Vet every supplier before you sign a wholesale contract! Ask them 15 questions and find out if your supplier is legit or if you should quit!
As you approach landing your first wholesale contract, you should remember to vet and perform due diligence before you sign any contracts. Suppliers go through a strict vetting process before they agree to add any potential sellers. Like suppliers, sellers should be cautious before agreeing on a contract with potential suppliers. This means asking your potential suppliers and partners a series of questions to ensure the supplier is authorized, legitimate, and reliable.
In this blog, we’ll be covering 15 questions that every seller should ask their supplier. If at any point the supplier cannot provide a clear response or simply shows they are unauthorized, we recommend canceling any contract negotiations and requesting refunds on any orders until the supplier can be thoroughly reviewed. Remember, Amazon wholesale is all about relationships. If your supplier cannot be transparent with you, it will be hard to trust them to be your business partner. Now, let’s jump into some questions!
Understanding the Amazon Supply Chain
The first series of questions are going to focus on understanding the entire supply chain. Essentially, you want to find out what you CAN and CANNOT do.
Question 1: What Can I Sell On Amazon?
The first question you must ask is simply, can I sell your products on Amazon? While this may seem silly, many manufacturers dislike Amazon and Amazon sellers for various reasons. Some suppliers will only allow specific products to be sold on Amazon, while others may flat out deny any products to be sold on Amazon. Regardless, you need to see what products, if any, are you allowed to sell on Amazon. If the supplier says you cannot sell any of their products on Amazon, you can try to negotiate a trial period or convince them to let you test out selling a few products. If they do not budge on their stance, it is best to move on and find a new potential supplier that will allow you to sell their products on Amazon.
If they allow their products to be sold on Amazon, you’re in luck! You can then move forward with the questions below.
Question 2: What is Your Minimum Order Quantity?
The next question is what is the minimum order quantity (MOQ)? The MOQ is the minimum amount of products or amount of money that sellers must spend if they want to order products. Some manufacturers’ MOQ is a unit minimum (a certain amount of stock) or it could be a spending minimum (a certain amount of money spent on products). The MOQ question should be straight forward and some sellers will even produce a price sheet with the MOQ for all of their items in their catalog. Take a look into the MOQ and see if the pricing matches your available capital resources. As always, pick suppliers whose MOQs suit your business needs.
Question 3: How Do You Source Your Products?
This next question allows sellers to understand the quality and legitimacy of the supplier’s products by asking where the supplier sources their products.
Do they manufacturer the products? Are they an authorized distributor?
Every Amazon supplier needs to be authorized, especially if they are selling brand-name products. It is important to note that Amazon only allows authorized products to be sold on their site. If they see issues with counterfeit products, they will not hesitate to suspend your account. When purchasing stock from a supplier. you need to ask where they are sourcing their products. If they are a manufacturer, they need to provide clear documentation to prove that they are an authorized, legitimate supplier If they cannot provide any resources to confirm this claim, you need to run and request a refund if you have submitted an order. It’s always better to be safe than sorry!
Question 4: What Condition Are Your Products?
Adding onto the last question, you should inquire about the conditions of the products. Most suppliers will state their products are all in a brand new condition more often than not. Amazon always prioritizes new products overused, especially within the Buy Box.
Sellers should always confirm the product condition before submitting any product order. If the supplier can only provide used or refurbished products, it may be best to move onto a new supplier.
Question 5: What Is Your Lead Time?
The lead time is the period it takes for the products to arrive once an order is placed. Most suppliers will have products on hand and ready to ship out. But for large orders, it may require some more time. Ask the supplier, if I put in an order and pay for products today:
How long will the products take to arrive at my facility or an FBA center?
What is the expected shipping and waiting time?
This question is more important to you, the seller than it is the manufacturer. While you always want your supplier to have high urgency and efficiency with orders, this question will be more important for you to forecast sales projections and know when to re-order products.
