Visiting a Supplier

I had a very unique opportunity a few months ago.  My sister was getting married out of state and we were traveling for the event.  As brother-of-the-bride, I really didn’t have much to do until the real events started, but we were there a day early as my wife was involved also.

So with nothing to do for virtually an entire day, I whipped out the map and realized that one of my drop ship suppliers was headquartered only about 40 minutes drive away.  ROAD TRIP!

So why did I do this? Actually, it’s very common for a retail buyer to visit a supplier.  But, if is fairly UNCOMMON for a drop shop seller to visit a vendor.  This is because we typically don’t have travel budgets, and since most of us are part-timers, we’ve got other things to do.  But, when the opportunity arises, I highly recommend it.  While the details of my visit would be long and boring, there are reasons and lessons to be learned by a supplier visit.

1.  I saw the products. Do you have any idea how many items I’ve sold from this manufacturer and never saw a piece in person?  I’ve now held them in my hand.  I know what they look like, i know the quality, and I can now answer questions about the products without having to contact the company.

2.  I got a nice tour of the facility and saw the orders being processed.  Believe it or not, having a good understanding of how your suppliers work can greatly improve the customer service you can offer to your customers.

3.  I met with my main contact, and the big wigs. These folks deal with their products every day, they know how to sell them, and know what works and what doesn’t.  Hearing their sales strategies, and constructive advice was invaluable.

Now, I’m not suggesting you run out and visit all your vendors.  It simply doesn’t make sense, unless they happen to be really close by, or you’re really well funded.  But if the opportunity arises, as it did for me, go for it.  The experience can be invaluable.

When To Fire A Supplier

So I’ve been thinking lately; when is the appropriate time to fire a supplier? I’ve fired some quickly, and some after a long thoughtful process. Before we dig in lets remember a few things:

1. Work to add vendor in the first place. Adding a new vendor, and all their products, is usually a big job in the first place. You’d hate to do all that work and reap no rewards at all. So firing a supplier isn’t something to be taken lightly or a decision to be made quickly.

2. Time for search engines/advertising to work. When you add new items, it does take time for the search engines to find them, and for any advertising methods you use to work. Don’t be too quick to pull the plug just because a supplier’s items aren’t selling; give things some time.

3. Most issues can be worked out with communication. Suppliers want to work with retailers; retailers want to work with suppliers. So if you’re having problems talk with them and express your concerns. Most issues can be worked out.

So, when to fire?

1. Constant customer complaints. This, of course, is one of the biggest ones. Customers complain about all sorts of things. But, when there is a string of complaints that fall upon the supplier, you’ve got a problem. Now, while we all would like to blame all of our problems on the supplier, the truth is that most issues are not their fault. Look internally first. Some things that could be the suppliers fault are: product quality, extremely slow shipping, shipping the wrong item, and shipping damages due to poor packaging.
2. Problems outweigh the benefits. OK, so you’ve got vendor problems. Don’t jump and get rid of them too quickly. If you are selling a ton of their stuff, and making some good margins on it, maybe it’s worth it to you to just take your hits and keep going. Don’t sacrifice good sales for occasional mistakes. Be sure that the problems greatly outweigh your gain before considering a change.
3. Vendor shows no signs of changing. Always give the vendor a chance. Remember, we have spent valuable time and resources to get these products on the site. Express your issues with the vendor and see how they respond. In a perfect world, they’ll do what they can go work with you. If they tell you “tough luck” well then you’ve got some decisions to make.
4. You feel as though you’ve done everything possible to save the relationship. You’ve done everything you can think of and still no improvements. Time to decide if it’s really worth it or not.
5. Almost no sales. This is, of course, after plenty of time has passed. I’ve had suppliers whose stuff has been on the site for 6 months to a year without a single bite, that’s when to re-evaluate. Make sure it’s been long enough, as discussed above.
6. Made a mistake in the first place. All of the above reasons assume that you want to keep the items. Sometimes you don’t. Not all matches are made in heaven. Maybe your system and theirs simply don’t work together. Maybe you thought the items would blend with your site, but they just don’t. Maybe you just need to move on. In these cases, go for it.

