In Part I of our two part series on Working with Suppliers, we discussed how to prepare for a discussion with your supplier about pricing and other contractual terms. We included the caveat that if you are a new retailer, your ability to negotiate is very limited. But, as your credibility and volume grows, so does your ability to forge better deals with your supplier.

Manage the negotiation.

Once your research and initial analysis is complete, you are ready to talk with your supplier about pricing. Approach the discussion in an open, friendly way.

The sales rep you will be speaking with has some latitude in setting terms. The more he likes you, the more motivated he will be to make you a better deal.

Be sure to explain your company. Help the sales rep see the potential that you bring. Explain how your business captures a specific market and why you think you will grow. This is especially important for small businesses. On the surface, you represent less business for essentially the same amount of work. To the extent that your business presents an opportunity, you have established an advantage to offer the sales rep.

Keep an open mind during the discussion. Remember that you would like to buy products from this wholesaler. Do not get stuck so wrapped up in the ‘deal making’ that you allow a small sticking point to destroy the opportunity for an otherwise profitable arrangement.

Write down everything that is discussed. This practice will help you remember and think through any agreements you made or questions that came up and need to be answered. It is also useful to be able to compare your notes to the contract that you will sign to be sure that all agreements have been captured.

Negotiating Tactics.

Here are a few simple things to think about when negotiating a wholesale supplier contract:

- Usually the first pricing you are offered is not the best pricing you may be able to achieve. It is a mistake not to ask for a better price. If it is not possible, you will hear that. If it is, you have done yourself a service.

- Talk about your purchasing in quarterly volumes rather than monthly; it does not change the facts but it gives a better picture of your business.

- Ask about incentives, promotions and other services. Many wholesalers have a host of programs available to help retailers.

- If pricing seems too low, ask why. It is a legitimate question. Pricing is not a mystery, it should be based on a definable set of costs and strategies. Be sure that low pricing reflects a legitimate issue such as overstock, promotion to gain market share, etc and not a substandard product or a product no one can sell (unless you have the secret to selling - then it is a great deal!).

Do remember that you will have more opportunities to negotiate terms over time. Do the best you can then let it go and settle into a productive relationship with your supplier.

Contractual Terms.

Many wholesaler contracts consist of a set of terms and conditions printed on the initial account setup paperwork. Be sure to read the terms, understand what they mean and that they reflect the agreements you made with the sales rep.

Here are some of the standard clauses in a wholesaler agreement:

Shipping, Risk of Loss, Transfer of Title.

The wholesaler details the terms of shipment and delivery including the payment and responsibility terms. Wholesalers frequently use FOB shipping terms. FOB stands for ‘Free On Board’ or ‘Freight On Board’. Whatever city is listed as the FOB is the destination to which the wholesaler pays the costs of shipping.

Typically, the FOB will be the same city where the supplier is located. You will be responsible for the cost to get the shipment from the wholesaler’s warehouse to your destination. The shipping section may also include the suppliers right to ship orders in part and so on.

Inspection and Rejection.

This section tells you as the buyer under what circumstances you can reject merchandise including time frame for doing so. In most cases, suppliers will require that you contact them first to discuss the shipment. They will then assign you an RA (Return Authorization) or RMA (Return Merchandise Authorization) number.

Be sure you follow this procedure. The reason for the return may affect the method of return. If you do not follow the procedure, the contract will usually stipulate that the supplier has the right to charge you for the returned merchandise.

Pricing, Payment, Security Interest: Merchant.

This section will describe payment arrangements including allowable methods of payment, number of days to pay, discounts for early payment, surcharges for late payment and so on. Be sure these terms correspond to the agreement made.

Warranty.

Suppliers usually warranty that a product is as described and will replace or repair products if necessary. Once again, there are procedures to follow which will be outlined in this section.

Force majeure.

Force majeure is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term ‘act of God’ (e.g. flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.

Governing Law, Attorney Fees, Miscellaneous.

The wholesaler will name its local laws as the applicable laws for the contract and will usually state that attorneys fees will be paid by the non prevailing (losing) party. This section protects both parties but it is more difficult for the retailer if the wholesaler is located at a distance.

If the wholesaler is in another country, it can be extremely difficult to pursue a legal remedy. It is sometimes possible to request that international arbitration be substituted for resolution of any disputes. There are a number of international arbitration groups that will mediate disputes between businesses in different countries using international law. It is generally less expensive to use arbitration than to pursue a remedy in the courts.

Honor the agreement.

