Vet Your Vendors

You can have the widest selection of products for your niche. You can trounce your competitors in the search engines. You can have your website set up for optimal conversion and have killer sales copy that gets visitors to buy. You can have an incredible customer service system in place to take care of every question or concern known to online man. But none of it will matter at all if you have a crappy vendor.

You need a reliable company to make your business strong. You don’t want to be scrambling around trying to keep your customers happy while your vendor offers nothing but excuses. A good vendor will take a vested interest in your business and treat you as the important part of their business that you are. You put a lot of time, money, and effort into getting the sales that make your business and theirs successful, that shouldn’t be taken lightly.

And it’s not just getting the sales, it’s also all the time and effort you put into getting a new line of products up for sale in your store. Depending on how you build you could be out days (if not weeks) of work or the cost of the freelancer you paid to do it for you. Either way it is a waste and a hassle you should not have to deal with. Even if you choose your vendor from a place like World Wide Brands who does research before listing them, I still recommend doing some follow up. If you are finding your own vendors you definitely need to be as thorough as possible in your vetting process.

So how can you tell if a vendor is no good? There are a few fairly obvious telltale signs you can look for right off the bat.

If you have to pay to join their dropship / wholesale program you’re dealing with a middleman not the source. This is okay to start with if you really want to sell their products but chances are you could dig a bit deeper and find whom your dropshipper is sourcing from and get a better discount. Often times these middlemen are dropshippers too and are not only marking the products up so they can make a profit but also passing some of their other costs onto you. So for all the time you put into making sales you will be losing what can amount to a lot of potential profit.

Find out if the vendor sells retail to the public and check out their retail website if they do. In a perfect world you want to deal with “wholesale to trade only” vendors but that exists predominantly with bulk wholesale companies. I only have one dropshipper that doesn’t also sell to the public. So you need to take a look at their retail prices and their search engine rankings before adding a single one of their products to your site.

Retail first; their wholesale price might be awesome but if they’re selling the products too cheaply to the public you will have no room to make a profit. I’ve come across a few vendors whose retail prices are less than what they would charge me and they throw a dropship fee on top. Such would be a pointless endeavor. Second, check out their search engine presence. If the margin for mark up is large I don’t worry too much about this because I’ll have funds to put toward advertising and getting links; but if it’s tight and they have a solid presence in the SERPs it is going to be tough competition. This isn’t necessarily a deal breaker but it will take more work to profit from than a vendor you don’t have to fight with for rankings.

Make sure there is no minimum order or that it is one you are prepared to deal with. A twenty-dollar dropship minimum I don’t mind but a two hundred dollar one… not unless the products I’m selling cost as least $201 apiece. I always ask the vendor directly about minimums because on more than one occasion I’ve gotten applications and price lists that contained incorrect information. You don’t want to find out after you get an order that you have to spend that sale’s profit plus some to get the item from your vendor. That has happened to me, it sucked and the vendor was entirely unsympathetic.

Know the vendor’s shipping, return, and exchange policies. You want to ask directly about these as well. If their items take longer to ship than other vendors you use in your store, what’s posted on your website, or what falls into the realm of normal human patience you need to know so you can tell your customers ahead of time. If they allow exchanges and returns - you really want a vendor who does - do they charge a restocking fee? Do they pay for return shipping on damaged items? How long is their return period? If their return policy is fifteen days and you have thirty posted on your website you could be out a lot of money and knee deep in returns you can’t actually return.

Ask about inventory. Ask them if they carry a lot of stock, if they say yes ask them if that means all items or just what they consider to be their most popular products. Ask about a few specific items you are interested in selling, getting a few concrete numbers will help you determine what adequate stock means to them. Find out how long it takes them to restock. A couple weeks is fine but I get edgy when the answer is six weeks or longer. I don’t like doing backorders but sometimes they are necessary just be sure you don’t get caught up with a vendor who you constantly have to backorder from. You will lose business, especially around the holidays, if your products are never in stock.

Choose a product or two, write down some questions about them, and call the vendor’s customer service number. Pretend to be an interested customer. You are going to get questions about the products that you can’t answer and you are going to have to deal with this company when you place orders or have order issues. I like to test their knowledge and the quality of their customer service before I decide to do business with them. Some of you may not like the idea of deceiving a customer service rep but it is harmless to them and important for your business. If they don’t answer their phones or can’t answer a few simple questions about their products I don’t want to deal with them.

Find out how the vendor accepts payment and how they will charge for or bill your orders. I have net thirty accounts, charges that are put through instantly, bulk charges that are done twice a week, vendors that accept only certain types of credit cards, and even one who only accepts PayPal. When it comes to payments you never want to be surprised. You need to make sure you can be compatible with the vendor’s requirements and have the necessary means in place or you could run into problems which could cause you to lose your relationship with that vendor. If they had the best prices or are the only supplier of a certain product this could be very detrimental to your business.

The best test of a new vendor is to actually place an order. Add a product or selection of products to your site – this test is more easily done with an established website that has regular traffic and sales – and promote them. Use your homepage, your blog, paid advertising, etc to get a quick sale. Now you can watch and evaluate your new vendor’s performance without putting in a huge time or monetary investment.

When it comes to your business and reputation, assume nothing. Any question that comes up should be asked. You may have specialized concerns based on your product line, don’t leave the answers to chance. Just as you have to apply to their program make them apply to your business. If you have to spend time worrying about them or dealing with unfavorable terms you’ll be taking away time and effort that should be spent building your business.

Vendor Checklist:

- Should be free to apply and join the dropship program
- Should offer fair retail prices so you can compete
- Watch out for minimum order requirements
- Know their shipping, return, and exchange policies
- Make sure they carry adequate inventory and can restock in a reasonable amount of time
- Test their customer service to make sure they will be there to support you
- Get all the details on how you will pay them and make sure you can do it
- Place a test order with the vendor to see if they practice all they promise