Conclusion

The reason that I stress so much to keep the relationship going at all costs is because drop ship items are virtual. That is, once you’ve got the items up on the site it doesn’t cost you anything to keep them there. It’s not like you’re buying inventory, stocking them, and having to dust them when they are in your warehouse forever. In many cases, it’s simply easier to leave the items on the site and see what happens. The book, The Long Tail, by Chris Anderson explains this further. Bottom line is to use caution with all decisions regarding your business. Don’t take anything lightly and hopefully good decisions will follow.

What is MAAP?

Many suppliers will mention MAAP when setting up an account. They may even ask you to sign an agreement stating that you’ll abide by their MAAP policies. Well, what the heck is MAAP and why is it important to me?

What is MAAP?

MAAP stands for (I believe) Minimum Allowed Advertised Price. Basically they are saying that you can not openly advertise the price of an item lower than the MAAP requirement. Suppliers and manufacturers use this in an attempt to protect their products from discounting which aims to protect their brand’s reputation. They don’t want retailers selling their products for dirt cheap because that will eventually cheapen the brand and make it harder for anyone to make any margin on the products.

Why As A Drop Shipper Should I Care?

Because if a supplier has a MAAP requirement, and you are found violating it, you run the risk of loosing the privilege of selling the item, or in extreme cases, risk a lawsuit.

Is it legal?

In a word, yes. Keep in mind that a supplier can not tell you what you must sell an item for. That is called price fixing, and it is 100% illegal. But there is a big difference between price fixing and MAAP. Price fixing dictates sales price (again, illegal), MAAP dictates advertised price. You can still sell the item for whatever you want; you just can’t openly advertise it for less than MAAP.

The way around it

Ever go to an online store and it says “call for pricing”? Or something like: “the price is so low we can’t show you. Add it to your cart for the price (you can always remove it later)”? Well those stores are going around the MAAP requirements on those products. They are not advertising the price, but will tell you if you ask, either by calling in or adding it to your cart (considered intent to buy). The call in method is relatively simple to implement if you have a call center or some kind if customer service. The add to cart method is a little more difficult and would take some extra coding or software to work on most store platforms.

Conclusion

My feeling is that MAAP is very confusing to the consumer. Most don’t even know what it is. So sites that use one of the above methods probably lose some trust. It’s hard enough to get customers to buy, but when you add an extra step, many will just go somewhere else. In practice, I generally just put the actual price I’m offering. If it happens to be too low, I just move the price up to MAAP and move on. Consumers like to know their price up front, and any time it seems to be hidden, you’ll lose more than not.

How Much Information Should I Give My Supplier About My Customer?

Many drop ship retailers worry about their suppliers “stealing” their customers. They worry that with all the information needed in order to ship the product, the supplier will start advertising to the customer directly for additional sales in the future; thereby cutting you out.

In my experience, this rarely happens. In fact, I don’t think it’s ever happened to me. It all boils down to being careful when choosing your suppliers. Make sure they are a good and ethical company. Have a clear understanding of what, exactly, will be in the box with your shipments. I had a vendor that did everything right, except put a sticker on the product box with their logo and website. I simply had them stop using that sticker and everything is now fine.

So What Does The Supplier Actually Need?

Well, name and address, obviously. The questions usually come with phone numbers and email addresses. I do supply phone numbers because that is passed on to the shipper (UPS or whatever). If the shipper can’t find the shipping address, they should use that phone number to contact the customer and complete the delivery. A good thing for us all.

I do not, however, give my supplier my customer’s email address. I have yet to find any reason that they would need that piece of information. Questions about the order should be coming back to you, the retailer. If they want the email address to send tracking information, give them your own. I want my company to notify my customer of shipment status, not the supplier.

Conclusion

Do your homework, pick good suppliers, and you really should never have to worry about your suppliers taking your customers. Most likely they aren’t in that business anyway. They realize there is much more in it for them to keep a retailer happy, than to take a single consumer. Double check periodically, however. You never know.

How To Be A Poor Drop Ship Supplier or Things a Drop Ship Supplier Should Never Do

I am very close to firing a supplier of mine. I really hate to do it. I’ve been with them since the beginning and while they’ve never been excellent, service-wise, I’ve been able to work through most issues. However things have gotten worse lately and I’ve about had it. So here is what they’ve done wrong.

