Finding a contractor for your store is just one of many steps you need to take, but it plays a key role. In the following article you will learn how to find the right wholesaler, how to negotiate satisfactory terms and what to watch out for when signing a contract. We will also introduce you to the issue of dropshipping.
How to choose the right company
The best way is to find the website of the company you are interested in. However, this alone will not give you full knowledge about the assortment and prices. The products and data provided therein are intended for retail customers. It is therefore necessary to contact the persons responsible for wholesale. There is also a high probability that you will have to register and then log in to the site to receive more detailed information about the range.
When contacting specific suppliers, it is worth preparing a list of questions and issues that you want to discuss. It is also a good practice to prepare a list of requirements you have towards your future contractor.
The easiest way is to enter the name of the wholesaler in a search engine. A company that has a strong position in the industry knows how to reach new customers, so it will certainly take care of proper positioning and after entering the keyword you are interested in, it will appear in the search engine. Facebook groups are also a good place to check. It is also worth going to trade fairs, because it is a great opportunity to learn about the specific offers of given entrepreneurs. You can also look at the websites of large stores, because they often offer wholesale in addition to retail, and its terms are written in a separate tab. Before starting cooperation with a contractor, it is also recommended to check opinions about him on various types of forums and industry groups.
Before choosing a specific offer, you should carefully analyze the following issues:
- assortment width,
- prices and the possibility of obtaining discounts,
- delivery dates,
- cooperation policy.
What to pay attention to when starting cooperation with a wholesaler
There are things you can't ignore when establishing cooperation with a new supplier. Among them are:
- possibility of using deferred payment, i.e. the so-called trade credit,
- the quality of shared photos, descriptions and product parameters (when using the integrator with the wholesaler,
- these data are downloaded to the store, so the better they are prepared, the less they will require corrections),
- possibility to see the goods on site,
- availability of an XML or CSV file with the assortment,
- the fact whether the wholesaler sells retail, and if so, how these prices differ from those offered to you,
- the possibility of importing products on request,
- assigning a salesperson to an online store.
What is dropshipping and how does it work
Dropshipping is an online sales model whose main assumption is to transfer the role of a supplier of goods from a store to a wholesaler.
It takes place when there is cooperation in the B2B model between an entrepreneur with his own business and a wholesaler. The customer cannot be a private person, as this could have insight into wholesale prices, which would have a negative impact on market trends.
In addition, there are also issues such as:
- fear of competition - cooperation with the company allows for its verification and avoiding unfair practices,
- sales settlement – only companies can issue invoices.
The essence of the dropshipping model is that a company establishing cooperation with a wholesaler does not store the goods it sells. This task belongs to the wholesaler, which keeps the products in its warehouses and sends them from there to the end customer. The store itself does not really deal with products in physical terms.
Terms of cooperation
When setting specific provisions in the contract, you should also remember about such issues as:
- shipping time of purchased products (customers can be merciless and leave negative opinions even with minimal delays, without first contacting the seller),
- data processing in accordance with the GDPR,
- price fixing on the goods sold,
- the possibility of returning products and its conditions (the company offering dropshipping is responsible for the complaint, but it is not obliged to accept returns; despite this, it is a common practice, so it is worth establishing cooperation with a company that offers them - if you sign a contract with a wholesaler that has expressed consent to this, remember to specify the address to which the return is to be sent and whether any additional fee is associated with it),
- frequency of updating stock levels,
- the ability to use your own courier labels,
- how to place orders (there are many options - e.g. via e-mail or a special author's panel),
- the possibility of reserving goods before the most intense sales season (this protects against unavailability of products at the time when they are most popular with customers),
- delivery price list.
Shipping prices can be very different, depending on which courier you are dealing with and what type of product is being sent. Companies offering dropshipping often use the services of their own couriers or companies with which they have been cooperating for a long time. When setting the shipping rules, analyze its costs, profiles of companies whose services are used by the wholesaler and check the possibility of choosing your own courier. You should also determine with the wholesaler whether dropshipping on delivery is acceptable and whether it is possible to send products abroad.
The contract and the conditions contained therein are binding and will affect your earnings. In order to gain and not lose anything, it is necessary to establish assumptions that are fair, logical and beneficial.
It is also worth asking if the wholesaler accepts sending a confirmation of the transfer as sufficient proof to send the shipment. Her position must be included in the contract.
Turnover and discount thresholds
The last issue related to dropshipping is discount thresholds and turnover. Many wholesalers offer favorable discounts for beginners, but this is not the rule. It is better to be aware of specific rates before starting cooperation and to know how the discount threshold is increased. They are usually determined on the basis of the time of cooperation and the amount of turnover.
A good practice to have better conditions for entering the market is to reduce the margin as much as possible, which over time, under the influence of increasing sales and longer presence on the market, will start to grow. This, in turn, should result in better terms of cooperation with the wholesaler, and thus better discounts. When dropshipping brings satisfactory earnings for both parties, the wholesaler can also offer you the opportunity to take out a trade credit. It is a very convenient solution thanks to which you will not have to pay for each order separately. In addition, it is provided free of charge, without interest and service costs. Each company has its own trade credit policy, which is often selected individually, depending on the creditworthiness and credibility of the other party. The greatest influence on its granting have:
- length of cooperation,
- previous, timely payments,
- wholesale turnover.
The collateral for the loan depends on the arrangements between the two parties. Various solutions are used, such as insurance or discounts, i.e. lowering the price for goods that have been paid for quickly.