Building A Drop Shipping Business: Negotiation Techniques To Win Over Suppliers

The success of any drop shipping business depends on the type of wholesalers and suppliers that the seller knows. Finding manufacturers who drop ship is a difficult process. Once you have found the right manufacturers, you may find negotiations a challenging course of action.

Start negotiations with as many suppliers as possible. Very few suppliers offer products on the sellers terms. Therefore, it is practical to enlist as many suppliers as possible this not only increases the chances of finding the right supplier, but it also provides you the leverage to swing negotiations in your favor by mentioning rival offers.

Find Suppliers

How do you find manufacturers who are ready for drop shipping, who are experienced, and who do not use unethical business practices? Here are a few tips:

eBay: This online marketplace remains the number one resource for sellers. New sellers find this a particularly good resource because eBay membership does not cost anything. Besides selling through this site, you can also find hundreds of drop shippers.
Drop Ship Directories: Directories are a free, easily accessible list of drop shippers for different types of products. The list is arranged on the basis of product category or popularity of wholesalers.
Contact Manufacturers Directly: Look up the contact details of the manufacturers on the product and call them. Larger manufacturers are aware of the concept of drop shipping. If they agree to drop ship, you can then begin negotiations.
Persuade Manufacturers To Drop Ship: Many manufacturers are wary of drop shipping. They believe that sellers who do not want to run risks or invest in stocks are not serious about business. A lot of manufacturers feel they can get hold of as many customers without using the services of sellers. Some manufacturers may not be aware of the drop shipping model, so you can explain what that means and see if they are willing to try your services.
Search Wholesalers: Many manufacturers drop ship through wholesalers or distributors, and they will be more than willing to put you in touch with the nearest distributor. Some manufacturers refuse a drop ship arrangement, in which case, you may have to look up local distributors for their products and see if you can negotiate a drop shipping deal with them.

Negotiating a Deal

Now that you have located and short-listed drop shippers, it is time to start negotiations. Remember that you are the smaller party, and this may put a little pressure on you. There are many other sellers willing to work with the drop shippers, so they are in the power position. This does not mean that you should accept all of their terms without having input. Here are a few tips for successful negotiations:

1.Watch Your Tone: Accusatory language or a bad tone creates defensiveness and hostility, as do statements that can be misconstrued as ultimatums (If you dont agree to my terms, I will take my business elsewhere.). Instead of starting sentences with you did, you should, or you did not, use words like it would be more convenient if or I have some reservations about this.
2.Pay Attention To The Other Partys Needs: Negotiations are not about winning against an opponent; they are more about finding common ground to work on, eliminating potential areas of discord, and creating a smooth working relationship. If the manufacturer expresses concern, try to provide assurances or work with them to find a solution. If you treat this as a battlefield, the other side will see you as the bad guy.
3.Express Yourself Clearly: Miscommunication leads to misunderstanding. In case verbal explanations are not enough, have charts and reports ready. To persuade the wholesaler that you are good at promoting their products, you have to present them with a sales and advertising plan. Tell them how you will acquire customers and handle rival products. If price is a major issue, explain to them why drop shipping at their rates is not feasible.
4.Dont Tell Them You Have No Other Option: Even if this was the only supplier who agreed to discuss drop shipping, there is no reason to let them know that. Drop hints that you are in talks with other manufacturers many sellers are amazed how fast the suppliers agree to the sellers conditions after realizing that the seller may be promoting a rival on their turf.
5.Dont Agree To Unethical Methods: In the highly competitive world of online selling, many sellers are ready to do anything to get ahead of competitors. If the wholesaler asks you to resort to dishonest methods (for example, charging for UPS shipping but hiring a low-cost, less reliable alternative), refuse politely. Someone who is ready to cheat your customers will cheat you as well and you are the one who will have to deal with customer grievances.
6.Dont Be Afraid To Appear More Knowledgeable Than Them: Many manufacturers are eager to reach a bigger market but are not aware of the fundamentals of ecommerce or drop ship. Explain the concept and how you can help them. Your expertise might just get you a good deal.
7.End It On A Good Note: Even if the negotiation was unsuccessful, dont slam the door on future partnership by walking out in anger or leaving on a bitter note. Let them know that you are open to business offers in the future, even if you could not agree to their terms this time around. Manufacturers often have second thoughts and get back to sellers a few months or even days after the meeting.

Ideally, the communication process should not stop at successful negotiations. You need to work constantly to keep the business relationship in good shape. This ensures smooth functioning of the drop ship business, as all complaints and issues are handled promptly.