1. Stopped Back Order Notifications. This supplier does not have inventory on their website, so you really don’t know for sure if they’ve got the item in stock or not when you order. For the most part, this hasn’t been a concern. I’d usually get an email in a day or two that an item is back ordered and I in turn would notify the customer. During the holidays, they decided that they were too busy to do this. So orders were put on back order with no notification. It is my belief that it is the supplier’s responsibility to notify the retailer promptly if an item isn’t going to ship. Not the other way around. This lead to countless “where’s my stuff” calls from customers.

1. Partial Orders. Additionally, they decided that if they had part of an order available, and part not, they’d just go ahead and ship what they had. Again with no notification to the retailer. So once again, we got countless complaints from customers that an item was missing from their order only to find out later that the supplier had back ordered it.

1. Changed Images. We also got countless complaints that the customers were getting the wrong product. After investigating, we found that the customer was getting the right item; it just looked different from the site. So, the supplier had completely changed the look of many items without notifying the retailers. So as a drop shipper, we had old product pictures without even knowing it. We had many customer complaints on this.

1. Can not supply item list. As explained in my last post, I contacted them to try to get a full product list (as well as a list of items with changed images) to try to do some updating. I was simply told that they didn’t have a product spreadsheet. How am I supposed to sell their products, if they can’t tell me what they are?

1. Terrible Website. These other issues made me start to really realize how bad their website is. Not only do they not have any inventory data, but when you check out, their shipping screen (where you choose ground, or whatever) has a cost of $0 for every available shipping method. This leads me to believe that they at one point made an attempt to give good information on their site, and just gave up. Of course, they do add shipping on later.

1. Told the owners don’t talk to people. When I voiced my concerns to my contact person (at least they have that), I asked if I could speak with an owner or some other high up manager so I could voice my concerns. I was simply told that the owners don’t talk to people. Don’t talk to people? I’m a distributor of their products and they won’t talk to me? Are you kidding? My only course of action was to send her an email and she’d pass it on.

1. No response to email with concerns. OK, so I sent the email. I confirmed with her that she got it. And after a few weeks, still no response from anyone on any issue.

So what to do? Problem is that I sell their products well, and like their products. Based on my vendor matrix, they have lots of cons but lots of sales. I hate to lose the sales, but I hate to continue with so many customer service issues that the consumer views as my fault. I’ve already lost several customers based on their practices, even got some negative feedback on shopping sites. I really don’t want that to continue.

Conclusion

My analysis is that this is probably a supplier that is really good in the bulk arena that is trying to do drop shipping without a good plan to do so. I feel as though I’ve made every effort I could to help them improve. With no return effort on their part. So, I will be removing their products this week and replacing with another vendor that I use. This other vendor doesn’t have nearly as many products, but they are similar and at least I know they are reliable. When I do remove the original supplier’s products, I will send a formal letter to let them know. In the letter I’ll reiterate my concerns and invite them to contact me when they have made improvements. I’d really like to carry their products again, but for the time being, I feel this is the right decision.

What do you think?

5 Random Thoughts on Product Selection

1.  Do I sell one thing or lots of different things?

A question that will have as many different answers as there are retailers.While there is no straight answer, there are things to consider. We can’t all be the walmarts or amazons of the world. These super stores carry a narrow selection of a great many things. In other words, they sell lots of kinds of products, but just a handful of selection in each of the categories. Time and time again it has been shown that small companies do better when they specialize.

2. Keep true to your store name

A lot of times your store name or URL will answer the product selection question for you. Bob’s Store could sell anything, but boathardware.com had better not be selling diamond earrings. Remember, just because you COULD sell a certain product, doesn’t mean you SHOULD. With each product you consider selling, think about how it would go with your other products. Does the new item blend in, or stick out like a sore thumb. If you had a real physical store, and you had these items next to each other on a shelf, how would it look? Remember that your customers are coming to your store for a specific reason. Adding weird and unrelated products can cause confusion and hurt your credibility.

3. Choose a nitch and stick with it

Yes it is here twice; yes it is that important. Specialize, specialize, specialize. It is of paramount importance to find a product you are an expert on, something you have an inside track on, or something that no one else is doing, and be the best at it.

