Dealing With New Suppliers

This short article focuses mainly on sales involving physical inventory goods instead of dropshipping. In some cases due to reasons of economy and shipping issues, you might decide to buy physical inventory instead. When you are starting out with a new supplier, getting the best bargain for every unit cost (price of the items) is vital. Many suppliers who sell exclusively to retailers don’t publicly list their item prices with an easily-accessible website. Actually, most of them don’t have websites and only get their company name and photographs of their products on web directories. They rely on people who find many interesting to approach them straight to request quotes.

The reason they don’t list prices for his or her products publicly is straightforward – to allow them to quote each individual individually and markup their prices for retailers who seem ‘green’ and don’t understand how to bargain. You will find those who are so trusting or inexperienced with dealing with suppliers (when they are starting out), that they think suppliers quote a standard rate once they request quotes. These folks might easily agree to a supplier’s initial quote (often a marked up rate), thinking they are obtaining the same deal as everyone else. Obviously, what this means is more profits for that supplier. Usually, suppliers from Alibaba.com choose not to display their item prices.

When you’re buying products by the dozens or hundreds, a dollar difference in unit cost can impact just how much profit you make. For instance, if you choose to sell 200 items, the additional profit you could make could be $200 when the supplier quoted a dollar less for every unit.

Now lets discuss the next scenario:

1. You have done enough research on the particular type of stylish wallet produced in Korea, and think they’d sell well.

2. You decide maybe you could buy 20 wallets to sell online, simply to test the speed at which they get sold. If they sell fast, you would buy in larger quantities in future.

3. After a little research, you manage to get the email contact from the supplier. You are also glad the supplier sells exclusively in bulk, and don’t have website or web store that sells wallets individually.

Point number 3 is essential because if the supplier actively markets and sells their very own product online, consumers can just buy directly from them cheaply. Instead, the supplier’s strategy is to simply target retailers (like yourself) who buy in bulk. By doing this, it is hard for consumers to ‘Google’ using the brand name you utilize to market the merchandise in auction sites like eBay etc.

Now you must decided to invest some cash to get inventory from this supplier. Bearing in mind this is the first time you will be contacting the supplier, an amount the first email for them end up like? You know that you would probably buy about 20 wallets to test how well they sell first. You realize you won’t buy anything less than 10 since you are 80% confident they’d sell well. Also, you’re a cautious person, which means you won’t buy anything more than 20 either, in the event you designed a bad judgement about the interest in the wallets. Hence, 20 is a nice, safe number. If they don’t auction well, and also you manage to sell perhaps 8 (estimated number) to break even, you do not lose any money. If they do sell well, you can always order new batches in higher quantities.

Initial Bargaining

The critical thing now is the obtain the supplier to quote the LOWEST price for every unit. This is very important since most suppliers, when dealing with new retailers, will pages and use a higher unit cost just to test their luck. They usually expect that you’d bargain, and they would quote a lower price. From their point-of-view, they think that if they quoted an acceptable price from the beginning, retailers would try to bargain anyway, hence reducing their first original quote. Hence it might be smarter for them to quote high at first to ‘buffer’ the price difference because of initial bargaining.

There’s two ways people would compose their first email to the supplier – the hasty way and also the cunning way. For the greatest price, one must be cunning.

Keeping in mind you want to buy 20 wallets. They are what the emails would certainly seem like:

The hasty way:

Dear Sir,

I’m thinking about buying your wallets when i think they’re excellent and would sell perfectly. I believe they are really great and would like to buy 20 wallets to market. How much will it cost for each wallet? Please give me your very best price and send us a sample invoice.

Regards

This appears like what a person getting starting out on reselling products would email. BIG MISTAKE! The supplier can certainly put the ball back in your court. He is able to straightaway quote you let’s imagine $20 for every wallet and it could be very hard that you should lower the quote substantially. Perhaps he’d lower it to $18 or $17 tops. How come he possess the power to do that? Because you sound desperate, and you revealed the sum you want from the beginning, and you explicitly asked for an invoice IMMEDIATELY, causing you to sound like a serious sucker who can’t wait to give up your money rightaway. Place yourself in these shoes from the supplier for Just a few seconds and imaging yourself reading this email you received. Does he seem like fishbait? You get the drift. Simply by saying ‘give me your best price’ does not mean that the supplier would. You have to force it out of him.

We now consider the second method of composing your first email – the cautious way:

Dear Sir,

I’ve come across your products and am thinking about them. May I understand what’s the MOQ and value?

