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    1. DropshipDiva is offline

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

      The success of any drop shipping business depends on your choice of dropship manufacturers, wholesalers and suppliers that you know and choose. Finding true drop ship suppliers is a difficult process. Once you have found the right manufacturers and wholesalers that are willing to dropship for you, you may find negotiations a challenging course of action.

      Start negotiations with as many suppliers as possible. Very few suppliers offer products on the seller’s 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:

      • 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 drop ship sellers.

      To counter this common misconception, you need to present a persuasive proposal that convinces the manufacturer to drop ship for you. What volumes of sale will you able to refer to the manufacturer? Do you have anything that backs your forecasts? Do you have access to an existing customer base that you can promote products to? Do you have an existing reputation (for example, being an existing eBay power seller, or having an established website or mail order business) which will persuade the manufacturer to side with you on a drop shipping basis?

      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.

      • Drop Ship Directories: there are many drop shippers directories online, some are free, some are paid for. Free directories tend to be outdated, often contain unverified drop shippers that are well known for ripping off resellers, but they are a good starting point. You will need to run checks on each drop shipper you find through those sources though, and place sample orders to check the quality of their goods.

      Alternatively, there are a number of paid directories which verify and monitor their listings, and that can save you considerable time in finding suppliers willing to drop ship for you. The best drop shippers sources are available through WorldWideBrands, eSources and Hienote.

      • eBay: It is possible to find drop shippers through eBay. Many eBay Powersellers also wholesale their products in addition to retailing them on eBay. As long as you don't undercut them, they will be willing to fulfill your orders in exchange for your efforts in marketing them on eBay or elsewhere on and offline. Don't underestimate the value fo sourcing through eBay, it is an extremely competitive marketplace, which means that eBay power sellers have access to rock bottom prices. Many of them will be more than willing to partner with you on a drop shipping basis, in exchange for selling their inventory quicker.

      • 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 their authorized 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 don’t 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 Party’s 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. Don’t 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 seller’s conditions after realizing that the seller may be promoting a rival on their turf.

      5. Don’t 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. Don’t 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, don’t 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 initial discussion.

      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, to ensure all complaints and issues are handled promptly, and to constantly optimize your and their drop shipping logistics.
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    2. Thank you for this post:

      WholesaleForum (13 Aug 2010)

    3. WholesaleForum's Avatar
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      Good tips on negotiation, thanks
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    4. gogoe is offline

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      Good article ! it's useful to me . thanks

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