When it comes to sourcing products from a dropship supplier, there are a lot of questions that need to be asked before you agree to do business together. I’ve created a list of questions that you'll need to ask any supplier with whom you plan on doing business.
But what about the questions a supplier will ask YOU? In turn, you also need to be prepared to play ball with suppliers and be ready to answer questions about your business. Let's take a look at some examples of what those types of questions may look like.
Proof that you're an actual retailer
This is the most basic question any supplier will ask you - are you an actual retailer, or just a consumer trying to pose as a retailer in order to get wholesale pricing?
To prove that you're a legitimate retailer, you'll want to be able to show a supplier a number of things, such as:
- A working website
- Your Federal EIN number (can be obtained here)
- A resell certificate(this isn't necessary but isn't a bad thing to have, either).
A website may be a bit of an investment, but it's something you'll have to have before doing any business to begin with. This is ecommerce, after all.
Having a fully-functioning website (complete with shopping cart technology) will show a supplier that you're serious, and your EIN will help speed the process of onboarding with that particular supplier.
Can you move product?
Suppliers don't want to sign customers who can't move their product. You'll likely be asked if you have a plan in place for selling beyond, "Oh, I'm just gonna put stuff up for sale on my site."
One of the first questions, if not the first, you'll be asked, is whether or not you have a sales history. Suppliers want to see that you have an existing customer base that's likely to produce sales in the short run, rather than waiting for you to build a customer base from nothing.
If you don't have a sales history, it's not the end of the world.
In place of a sales history, you'll need a thought-out marketing and business plan, and a potential pricing strategy all in place before you go talk to a supplier. They'll want to know exactly what your business model is. Specifically, they'll be interested in looking at what you plan to do on the marketing side of things to help move product.
According to advice given to suppliers from an article on Marketing Donut, suppliers are told to make sure that they,
"Get final sign off on all the marketing material (catalogue pages, web content, staff training) and point of sale (POS) about your product from the retailer. You can insist on this if you give the impression that you will not support any misrepresentation of your product to consumers. When you check the material make sure that it has your three top Unique Selling Propositions (USPs) and that they haven't just included some nonsense tech specs (which they tend to do). As someone once said, 'retail is detail.'"
Suppliers will want to make sure that their products are fairly represented, and to help this process, they may even have product data available for export straight to your website. Either way, your marketing and merchandising tactics will be a topic of conversation with any supplier.
Do you have any previous retail/business experience?
A lot of people who set up an online store powered by dropshipping are often laboring under the delusion that dropshipping is a "get-rich quick" scheme. While you can certainly make good money with this model, it requires just as much work as if you owned your own inventory.
This is why you can expect to be asked about your previous business or retail experience. A supplier will want to know that they're bringing on someone who understands the retail and dropshipping world.
If you don't have any previous experience, and this is your first thrust into the ecommerce world, it may be harder to find a supplier to do business with right off the bat. However, this doesn’t necessarily mean you won’t find a supplier to do business with you. Make sure you have a concrete business and a well-prepared plan, and don't worry. There is a mound of information available for beginners looking to get into the ecommerce world to help you. We even have a whitepaper that outlines some very basic tips about the Dos and Don'ts of dropshipping available for free download.
Aside from our resources, a quick search for "beginner ecommerce tips" brings up the following results page:
With information from ecommerce experts Shopify and Entrepreneur, you'll be able to find enough background information to help you grasp the basics of ecommerce before you begin talking to potential suppliers.
How much do you know about this niche?
As I've stressed on this blog before, selling products in a niche is one of the integral keys to ecommerce success. You can't expect to sell everything under the sun and make it work. That tactic is used by the ecommerce giants like Amazon, because they can afford to sell some products at a loss, knowing they'll make up the difference from other high-margin items.
When you start thinking about running an ecommerce store, you should automatically think about selling in a niche that you're knowledgeable about. If I was to start an ecommerce store, it'd focus on selling fly fishing gear - that's my passion.
Choose to sell in a niche that contains products you're passionate about. If you pick a niche that you think will be profitable, but have no knowledge about the industry, its trends, or the buying habits of people who shop in that niche, a supplier might be wary to bring you on. After all, they may be wary of people who don't know anything about their products.
This is by no means a comprehensive list of questions you might get asked by a potential dropship supplier, but it's a good starting point to get your feet wet before you start contacting suppliers. You'll need to be prepared to answer any number of questions if you want to convince a supplier that you're worth onboarding.
Photo courtesy lisaclarke.