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How to Evaluate Drop-Ship Suppliers and Distributors

Written by Russell Cragun on February 12, 2014 in How to Sell Products Online
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If you’re already an online retailer, or you’re putting together a business plan to begin your own online retailing enterprise, chances are you’ve got a good grasp on the concept of shopping. And that’s a good thing, because if you’re thinking about adding drop shipping to your distribution plan, a little investigative shopping might be in your best interest.

Specifically, you’re going to need to find drop ship suppliers, whether that is a manufacturer or an authorized distributor. And finding a good supplier that is willing to drop ship can be an involved process. For starters, there remain many disreputable shippers and distributors out there that are willing and happy to take you and your new business to the cleaners — or at the very least, provide you with a nightmarish entrepreneurial experience.

So before you even get started, we want you to know that by working through an agent or a drop ship aggregator such as Doba, you gain access to a cadre of honest, above-board suppliers and distributors, all of whom have been vetted and are willing to help you build your business.

Now, if you’re going it alone, you need to know how to evaluate and identify the best qualifying drop ship suppliers. What you’re shopping for is a supplier or authorized distributor that may also be the manufacturer of the product you want to sell online. Put simply, all suppliers are tasked with shipping goods to your store or directly to your customers. And to find a match to your retail business requires the same proven techniques you would use in checking out any other investment.

Your first order of business is to build up a list of potential suppliers and manufacturers along with their contact information. Once you have a comprehensive list, start making inquiries from others before you even consider getting in touch with the folks on the list. See if the supplier or manufacturer lists retail references, or look online to see who else is using them. You want to know if the supplier has been in business for a respectable amount of time. Is the supplier a member in good standing of the Better Business Bureau? If they aren't the manufacturer, find out if they’re an authorized distributor.

When you’ve culled the list down, start calling the suppliers, asking first if they even offer drop shipping. Find out if there’s a minimum order requirement. What’s their return policy, and is it favorable to you and your customers? Ask if they charge a drop fee.

Find out what they require of you as a retailer. And see if they’re willing to provide images for your product pages, along with descriptions of products for you wordsmith or use verbatim. And of course, look to see if they compete with their own retailers (especially on eBay, Amazon, or even their own website). And while you’re at it, see if they offer real-time inventory updates. Other questions to ask:

  • Do they offer volume discounts or tiered pricing?
  • Do they prohibit selling on certain sites?
  • Is their staff accessible and easy to get along with?
  • Will they notify you when a product is discontinued?

Keep in mind that any supplier worth working with is going to have a raft of questions for you, too. With that in mind, be prepared to provide the following:

  • Your Federal EIN (Employment Identification Number)
  • A written description of your target market
  • Your website address
  • Your previous year’s sales
  • Your expected order volume

Distributors who only work with established retailers probably aren’t going to want to have anything to do with a fledgling concern that can’t even provide gross sales totals. And, of course, if you’re new to the field, you aren’t going to have those figures. It’s going to be up to you to dazzle them with a business plan of action and enthusiasm.

Assuming you successfully partner with a supplier or distributor and quickly prove your worth by racking up sales and proving to be an asset, don’t settle in and rest on your laurels. If you’re truly bringing in the sales figures, it might be time to drop strong hints about negotiating lower prices for merchandise. Most wholesale suppliers offer better pricing for their top-selling retailers and you might suggest you be elevated to the next pricing tier.

In fact, it wouldn’t hurt at all if you were ask your drop ship suppliers to eliminate the drop-ship fee from your shipping charges once you’ve established yourself as a solid partner of theirs.

Again, if you’re striking out on your own to find drop ship suppliers, we wish you the best of luck. However, if you require some good reasons to go with a drop ship aggregator like Doba, there are benefits. We enable you to choose from a variety of product lines. You have access all of these products from a single location and you have a staff here at Doba who will help you if you run into difficulties.

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