Regards

This retailer is extremely cautious. He doesn’t sound desperate and instead of stating rightaway the quantity he wants, he requests the MOQ (minimum order quantity) required to place an order. Most suppliers come with an MOQ before they accept sell to you. Most will not sell you 1 wallet because it will not be economical to allow them to manufacture the wallet. This is also healthy for you because consumers cannot just buy 1 wallet on their own, but have to purchase from resellers like you in a marked up price. This retailer knows how to use terms like MOQ, so suppliers would be wary to ‘mess’ with him as he seems to know what he’s referring to. Generally, suppliers are obliged to provide reduced prices for larger orders included in goodwill. Unlike the person who sent the ‘hasty’ email who asked ‘how much is each wallet’, this person asked ‘what is the price’, implying he knows that if larger quantities are ordered, he Ought to be eligible for a quantity discount. By not stating explicitly how many wallets he wants, the retailer puts the ball within the supplier’s court to provide a variety of prices for various order quantities, or at best the price of a particular MOQ. At this time it is as much as the supplier to decide things to quote. He might reply something similar to this:

Dear buyer,

Appreciate your interest, here’s our quote..

Unit Price: 15 USD

MOQ: 10 pcs

…

Regards

Bidding Your Time

The supplier has quoted a MOQ of 10 pcs at 15 USD each. Keep in mind that you had been thinking of getting 20 pcs? At this time, you have a chance to bargain for any cheaper price. However, do not simply say ‘I want to order 20 pcs, are you able to lower the system price?’ If you say do that, the supplier could just say ‘Yes, for orders of 20 pcs or more, we give a discount. Each piece will be 14 USD’. This could POSSIBLY negate all likelihood of you trying to get even Affordable prices later on if you choose to order 50 pcs or 100 pcs, once you agree that for 20 pcs or more, each bit will be 14 USD. At this point, what I would do is bid my time. Do not be in a hurry to retort. Wait per week or even more, even two. The key is to not appear desperate! I have had experiences whereby I did not answer quotes because of busy schedules, and exactly what do you realize? The supplier actually had COLD FEET and sent me a reply similar to the following:

Dear buyer,

How’s it going? Haven’t received an answer of your stuff yet.

Let me suggest we all do business with Korean won not USD as our currency since we don’t must have each buffer as exchange rate.

Then, below items can be supplied with 15000 KRW (around 12.8 USD).

Regards

Just because I’ve taken longer to determine, he thought I discovered his quote too expensive and am ignoring him. He then chose to tell me about some ‘exchange buffer rate’, and thus he is now quoting in KRW, which effectively lowered the buying price of each wallet to 12.8 USD, WITHOUT even needing me to bargain at all. All I did was my insufficient a hasty reply. In the looks of it, this probably appears like exactly what the supplier does with all of pricing enquiries – quote high and watch for response. If no response, cook up some reason about ‘exchange buffer rates’ and provide a rather lower price. In the long run, this tactic yields him a higher profit because there are certain to be lots of people who accept his initial quote immediately. At this time, his new prices are 12.8 USD to have an MOQ of 10 pcs, with a unit price of a lot more than 2 USD less than his initial quote. With his new preposition, you can then reply something similar to this:

Dear Sir,

Sorry for that late reply when i was on vacation. Appreciate your quote. Can i have any discount for higher quantities like 50 or 100 pcs?

Regards

As you can see, it is simple to and casually ask for reduced prices for higher quantities without coming across like a difficult or abrasive customer. You’ve already easily lowered the unit price to 12.8 USD, so any more quantity discounts is really a bonus. The supplier will often be obliged to offer a further discount as goodwill for higher quantity orders. For my case, he reduced the system price to 14000 KRW (12 USD) for orders of 50 or even more. It’s up to you at this time to determine the way you want to play your cards. However, I recommend that you simply do not be too aggressive this time onwards since you have not actually made any first order yet. Make a first order to gain the supplier’s trust that you’re serious in doing business. In future, your bargaining power increases while you place a second or third order. Your status as a repeat customer who brings business continuously would make it tough for him to reject your requests for discounts which are within reasonable means.

As you can see, the main difference in email strategy could lower the supplier’s quote by a large amount. The price distinction between a hasty email and a cunning series of replies reduced the system cost of our wallets from 20 USD to 12 USD. What this means is a higher profit margin for you personally. So, play your cards right when confronted with suppliers, best of luck!