Finding the right vendor that will work with you and help your business is one of the hardest parts of retail. If you are just starting out not only must you find the true wholesaler suppliers, you have to find ones that will open the door to you. In many ways, retail is like the ‘good old boys club’ they really don’t want newcomers to join.
Here are a few tips to get you started.
Make sure you are buying from a reputable source.
- Look at their history
- How long have they been in business?
- Generally it’s better to find your source offline; like a trade show or through a business association
- Check the suppliers references with the Better Business Bureau, do a Google Search on the company, etc
Start small and build a relationship
Ask what the MOO is (Minimum Opening Order) and try to keep the first order at that amount.
Try to conserve your capital (cash) don’t over-order. Ask for show discounts if you are at a trade show.
Once you’ve ordered, reviewed the products and company the next step is to set-up a credit account.
Purchase on credit (not your credit card – on the vendor invoicing system) and pay off completely before due date, but not too soon. Keep your cash as long as possible. But always pay your suppliers on time. This one step will get you more goodwill than anything else you do!
After you have ordered and paid a few times, it’s time to start negotiating. Suppliers and sales representatives will be more open to working with you after you show them you are a reliable seller. Find out if there are any ‘early order’ discounts. Early Orders are placed before they bring in their supply. Vendors will give you a discount if they know you’ll take delivery as soon as their shipment comes in.
As you start to build trust with the vendor and see how they control their inventory you can decide whether the company is reliable enough to approach about drop shipping. If the supplier keeps good stock, has a good communication system (or customer service support) you should consider approaching them to work out a deal. Ask the vendor drop ship the larger or more expensive items while you continue to order the smaller or less expensive items in larger quantities.
If your vendor agrees to drop ship don’t expect a super discount on the drop-shipped items. Because your supplier is holding the inventory, tying up their storage space and capital investment, they’ll expect the lions share of the profit. That’s OK, you’ll still be ahead of the curve because you can offer a greater ‘depth of inventory’ or larger selection for your buyers.
Building a relationship with your suppliers takes time. Expect to start slow. As you get started (unless you have an ‘in’ with the company) you probably won’t get the best prices on products until you prove yourself. Conserve your cash, start small and build slowly, and always be on the look out for the next vendor to start a relationship with. It’s healthy in business to have more than one source for your products.