Question 6: How Often Do You Add New Products?
Most if not all suppliers regularly add new products to their catalogs. If you sign on as one of their sellers, you want to make sure you get access to all the new, profitable products to add to your Amazon business. This is why you should always ask, how often do the suppliers add new products? Some will add products weekly or monthly while others may have new products for every quarter or new year. Whatever their schedule is, inquire about new products and see if you can get access to them. New products can lead to more sales, higher profits, and accelerated growth for your business.
Question 7: Do You Have A Catalog You Can Provide Me?
Always ask for the catalog. Some suppliers and manufacturers may not provide you with a full catalog until you sign a contract, but it never hurts to ask beforehand. Asking for the catalog empowers sellers to analyze all potential products and view how profitable they can be. By having access to a catalog and performing simple product analysis, sellers can determine the profitability of a catalog before even landing an account. If you’re not sure how to perform product analysis, check out our previous blog on A Guide to Product Analysis to determine the profitability and return on investment (ROI) of any product!
Getting to Know Your Amazon Supplier
By now, you should have a decent understanding of the supply chain, the supplier’s products, and what exactly you can sell on Amazon. Now, it is time to get to know your potential supplier better. These questions below will focus on helping you validate the authenticity of the supplier to ensure they are authorized, ethical, and dependable.
Specifically, these questions will reveal how transparent and cooperative a supplier will be with you. Sellers should strive to find business partners that are open and actively willing to collaborate. If at any point you feel like the supplier may be acting suspiciously or is not straightforward with you, it may be best to move on to a new supplier.
Question 8: How Long Has Your Company Been in Business?
The first question is an easy one, how long has the supplier been in business? This question is very direct but reveals a ton about the supplier. Suppliers with longer histories will be more reliable than ones with short lifespans. Although don’t be too hasty about this question, suppliers can easily lie about the length of operation. This question is a softball that will allow you to transition into deeper, more meaningful questions.
Question 9: Which Product Category Do You Make the Most Sales?
Next, you should inquire about their current operations, with an emphasis on their performance. This is when you should ask, which product categories do they make most of their sales revenue? Some suppliers may focus on electronics while others can range to food or beauty products. Listen carefully to what they respond with, as it may be a good indication of where you should start your product analysis. If the supplier has a lot of sales in electronics and technology, maybe start looking into those products first.
Question 10: Where Do You Make Most Of Your Sales Now?
Some manufacturers and suppliers will focus a majority of their efforts on brick and mortar stores while others will be entirely online sales. There is no “right” or “wrong” answer here, but one thing all sellers should be wary of is if the supplier states they mainly work with Amazon FBA sellers. While this may be great for you as an Amazon FBA seller, think of the potential competition you have for this supplier’s attention and the potential competition for this supplier’s products.
For starters, they may work with dozens or even hundreds of other FBA sellers who are all fighting for the same things. All the FBA sellers sourcing from the same supplier means you all have access to the same catalogs and products, which equates to more competition in the Buy Box, fewer sales, and limited stock availability. Ultimately, this question will determine if the supplier is even worth pursuing. If they have a long list of FBA sellers, you might want to move on to a new supplier whose products and catalog will provide you with more benefits and less competition in the long haul.
Question 11: Where Are Your Manufacturing Locations or Warehouse Locations?
Another straightforward question with huge implications, where are your supplier’s manufacturing locations? If your supplier states that they do not manufacturer their goods, they may be a distributor which means you’re talking to a middle man rather than an actual manufacturer. Note that distributors will sell you products at a higher price than the manufacturer would. If this is the case, you may want to reconsider signing a contract and instead focus your efforts on contacting the manufacturer of the products who can give you a better deal.
Question 12: Does Your Company Participate in Trade Shows or Other In-Person Events?
