The success of your online store is dependent on the reliability of your suppliers, especially if you're using dropshipping as a primary means of fulfillment.
While there are many ways to evaluate potential dropship suppliers, you also need to have a checklist of questions to ask any potential supplier, in order to make sure that they're legitimate. Here are 10 questions you should be asking any potential supplier.
1. Do you sell to the general public?
A "dropship supplier" that sells to the general public is, in fact, not a dropship supplier at all. They're just a retailer posing as a supplier. A true dropship supplier sells items at wholesale cost only to retailers. If a supplier you're considering will sell their product to anyone and everyone, you're going to be paying more for a product than you should be, which makes earning a profit an even more difficult task for you.
2. Will you do business with a first-time business owner?
If this is your first rodeo with retailing, and you're trying to break into the ecommerce world by using dropshipping as your primary fulfillment method, you'll need to make sure that the suppliers you're considering are willing to work with first-time business owners. The above linked article goes into detail on the housekeeping items you'll need to have in order before approaching a potential dropship supplier - things like a business plan, your EIN, and business model - that'll help give you the image of legitimacy you need in order to convince a supplier to do business with a first-timer.
3. Do you charge a monthly subscription fee?
A reliable supplier won't charge you a monthly fee just for the honor of doing business with them. Charging a monthly fee could be a sign that the supplier is in financial trouble (and you don't want a supplier going out of business on you) or has other organizational problems going on that could present fulfillment issues for you and your customers. Neither of those are issues you want to deal with, so if you come across a supplier asking for a monthly fee, go find a different one.
4. What are your returns policies?
There's no getting around this - you're going to have to deal with returns. It's part of working in the retail world, be it ecommerce or in a physical store. Before deciding to do business with a dropship supplier, you need to make sure you have a clear understanding of how they handle returns, so that you can provide your customers with a simple, painless returns/refund process when they're not satisfied with a particular product.
5. What are your minimum order requirements?
Some dropship suppliers will only work with retailers who are moving a certain amount of product per quarter, or generating a certain amount of revenue per year. If a potential supplier does have a minimum order requirement, you need to know what that is and if ordering that amount of products will be a feasible strategy for your business. If you're an established online retailer, and you know you can move the products, then by all means, don't let a supplier's minimum order requirement scare you off. But for the new online retailers, you'll want to work with a supplier who doesn't have minimum order requirements.
6. What type of data feed integration do you provide?
Nothing is more frustrating for a customer than buying a product only to hear from you after the fact that it's out-of-stock. In order to avoid out-of-stock issues with your listings, you need to clearly understand any potential supplier's data integration and how frequent and reliable.
7. What is your average processing time?
When your customers place an order on your site, they'll expect their products to arrive quickly. Thanks to services like Amazon Prime and same-day in-store pickup options, customers have grown accustomed to their orders arriving very quickly.
You need to have a clear understanding of how quickly a supplier can pack and ship your individual orders. This information will either inform your website messaging around shipping (if you're a new retailer) or you need to make sure that a new supplier's fulfillment times fit your existing policy.
8. Do you charge drop fees/other fees?
Drop fees are common in a dropshipping relationship (a fee charged to offset the cost of packaging and shipping individual items, usually around $5 or so). You need to be aware of what a potential supplier charges in drop fees, and if they have any other fees as well. This ties back into doing some in-depth research on their pricing, but it's worth mentioning individually here because these types of fees can wipe out your profit margins if they're not carefully managed and planned for.
9. Whom can I call when I have a question or problem?
Dropship suppliers are notorious for having terrible, 90s-style websites, but reputable suppliers shouldn't be hard to get in touch with, or to do business with. If a supplier doesn't have a defined role for customer support and/or can't clearly articulate that person's availability, do yourself a favor and find a supplier that's already got their act together.
These ten questions will help you evaluate potential dropship suppliers and ensure that you make the best possible choice when you're looking for suppliers for your online store. However, if you're struggling to find a good supplier, you may want to consider taking a look at a Doba membership. A Doba membership gets you direct access to nearly 200 suppliers and over 2 million products, and you can start listing products and selling on your site immediately. A Doba membership eliminates the need for you to deal directly with suppliers, since Doba takes care of that on your behalf.
You can get access to a free 7-day trial of Doba by clicking the button below.
Photo courtesy Gwan Kho. Used with permission.