Picture this scenario…
You’ve put together a list of potential vendors that you want to work with either from a tradeshow or from a manufacturer’s distributor list.
You’ve never purchased in bulk before. You don’t have a website or a domain and you are extremely apprehensive about contacting your vendors for the very first time.
So what do you do? You stall…
A voice inside your head tells you…Maybe I should put up a website first. Maybe I should start a corporation or an LLC. Maybe I need business cards:)
But in reality, you should be figuring out what you want to sell and nailing down your product sourcing strategy as soon as you can.
Recently, I received this email from one of my readers who was a bit apprehensive about contacting their first vendor.
Just want to say thanks for the extensive information you provide on your site. I have found it quite valuable and encouraging.
I’m just starting out with my new venture and was hoping you could help? I have decided on the kind of product I would like to work with but I’ve come to a grinding halt at the thought of contacting my supplier. The kind of things that run through my mind are:
1. How do I approach my supplier e.g. what kind opening letter/email should I write?
2. Should I have decided on a company name and have my website up and running before I make contact with my supplier?
3. How do I deal with the question – How long have you been in business for?
So, I was hoping you could shed some light on the above and whether you have any samples of letters/emails you may have used in the begging when first making contact with your potential new supplier?
Editor’s Note: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course on ecommerce.
Choose A Sourcing Strategy First
First off, the way you approach your vendor will depend on your sourcing strategy.
Do you want to dropship?
Do you want to buy wholesale?
Do you want to private label your own products from Asia?
All of these models require a slightly different game plan.
If you haven’t chosen your ecommerce business model yet or if you are not 100% sure which product sourcing strategy to go with, read this post first where I outline and compare 8 different ecommerce business models.
Bottom line, approaching a vendor for dropshipping is a lot different than buying wholesale and carrying your own inventory.
Similarly, importing goods from overseas and dealing with Asian vendors requires a different strategy as well.
But don’t worry. I’ll break them all down for you in this post.
Editor’s Note: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course on ecommerce.
How To Approach Wholesalers In The United States Or In Your Own Country
When it comes to sourcing products for your online store, buying your goods wholesale in your own country is by far the easiest way to go.
There are very few requirements and most vendors will be willing to work with you no matter what level you are at.
In the United States for example, all you need is a sellers permit or business license and you’re good to go. You don’t need a website. You don’t need to have a corporation or an LLC.
You can simply call or email the wholesaler, tell them that you’d like to carry their goods, and ask them how to make a purchase.
If you’re in the US, they’ll probably ask you for your sellers permit for tax purposes and tell you their minimum order requirements. That’s it!
Note: Some vendors won’t even ask you for your sellers permit! But having one allows you to purchase your supplies tax free. It also demonstrates to your vendor that you actually have or are trying to start a real business.
In addition, it’s required by law to have a sellers permit BEFORE you start selling online because you need to pay sales tax in your state.
In my experience, most wholesale vendors in the United States have very reasonable purchase minimums on the order of hundreds of dollars so your upfront costs won’t be too bad. (The minimum order requirements will vary from vendor to vendor).
Overall, going the wholesale route is super easy.
Because you are buying the product outright, the vendor generally won’t care whether you are an established business or not because they get paid no matter what.
Once you’ve established a track record of consistent orders, you can ask for “net 30” payment terms. “Net 30” is a form of trade credit which allows you to pay for your goods up to 30 days later to help with your cash flow.
How To Approach Vendors For Dropshipping
While buying products wholesale is super simple, getting a vendor to dropship for you is a different beast.
It’s because when you buy wholesale, the transaction is simple. You pay the vendor and the vendor sends you the goods.
But when it comes to dropshipping, you are essentially asking for a partnership.
Instead of buying products in bulk, your vendor will be fulfilling every order that you send them “individually”.
In addition, you will have to work with them closely to make sure that the packaging and inserts display your brand as opposed to theirs.
In short, the commitment that a dropship vendor must make is much larger than a simple wholesale arrangement.
Dropship Vendor Requirements
As a result, you need to be fully prepared BEFORE contacting a dropship vendor because you must come across as a legit business.
