Coronavirus changed the face of eCommerce forever. Those days saw a massive increase in online trading and consumption, and aside from the myriad businesses that sold us all the weird and wonderful things we were buying up during that time, there are the countless Amazon Suppliers that made sure that the businesses we bought from had the things we needed.
An Amazon Supplier is a wholesaler that ensures that Amazon Sellers (businesses that trade through Amazon) have what they need. With the ecommerce sphere having experienced such a recent boom, it seems like a good time to look at the process for finding a reliable amazon supplier.
Supplier Type Selection
The first thing to do is to look at what kind of Amazon Supplier you might need. There are two main kinds, manufacturers, and Trading Companies.
A manufacturer is, as the name rather unimaginatively suggests, is a factory that possesses the tools, equipment, materials and manpower to create your products.
A trading company is a company that has a relationship with a manufacturer (or manufacturers) in order to make the customer’s product. They make money through a mark-up on the product they supply to the businesses.
So which do you go with? Well that depends on a few things. How effectively can you communicate with one supplier over the other? Communication is the base line prerequisite for a good business relationship. Ensuring that your needs are heard and met should be the first step in choosing a supplier type. The second consideration is the supplier’s experience with importing. Depending on where your supplier is in relation to you, you may need time to build a steady importing relationship with a factory, while a trading company already has that relationship built. The third thing to look at is the cost of getting your inventory. Obviously, in general, you want the lowest price possible – however one supplier may have advantages over another that makes additional cost worth it. Although trading companies take a mark up, their relationships with factories may translate as savings to you. It’s important to do your due diligence. The final consideration is how big their MOQ is, that is, their Minimum Order Quantity. How many units of your product do you have to order before they’ll ship it to you?
Verification Steps
After you’ve selected what type of supplier you’re going with, you can get to the next stage. The same way that some people get vetted before a job, it’s up to you to ensure that your potential supplier is legit. But what are you looking for exactly?
There are several checklists online of what to look for when verifying an Amazon supplier, but there a few common elements to all of them:
Making sure that the supplier has all relevant business licences is probably the best first step, ensuring that your potential supplier is not only legally allowed to trade with you, but that they have maintained that licence and its standards through their business history.
In the case of manufacturers, checking their factory audit records is extremely important to making sure that the factory has a history of maintaining safety and quality standards.
Just like any prospective working relationship, it’s important to know who you’re getting in cahoots with, so it’s worth checking other companies that your prospective supplier has worked with before, possibly even contacting them to get a first-hand account of performance etc.
Some suppliers may even offer a video tour or walkthrough of their facilities as part of their onboarding process, offering a great opportunity to personally check the supplier’s capabilities.
Sampling Process
Of course, even checking all of this, there are still suppliers that fall through the cracks of probability, and gold-standard facilities and practices can sometimes not add up to gold-standard products.
This is where checking a sample of what the supplier can offer you is intrinsic to the process of choosing a supplier. In manufacturing, there is a principle known as the “golden sample,” which is exactly what it sounds like – an example of a perfectly made product. It represents the final green light before mass production, but also stands as an example of what this manufacturer is capable of.
Along with the golden sample, you also need to check the specifications of material used, approve packaging, and ensure that labelling requirements can be met by your supplier.
Quality Control Plan
If the quality of your products takes a significant downturn over the course of your business, it will obviously cause some harm to your business’ reputation and success. Therefore it’s important to check the quality control plan of your supplier.
AQL inspections (Acceptable Quality Limit), allow suppliers to set a benchmark for the lowest acceptable quality in what they produce. In other words, it’s representative of the number and kind of defects while still remaining tolerable.
In addition to AQL inspections, suppliers should carry out pre-shipment checks, and a comprehensive defect management plan.
Clear Commercial Terms
The final stage in vetting your potential suppliers is to check some production standards. What is their MOQ, or “Minimum Order Quantity?” Basically, how many units do you need to order before they’ll ship you your stock?
Next is to check their lead times. What this means is, what is the length of time between you placing your order, to you actually receiving your order? Lead times that are slow or unpredictable can have serious repercussions for your business.
With this information you can check whether or not your supplier meets the incoterms, the International Commercial Terms. These are internationally enforced laws for dealing in goods.
Finally, you want to check two things. First, the payment stages of your supplier, allowing you to pay before or after receipt of your goods, and how well protected your IP is.
Once all this information is secured, you and your supplier should be right as rain!
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