4. One supplier can help with shipping estimates

Having one supplier makes things really easy. There’s no confusion as to where to send an order, you’ve got one point of contact for any and all issues, and you’ve only got to keep up with one set of price changes (and product additions/deletions/etc.). It also makes shipping costs a breeze. If everything is shipping from one zip code, it’s a whole lot easier to use weight and get an accurate shipping estimate. By contrast, if you’ve got 10 vendors from all over the country (as I have), shipping can be a nightmare; you often end up loosing on some shipping, and being unfair on others.

5. One thing puts all your eggs in one basket

However I am not a fan of single source drop shipping. If you have really defined your nitch and there is only one really good drop ship supplier available, then fine. But I think most stores will have the need for enough variety in products to have at least a few vendors. Which is good. Now you do lose the ease of shipping. But one supplier does put all your eggs in one basket, so to say. What if that supplier suddenly goes out of business, suddenly greatly increases your prices, or becomes the most unreliable shipper in the industry? With multiple suppliers you have options. It’s hard to fire a supplier when you’ve only got one. And sometimes you may need to hand out a pink slip or two.

Well Then Whose Department Is It?

Ever go to a department store and try to find help?  You walk around for ever and can never find the right person.  How frustrating is it to find someone to help, only to be told, “Sorry, that’s not my department”?  If you are in the business of selling things, isn’t customer service everyone’s department?  It sure should be.

In the drop ship world, you, the retailer needs to take full responsibility for all customer service issues, good or bad.  Blaming problems on your drop ship supplier is the equivalent to saying “it’s not my department”.  Your customer doesn’t care.  They placed an order with you, and it is your responsibility to deliver.  Apologize for the problem, and tell your customer that you are going to do everything you can to fix it, and then work with your supplier to do so.  It doesn’t really matter whose fault it is, because in the eyes of the customer, you, the retailer, is the only one that matters.

Is Worldwide Brands Worth It?

I got a nice comment from Jeanette on my post:How do I find real drop shippers. In case you didn’t get a chance to see it, here’s what she said:

Thank you for starting this blog! It’s an excellent resource for people just starting out in drop-shipping (like me).

I have to question, though, your bit of advice about Worldwide Brands. I’ve heard that there’s a glut of retailers on there, so you end up paying $300 to sell products that MANY someone else’s are already selling. It could end up being a good chunk of change right out the window.

Also, you may want to disclose that you’re earning affiliate income from promoting Worldwide, as well. Your affiliate code is attached to the link. Darren Rowse at ProBlogger suggests sites and services all the time, but is sure to disclose that he profits from any memberships purchased from click-throughs. It’s just an idea, if you want to keep up the integrity of the site.

Other than that, good luck, and thank you!

Thanks for the complement, Jeanette.  Let me see what I can do.

Is Worldwide Brands over used?

I can see where you are coming from with your concern about there being a glut of people using World Wide Brands. I think one thing that doesn’t get mentioned a lot is the incredible diversity of the suppliers that you will find.  It’s a matter of finding your nitch and using the suppliers that fall into it.  So, if you are wanting to sell electronics, sure, there will be tons of people to compete with.  But if you want to drop ship adhesives and sealants or automotive detail chemicals, you will find a supplier at World Wide Brands and you probably won’t have too many competitors with the same product.

Product selection is only half of the battle

Just because you have similar products to other stores doesn’t mean you can’t be successful.  Think about it this way: how many stores can you think of that sell Sony products?  Let’s see: Target, Wal-mart, Kmart, Best Buy, Circuit City, and probably thousands more.  How about when you see a commercial on TV and it says “available at these fine retailers”.  There are several stores listed.  The point here is that you don’t have to be the only store in the world selling Sony in order to be successful with Sony.  Each of the stores I’ve listed has their own customers, their own way of doing business, and their own advertising and selling strategy.  Who cares if other people are selling the same items from the same suppliers as you!  To be successful, you need to find your own way of doing business.

Worldwide Brands is worth it

It is my humble opinion that World Wide Brands IS worth the $300 price tag.  Yes, I personally use it.  Yes, it really was my first business purchase when I started my company.  And no, I don’t think I would have found all of the suppliers that I have without it.

