, and agreements for after-sales services and support.
- Penalties or compensation clauses for non-compliance.
Get any exclusive agreements in writing, clearly stating the end use of products and after-sales services. Hiring a qualified business lawyer to draft or review the agreement is strongly recommended for added protection in case of disputes.
By following these negotiation tips and securing a detailed purchase order contract, you can build strong and fruitful relationships with your suppliers, ensuring the success of your business.