Suppliers are your business partners. The right one can set you up for success. The wrong one can jeopardise your business before it’s even got off the ground.
At this point in your eCommerce journey, you’re well on your way to launching a business and making money online. You’ve decided on a niche. You’ve chosen a product.
Don’t let the search for suppliers derail your dream. Follow this guide to connect with great suppliers that will give your business every chance of success.
In this guide, we will show you:
- How to choose the right type of supplier for your business
- How private labeling works
- How to contact suppliers (including sample scripts)
- How to avoid supplier scams and fraud
- How to connect with high-quality suppliers
Choosing a Supplier That Fits Your Business Model
The type of supplier you work with will depend on the way your eCommerce business is set up. While some suppliers will provide multiple services (such as wholesale and dropshipping) you can’t assume that every supplier will be compatible with your business model.
What Is Dropshipping?
The dropshipping business model is one in which the seller (you) does not keep goods in stock, but instead transfers customer orders and shipping details to the supplier, who then ships the goods directly to the customer.
How Dropshipping Works
- You list your products for sale on your preferred eCommerce platform.
- When you make a sale, you notify your supplier.
- You pay the supplier the wholesale price for the product (which is a fraction of the price you’ve just sold it for). You will likely pay a small drop shipping fee to your suppliers, too.
- The supplier then packages the order, according to your instructions, and ships the package to your customer.
- You don’t have any contact with the package, you simply act as a middleman between the supplier and customer. You are, however, responsible for communicating with the customer.
Who Is Dropshipping For?
Dropshipping is a convenient business model for anyone interested in starting an online store, but is particularly suited to people who are new to eCommerce. That’s because you don’t need storage space for stock and you don’t need to invest money in buying bulk goods that might not sell. You simply list your products online and wait for the sales to start rolling in.
This means there are less risk and expense for sellers. However, on the flipside, your profit margins will be lower because you’ll likely be paying the highest per-item costs of all the suppliers. That’s because you won’t be getting discounts for buying in bulk. Convenience comes at a cost.
What to Look for in a Dropship Supplier
There are different kinds of dropshippers: Some are “true” dropshippers who will simply process and ship a single item, if and when you make a sale. This is the most convenient arrangement for a new dropshipping business.
Other suppliers require you to pre-purchase the goods. Pre-purchasing doesn’t mean you need to receive and hold the items yourself — the dropshipper will still do all of that. It simply means that the next $X worth of inventory you’ve paid for will be automatically shipped out when a customer orders it.
When you’re contacting a supplier make sure they offer the dropshipping arrangement that works best for you.
Where to Look for Dropshippers
SaleHoo provides easy access to more than 8000 trusted suppliers and you can simply filter those that offer dropshipping services. On top of that, we personally verify each and every supplier on our site to ensure that every product is authentic and legitimate.
Alibaba and AliExpress are easy platforms to work with if you’re a beginner. The great thing about Alibaba/AliExpress is that they are free and they have a good supplier rating system. However, unlike SaleHoo, they won’t give you information on what’s hot and popular, and you have to deal with communication barriers, variable shipping costs, and potentially fraudulent orders.
There are other online directories such as Dropship Direct, Inventory Source, and Doba etc where you can find dropship suppliers. For a comprehensive list of directories with their pros and cons, feel free to check this guide: Best places to find wholesale drop shipping suppliers.
What Is a wholesaler?
A wholesaler is a company that purchases products directly from the manufacturer and resells the items to other businesses (you) for a slightly higher price.
How It Works
- The wholesaler buys products from manufacturers and lists them for sale. They usually have the buying power to purchase bulk items for the lowest possible prices.
- You source a product from one of these wholesale suppliers.
- Generally, the more stock you buy, the lower the per-item price will be.
- You pay for the products up front and get them shipped to your address.
- You list the products on your preferred eCommerce platform and start selling.
Who Is It For?
Sourcing products from wholesale suppliers is a common retail business model. The option is best suited to those who have money to invest upfront to buy bulk goods. You’ll also need to have a place to store your stock. It’s a good option for sellers who have some experience and a high level of confidence that their product will sell. Buying products wholesale means you can often negotiate a lower price, meaning your profit margins will be higher.
