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.
Table of Contents
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.
2. Google
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.
3. Alibaba.com
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.
Should You Find Domestic or Foreign Suppliers?
The global economy provides you with a broad selection of suppliers that extends far beyond the borders of the country(ies) in which you sell products, giving you access to a wider variety of quality products at competitive prices. However, importing products from suppliers in other countries isn’t always best for business. When deciding between domestic suppliers or their across-the-border counterparts, consider a variety of factors, including shipping costs and times, customs inspections, language barriers, and more.
In this section, we highlight the potential benefits and drawbacks of working with suppliers in other countries versus those in your own country, so you have a general idea of whether to focus your efforts on working with domestic or foreign suppliers. Many sellers choose to work with a combination of the two, evaluating each supplier based on its own merits.
Pros and cons of working with domestic suppliers
The major benefit of working with domestic suppliers is that you have a lot in common with them:
Location: Proximity to you and your customers offers several advantages, including the following:
- Better quality control: You have more freedom to check out local manufacturing operations and inspect products.
- Improved inventory control: You may be able to reduce your inventory-carrying costs by ordering in smaller batches and holding less product in inventory.
- Increased responsiveness: Local supplies are likely to respond more quickly and effectively to any problems that arise.
- Improved supply chain efficiency and lower shipping costs: You avoid customs, import taxes, port charges, and duties, and avoid having to ship products great distances.
- Fresher products: If you sell time- or temperature-sensitive products, sourcing from nearby suppliers can help ensure products are fresh.
Jurisdiction: By operating in the same country, you’re generally familiar with the rules and regulations suppliers must follow. You’re at less risk of unknowingly teaming up with a business that operates illegally or unethically. More importantly, if you have a supplier in a foreign country manufacturing a product you invented, you may have less protection over your intellectual property rights; in other words, the supplier may be freer to steal your invention or idea.
Language: Because you and your domestic supplier probably speak the same language, you’re less likely to have disagreements or miscommunications that can negatively impact your business.
Currency: By using a common currency, you avoid the complexities of having to convert prices from one currency to another.
Customers: Sourcing products domestically enables you to market the products as being manufactured domestically, which may provide an advantage over sellers who source products from foreign manufacturers.
The potential drawbacks of working with domestic suppliers include the following:
- Higher prices: Suppliers in other countries may be able to offer similar quality products at a lower price for various reasons, such a being able to operate in a jurisdiction with less stringent workplace regulations.
- Limited product variety: Domestic suppliers may not have access to the products you want to sell.
- Limited production capacity: Foreign suppliers may have greater production capacity and hence be better equipped to fill large orders.
Pros and cons of working with foreign suppliers
Foreign suppliers may offer benefits over their domestic counterparts, including the following:
- Lower prices for comparable quality: Suppliers that operate in countries with fewer regulations and lower pay can manufacture similar products for significantly less money and pass the savings along to retailers and their customers.
- Broader product selection: Foreign suppliers often have access to products that aren’t available from domestic suppliers.
- Greater production capacity: Some countries have much larger manufacturing plants than others, enabling them to fill large orders faster and offer deeper discounts on purchases of large quantities.
Although foreign suppliers may offer a greater variety of products at lower prices, consider their potential drawbacks:
- Language and cultural barriers: Communicating with foreign suppliers may pose a challenge.
- Distance: Performing due diligence with suppliers in distant countries is a challenge. You may need to rely on third-party service providers to vet foreign suppliers for you. In addition, distance increases the difficulty and costs of overseeing manufacturing processes and quality assurance.
- Negative public relations (PR): Depending on the supplier and the country in which it operates, having a business relationship with a foreign supplier or using foreign suppliers when domestic suppliers are struggling and unemployment is high could generate negative PR.
- Different currencies: When suppliers use a different currency than you’re accustomed to, calculating and comparing prices among different suppliers becomes more challenging.
- No guarantee of intellectual property (IP) rights: Given the weak IP laws in certain countries, protecting your valuable product ideas and designs can be very difficult and costly. After hiring a foreign supplier, you may start to see lower priced counterfeit products on the market that look suspiciously like the one you invented.
International suppliers are easy to find on B2B ecommerce sites such as Alibaba.com, which features more than six million products from more than 35,000 suppliers in various countries.
Key Criteria to Consider When Finding Suppliers
Whether you decide to use domestic or foreign suppliers (or a mix of the two), you need to vet each supplier under consideration to ensure that your suppliers can deliver the products and the level of customer service needed to meet or exceed your customers’ expectations. In this section, we highlight key criteria to consider when evaluating suppliers.
To avoid future misunderstandings, conflicts, and business disruptions, invest some time and effort in evaluating your supplier options. Avoid the common temptation to choose a supplier based solely on price.
