Connecting With Vendors & Suppliers

Once you’ve found a solid market and possible product line, it’s time to find out whether you can source this product at a profitable margin. 

This is the part many people skip – because it isn’t always easy.  But this step is the key to success for all businesses.  You’ve found a solid market segment.  You’ve found a product or line of products that they want or need.  But the bottom line question now is: “Can I make money selling this?”.

Once again, I am going to recommend that you read the book “What to Sell on eBay and Where to Get It”.  There is some invaluable information presented about how to contact and communicate with potential suppliers. 

What Comes First? The Business or the Supplier?
One problem beginners will run into with sourcing product is that all legitimate suppliers will require that you have a tax id.  You will need to get a tax id eventually, as well as a checking account, in order to work with suppliers and credit card merchant accounts.  Now is a really good time to go ahead and apply for at least the tax id.  It can be an intimidating first step, but it’s really not that hard.  Your tax ID is through your state and all processes are slightly different - but just go to your state’s IRS site for more info. 

Some may also require financial references such as a business checking account and references from other suppliers.  What they are really looking for are two things: a) Are you a legitimate business?  and b) Will they have problems getting paid?  As long as you let them know that you are not looking for any financing, such as Net 30, and that you are willing to pay for everything up front, you shouldn’t have a problem if you don’t have these things yet.

Several suppliers also want to see that you are legit by looking at your website.  If you are working on this step as a preliminary one to actually jumping into this market, let them know that.  A word of caution here - some distributors and wholesalers are going to hold pricing close to the vest - don’t be pushy, just move on to the next one.

It’s a bit of a “catch 22” – you want to know what kind of pricing to expect to estimate your margins.  And the distributor wants to know you are a legitimate retailer before they give out confidential information such as their dealer-direct pricing model.

You will find suppliers to work with here.  Just be patient and know that it may take several calls to find the right one.  Be respectful even if you are rejected - you never know when you may work with them in the future.

Once you have this information, you need to compare it to the top competitors’ pricing to find out if you might have a good profit margin. 

Product Sourcing
Once of the easiest ways I found to source product is to work with the folks at World Wide Brands.  They have made their business to locate and negotiate with suppliers around the world on behalf of the small business owner.  They have already screened their distributors to be sure they are not only legit, but are willing to work with small business owners. 

 
Manufacturer Direct
Another tactic I have used in the RC business is to start out with distributors and once we were really good at SEO, I would contact the manufacturer directly and highlight our ability to rank for their top products.  Many times we would be coming up #1 for their top product, which would show them that we were serious about their product line.  This worked especially well with the smaller, less-known manufacturers.

Get More Information on Market Research and Getting Started in eCommerce at www.OnlineBizConsulting.com