Where to Look for Wholesalers
In Your Local Area
You can start by searching on Google for “[your area] + wholesale market/wholesale mall”. There may also be wholesale directories and magazines for your area. Sourcing locally means you’re able to inspect the goods and talk with suppliers more easily.
There are many online directories where you can find wholesalers. Click here to see the best places to find wholesale suppliers.
Trade shows are exhibitions, usually organised by different industries, where wholesalers and manufacturers display their latest products. You can see if there are trade shows coming up in your area by searching online.
SaleHoo Wholesale Directory
Use the wholesale filter in SaleHoo’s directory of more than 8000 suppliers to easily connect with verified and trusted suppliers.
What Is a Manufacturer?
A manufacturer is a company that makes a product from scratch and sells it to wholesalers or retailers.
How It Works
- The manufacturer makes a product or range of products. These can be made at the request of wholesalers and retailers (you), or independently.
- As a retailer, you can source products directly from a manufacturer for a low price.
- There will typically be minimum order quantities (MOQ), meaning you have to buy in bulk.
- You then list the products for sale on your chosen eCommerce platform with a significant profit margin.
Who Is It For?
Sourcing directly from manufacturers is generally for sellers who have considerable experience or are looking to make a serious investment in their business. Because manufacturers rely heavily on economies of scale to keep their production costs manageable, they won’t sell you just a few items. You’ll likely have to buy in bulk. We’re talking hundreds, if not thousands of items at a time. This means the financial investment is significant and you also have to find a place to store all that stock. On the upside, you will get the products for the lowest possible price and make more profit for each sale.
Where to Look for Manufacturers
Sourcing products from local manufacturers means you can easily visit the factory and inspect the goods before committing to an order. However, it’s unlikely that your area will have manufacturers for a wide range of products so your options may be limited.
A lot of product manufacturers are based in China. Check out our guide to finding reliable manufacturers in China.
You can find manufacturers for specific products you’re interested in selling by browsing popular online marketplaces, including Alibaba, Aliexpress, eTradeAsia, LightInTheBox, and TradeIndia.
What Is Private Labeling?
Private labeling is an arrangement where a product is manufactured and supplied by one company and offered for sale under another company’s (or individual seller’s) brand.
How It Works
- A retailer (you) arranges for a manufacturer to produce a product that features your brand.
- You have to pay additional fees for the production of a custom product. You will also be required to buy in bulk (MOQ).
- The manufacturer ships all of the goods to you so you will need a place to store the stock.
- You list the products for sale on an eCommerce platform.
Who Is It For?
Private labeling is a good option for sellers who want to establish their own brand and have a point of difference from those who are selling generic products. It costs more than other business models to get started but the long-term benefits can be significant. Having a private label product makes for more powerful branding and marketing and gives you ownership over the product. You can generally sell private label products for a lot more than generic products. The downside is you do have to invest money in creating a brand, paying a manufacturer to produce a product, and buying in bulk.
Where to Find Private Label Suppliers
Comparison of Different Type of Suppliers
||Cost per item
||Supplier handles shipping
||Seller handles shipping
||Seller handles shipping
||Seller handles shipping
How to Contact Suppliers
Once you’ve decided on your business model and the type of supplier you want to work with, you need to make contact.
There’s no rulebook for how to contact suppliers, but there are tips and tricks that can help you establish a professional partnership.
The main way to achieve this is by not coming across as an eCommerce newbie (even if you are one).
In order to do that you need to project confidence and experience using clear, concise communication.
You also need to be aware of what suppliers are looking for.
It’s always a good idea to pick up the phone and call suppliers, rather than simply using email. It can be easier to determine legitimacy and trustworthiness when you’re talking to a real person.
TIP: We recommend you make contact with at least five suppliers to make sure you’re getting the best possible deal and a great business partner. It might be time-consuming, but you’ll learn a lot and your business will be better for it.
What Suppliers Are Looking For
It’s important to realise that business relationships have to be mutually beneficial. While you want a supplier who’s reliable and trustworthy, a supplier wants you to be fair and professional. Here are three qualities that you should be projecting in your communication with suppliers.
