5 Things You Must Do When Evaluating Suppliers
The key to the success of any Amazon seller happens at the supplier level. If you have great suppliers who give you a good margin and lots of trust, your business is likely to be successful. On the other hand, bad supplier relationships can destroy your profit margin, inventory, and seller metrics.
When you are seeking out a new supplier, cost is an extremely important part of the evaluation process, but it can’t be the only thing. If you are shipping items directly to Amazon from your supplier, you may not see packaging or quality issues that result in a string of bad reviews that can kill your business. Similarly, a supplier that demands unreasonable terms and is hard to work with will leave you spending more time on the phone than on your business.
Here are five factors (other than price) to consider when you are evaluating a new supplier.
1. Long-Term Relationship
Having high-quality, long-term relationships with your best suppliers is the ideal situation for Amazon sellers. Before making a quick order from an electronic catalog, probe more into the supplier. How long have they been in business? How many clients do they service? Do they seem like they are looking to quickly unload some bad inventory, or do you see a lot of potential for an ongoing relationship?
Regardless of how cheap you get it, a low quality shipment will soak up lots of time, effort, money, and will hurt your reputation. It is always worth it to check up on a supplier and see what kind of commitment to quality they have. This is especially important when you are dealing directly with a manufacturer. Do they have any certifications like ISO 9001? What kind of insurance do they offer? Do they demonstrate an awareness of the quality levels they are shipping? If it is important to your business, how do they certify organic or “green” products? If you are selling or thinking of selling private label items, check out our recent webinar on Private Label Selling.
If you find an item that sells well, will the supplier be able to handle larger orders? Or conversely, if you are just getting started, are they OK with smaller orders? Do they have the internal resources to provide you with a dedicated resource? How long does it take them to respond to your requests? Will you have multiple ways to get in contact with them if there are any issues? These are all important things to think about when choosing a supplier who can support you as your Amazon business grows.
One of the most underutilized negotiation methods is flexibility of the terms of agreement. Can you negotiate a faster delivery time or method? What about invoicing terms and payment dates? Are they willing to make deals for larger orders? A great relationship with a supplier means that they are willing to work towards mutual success.
5. Communication Style
When you call or email, what is the tone of the supplier? Do they seem more committed to quick transactions or high quality service? Do they have a lot of spelling and grammatical errors in their communication? Are they combative? Do they take the initiative to contact you if there are any delays or changes?
- shows product margins
- gives you the Amazon category and product sales rank
- tells you the number of FBA sellers and total sellers
- gives you insights into the lowest FBA price and lowest price overall
- tells you if the product is oversized and how much it weighs
- helps you calculate potential profit
But even with all that inside information, you should also do your background work to evaluate all the sides of a business relationship with the supplier. In addition to all the suggestions above, asking for references from other buyers is a great way to make sure you are doing business with the right people.
Great business partnerships make for great business. Fully evaluate any new supplier to ensure a great future.
Ready to start your journey to making the right decision about which products to stock in your Amazon store? Try MarketScout today.
Originally published on August 31, 2015, updated August 7, 2019
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.