Affiliate Links

I have great respect for Darren Rowse and have read his blog for several years now.  And yes, I do use some affiliate links.  I provide full disclosure on my about me page.  Blogging does take time and money so if I can make a little here and there, great!  If someone happens to click from my blog over to World Wide Brands and make a purchase, I would get a commission.  However, that has happened a grand total of zero times, so I don’t even know what I would get. 

Regardless of any of this, this blog is entirely my opinion.  It’s entirely authentic, and I will not take any funds from anyone who requires me to write positively about them.  If you want to pay me to look over a something and blog about it, fine.  But I might hate it, and if I do, that’s what I’ll write. .

I hope this clears the air and I hope some questions have been answered.

Always feel free to drop me an email with questions or comments.

Oh no, an item is on back order with my distributor, what do I do?

This is the worst.  You work so hard to get that sale, and once you have it you can’t deliver because your supplier is sold out.  Communication is the key.  When this happens to me, I take the following steps.

I communicate with the supplier

I first have a conversation with the supplier to see what has happened.  My goal is to get a good idea of when the item will be back in stock.  I want to make sure that the item really is coming back and isn’t discontinued.  I also check on alternatives.  What similar products are ready to ship immediately?

I communicate with the customer

Secondly I communicate with the customer.  I let them know that the item is currently unavailable and that we are truly sorry about the inconvenience.  I let them know when the item is expect and ask if they can wait.  I also offer them the alternatives.  Maybe they’d be just as happy with the same item in a different color.  This is a great way to save a sale.  A word of advice; it is better to suggest specific products as alternatives.  Just asking if there is something else they’d rather have will usually result in a “NO”.

Conclusion

It is my experience that most customers are satisfied if you simply let them know what is going on with their order in a timely manner.  In my business, 75% of the customers are willing to wait, 10% will take a different item, and 15% will want to cancel.  Not too bad in my opinion.  Even if you loose the sale and have to cancel, the excellent customer service you displayed by communicating with your customer will compel them to come back next time.

Tags: drop shipping, ecommerce, back orders

Manufacturers, Distributors, and Middlemen. Oh My!

What is the difference between a manufacturer and a distributor?

This issue can be a little confusing as companies can be one or the other, or both.

In general, a manufacturer is a company that designs and makes a product. Sometimes the actual making of the product is done in-house, sometimes it is outsourced. The underlying point is that they most likely own the patent/trademark for the item and move the product from an idea, to a live item. These companies spend a great deal of money on research and development, quality control, and improving the manufacturing process.

A distributor, by contrast, is a company that focuses on selling and delivering the product. They are experts on sales, marketing, inventory management, and public relations. Typically, a distributor will carry lines from many different manufacturers and use their relationships with retailers to get the products out into the marketplace.

So What is a Middleman?

For our purposes, a middleman is a company that tries to use their advertising and marketing knowledge to wedge themselves between you and the authorized distributor. These are the guys that come up when you do a web search for "drop shipping". Typically they add an extra layer of cost for you while giving little benefit in return.

By contrast, an authorized distributor or manufacturer that offers drop shipping will very rarely advertise this. Their primary business is in the bulk wholesale market. Drop shipping is a secondary service offering for them.

Why doesn’t the manufacturer just do it all?

Both sides of the business take money and expertise to be successful. In general, a manufacturer will prefer to spend their time and resources on developing new products. If a manufacturer does choose to distribute as well, it is typically in bulk formats. I would say that it’s pretty rare for a true manufacturer to offer drop shipping as selling one item at a time is really far out of their realm of abilities.

Who cares? Why is this important information for A Drop Ship Retailer?

In the drop ship world, there is lots of talk about find “real wholesalers”. My point in telling you this is that both manufacturers and authorized distributors can be real wholesalers. They simply play different roles in the chain. What you have to be careful of are the middlemen. I know it’s confusing because the middlemen are very good and positioning themselves as experts and "perfect solutions" to drop shipping.

Conslusion

The lesson to learn here is to ask lots of questions to be sure you understand who you are working with. Do you best not to confuse a distributor with a middleman, and visa versa.

Tags: drop shipping, wholesale, distributor