Not only do you need to have your sellers permit ready to go but I would also put up a professional looking website ahead of time.
But wait Steve. How can I put up a website before I have anything to sell?
Just because you have a website doesn’t mean that it has to accept transactions. Just because you have a website doesn’t mean that it needs to be fully functional.
Remember. You are asking your dropship vendor to become a partner. And they will not want to partner with you unless you can prove to them that you have a plan to drive sales.
Now is putting up a website explicitly necessary? No.
But having a great looking website will go a long way in convincing a vendor that you are worthy of their time. The choice is yours.
Evaluating Your Dropship Vendor
Once you’ve shown your dropship vendor that you mean business, you need to perform your own due diligence as well.
Here are some questions to ask.
- Is there a dropship fee? – Often times dropship vendors will charge a per order fee for fulfillment.
- How long does it take to ship product once an order has been placed? – Customer service is always a major concern when dropshipping
- How are orders placed? (Phone, fax, email, API)
- Do they support EDI? – EDI is way to get real time inventory data from your vendor so you don’t sell goods that are out of stock.
- How are orders tracked? – Will they send shipping and tracking information to the customer?
- Can you place my company name and logo on the package? – It’s important to use your brand on the packaging
Note: If you are looking for a good place to find dropship vendors, Worldwide Brands can save you time by sorting and categorizing a large database of vendors for you.
How To Approach Vendors From China And Overseas Countries
If you want to sell private label products online or if you want to sell your own branded products, the best way to proceed is to have your goods manufactured overseas.
Now this is not as intimidating as it sounds. But dealing with Chinese vendors is a LOT different than dealing with vendors in the United States.
First off, they don’t care the slightest bit about permits or certificates.
You don’t need to have a sellers permit.
You don’t need to have a corporation or an LLC.
You don’t need to have a website or anything at all!
The only thing that an Asian vendor cares about is whether you can purchase a product in volume and on a consistent basis.
As a result, you need to come across as someone who has purchasing power when you first contact them.
Here are a few rules of engagement that I always employ.
- Never contact them as the boss or owner. Instead pretend that you are a buyer or a subordinate for your company
- Never tell them that you don’t know what you are doing. Instead, project confidence in your emails and your correspondence. Do not ask stupid questions that could easily be looked up with a simple Google Search.
- Never tell them that you are just getting started. If they ask for your website and you don’t have one, tell them you primarily sell your goods in retail stores or mall kiosks.
- Never show them an incomplete website. There’s no real point in showing off your website if it’s not ready. If you tell your vendor about your website and it’s empty or incomplete, then they will not take you seriously.
Confidence is the key.
You have to be decisive, know what you want and convey to the vendor that you would like to feature their products for your business.
If they think you are just a newbie, they will not reply to you or give you the time of day. In some cases, they may even give you inflated prices so you’ll just go away.
Ask About Minimum Order Quantities
Assuming your vendor carries items you want to sell, I usually try to address the minimum purchase or minimum order quantity question first.
Before you initiate contact, you should have an idea of how much you are willing to buy and how often. While this is a difficult question to answer if you don’t have any customers, the reality is that you need to make an educated guess and not be wishy washy about it.
Make sure you get this out of the way first.
One time my wife and I spent a few hours talking to a vendor only to discover at the end that their minimum purchase was 50k worth of merchandise which was well beyond our means.
There are different vendors and distributors that deal with different classes of customers. Make sure that you are dealing with the right one that fits your business.
Usually I’ll bring up the minimum order quantity question in a very subtle manner.
For example, I might ask…
Please give me a quote for this product in 500, 1,000, 5,000 and 10,000 unit quantities.
If the vendor is way beyond your league, they’ll tell you. But if the vendor is within this range, you won’t come across as a newbie for asking the question.
Once you’ve determined that your purchasing power is a match, you should always ask for samples to evaluate product quality.
If the samples check out, here are some other questions we ask.