This particular question is more applicable to domestic manufacturers and pre-2020 before the start of the pandemic. As COVID-19 restrictions lift, you may see more and more events pop up such as tradeshows and exhibitions. You may be wondering why you would ever need to ask your supplier if they participate in live events. But, in-person events provide you a huge opportunity: meeting your supplies face-to-face. While it may seem like a lot of work, the opportunity to meet your suppliers in person, converse, and establish more personal relationships is invaluable. This is how to build strong rapport and long-lasting business partnerships that will empower your business and accelerate your growth long-term. Who knows, it may even lead to more perks such as access to exclusive products, bigger discounts, and more.
Ask About Amazon Purchase Orders
Now that you know more about the supply chain and your supplier, you can now move onto the last set of questions. These questions focus on one thing: Amazon purchase orders. If you were to submit an order right now, what would happen? What should you expect? The following questions provide sellers with an insight into some of the logistics they can anticipate if they decide to sign a wholesale contract.
Question 13: Do You Provide Shipping to Amazon FBA Centers?
First, you should inquire about shipping methods. Does the supplier provide direct shipping to Amazon FBA centers? For FBA sellers, this is an essential and invaluable question with huge implications for your business model. If the supplier provides direct shipping, then that is fantastic news. This means your supplier should provide packaging and prepping services and you will not need to hold any physical inventory in your home or warehouse.
If the supplier does not provide direct shipping, you need to consider how this will impact your business and logistics. If they cannot provide shipping to Amazon FBA centers, do you have the resources and space to store inventory? Do you want to package the products yourself or pay Amazon’s service fees for them to prep products? We go into high-level details about shipping in our Amazon Shipping 101 article. All of these decisions can severely impact your profitability and business growth. Depending on the answer the supplier provides, account for those potential costs and fees before signing a contract.
Question 14: What Payments Do You Accept and Are There Additional Payment Fees?
After shipping, ask about payment methods. Payment methods will vary depending on the manufacturer’s standard operating procedure (SOP). Some suppliers only accept one method of payment while others accept a multitude of payments. This can range from checks or credit card payments to wire transfers. Inquire about all possible methods and pick the one that makes sense for you and your business needs. We also want to note that some payments charge extra fees such as a 3% on all credit card payments.
Question 15: Can You Provide Invoices to Get Brand Approvals From Amazon?
The last question we want to bring up is about invoices. You should receive invoices after you put in an order to pay for your products. Some products are “gated” or restricted on Amazon and will require you to undergo Amazon’s approval process before you can add the products to your inventory. Amazon has restricted categories, subcategories, and brands that need to get approved. We discuss this more in detail in our blog on Getting Ungated in 2021.
Essentially, the invoices you receive from the supplier can be used for Amazon’s approval process. If you want to sell restricted products, make sure to ask your supplier if they can provide invoices so you can get ungated. If your seller is authorized and licensed to produce the branded products, this should be no issue at all. But, if the supplier cannot provide an authorized invoice or any other documentation to validate their operation, leave immediately and request a refund for any orders you paid for. They may be potential counterfeiters and will try to sell you fake products. Prioritize your business first, don’t risk selling fake products and losing your Seller Central account!
Start Amazon Sourcing!
If you reached this point, you should have vetted your potential suppliers and have decided to move forward to signing an account contract or to find a new supplier. Regardless of your decision, you now have a simple procedure to vet and validate any potential manufacturer before you even submit an order. While these 15 questions are a great way to review your suppliers, we want to emphasize that these should not be the only questions you should ask! Be curious, ask as many questions as possible to ensure your supplier is legitimate and authorized. Whether it be 15 questions or 1500 questions, you should always ask questions before you agree to any business partnership.
Once you have investigated your potential supplier and confirmed their operation, you can start looking into their catalogs and source profitable products to grow your Amazon FBA business! For our sellers out there, we can help you find high-demand, profitable products! Check out our tools at Sellgo.com like our Search Management tool and Profit Finder to organize your supplier’s catalog. Quickly identify winning products that will accelerate your business’ growth and start making money today!