Serious Buyer Mentality
You should come across like you mean business. This means you should have done research on the supplier. You should know if they provide dropshipping or private label services (if that’s what you’re looking for). Suppliers want to know that you’re serious about eCommerce, you have a business ready to go, and you’re committed to following through with your enquiry.
Clear, Concise Communication
You should avoid vague and excessive questions. Know what you want and be to the point. Have a list of questions that you need to confirm with the supplier. Everything else can either be researched or answered in subsequent emails. It also helps if you’re polite.
Suppliers ideally want to work with someone who’s in it for the long-term as this provides them with more predictable income. You can achieve this by providing links to your online store or briefly mentioning the plans you have for your business. Even if you’re new to eCommerce, by projecting an air of confidence you will more likely come across as a seller who’s in it for the long-term.
BONUS: For more tips on contacting suppliers, check out this guide.
Best Questions to Ask Suppliers
So you’ve found at least five suppliers to make contact with and you know what they’re looking for in a potential customer. Now, what do you ask them?
As outlined above, you want to keep your questions to a minimum. Asking too many questions upfront will make you seem inexperienced.
Types of Questions to Ask Suppliers
If you receive a positive response to your initial email, you’re off to a good start. But there’s a lot of information you need to get from a supplier before you commit to doing business with them.
You need to ask questions about:
- The company’s background (and request references)
- The product/s you’re interested in (availability, warranty/guarantee)
- What services they provide (dropshipping, manufacturing, private labeling)
- Placing an order (price, discounts, MOQ)
- Shipping (cost, time, tracking numbers)
- Payment (terms and method)
- Support services (return and refund policies)
BONUS: 35 questions to ask eCommerce suppliers
How to Request a Quote
Requesting a quote from a supplier is not quite as simple as getting a quote from your local mechanic. The process is slightly different for each of the business models outlined above. You don’t only need to enquire about the price of your product, but also minimum order quantity (MOQ), potential bulk purchase discounts, hidden fees, and payment terms and conditions.
This is generally the per-item price. If you are dropshipping, this will typically be a set price for each sale, plus a dropshipping fee and the cost of packaging and shipping. Whereas with wholesalers and manufacturers, you can usually negotiate cheaper per-unit prices by buying in bulk. When you request a quote, you want to know the per-item price as well as any additional fees and costs. You also want to enquire about possible discounts.
MOQ (Minimum Order Quantity)
You need to ask suppliers if they have an MOQ for the product/s you’re enquiring about. It’s rare for dropshippers to have MOQs, but sometimes they do require you to pay for a set number of items at a time.
You need to ask suppliers about turnaround time (how long it takes them to process an order and get the product to you or your customers). Fast delivery is an important part of customers service and you need to be sure that your supplier has an efficient system for processing orders and shipping them internationally.
You should ask suppliers about their payment terms and methods. Can you pay securely with a credit card or international bank transfer? If dropshipping, can you pay once a month or do you have to pay every time you make a sale? Just be clear about expectations before committing to a supplier.
While requesting product samples isn’t explicitly related to asking for a quote, it’s something you should definitely do before deciding on a supplier. This is an important part of quality control. Whether you visit the factory or wholesale depot, or you get the dropshipper to send you samples, you should always test the product before you start selling it.
Sample Script for Suppliers
Here is a script that you can use when contacting a supplier for the first time. It’s clear, concise, and to the point. For additional email scripts and pro tips for communicating with suppliers, click here.
TIP: Sending loads of emails, but not getting many replies? You’re probably a little too vague in your emails, leading suppliers to assume that you’re not serious. Check out this guide on how to draft a concise yet professional enquiry email.
Avoiding Supplier Scams
Doing business with suppliers who you might not ever meet poses some risks. While most suppliers are legitimate businesses, there are always some who are there to exploit unsuspecting customers. Unfortunately, eCommerce scams or fraudulent behaviour are very common, but there are steps you can take to protect yourself.