- What are the lead times for manufacture? – Typical lead times will usually be on the order of months
- What are your payment terms? – How much payment is required up front. Usually you will have to put 30% down and pay the remaining upon completion
- How long have you been in business? – You generally don’t want to work with brand new factories
- How large is your facility? – Sometimes I’ll ask for a Skype tour of the factory floor
- What other related products do you manufacture? – If they sell a bunch of disparate items, that’s generally a bad sign that they are not really a factory.
- Who are some of your existing customers in the US? – I prefer vendors who are used to working with western countries.
Different Vendors Cater To Different Business Sizes
If you are having problems finding a Chinese vendor that matches your minimum order requirements, don’t get discouraged. Every successful business has to start from somewhere.
The important thing to realize is that there are a wide variety of vendors who cater to different classes of customers. And it’s essential to figure out if you and your vendor are a good match up front so that you don’t waste any time.
For example for our wedding linens store, we are still considered a small fry when it comes to our purchasing volume so it wouldn’t make sense for us to contact a large linen manufacturer directly.
When I contact a vendor for the first time, I always start with email and transition over to Skype or WeChat. If possible, I try to arrange a face to face meeting by actually travelling to China. (This is recommended but not required)
When I send email, I don’t use a standard form letter or template because I purposely write my correspondence in a more personal tone.
Remember, you are dealing with real people here and you are trying to develop a relationship. I try to treat all of my vendors like I would treat an old friend or coworker.
How To Get A Vendor To Give You The Time Of Day
In the beginning, my wife and I had a lot of problems contacting vendors because we didn’t understand their needs.
And in order to be successful, you have to put yourself in their shoes.
If you are dealing with a wholesale vendor or distributor, their primary need is to get paid for their products. There is very little upfront commitment.
If you dealing with a dropshipper, their primary need is to work with a store that can drive consistent sales. There’s a much larger upfront commitment to set up and maintain a dropshipping account and the hassle of shipping individual orders must be worth their time.
If you are dealing with a Chinese vendor, they have limited factory capacity so they need to work with someone who can provide consistent sales at higher volumes.
Before you approach any supplier, make sure you have a strategy in place that caters to their needs and your own.
And don’t forget that your vendors are trying to make a profit as well. The best arrangements are ones where you and your vendor can both make money and share a mutual interest.
When we first started out, we used to 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.
Remember That Vendors Are Just Regular People
If you feel intimidated by the thought of contacting your vendors, you need to remember that they are just people running a business just like you.
It all boils down to establishing a good business relationship and finding the right fit. If a vendor is rude or doesn’t give you the time of day, then they are not the right fit for your small business.
If you outright lie about the size of your business to get your foot in the door, the truth will come out eventually when you can’t afford the minimum buy. I can guarantee that once you find the right vendor, you will not feel intimidated at all.
As part of running our online store, we get requests from businesses all of the time that want to carry or purchase our items wholesale or in bulk.
And the bottom line is that I’d much rather work with someone who is upfront and straightforward. You are trying to build a business relationship here, not just buy products.
You need to know that you can depend on your vendor to deliver and they need to know that you will pay on time. The rest will work itself out.
With that in mind, don’t waste time reaching out to anyone until you have a plan in place because first impressions matter. If you screw up the initial contact, you’ve likely lost your chance forever…which brings me to my last point…
Start Off By Practicing On Some Vendors You Don’t Care About
As you go down your list of vendors, you need to realize that the majority of these vendors are not going to be working with you for some reason or another.
And before you start contacting them, you need to prioritize your list. Which vendors do you absolutely want to land? Which ones do you care less about?
Especially if this is your first time sourcing product, you should do some practice runs on vendors that you don’t really care about until you have refined your pitch.
I remember sounding like a bumbling idiot the first time I contacted one of our Asian vendors and that was over email! I had no idea what the proper procedure was nor did I even know how to make a payment overseas.
I was also unfamiliar with the terminology when it came to shipping and importing goods from abroad.
In any case, it took me a few iterations and a few lost vendors before I fully understood the lingo. And my ignorance drove away a few key vendors early on that I really wanted to work with. Don’t make that same mistake!
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- Dropshipping Vs Affiliate Marketing: Which Online Business Will Make You More Money?
- Buying Wholesale Versus Buying From A MiddleMan
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