Wholesale Tools – How to Choose the Right Supplier

Sourcing

2024-09-23

Whether you are an established business or an entrepreneur looking to start working for yourself,

“B2B eCommerce is becoming increasingly important for growth in the wholesale industry, accounting for 16% of all manufacturing and distribution sales in 2024. This represents a significant increase from previous years, as more companies turn to online platforms for sourcing and selling” Digital Commerce 360

getting into—and growing in—the liquidation industry can be challenging. It is not hard to find inventory but finding inventory from suppliers you can trust is another story. Companies often work for lifetimes to become partners with big-box retailers or major manufacturers.

So, where does that leave the rest of us? How can you find the right inventory that helps you turn a profit quickly enough to replenish stock and build a customer base? You need a supplier that does the heavy lifting for you and can reliably equip your business for the long term.

Let us look at a list of key criteria for choosing a wholesale supplier.

Supplier Profiles and Practices

Product Range

For those just starting out, it is crucial to research products that perform well across various categories. Take strategic risks by buying from distinct categories to see what works best for your market.
Your supplier should be adaptable to your changing needs. As you discover products that sell well, they should be able to increase your supply. Conversely, if something is not working, they should help you in pivoting to assorted products.
You should be able to find items by category and containers with predominant product mixes—all readily available for you to shop from.

Reliability

Quality can often be hit or miss in the liquidation industry. If you are buying AS-IS returns, there is always an inherent risk of damage, missing parts, or non-working products.
However, when buying overstock or refurbished items, ensure your supplier provides you with at least an industry-standard warranty. This not only protects your investment but also shows that the supplier stands behind the quality of their products.

Reputation

Always investigate a potential supplier’s reputation in the industry but be cautious of online reviews and discourse – whether good or bad. Instead, consider these methods to verify if your supplier is reputable:

References from Existing Customers: Reach out to other businesses that have worked with the supplier to get firsthand accounts of their experiences.
Contracts: If a supplier holds contracts with multiple big-box retailers, manufacturers, and distributors, they are likely trustworthy.
Product Range: if a supplier advertises multiple brands of products from distinct categories and different retailers, they typically are more likely to be legitimate.
Footprint: Does your supplier offer inventory across multiple large supply chain locations? Companies do not scale without achieving some level of success.
Business Longevity: Look at how long the supplier has been in business. Companies, whether private or public, should have records of their incorporation available online.
Certifications: Certifications from reputable organizations like the Better Business Bureau, R2, ISO, and others add credibility.

Pricing and Negotiation

Surprisingly, extremely low prices are not a sign of trustworthiness. Instead, look for a supplier who is in tune with supply and demand, understands their inventory levels, and knows the quality of their products. Remember the adage: “If it seems too good to be true, it probably is.”
Seek out suppliers who work hard to price competitively for all parties involved and are willing to work with you when retail gaps are found.

Partnership

While some buyers prefer purely transactional relationships—which is where eCommerce excels—a legitimate supplier will have a team of account managers ready to help you succeed.
A supplier should not claim to be in every space. If they handle eCommerce , bin stores, exporting, buy truckloads and sell by pallet in person, retail, and discount stores, where do you fit in? A good supplier seeks partners who can do things they cannot, treating you like another arm to deliver products to consumers and leaving you enough margin to keep your business growing.
They should inspire ideas in you, encourage you to take intelligent risks, serve as sounding boards, and offer advice when you need it—not just process invoices.

“Global eCommerce sales are expected to hit $6.33 trillion in 2024, demonstrating an 8.8% annual increase” from Ecommerce Tips

Transparency

The key decision-makers at a supplier should not be hidden from you. This does not mean your customer service agent or account manager is not your primary contact, but you should hear from the decision-makers. This can take the form of videos, live events, joint calls, panels with Q&A sessions, account reviews, and more – from leadership and pricing teams.
Transparency fosters trust and allows for a more collaborative relationship.

Now, let us delve deeper into how a supplier can equip your business to be successful while keeping their own operations running smoothly centered around technology and resources.

Technology and Resources

Order Management Tools

Any supplier you work with should have access to either a third-party or proprietary order management system. It should be capable of bundling orders, managing those bundles for scheduling, allowing flexible payment applications, and keeping proper records so you can request updates on order progress at any time.
Efficient order management ensures that your inventory reaches you on time, allowing you to meet your customers’ demands promptly.

Inventory Management

Suppliers should keep unit and container-level records for assorted reasons, including correct stock levels.
Inventory management matters to you because you need reliable data to be successful. A supplier should be able to provide manifests with locations, UPCs, titles, categories, retail prices, unit IDs, and container IDs. This information is pivotal for tying your receipts back to manifests and potentially selling your items directly to consumers.

Customer Service

A supplier should have a robust customer service arm with published standards for communication across different mediums.
There should be evidence of a customer service email address, phone number, web form, and chat support. Responsive customer service is essential for resolving issues quickly and keeping a smooth operation.

