SRM: 5 Important Tips & Questions to Ask when Choosing A Good Supplier or Distributor for Your eCommerce Business
Your suppliers and distributors are a major component in the success of an ecommerce business. The decisions they make and how they operate their business will trickle down and affect yours. The saying “you’re only as good as the company you keep” springs to mind. So choosing the right one is an important step to building your online business. Below I’m going to touch on a few tips to look at and some questions to ask before you choose your next supplier. We still have about 90% of the original suppliers that were sourced before Mantality launched, and the suppliers we no longer have, that were with us from the start, either stopped stocking the products we were buying from them or unfortunately went out of business.
Find products you have a personal interest or affinity with
This is a biggie. You want products that have your personal seal of approval before even dreaming of selling them to a customer. Products that you have a keen interest are more likely to do well on your ecommerc store than any others. Why? Because you’ll be more inclined to promote them and create campaigns around them to ensure they do well. You’ll be proud that a product you love and use personally is available to your customers. Furthermore, you’re more likely to create blog reviews and video reviews etc around products you have a personal experience with. Finding these products is another kettle of fish though, and which I talk about in tips for finding suppliers and products.
Choose products that are going to sell
Seems like a no brainer right, but this is not as easy as you might think though. You can more or less get an idea for products that are going to sell well by the online buzz they’ve created as a brand, and to see which websites have picked them up and featured their products. You can find this about by looking at your suppliers best selling lists or asking which are their best sellers. However this is not always guaranteed that if a product is doing well generally that it will do well for you too; as a rule of thumb you do need to have such products on your site to attract the crowds and give the perception to customers that you’re selling these popular products.
However, by choosing the most popular products out their you can be sure that you’re going to have some fierce competition, so you’d better have the marketing equivalent of an ace up your sleeve to get a leg up on your competitors. This is another reason as to why you should also focus on more niche products that are going to be harder to find by the customer. Work on an 80/20 split of niche to popular. Also think about making your own products by bundling in other niche products with these popular ones to make an entirely new product.
Choose a supplier or distributor that is backed by a good brand and manufacturer
If you look further down the rabbit hole, or up the chain in this case, you need to look at the brand that is backing your supplier. The buck stops with the manufacturer ultimately so if they’re doing a crappy job at marketing or there’s a lot of negative perception about a particular product, that it going to trickle down to your business and affect how you’re perceived and how you do business. Have the same frame of mind, and questions at hand when looking at a brand or manufacturer. Their success could mean yours too.
Don’t rule out retailers that have a distribution or wholesale division
Many large international ecommerce stores have a wholesale or distribution division that shouldn’t be ignored. These are online businesses that have grown to the size where they’re buying in the kind of bulk quantities where they can offer products at the same wholesale prices as distributors. The benefit of using such suppliers is two fold because you’re able to see where they’re focusing their marketing efforts on, as well as them being able to offer good shipping rates due to their bulk shipping discounts arranged with their couriers. The down side is they may run out of products quicker than anticipated, and may also give preference to their own B2C business for the last few units versus yours.
Look for suppliers that are engaged with their business customers
Supplier relationships are a bit like marriage, they only work as well as the effort each of you put into it. So look for suppliers that are engaged with their business customers through social media and in the real world. Some suppliers and distributors are under tight contracts to ensure their exclusivity in a given territory so they need to sell a certain amount to remain a distributor of that brand. The smart ones realise the value in partnering with their retailers and driving sales to them in the form of collaborations, listing them as stockists in print ads, giving them sample units to demonstrate, consigment stock, extended lines of credit and so forth.
Below you see a YouTube video I recently created to showcase the brand: Runtastic, where I interviewed our supplier and he talked about the brand and its features and benefits. This is beneficial to both parties, because it leverages your suppliers’ knowledge of their product and also informs the customer about you and the brand at the same time. The customer can also see the people behind the brands and can connect on a more personal level with the brands involved.
Once you’ve found that potential supplier, there are few important questions to ask them and yourself.
Questions to ask yourself and potential supplier
- Do they dropship and what’s the turnaround time? Dropshipping in the early stages is always a good idea to get a feel for how well the products do. Then you can start to stock the good sellers.
- What’s their website like and will it be easy to extract product images and product descriptions? It can be a real time saver if they have all the digital assets in place when it comes time to list your products.
- What do their blog and social media profiles like? This will give you an idea of how often they post new products and can help you with buying decisions for future orders.
- Do they offer 30 day credit terms and what’s needed? Some suppliers need 6 months or more of solid trading before offering these.
- Do they offer any sort of rewards for purchases?
- Do they sell direct to the customer via their own retail website? While not uncommon, this will mean you’ll be competing directly with them for sales.
- Ask about their returns policy for damaged units and DOA etc? This can be very important and you want a supplier that will step in and cover some of the costs associated with reverse logistics because you can almost guarantee saying goodbye to any profit if there’s a problem with a product, and it needs to be collected, returned to supplier then re-shipped to customer.
- What is their average turnaround time for orders?
- Will they help out with shipping charges? Ask if you can get an order discount when an order is over a certain value.
- Does the supplier or distributor list their retailers in a stockists section on their website and do they help promote their retailers? There’s an SEO benefit by having your logo and website linked to from a supplier.