1. Experience and expertise
Supplier experience and expertise in a certain product or product line may be the most important consideration. Look for manufacturers of a single product or product line — athletic shoes, sewing machines, mattress pads, oil diffusers, whatever. Suppliers that offer a broad selection of products are more likely to be traders or vendors, not manufacturers. Contact the supplier and ask the following questions:
- What products do you manufacture at your own facilities? Look for suppliers that manufacture the products they offer. Otherwise, you’re likely to get lesser quality products with additional markups.
- Into which markets/countries do you export most of your products? This question enables you to gauge the supplier’s experience doing business in your country without disclosing which country you’re in. If the supplier ships products to your country, and you’re concerned about certain compliance issues, ask follow-up questions to ensure that the supplier is familiar with those issues.
- What quality control issues do your customers most commonly complain about? This question gives the supplier an opportunity to be transparent about quality control issues at its facilities and how it addresses those issues. If a supplier seems evasive in answering this question, it may be hiding something. Ask for customer references. Though most suppliers refuse to share customer information, if you can get references, speaking with the customers can provide you with excellent insight into the supplier’s performance and any quality control issues.
- What quality assurance standards and procedures do you have in place? The purpose of this question is for you to get a sense of the supplier’s ability to detect and correct production issues as early as possible in the production line. This ability is crucial for minimizing product defects and keeping production costs low.
2. Clear communication
Whether you’re working with domestic or foreign suppliers, clear communication is essential for coordinating your efforts and addressing any issues that arise. Poor communication can lead to delays and mistakes with orders — for example, receiving the wrong product or having a product delivered to the wrong location. Look for suppliers who meet the following criteria:
- Communicates in your preferred language: The supplier’s ability to communicate with you in a language you understand, both in spoken and written language, is essential.
- Is readily available: You should be able to get in touch with a supplier during regular business hours. If you leave a message, the supplier should get back with you within 24 hours (preferably much sooner), via email, text message, or phone call.
- Is transparent: Try to work with suppliers who are honest and open and admit their mistakes. If a supplier gets defensive, blames others for mistakes, or makes excuses, consider choosing a different supplier.
- Is understanding/empathetic: Look for suppliers who understand the challenges you face in filling orders and serving your customers, so you don’t have to explain why certain issues are so important to you. The best suppliers anticipate your needs and concerns and address them before you feel the need to bring them up.
3. Past performance and reputation
A supplier’s past performance and reputation are generally good indicators of future performance and whether the supplier will be a reliable partner for a long time to come. In this section, we describe qualities to consider for evaluating a supplier’s reputation.
Don’t rely solely on what you find on a supplier’s website (or whether it even has a website) to choose or rule out a candidate. Small, independent suppliers may not have a website, whereas a con artist can easily build a website to make a fake company appear legitimate. Contact the supplier yourself and check its references from other retailers and sources (such as supplier directories).
Longevity
Contact the supplier and ask how long the company has been in business and specifically how long it has been manufacturing the products you’re interested in sourcing. A supplier that’s been in the business for several years is more likely than a recent startup to remain in the business for years to come.
Participation in major tradeshows is a great indication of a supplier’s longevity and positive reputation. Suppliers that participate in these tradeshows are generally well established.
Ethical considerations
Over the past few years, some major brands have been embarrassed and even punished by customers for the unethical practices of their suppliers, such as using child labor or having employees working in unhealthy or unsafe conditions. In some cases, customers have called for boycotts to pressure brands to take corrective action. In addition to boycotts, the negative publicity often grabs the attention of regulatory agencies that have the power to shut down the suppliers, which can lead to disruptions in the supply chain.
Whenever possible, prior to choosing a supplier, tour its manufacturing facilities and talk to employees. Look for any evidence of unethical or unfair business practices, such as the following:
- Child labor
- Unhealthy or unsafe working conditions
- Forced overtime
- Sexual harassment
- Discrimination based on race, ethnicity, gender, age, and so on
Regulatory compliance
Short of committing to ethical business practices, every supplier should comply with the laws of the land in both its home country and any countries in which it does business. Any failure of one of your suppliers to comply with regulatory requirements, especially in transactions that directly involve you, could lead to disruptions in your supply chain or even get you into legal trouble.