Returns Management

A supplier should be able to aid your business on multiple fronts, including offering technology solutions to help you manage returns from retail sales. Efficient returns management can save you time and money, allowing you to focus on growing your business.
Learn more about ReturnPro™

Lastly, let us investigate what kinds of information suppliers should be able to provide you with as you look to buy inventory for your business. Information can be hard to come by in secondary markets, especially concerning goods. Even if you know your supplier, it is important to have detailed information about products and containers or lots. Here is what to look for:

Information Transparency

Condition

The condition of products or products in containers should be clearly shown on all listings or private lists and should be easy to understand.
Sometimes products are brand new, brand new with box damage, conditionally assessed, fully refurbished, not working, or untested AS-IS returns. You should know what you are buying before you make a purchase.

Pictures

Pictures of containers are particularly important, as are product images from the supplier’s catalog. Knowing what you are buying is crucial, and when ordering from a distant location, these pictures are invaluable.
Before closing a big deal—such as multiple truckloads or large-value unit orders—you should have the ability to get more visibility into the product through your account manager or customer service agent.

Locations

A clear list of locations should be shown on eCommerce sites and private lists.
The supplier should offer the ability and even encourage you to tour their supply chain facilities with products and containers you can buy. Seeing the operation firsthand can provide added confidence in your supplier’s capabilities.

Concluding Thoughts

With all this in mind, there are multiple good suppliers out there. Many offer different services and specialize in distinct categories of goods.

If you are looking for your first supplier as you launch your business and you are on the cusp of making that decision and want to do research, we hope this article helps you find a company that works for your next big venture.
If you are an established business with decades of experience and stable profits, you might be wondering how useful this information is to you. A known commodity is a safe bet, but what if you could grow and expand your business with a second or third supplier? It is worth exploring because you may be leaving revenue and margin on the table.
If you are already set up but unhappy with your current situation, use this information and these tools to evaluate where you stand. Where are the gaps? What could you push your supplier to do for you? Or should you find another supplier? These questions will help you define your next steps, and this information can aid you on that journey.

In conclusion, while we would love to have every single one of you work with us, we know that is not realistic. As you seek a partnership with the right supplier, value the right things, and ask the tough questions. Allow for imperfections on both sides of the relationship and challenge each other to always improve. Fight to get your hands on the necessary data to make your business efficient and correct upon resell. Find a supplier that will offer advice to make your business successful and that values your perspective. If you are tempted to start buying and selling goods, start small and take some calculated risks as you build.

If that happens to be Direct Liquidation, we are ready to meet you. We are always striving to improve, and your feedback is a part of that continuous improvement loop. We will listen, we will grow with you, and we want partners who do the things we do not – let us help you succeed.

Frequently Asked Questions (FAQ)

Q: How do I evaluate a supplier’s reliability?

A: Look for suppliers that provide clear condition grading, offer warranties, and have a history of consistent quality and fulfillment. Check their record of accomplishment for on-time deliveries and how they handle any issues that arise.

Q: What certifications should a supplier have?

A: Suppliers with certifications like the Better Business Bureau (BBB), R2 (Responsible Recycling), and ISO (International Organization for Standardization) are more likely to follow industry standards and offer high-quality products. These certifications show a commitment to quality and ethical practices.

Q: How important is a supplier’s product range?

A: A broad product range allows you to experiment with various categories and scale up as you find what works in your market. It also provides flexibility to pivot quickly if market demands change.

Q: What are some red flags to watch for when choosing a supplier?

A: Be cautious of suppliers offering prices that seem too low. Additionally, lack of transparency, poor customer service, limited information about their business, and unwillingness to provide references are all potential red flags.

Q: Should I look for a long-term partnership with my supplier?

A: Yes, building a partnership with your supplier can lead to better pricing, more support, and insights that help you grow your business. A strong relationship fosters mutual success.

Q: Should I buy returns from liquidation suppliers?

A: Absolutely; returns often result from buyer’s remorse, accounting for 30-35% of all returns, especially for higher-priced items. In fashion, bedding, and curtains, up to 50% of returns happen because customers buy multiple sizes or colors and only keep one. In some categories like electronics, no-fault-found rates can reach 70%, meaning many returned products are in perfect condition but sold at a discount. This provides high-demand items at lower prices, offering an excellent opportunity for profit (ReturnHelper and Invesp). Additionally, some suppliers perform refurbishment and repairs on returns, increasing their cost but also their inherent value for you.

Q: Should I buy overstock from liquidation suppliers?

A: Yes; overstock items, while having less demand from retailers and manufacturers, provide businesses like yours with an opportunity to introduce these products to new marketplaces and entirely new markets. Typically, clearance products are marked down by the retailer and then exited through a liquidation partner to create space in their distribution network. These goods can be found from multiple trusted suppliers that hold contracts with different retailers, distributors, and manufacturers. Small and medium-sized businesses can reach different customer bases or potentially sell on eCommerce channels not previously used.

Remember, choosing the right supplier is a critical step in the success of your business. Do your due diligence, ask the right questions, and do not be afraid to walk away if something does not feel right. Your supplier should be a partner in your success, offering support, transparency, and quality products that meet your customers’ needs.