Once you have made an agreement, honor the terms and you will find that as your business grows and your credibility grows, your wholesale supplier will look for ways to retain you as a customer.

eSources UK Wholesale Directory

Working With Suppliers Part I       Contact eSources

Your relationship with your wholesale supplier is critical to your success as a retailer. Unless your agreement with your wholesaler is favourable, you will not be able to sell at a profit.

Equally important, your wholesale supplier must be reliable so you can fill orders according to your published time lines and customers delivery expectations.

Establishing and maintaining the right relationship with your supplier requires skill, preparation and a very good understanding of your needs and your suppliers’ needs. A well negotiated agreement is a win for both sides. However, there is a caveat. If you are a new retailer with little or no credit history, trade references and the understandable desire to start purchasing in small quantities, your ability to negotiate is very limited. In general, you are asking the wholesaler to risk the time to set up an account with you, an unproven business.

Understand the Wholesale Supplier’s needs.

Wholesale suppliers buy and inventory products based on their expected sales volume to retailers. A significant part of their reputation rests on being ‘in stock’ for orders so they are constantly balancing the need to be stocked with the need to minimise cash tied up in purchase and management of too much inventory. Wholesalers make money on the markup they charge on products sold.

Wholesalers’ reps are tasked with finding and establishing accounts with retailers to distribute their products. Sales reps are usually rewarded by making a commission on sales so they are interested in adding retailers to their list. Most sales reps have some flexibility in the terms they can offer a retailer.

For example:

  • There may be 5 to 30 percent or more flexibility on pricing that can be awarded based on volume purchased, exclusivity, promise of repeat orders, faster payment and so on.
  • Payment terms are typically net 30 but can sometimes be extended to net 60. (Net 30 means that you have 30 days to pay for merchandise that you buy, giving you time to sell the products before you have to pay for them.)
  • Shipping and delivery can sometimes be expedited.
  • Some customers can be given priority on filling back orders.
  • Extended product warranties are sometimes available.

Most sales people have closing dates for hitting sales goals. The closer they are to that closing date, the more motivated they are to make sales. Closing dates are often quarterly.

Sometimes the sales rep is less interested in maintaining a specific profit margin than in taking on new business in a particular marketplace. Under those circumstances, there are sometimes additional opportunities for making a better deal. However, as much as sales reps want to do business, they cannot do business if the retailer demands concessions that are outside of their parameters. Sales reps are also reluctant to do business with retailers who are difficult to work with because it takes too much time to keep them happy.

Bottom line, there is room to negotiate with suppliers, especially over time if your business with them grows. However, there are limits to concessions that can be made and as with any relationship; you will get much further with a positive, respectful approach.

Prepare for the negotiation.

The better informed and prepared you are, the more likely you will be to succeed in any negotiation. Study the wholesaler’s product and price list. Recognise that individual products may work differently in your business. Be as well informed as possible about what volume of orders the wholesaler can expect from you.

What do you need from your wholesale supplier?

Everyone wants a lower price, of course. What is the discount you need to make your business work? What can you do without? For example, if the wholesaler offers payment net 30, can you offer net 15 in exchange for a price consideration? Frankly, you will not know if that is a possibility for you unless you sit down and look at your own sales record, your cash flow, the seasonality of your business and so on. Do the analysis ahead of time so you know your own parameters, you can be sure that the sales rep knows his.

eSources UK Wholesale Directory

Research the Alternatives.

There are usually alternatives for sourcing your products and you need to know what they are for several reasons. First, it is helpful to be able to point to a competitor’s willingness to negotiate. For example, ‘I am very interested in placing my business with you. I like your products and services and I can work with your terms. My problem is that XYZ Company is giving me x percent more discount on substitutable products; I need that break to make my own business numbers work. Is there any additional consideration you can give me?’

Variations might be, ‘What would it take to get to X percent discount?’ or ‘I am certain enough of my ability to sell this product quickly that I can offer you payment in net 20 instead of net 30 in exchange for the price concession.’

Second, you need to have backup suppliers in place or able to be in place quickly in case there is a problem with your primary supplier.

Time to negotiate.

Now that you have done the initial work, you are ready to have a discussion with your wholesale supplier.

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Seller: Amazon
Drop Shipping For Sellers is a Complete How-to Drop Ship Guide. This book is a Complete Guide to help you start your very own successful online business, or help you expand an existing one, while taking advantage of the many benefits that only Drop Shipping can offer. While eBay and PayPal are the main focus points of our discussions, many of th[Read More]

Drop Shipping For Sellers is a Complete How-to Drop Ship Guide. This book is a Complete Guide to help you start your very own successful online business, or help you expand an existing one, while taking advantage of the many benefits that only Drop Shipping can offer. While eBay and PayPal are the main focus points of our discussions, many of the techniques and procedures you will discover, can easily be applied to virtually any type of online business, whether you decide to offer your products in auction format such as eBay offers, or directly from your own eCommerce website. No Other Product is as comprehensive. And No Other Product offers as much practical information on how to get started, and how to succeed in your own eBay/Online/Dropship Business as this Book does.

Seller Amazon

The answer to this is earnings, time, and success. Using the drop ship method saves the retailer money and time. This method is also ideal for any individual wanting to get into ecommerce. You will not find anything like it on the high street that compares to the cost of an online store.

  1. The seller saves on space by not having to pay for a storage space.
  2. The seller saves by not having to keep bulk products that he can’t sell.
  3. The seller saves on packaging and shipping the product to the customer.
  4. The seller saves money by not having a large payroll. The seller does not need staff because the drop ship method takes care of that.
  5. The retailer saves valuable time so that he can do things that are more important like promotion.
  6. The retailer doesn’t have to research to find products and shippers in order to meet quota.
  7. The retailer saves time with no travel costs, Dropshippers take care of all transport and delivery details.
  8. The retailer actually saves money and time by having a virtual storefront, all you need is a webhost and a website.

The drop ship method has helped many people make a very good income without having to make a large investment or store products or finding the right products for sales. The use of a drop shipper is truly invaluable for your online store.

The drop ship method is simple to start up and anyone with the desire and will can achieve real results. It’s not complicated and most companies provide advisors to help you so that when you first start up you will know what to expect. Many companies have their own sites and offer forums for store owners to share ideas. The online advisors can also help to solve any problem you might be having. It is not easy to get free advice when you are in business. It is easy to get fraudulent information and lose a lot of money and never seeing any returns. That is why the drop ship method is so popular it helps resolve many issues in a well organized manner.

The OneSource Directory offers you connections to over 9000 suppliers and over three million products. The company also does the Import wholesale supplier business so that is something else you don’t need to worry about but you can benefit from. The “HOT” products to sell online are provided for your benefit so that you can decide to sell them or not.

A quick tip, check out EBay Pulse, you can find all the best selling products by category. As we, all know EBAY is one of the leading online companies people use to sell and buy products. The company offers auctions, classified sales and storefronts that you can use. Many people do sell on EBAY and millions of people go to EBAY to buy products. Such is the ease of using EBAY many people have quit there jobs and work from home.

Wholesale Dropshipping has become a booming business. This business is global in nature because everywhere in the world there is Dropshipping taking place. It’s a very simple process that retail businesses use every day. The wholesale Dropshipping business has one primary function and that is to move merchandise from warehouse to customer for the retail market. Because of this wholesale Dropshipping business, people all over the world enjoy every type of merchandise delivered right to their front door. Before the start of wholesale Dropshipping, the same merchandise was shipped by the wholesaler and again by the retailer before the customer received it.

In other words, the retail company used to order from the wholesale and then have to ship to the customer. With the use of wholesale Dropshipping services the retailer can simply send the name and the customer’s information to the Dropshipping Company, the wholesale Dropshipping Company then sends the merchandise directly to the customer. Dropshipping has become as common as going to the post office. Profit by the retailer is made on the difference between the wholesale price and the retail price. Every company at one time or another uses a Dropshipping company to deliver goods to a customer. The Dropshipping business has helped many small business owners to stay afloat. The expenses of a company are considerably less when Dropshippers are used, which in turn opens business up to individuals.

The complete shipping process for the retailer is modified and the wholesale Dropshippers redefines the shipping process. Many jobs have been reclassified because of Dropshipping. Some personnel have found it necessary to do other jobs than what they have been accustomed to doing.

Just about every other business uses a Dropshipper to move merchandise to customers. If you have an online business or a catalog business Dropshipping is one of the best way to get merchandise to your customer. Dropshipping has enhanced the bottom-line for many large and small businesses. The two most important things that Dropshipping does are to help the retailer with paperwork and shipping costs.

With wholesale Dropshipping a whole new world economy has become available. The retailer can source customers from all over the world and supply any item that is required. Whatever you wish to sell can be found in one form or another through the wholesale Dropshipping process. Dropshipping has become a quick and easy way to get started in e-commerce. Two other big advantages of Dropshipping are; no money is invested up front; and the second advantage is that there is no danger of having unsold merchandise in you inventory. When you use the Dropshipping methods you purchase merchandise only when you have sold merchandise. So you do not have to worry about an oversupply of one item and an undersupply of another item.

  
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