To assess a supplier’s commitment to regulatory compliance, obtain the following information/documentation from the supplier:
- Tax identification
- Business registration information
- Production facility certifications for any sensitive products such as medical products, food items, skincare or children products — documents such as FCC Declaration of Conformity, Restriction of Hazardous Substances (RoHS), Good Manufacturing Practice (GMP), General Certificate of Conformity (GCC), Children’s Product Certificate, and Model Toxics in Packaging Legislation
- Any other documentation the business may be required by law to have to do business in its country or your country or to deal in a certain product you sell
4. Responsiveness
Responsiveness is the quality of reacting quickly and positively, which is an important quality in a supplier. You want a supplier that’s responsive not only when you’re ready to place an order, but also when you encounter delayed deliveries, product defects, compliance issues, and other problems. Responsive suppliers:
- Are easy to contact via phone, text, or email
- Respond within minutes or hours, not days or weeks
- Listen and ask questions to fully understand a situation
- Solve problems and collaborate to achieve the best outcome for you and your customers
The best suppliers are open to third-party quality checks and even help third-party inspectors with the product documentation and relevant processes during the audits. If you request a third-party quality-control check, and the supplier refuses or is reluctant to grant your request, that’s a red flag indicating the supplier is probably hiding something.
5. Prices
When evaluating suppliers, a key consideration is price. Lower prices enable you to compete more effectively with other Amazon Sellers while improving your profit margins.
When comparing prices, look beyond the price of the items you want to source to consider all costs involved, including production costs, shipping costs, and Fulfillment by Amazon (FBA) fees. The following sections explain the costs you need to consider.
Product and production costs
When comparing the prices of a certain product from different suppliers, try to understand the reasons behind the price differences. Suppliers that offer lower prices may be able to do so due to one or more of the following factors:
- Negotiating lower prices for raw materials
- Using lower quality materials that cost less
- Paying workers lower wages
- Operating in jurisdictions with fewer regulations
- Using more efficient manufacturing processes or equipment
- Offering discounts are larger production runs
By knowing the underlying factors that enable a supplier to offer the same product for a lower price, you can make a well-informed decision of whether paying a lower price is worth whatever you may be required to give up.
Shipping and related fees
When comparing prices from different suppliers, consider all the costs of moving the items from the supplier to you or to Amazon fulfillment centers. These costs include shipping, handling, and any customs fees. Find out the total cost of shipping and related fees and who’s responsible for paying them — you or the supplier.
Some suppliers may be able to offer lower shipping and related fees than others due to the following factors:
- Location: For example, domestic suppliers don’t pay customs fees and can generally ship items faster and for less by ground because they operate in the same country. Some foreign suppliers may be able to save on shipping costs because they’re closer to a major shipping port.
- Labor costs: Some suppliers may have lower labor costs than others, enabling them to charge less in processing or handling fees.
- Shipping volume: Suppliers that ship a large volume of products often negotiate for better shipping rates and can pass these savings along to you.
FBA fees
A great way to slash your overall costs and save yourself valuable time is to have your suppliers prepare and ship products directly to Amazon fulfillment centers instead of to you. Many suppliers, domestic and foreign, offer this service. Of course, they charge for it, but they can probably do it for less than it would cost you to do it yourself.
Ask your prospective suppliers if they’re able to ship directly to Amazon fulfillment centers and if they’re familiar with and have the processes in place to comply with Amazon packaging guidelines.
Choose only reputable, reliable suppliers who have an excellent track record with FBA. When suppliers ship directly to Amazon fulfillment centers, you lose your ability to check shipments from the supplier for defects in products and packaging. You’re placing your trust in the supplier.
How To Find The Right Products
A lack of product research skills will prevent you from spotting potential products. Here are some tips to keep in mind if you are an Amazon seller who is trying to source products from global suppliers.
- Market research: Conduct some market research to find the items that sell well online. Find a product that solves the problems of your customers. Google trends can help you find popular keywords and product trends.
- Validate your idea. Visit e-commerce websites and read customer reviews
- Profit Margin: For a business to be profitable, your products must have a decent profit margin. Product prices and sales volume will determine the profitability of a product. Try to find products that are priced between $15 and $50. As long as the product is a good fit, customers wouldn’t think twice about making a purchase at this price point. In addition, choose a product that has a good sales volume in your niche.
- Product demand: Is your product in demand throughout the year? Avoid seasonal products. Find profitable products within a niche by searching for top-selling products on Shopify, Amazon best-sellers, Amazon wish list, and similar e-commerce sites.
- Competition: Any product that has low competition and fair demand is perfect for Amazon FBA.
Learn more about the best Amazon product research tactics.
How To Negotiate Prices and Terms
Prior to signing any formal agreement or contract with a supplier, negotiate the pricing and terms. Although suppliers may present their prices and terms as a take-it-or-leave-it offer, they’re usually open to negotiation. They don’t want to leave money on the table and would prefer negotiation over losing an additional source of business.
In this section, we provide guidance on how to negotiate with suppliers to improve the price and terms they initially offer.