Be aware of the following warning signs of potential scams and fraudulent companies when you’re dealing with suppliers. While these may not be a definite deal-breaker, they warrant a more thorough investigation of the supplier.
No Phone Number
If the supplier doesn’t list a phone number on their website, I wouldn’t do business with them. This is a big red flag.
Doesn’t Accept Credit Card or Checks
If they want wire transfers, just say no. While some legitimate suppliers do only take wire transfers, they are few and far between, and highly risky. It’s best to avoid them.
No Address on Their Website
All real suppliers will list their address, period. If there’s no address, don’t bother with them.
Not Listed on the Better Business Bureau (US-based companies only)
If they are based in the United States and they aren’t listed on the Better Business Bureau (BBB)’s website, then that can be a bit of a red flag. It doesn't always signify that a supplier is a scammer. It's just another piece of evidence to consider.
Selling to the Public at “wholesale” Prices
Some retailers advertise their prices as "wholesale" prices, but really they're just retail prices. They use the word "wholesale" as a simple sales gimmick to make people feel like they're getting a great deal.
And while we're here, let's look at some things that are NOT necessarily a warning sign:
Charging a Monthly Fee
While it isn't common, there are some legitimate suppliers that will charge you a monthly admin or management fee. Just because you see a monthly fee, it doesn't necessarily mean the supplier is a scammer — especially if all the other evidence suggests that they're legit. Take a look at the other signs and see if it all adds up.
A Poorly Designed Website
If a supplier’s website looks terrible (like it's from the 90s), you might think this is a good sign that a supplier isn't legitimate, but it's actually not. A great many fantastic suppliers are really, truly terrible at marketing and web design. Often it's because they don't need a great website to do business: They have established relationships and other marketing channels. So if you're thinking of ditching a supplier because their website is a time capsule to the 90s — think again.
How to Tell if a Supplier is Legitimate
Now that you know what to watch out for, here are some practical steps to take to check if a supplier is legitimate, or a fraud.
Check How Old Their Website Is
A really new website either means the company is brand new, or its a fraud. Be wary of young websites. Don’t rule them out entirely, but make sure they stand up to the other checks. To look up the age of a website, type it into the domain age checker tool.
Search Their Company Name, then “ripoff” or “scam” in Google
Many people will post online when they’re scammed by a company. To find these posts, just type in the name of your supplier followed by “ripoff”, “fraud” or “scam”, and see what comes up.
Contact the Supplier
Calling a supplier is one of the quickest and surest ways to determine their legitimacy. If they don’t answer during business hours, or you get an automated message that doesn’t sound right, or you get someone who just sounds fishy, proceed with caution.
Verify Their Address
Go to Google Street View and look up their address. Is it a vacant parking lot? Can you see their logo or business name on the building? If not, ask them about it. They may have a legitimate reason, but it could be a red flag.
Get Suppliers from Supplier Directory
Use a trusted supplier directory like SaleHoo to source your suppliers. SaleHoo has vetted and verified more than 8000 suppliers around the world. By working with one of these suppliers you remove the guesswork and significantly reduce the risk of going it alone.
Build Lasting Relationships with Suppliers
Choosing a supplier to work with is an important milestone, but that’s not where the work ends. It’s the beginning of an ongoing business relationship that has the potential to make or break your online store. Here are a few tips for maintaining a healthy relationship with your supplier.
Stay in regular contact with your supplier (at least 2-4 times per week). Even if there’s nothing official to contact them about, let them know which products are selling well, how business is going. Let them know they’re appreciated and valued. Be polite and friendly like you would in any other relationship.
Address Issues Immediately
Whenever things go wrong (and they will), be sure to inform your supplier as soon as possible. It’s better to deal with issues upfront rather than let frustration build up over time.
Pay Accounts on Time
You like it when your customers pay promptly and your suppliers like it when you pay them on time. Paying your bills on time is not only good business, but it’s a sign of respect and appreciation for the supplier.
BONUS: How to evaluate and choose a supplier
Finding a supplier can be a daunting prospect for aspiring online sellers, but this guide will help to make the process as smooth as possible.
A good quality supplier can serve your business for many years and help you to build a successful online store.
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