Practical Ecommerce

11 Tips for Merchants to Add Suppliers

Editor’s Note: Chad Weinman is owner of Cat5 Commerce, a seasoned ecommerce firm in St. Louis, Mo. that operates HikingBoots.com, TacticalGear.com, and MilitaryBoots.com.

He wrote us recently, stating, “I was writing a memo to my vendor relations manager that illustrated some techniques on how to approach suppliers that are less than enthusiastic about opening pure-play online retailers. Would you want to see it?”

We said, “Yes,” and we found his memo informative on process of dealing with suppliers. So, with Weinman’s permission, here is that edited memo, below.

Chad Weinman

Chad Weinman

One of the most difficult challenges entrepreneurs face when operating a pure-play online retail business is building out their supplier network. Many suppliers will not even show you a dealer application, let alone open an account, if you are without a brick and mortar presence. This nonsensical policy was born out of a knee-jerk reaction designed to curtail the sudden wave of interest in retail by the eBay generation.

While some of the more established retail players might benefit from this barrier to entry, manufacturers ultimately lose by preventing the free market system from working its magic. The following tips will help get your foot in the door and add more top brands to your stable.

  1. Don’t take “no” for an answer. These types of blanket policies are usually flexible. Do you think New Balance would pass on Zappos just because it does not operate a brick and mortar store? If you run into such a policy, it’s time to start putting together a battle plan. If your first point of contact won’t budge, move up the food chain.

  2. Show up in person. Attend trade shows and meet manufacturers face-to-face. Making your case in person is much more powerful than just another email sitting in an overcrowded inbox. Maintain a professional appearance, come prepared and open a dialogue.

  3. Carry inventory. If you’re having a difficult time opening an account with a manufacturer, the last thing you want to do is ask them about drop shipping. Suppliers are used to doing business with stocking retailers, whereas the drop shipping model is a newer and sometimes less-accepted approach. Drop shipping retailers don’t assume much risk and therefore have nothing to lose. At this point you’re just trying to get an account open, so take it one step at a time.

  4. Write an order. In order to demonstrate your commitment to a prospective supplier, be prepared to place an opening order on the spot. Somewhere in the neighborhood of $3,000 to $5,000 should be sufficient. Remember, in business, money always talks.

  5. Don’t say eBay or Amazon. Be sure not to mention eBay or Amazon, as these platforms raise immediate red flags. Many suppliers have policies specifically preventing retailers from doing business with such online marketplaces even if their accounts are established and in good standing.

  6. Get the details right. Don’t use a home mailing address, don’t use business cards you got for free and — whatever you do — don’t use an aol.com email address.

  7. Embrace the domino effect. Focus your energies on a leading supplier and get them to open and account with you. Not only will it add credibility to your website, but once you have that company on board the other suppliers will fall in line with much less resistance.

  8. Woo the sales rep. Your first point of contact is typically a sales representative. Generally these folks work on commission. If you can convince them that your account is the next big thing, they may just take it upon themselves to champion your cause.

  9. Acknowledge brand equity. Established suppliers have been in business for decades building their brands. Address this deep history and assure them that your representation of their products will meet expectations. Forming a new retail partnership takes a certain level of trust, and it is important to make a credible impression.

  10. MAP it out. Many manufacturers implement a minimum advertised price — or MAP — policy. Such policies prevent low-overhead retailers from undercutting their more established cousins. Make assurances to a prospective supplier that you fully intend to comply with any such policies, including MAP, at all times.

  11. Bring value to the table. A majority of brands operate their own retail websites where they sell directly to consumers. Moreover, they are likely to have dozens of existing dealers with ecommerce websites. Ask yourself, “What value does my store bring to the marketplace?” If you do not have a clear answer, then you cannot blame a major brand for not being enthusiastic about the prospect of working with you. Figure out what it is that your business has to offer and communicate this with intense passion every chance you get.

Contact Chad Weinman on Twitter, at @cweinman.

Practical Ecommerce

Practical Ecommerce

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