Prepping for negotiation
Prior to contacting a supplier to open the negotiating process, do your homework:
- Write a list of price and terms you want to discuss, including price, quality expectations, shipping and delivery costs, and FBA fees. If you’re negotiating with a manufacturer to produce a unique product you developed, you’ll also want to include intellectual property rights, non-disclosure, and non-compete agreements in your discussions and contract.
- Prioritize the items on the list from most to least important, so you have some criteria to guide your trade-off decisions. You should have some idea going into negotiations which term you’re willing and unwilling to negotiate and to what degree.
- Write a list of your strengths, such as high-volume orders, the likelihood of repeat orders, your plans for expansion, and so on. Think in terms of what you bring to the table to sweeten the deal for the supplier.
Don’t make price the sole or top criteria for negotiation. What you get for your money (the total value of the deal) is more important. As you write a list of terms to negotiate and prioritize the items on your list, be sure to consider the following terms:
- Product value: The quality of the product you’re getting for the price quoted.
- Shipping and delivery terms: The supplier’s ability to deliver the products to the target destination on time, in good shape, and affordably.
- Deposit and payment terms: Flexible deposit and payment terms can enable you to gain access to inventory you might not otherwise be able to afford. Never agree to pay 100 percent upfront. If you’re hiring a company to manufacture a branded product you own the rights to, you typically pay a 30 to 50 percent deposit with the remainder due after the products have been manufactured and passed inspection.
- Manufacturer’s warranty: To protect you from having to cover the cost of returns due to defective or poor quality products from the manufacturer.
Brushing up on effective negotiating tactics
Negotiation is more art than science, but certain tactics have proven to be effective in getting suppliers to give more than they initially offer. Here are a few negotiating tactics that are useful whether you’re a novice or seasoned negotiator:
- Don’t accept the first offer. Always make a counteroffer.
- If a supplier offers an unbelievably low price, dig deeper to find out why. If a deal seems too good to be true, it probably is. Maybe the supplier is compromising on product quality or using substandard materials. Perhaps the supplier is cutting costs by not offering a warranty.
- If a price seems high, present concrete reasons the price should be lower, such as demand for the product is dropping, the cost of materials has dropped recently, or other suppliers are offering the same product for less.
- Be willing to give on terms that are less important for you and more important for the supplier in exchange for terms that are more important for you and less important for the supplier.
- If a product has features or functionality your customers don’t need or use, ask the supplier if the product can be manufactured for less by removing those features or functionality.
- Ask whether the supplier offers discounts for high-volume or repeat orders.
Don’t squeeze the supplier too much to the extent that the negotiator backs out or makes hidden compromises, such as secretly reducing product quality. Demanding cutthroat prices can also result in a supplier feeling unhappy about the relationship and providing second-rate customer service as a result or cause the supplier to start looking for better customers to replace you.
Obtaining a purchase order contract
After negotiations, have your attorney prepare a purchase order contract detailing the agreed upon price and terms, which both parties must sign. Be sure your purchase order contract contains the following:
- Product specifications
- Inspection/testing requirements (for example, arrangements for third-party product inspections during and after a product run)
- Confidentiality/intellectual property agreements (if applicable), including language to protect branding, logos, and other trademarked items
- Detailed pricing structure, including discounts for orders of different quantities
- Deposit and payment terms, including deposit amount (if any), when payment in full is required, and method of payment Telegraphic transfer (T/T), which is a direct wire transfer from one bank to another, is typical. Consider arranging payments through an escrow company, which holds the funds until the supplier meets its responsibilities under the contract — for example, completing the production run and successfully passing inspection of the products.
- Packaging and labeling requirements, if any, including any FBA requirements
- Shipping and delivery terms, including costs, which party is responsible for covering the costs, where products are to be shipped and estimated time from order to delivery
- Manufacturer warranty, if applicable
- Any agreements related to after-sales services and product support such as requirements to service or repair products or provide replacement parts or software updates
- Any penalties or compensation due to each party in the event that the other party fails to comply with the terms of the agreement
- Language to establish the jurisdiction in which the terms of the agreement are to be enforced
Get any exclusive agreements in writing, clearly stating the end use of the products and any and all after-sales services and support provided by the supplier. Amazon will require these agreements to help field any customer complaints or claims that challenge your intellectual property rights.
We strongly encourage you to hire a qualified business lawyer to write up your agreement or review the agreement presented by the supplier before you sign anything. That way, if a disagreement arises between you and the supplier, you have an attorney available who’s been involved since the start.
Consider taking Amazon FBA courses if you want to learn more about how to work with suppliers.
Here are the Amazon FBA course reviews for you to make references and see which course you should choose: