In the course of running your store, you will inevitably have to deal with many types of different vendors. Some vendors won’t give you the time of day whereas some vendors will be practically begging for your business. Some vendors will be reliable whereas some vendors will be flaky but inexpensive.

Every vendor that you will deal with will have its own set of priorities and perspectives, many of which will differ from your own. Because you may not always see eye to eye, it is important that you deal with your vendors in such a way that your goals and their goals become aligned.

Make Your Expectations Clear

Many problems that stores face with their vendors stem from misunderstandings and differing expectations. Whenever we deal with any new vendor, we always present all of our needs and expectations up front. For example, here’s a general checklist of items that we typically discuss up front.

• Volume of merchandise that we plan on purchasing and at what time intervals. Sometimes this is difficult to determine, especially with a brand new store. However, if you put forth a good faith estimate, this is usually good enough.
• Lead times between receiving the actual order and delivery times
• Warranty and return policy
• Pricing in the volumes that we wish to purchase
• Delivery methods
• Payment terms
• Forms of payment
• Sampling of merchandise

Get To Know Them on a Personal Level and Meet Them Face to Face

Even though you’ve signed a contract with a vendor and reached a mutual agreement, always remember that a contract is a piece of paper and nothing more. The most important thing is to get to know your vendors and establish a positive relationship. If your relationship is not good, then no contract or piece of paper will prevent things from going awry. We always try and meet all of our vendors and get to know them on a business as well as on a personal level. Direct contact is especially vital as it allows you to associate your vendors with an actual face.

Propose Arrangements that are Mutually Beneficial

Don’t forget that your vendors are trying to make a profit as well. Always try and propose arrangements in which both you and your vendor can both make money and share a mutual interest. When we first started out, we used to always try and extract the lowest possible price out of our vendors. But what we found was that this tactic generally pissed them off. Once we started getting a little more creative with our deals, our relationships with our vendors became much better. For example, instead of trying to negotiate an absolute price up front, we agreed on a pricing structure based on volume of sales.

Make Them Feel Special

A good vendor relationship builder is to give their products special treatment. Offer to feature their products exclusively on the front page or offer incentives for customers to purchase their items. Vendors are much more likely to reciprocate if you treat them extremely well.

Avoid Vendors that Seem Abnormally Cheap

We learned this lesson the hard way. In the beginning, we looked for the cheapest of the cheap in terms of vendors. It took us a while but we finally learned that low prices almost always come at a much greater cost. For example, we had this one cheap vendor who sent us products to sell where over 30% of items sent were defective. When we tried to call and complain, they could not be easily reached. After factoring in the defect ratio, we weren’t getting that great of a deal in the end plus we had to waste time going through all of our merchandise to pick out the bad items.

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