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Negotiating with Suppliers: Tips and Tricks for Amazon Sellers

From Building Relationships to Leveraging Your Purchasing Power, Here’s How to Master the Art of Negotiation to Increase Your Profits!

  • February 14, 2023
  • /
  • Brian R. Johnson
two young business professionals shaking hands

Let’s say that you’ve got a great idea for an Amazon product but need a supplier. Or, you might already have a supplier, but for one reason or another, you just don’t seem to be in “sync.”

Like all relationships, the partnership with your Amazon supplier involves time and energy. However, what you receive in return can be invaluable.

As an Amazon seller, negotiating with suppliers is a crucial part of your business. It can make a significant impact on your profit margins, product quality, and supply chain management.

In this blog post, we will provide you with some useful tips and tricks to help you negotiate with suppliers effectively. These tips can not only get you the best deal possible, they’ll also allow you to build a long-term relationship with your suppliers, leading to a more successful Amazon business.

Is This a Big Deal? 

Yes, it absolutely is. After running cost projections to check for profitability, Amazon sellers know that a few pennies one way or the other is often enough to tip the scale towards selling a product, or not.

Although the relationship with your supplier goes much deeper than simply cost, that’s where we’ll start.

Pricing Matters

By negotiating lower prices, Amazon sellers can reduce their product costs, increase their profit margins, and gain a competitive edge. 

Negotiating with suppliers involves a collaborative process where both parties seek to reach a mutually beneficial agreement that satisfies the needs of the buyer and the supplier. Effective negotiation can lead to suppliers providing better prices, discounts, and favorable payment terms. 

Keep a Closer Eye On Quality Control 

Strengthening relationships with suppliers and setting high standards for quality can reap big rewards. Not only will customers be more satisfied, it’ll be more likely that your products meet your customers’ expectations, leading to better reviews, higher sales, and a more reputable brand.

Minimize Negative Reviews

When you take the time to truly understand not just your product, but the supplier behind it, the chances are good that you can reduce the amount of returns and customer complaints. With customer reviews such an important part of Amazon’s algorithm, this has renewed importance. 

Innovation and Differentiation

If you’re looking to set yourself apart from the competition, the process of creating a close relationship with your suppliers helps open the door to new cutting-edge products and materials. Not only will this help your brand innovate, but it can also give you an upper hand in today’s competitive market! 

Think About the Future

We’re all aware of how rocky the supply chain has been since the onset of the pandemic. 

Making the most of your supplier relationships can lead to a series of long-term benefits. 

Through effective negotiation, you’ll be able to create a trusted partnership with them and enjoy more consistent supply, better terms on pricing and purchases, as well as improved collaborations over time.

Negotiating Your First Steps

It’s important to take the time and effort when finding a supplier partner for your Amazon business. Doing proper research is essential if you want to make sure that your decision will be beneficial in the long-term. Here are some useful strategies you can use so that nothing slips through the cracks during this process!

Know Your Own Needs and Priorities

Before starting your search for a supplier, you should have a clear understanding of your business needs and priorities. Most importantly, you NEED to know what it’s going to take to be profitable on Amazon’s marketplace. 

In order to ensure the perfect fit for your project, it’s essential you weigh up all options. Consider product quality, production time and cost effectiveness – plus delivery charges. When these elements are taken into consideration, it’s easier to find a suitable supplier that best meets your particular needs.

Finding the right supplier is essential to ensure your company can meet its needs and goals. To get started, tap into resources like Alibaba or dive into a good old-fashioned Google search. 

After you’ve identified potential prospects, do some research – read reviews, check references and evaluate product offerings they have available. 

Don’t forget other important factors such as production capabilities & quality control processes in order to guarantee that their capacity matches perfectly with what’s required of them by your business!

Make sure to ask for referrals, and do your research! Scout out reviews from satisfied customers and search the internet for the wholesaler you’re considering. Check for complaints, negative customer service comments, or other issues that could be red flags. 

Ask the supplier about their liability policy, and finally, have your business license and tax identification number ready. You’ll need this to begin conversations with prospective suppliers. 

Pay Attention to the Bottom Line

Don’t get stuck with unexpected expenses! Do your research to make sure you understand the total cost of doing business with potential wholesalers. Be proactive in assessing all relevant fees and costs so you can avoid any nasty surprises down the line.

 Make sure and ask about:

Know Your Bargaining Power

When negotiating with suppliers, it pays to know your market position and be aware of who you’re competing against. As a new seller or someone ordering in smaller quantities, you’ll likely have less leverage at the bargaining table. However, if you can order more product up front, then there’s potential for better terms!

Your relationship with suppliers is a bit of a moving target. You might need to start at one price, they renegotiate as your relationship (and experience as an Amazon seller) develops.

Turning Negotiation Into a Relationship

It’s a good idea to put the time and energy into developing a relationship with your supplier by becoming familiar with them on a personal level. Then, make sure that you understand their products and processes. This can help build trust, which is an important factor in negotiating more advantageous terms down the line. 

As you would in any interaction, thank them for all of their hard work – it’s essential to show how much you appreciate them and recognize that they’re a vital member of your team! Make sure to avoid hostile tactics such as threats or ultimatums; keep communication friendly yet professional at all times.

If you navigate this part of the process correctly, you’ll not only end up with better prices, you stand a very good chance of making sure that if there’s a possible supply chain disruption, you have a “friend” on the other side of the world looking out for you! 

