As an Amazon wholesaler, selecting the correct suppliers is key to your success. If you’re new to the Amazon FBA wholesale realm, negotiating with suppliers may seem daunting, but it’s necessary to the success of your business. That’s why we’ve created this guide to assist in mastering negotiation techniques and offer handy tips for haggling with Amazon wholesalers.
Things to Consider Before Starting Negotiations
Before diving into negotiations with wholesale suppliers, it is essential to recognize the differences between this process and sourcing from online or retail arbitrage. To secure the best prices for bulk products, it is crucial to establish direct contact with the brand owner or manufacturer. This can lead to reduced costs, competitive pricing, and ultimately higher profits, although there are challenges to overcome.
Entering a supplier network can be challenging
Engaging with prominent brands and requesting to set up a wholesale account can be a complex task. Major brands typically rely on established reseller networks and are often resistant to adding new suppliers. Initially, top suppliers may reject your account-opening requests. Therefore, persuading a brand that you can enhance their business and boost sales is vital.
Hesitance of suppliers to work with Amazon sellers
Suppliers usually prefer collaborating with sellers who operate across various channels beyond Amazon, including other ecommerce marketplaces or physical stores. This preference stems from their desire to expand sales rather than oversaturate Amazon with sellers, which would only escalate competition without significantly increasing their sales volumes. Nevertheless, if you observe the behavior of Amazon sellers already working with the brand competing for the Buy Box, you can likely find a selling point based around value that you can provide or commitment to maintaining their minimum advertised pricing (MAP).
Expectation for references
Suppliers often request references, resale certificates, agreements, and other assurances due to their lack of familiarity with you. Dealing with an unknown Amazon seller can be considered risky by suppliers. Be prepared to handle extensive paperwork, including agreements and formalities in order to demonstrate your commitment to working with them.
Demonstration of expertise
It is essential to demonstrate extensive experience in Amazon sales and the capacity to generate greater sales volumes for the brand. Building a solid partnership with a supplier, which requires time, is crucial. Use your negotiating abilities and persistently present yourself as the prime candidate to boost the brand’s sales. Once you establish rapport, then you can delve into discussions about discounts and improved terms.
How to Get Ready for Negotiations?
Effective preparation is crucial for successful negotiations with Amazon wholesale suppliers. This involves thorough research, strategic planning, and clear communication. By preparing adequately, you can secure a favorable agreement that aligns with your requirements.
Research the supplier
Prior to negotiation, study the supplier’s business and product range. Understand their pricing, terms, and sales conditions to grasp their offerings. Ensure the supplier’s reliability and credibility by verifying their registration number and confirming the existence of a physical warehouse. Establishing the wholesaler’s legitimacy is vital as you will make significant investments in this partnership.
Compare price proposals
Identify multiple suppliers offering the products you intend to sell and compare their pricing. This comparison helps determine the average product price and identify the suppliers with the most competitive rates.
Understand your figures
Familiarize yourself with your figures before engaging with suppliers. Calculate profit margins and establish a target price for the product. This clarity allows you to assess what you can afford to pay and guides your negotiation strategy. Determine the required product volume to negotiate advantageous pricing and sales terms.
Establish objectives
Define key negotiation goals. Determine desired outcomes, such as securing a lower price, improved payment conditions, or increased order volume. Set a point where continuing the negotiation becomes unfeasible.
Demonstrate flexibility
Stay open to compromises during negotiations to find mutually beneficial agreements. Be willing to adapt goals and expectations to meet midway often results in advantageous outcomes for both parties.
Nurture relationships
The development of rapport with suppliers can can lead to better long-term prices negotiations. Maintain open communication and show respect towards suppliers, expressing a long-term commitment to the partnership. This approach may lead suppliers to offer more favorable prices and terms.
Prepare negotiation leverage
Identify leverage factors that could strengthen your bargaining position, such as order volume, payment flexibility, or promotional capabilities on Amazon for the supplier’s products.
7 Strategies for Securing the Best Supplier Prices
When negotiating with wholesale suppliers, the goal is to secure the most favorable prices and terms, ultimately maximizing profit potential. Here are seven strategies to help you obtain the best offers from suppliers.
1. Let suppliers compete
Encourage suppliers to compete for your business. Reach out to multiple suppliers offering the product you intend to sell. Request quotes, specifying the quantity required, as it can influence pricing. During negotiations, inform each supplier that you are considering multiple quotes and seeking the best deal. Maintain a respectful yet assertive attitude, and don’t hesitate to inquire about discounts or better terms.
2. Utilize seasonal discounts
Take advantage of end-of-month or end-of-year discounts offered by some suppliers to cut costs. Monitor these opportunities and engage in negotiations for further price reductions. Planning ahead and stocking up during off-peak seasons can enhance profit margins when demand rises.
3. Negotiate bulk purchases
Purchasing in large quantities often leads to suppliers offering discounted rates. When buying substantial volumes, discuss securing a lower per-unit price to optimize savings and increase profitability. Additionally, explore potential additional discounts based on differing pricing tiers linked to purchase volumes.
4. Explore prepayment options
Certain suppliers may provide better pricing for upfront payments, particularly for cash transactions. If feasible, negotiate for improved terms by paying in advance. This approach not only saves money but also fosters trust with suppliers. However, exercise caution when making significant prepayments, ensuring dealings are with reputable, established suppliers.
5. Leverage bundled offers
In instances where price negotiations on a high-demand product face resistance, consider proposing a different tactic. Instead of solely seeking a lower price, inquire about potential discounted offers on other items in exchange for the main purchase. This strategy may unveil additional products the supplier is keen to sell at reduced prices alongside the bestselling item, presenting a profitable opportunity.
6. Utilize NET terms
Don’t underestimate the benefits of suppliers offering NET terms, providing you with interest-free credit. With NET terms, you can order inventory and pay for it after selling it, aiding in managing cash flow effectively.
If you’re unfamiliar with NET terms, they offer a credit line from your supplier. Typically, you pay for orders at the time of purchase or upon delivery, but with NET terms, you can delay payment. These terms are commonly labeled as “NET 30” or “NET 60,” indicating the days you have to settle the payment post-order.
However, exercise caution as mismanagement of NET terms has led to business failures. In situations where you can’t afford inventory payments or sales are slower than expected, adverse consequences may follow. Nonetheless, when used judiciously, NET terms can optimize cash flow efficiently.
7. Request free shipping
Suppliers might provide free shipping upon request, even if not explicitly offered. If declined, inquire about the minimum purchase threshold for free shipping eligibility. Even if you don’t plan to spend the required amount, knowing the threshold is beneficial in case your initial request is denied.
In Conclusion
Negotiating prices with Amazon FBA wholesale suppliers is a crucial skill for enhancing profit margins. Employing negotiation strategies wisely can lead to mutually beneficial agreements. Building lasting relationships with suppliers through respect and honesty is key to securing favorable prices and agreements for future transactions.
Remember to understand your profit margins and financial limits during negotiations and utilize tools like Seller Assistant App for product research and comprehensive analytics that can help you make the right decision.
This blog was contributed by our partners at Seller Assistant App.
