Originally published on July 21, 2020, updated July 21, 2020
In this guest article, the team at PingPong shares information about safely paying your Amazon suppliers as well as tips to save you money in the process.
Hello, to all you savvy and sagacious Sellers.
Read this article if you care about:
Let’s play a quick game of "would you rather?"
Would you rather send a person you’ve never met a HUGE chunk of change to a place you may have never actually been to or seen, that you don’t know is real, via a wire transfer AND also pay foreign exchange and other fees
Would you rather have the person you’re sending the money to be verified through a rigorous and reputable process, and pay a lower, single cost to send the money in the supplier’s domestic currency?
Well, we said we’d show you the safest and most secure way to pay your suppliers AND save you some money, and that is exactly what we plan to do.
Enter, PingPong. Not the table game. The eCommerce Unicorn you may or may not know exists.
Do you want to be confident you know who you're paying? Here’s the thing. Fraud and scamsters exist. They have all sorts of tricks: photoshopping invoices, swapping bank accounts, the list goes on.
PingPong checks to make sure that the supplier you’re dealing with is legitimate. We also offer very transparent, lower costs for taking care of you.
There are a few universal best practices to keep in mind when it comes to choosing a supplier, paying them, and safely receiving your goods. To make it easy, we’ve compiled them here. Vets, feel free to weigh in with any additional tips in the comments.
Payment Agreements - The most commonly accepted agreement we see when it comes to striking a deal with suppliers is a 30/70 contract.
What does this mean?
It means you’ve found a supplier you want to buy goods/products from (you may have even had several different suppliers send you samples by this stage), you’re going to order 1,000 rollers from them (or whatever you and your customers are into), and it’s time to show them you’re serious.
Never send 100% payment up front.
Why? Because you don’t know these people. They live in a different country and you haven’t met them. Establish a rapport.
Pay 30% of your invoice up front to start production, and the remaining 70% later when production is complete. Think about it. If anything goes wrong for any reason, you’ll only be out 30% of your money instead of 100%. Make sense?
There’s an additional step before you should sign off and send the remaining 70%.
PRODUCTION -> INSPECTION -> PRODUCTION COMPLETE
The supplier says they have everything ready. They’re prepared to ship to you or to an Amazon warehouse (if you're using FBA).
Hire someone to do an inspection on what you ordered. Don’t blindly accept and store or ship your goods to a warehouse without doing this. It’s common to hire someone to ensure you’re getting what you ordered. Suppliers expect this. An inspector can check all sorts of things, including:
A lot of sellers do this for at least the first three orders when working with a new supplier. Also, double check that you aren’t violating infringement laws/risks. Confirm patents and trademarks. If another brand is selling a similar product, you want to make sure legal action won’t be taken against you for attempting to sell that product.
What is KYC?
Straight forward, Wikipedia definition: The know your customer or know your client (KYC) guidelines in financial services requires that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a bank's Anti-Money Laundering (AML) policy.
If you’re using a service that isn’t offering KYC as a standard, you’re missing out on killer customer care.
PingPong’s KYC process:
When everything checks out, PingPong gives you the green light to safely start paying suppliers.
Imagine opening a bank account. An ID is provided, with a Social Security number. A personal (or business, in the case of a business account) address and phone number is provided.
You cannot waltz into a bank, be assigned an account number, and begin banking without this verified information.
Outside of our KYC procedures, we also take measures to confirm your supplier.
This layer of protection gives you more confidence to send money to a supplier rather than blindly sending a wire transfer to a name and account number you’ve been given by a person you’ve never seen or met.
With PingPong, tier one banks like HSBC, CITI, Wells Fargo, and JP Morgan hold your money. PingPong will send your money to your supplier in any currency for a flat, transparent 1% cost. No games. This is convenient for you and your supplier. They are likely used to accepting only USD, or eating the fees for foreign exchange.
A lot of people use money transfer apps and wire transfers to pay their suppliers (yes, even veteran sellers). They don’t fully understand the risks.
You have to be very cautious when making a wire transfer to anyone.
If you so much as spell a name incorrectly, get a number out of place or accidentally send 10,000 instead of 1,000 - it could be 3 weeks (or more!) before you are able to recuperate your money. That’s if you can.
Many money-sharing apps charge fees between 3-6% to send money. A supplier will likely want you to pick up that cost.
If you’re in the United States or Europe but need to pay a supplier in a currency different from your domestic currency, guess what: more fees.
If you get trade insurance on a supplier payment, understand all options. If a supplier doesn’t ship your merch, they’ll cover it, which is great. The downside is that this insurance is often costly, an additional 8% or even higher, and is in addition to foreign exchange and application fees.
Getting started with PingPong is super easy. Expand your business internationally, pay suppliers and get deals on foreign exchange costs. Check it out here.
What are some tricks or tips you use to navigate paying suppliers? Share your experiences, ask a question or leave a helpful tip in the comments. We love hearing from you!
Originally published on July 21, 2020, updated July 21, 2020
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.