Communicate, Communicate, Communicate

Healthy dialogue is at the core of every successful partnership. Let your supplier know what you’re after and stay open to their offers, insights or worries – all valid points that can contribute to a better understanding between both parties! Be concise in expressing yourself so there’s no room for misinterpretation. 

Remember, a lot of factory representatives and suppliers might act as if they understand more of your native language than they really do. OVER communicate to make sure that nothing slips through the cracks. 

Respect Their Expertise 

When you work with a supplier who has specialized knowledge and experience in their field, it’s important to recognize and respect their expertise. You can do this by asking questions and seeking their input on various aspects of your business, such as product development, manufacturing processes, or marketing strategies. 

By valuing their input, you demonstrate that you trust their expertise and are willing to learn from them. This can lead to a more collaborative and productive working relationship, where both parties can benefit from each other’s strengths.

Get On a Plane

If possible, visit your supplier’s facility in person. This not only shows you’re dedicated to growing the business relationship, but it will also provide invaluable insight into their production process, quality control measures and work environment. These insights will give you the knowledge and perspective to better manage your future collaborations!

Give Your Supplier Feedback

When working with a supplier, it’s important to provide them with regular feedback on their performance. Constructive feedback helps to maintain a productive and collaborative working relationship, as it allows the supplier to understand your expectations and make improvements where necessary. 

To provide effective feedback, it’s important to be specific and provide examples that demonstrate the areas in which they are performing well, as well as the areas in which they can improve. This could include aspects of their product quality, delivery times, communication, or any other relevant factors. 

By giving feedback regularly and being clear and specific, you can help your supplier to better understand your needs and expectations, which in turn can lead to improved performance and better results for your business. Additionally, by providing specific feedback, you can avoid misunderstandings or miscommunications that can negatively impact your working relationship.

Demonstrate Flexibility (Where Possible) 

In a business relationship with a supplier, being willing to adapt to their needs can lead to a more productive and collaborative partnership. This means being open to considering their suggestions for changes or improvements to your product, and being willing to make appropriate concessions or trade-offs. By doing so, you demonstrate that you value their input and expertise, and are willing to work together to achieve common goals.

It’s important to carefully consider any feedback or requests for changes, and to evaluate the potential benefits and costs of implementing them. In some cases, it may not be feasible or practical to make certain changes, but by maintaining an open and flexible approach, you can work with your supplier to find alternative solutions or compromises that work for both parties. 

This can help to build a stronger and more sustainable business relationship over time, and can ultimately lead to better outcomes for your business.

The 5 Most Common Mistakes Amazon Sellers Make

1. Focusing Only on Price

When considering a negotiation, it’s important to think beyond price. Sure, cost is an essential factor — but overlooking quality and reliability can put you at risk of getting less than what you pay for in the long run. After all, the best deal might not always just be about saving money; sometimes great value comes from understanding how different elements come together to create success down the line.

2. Don’t Assume Your Supplier’s “Yes” Really Means Yes

As I said above, don’t assume that the supplier understands everything that you’re saying. A lot of cultures are overly sensitive to not wanting to disappoint you. So, yes is often the answer, even if it’s something that might be either unlikely, or, impossible. 

To avoid misunderstandings and miscommunication, sellers should take the time to understand each supplier’s capabilities, expertise, and limitations to avoid costly mistakes.

3. Overestimating Your Bargaining Power

In any negotiation, it’s important to be realistic about your bargaining power and to make reasonable requests. If you make unreasonable demands, you risk causing your supplier to walk away from the negotiation, which can result in a breakdown of the business relationship. It’s common for sellers to overestimate their bargaining power, especially if they have limited options for suppliers or feel that their product or service is in high demand. 

However, it’s important to remember that suppliers also have their own interests and priorities, and may be unwilling to agree to terms that are unfair or unreasonable. By being realistic about your bargaining power and making reasonable requests, you can create a more productive and respectful negotiation process. 

4. An Inability to Compromise

In any negotiation, compromise is often necessary in order to reach a mutually satisfactory agreement. If a seller is unwilling to compromise on their demands, it can make it difficult to reach an agreement with the supplier. This is because suppliers often have their own interests and priorities, and may be unwilling or unable to meet all of the seller’s demands. Successful negotiation involves give and take, where both parties make concessions and trade-offs in order to reach a solution that works for both of them.

5. Insufficient Preparation

Lack of preparation can lead to ineffective negotiation. As I mentioned above, you should research and prepare before entering into a negotiation. That includes everything from deciding what you want to sell, focusing on the supplier’s logistical capabilities, and making sure you’re fully aware of the costs and fees involved. Yes, this is so important that it warrants a second mention. 

Avoiding these common mistakes will help you to negotiate more effectively with your suppliers, build long-term relationships, and grow your business.

Negotiating with suppliers is an important part of staying competitive as a business, but it’s also not always easy. To ensure success for your Amazon venture and develop solid relationships along the way, take advantage of essential strategies offered in this blog post – a strong supplier relationship is a key factor in building a successful Amazon business in the long term.

How Canopy Management Can Help

Amazon has been at the forefront of the eCommerce world for over two decades, providing a platform for millions of businesses to sell their products. With the rise of eCommerce, Amazon has become the go-to destination for shoppers across the world, making it a valuable advertising platform for businesses looking to reach new customers.

Back in the early days of Amazon, Amazon PPC was just one way of launching a product. Now it’s almost impossible to find success without it. Yes, there are some that do, but they’re the exception, not the rule. Here are 10 tips to get started quickly with Amazon advertising in 2022. And as always, if you have questions about Amazon advertising, the pros at Canopy Management are here to help.

Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”:

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