9 Dos and Don'ts in Negotiating with Suppliers for Amazon Wholesale Seller

September 29, 2020
Written by Kevin Wong

One of the most challenging tasks an Amazon wholesale seller must accomplish is getting a supplier's approval. After choosing a product to sell and creating a shortlist of Amazon FBA wholesale suppliers, the next crucial stage is negotiating with the suppliers and convincing them to do business with you.

If you are having a hard time succeeding in this phase, here are the nine dos and don'ts you should keep in mind when negotiating with your prospects:

Don't act like a newbie

Seasoned suppliers are always on the lookout for "fresh meat" who are willing to follow their demands. So, please, don't act like a newbie because suppliers may take advantage of it. Demonstrate your worth by learning their concerns and expectations to meet an equal footing with them. 

Here's how you should act around them. First, build a rapport and throw a decent joke to ease the tension. Remember that suppliers are still human beings who long for a meaningful conversation now and then. Then casually tell them you are looking for a supplier to spend around $10,000 to $20,000 with. Add that you are well-aware of the importance of the MAP (Minimum Advertised Price) policy. More importantly, be clear that you are finding a business partner and not just a supplier.

This is the kind of persona you should present to them when you meet with them.

Do regard yourself as a big fish

Amazon FBA wholesale suppliers are also willing to put a lot of effort into the relationship at the beginning to win your business. The deal breaker is after you've made a lot of demands, you only want to make small orders. It will not only make you a "small fish" to a supplier's eyes, but they will perceive you as a non-professional Amazon seller who doesn't want a long-term working relationship.

Show them that you are willing to commit and want to build a real business with them. You don't want to be just another small wholesale account, but instead a "big fish" in their portfolio.

Don't meet them without buying criteria

If a potential supplier asks you what you need from them, what will be your answer? Uhh, I need tons of supplies from them? And that's how you will lose in the negotiation process!

Before you set a meeting, determine your buying criteria, which includes the amount per unit in profit, gross margin after Amazon FBA fees, and the number of units of volume per month. In short, be as specific as possible because this will help you to hold the power position. You will make the requests, not them.

If they disagree with your buying criteria and proposition, walk away instead. Wait; what? In the negotiation game, avoid at all costs to become the chaser because it should be them chasing you. Once you do this, you will notice a sudden shift on their side, and they’ll be more willing to offer a better deal than what you've proposed.

Do show off a little

We are not suggesting you brag your accomplishments. When we say that you should show off a bit, do your homework first by learning about your potential supplier. Based on the information you've gathered, create a shortlist of recommendations on how you can increase sales and rankings for every listing they have on Amazon.

This way, you show how valuable you are by giving away free recommendations that you are willing to do for them. Plus, stating your serious interest in buying their inventory. This is the legit way to wow a supplier.

Don't be another slice of the pie

In other words, don't be another Amazon wholesale seller who will buy inventory, sell it until it runs out, and request another set of orders. Rinse and repeat. Amazon FBA wholesale suppliers cringe at that kind of approach because they are not making any profit.

They want to work with a seller who can increase inventory's original size into two- or three-folds and can let it sell through. You can accomplish this feat by running Amazon PPC campaigns and advertising your products off Amazon.

Do show them respect

Before, we've mentioned that you should not act like a newbie because they may use it against you. However, be mindful of your words and actions when communicating with them. Again, suppliers are humans, too, and their emotions can influence them.

Tread carefully by showing respect and admiration to them. You can genuinely do this by looking at their website and social media accounts. Praise them in goodwill so they can be more open to negotiating with you.

Don't be afraid to ask questions

This is the essence of negotiations: asking the right and relevant questions. For example, when the supplier informs you that the product's prices are going up, dig deeper to understand why they are making such an increase.

This is also the way to help you understand their business and how they work. It would be best if you asked other questions about their company registration number, sellers they are currently working with, years in the industry, the minimum order, and the expected profit margin of a product.

Do request a sample

Another way of proving you are a serious buyer is asking for a sample of their products. It also verifies the supplier's competence, and you can scrutinize the quality of the product.

Moreover, you will have a good idea of how good they communicate, how fast they ship orders, and how great they are in packaging.

Don't just focus on how much you will earn

It doesn’t mean that it is okay to take for granted your bottom line for the sake of getting a good supplier. What we are trying to say is besides thinking of your profits, consider the supplier's margin as well. Set a reasonable baseline price that won't hurt their bottom line. Remember that they also want to make money out of this transaction.

The standard for most suppliers is a 20% profit margin. So if you want to ask for a discount, it would be fair to ask around a 10% discount.

In closing

One of the critical factors to ensure success in selling wholesale on Amazon is finding the right supplier. But first, you must know how to negotiate and deal with them. Don't just act as a mere Amazon wholesale seller. Prove to them that you mean business, and you are eager to be a valuable partner on a long-term basis. If you want to be treated as one, follow the tips above to secure the approval of your prospective supplier.

Let us negotiate for you, dear Amazon wholesale seller. We have a team of experienced Amazon experts in Seller Interactive who know the ins and outs of Amazon wholesale business. Please email us at [email protected] or [email protected] today.

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