How To Deal With Manufacturers For The First Time

When you are starting a business, and start negotiating with manufacturers or suppliers, a lot of anxiety can overcome you.

You start thinking that they will notice that you are new to this, that you don't know about the product or service you want to buy, and maybe, that you will be taken advantage of.

I've been negotiating with suppliers for the last 4 years regularly, this year more than ever, and my approach to this essential part of the business is very different from what I initially thought or did when I started.

Today I want to share with you some of the things I've learned during this time so, here's what I did and what I do now when talking to manufacturers.

In the beginning, I was worried that I would do something wrong, that I wouldn't look professional enough, and that I would have to pay super high prices because the salespeople could tell that I was a newbie in the negotiations arena (even though I've been selling and negotiating products from time to time for more than 10 years).

For me, negotiating as a company... a real company, was daunting so, I looked for some ways to remove some pressure from me, to get more time to negotiate, and to be able to make better decisions.

Maybe you are in the same place right now.

I followed some of the recommendations from other experienced sellers and I created a document with the RFQ (Request For Quote) including AAALLLLL the characteristics that I could imagine for the product I wanted to source, mainly, what I could gather from the information in websites from products similar to mine, and more specifically on Amazon and on Alibaba, that are the main platforms where I sell and buy from.

I started contacting suppliers and I sent them the document.

When they got back to me, they started asking me questions about characteristics that I haven't thought about, and which (obviously) were the really important things for the product so, I had to start doing research about what they were asking me, like materials, certifications, functionalities, etc.. (the things that you need to learn change according to the product and takes some time).

At this moment was when I REALLY started to learn and understand my future product, before that, it was just guessing.

If you don't come from the industry your product is in, or haven't worked with this kind of product before, there's no way you know what you really need to know about it so, take the leap and start asking. 

Your suppliers are the best source of information. 

They want to sell you their products so they'll solve ALL the questions you might have.

Right now I don't even create the RFQ, I just start asking them questions about the products and then, I start putting together all the characteristics that I'll make sure will be included in the purchase contract.

Now, this is what I do when I want to source a product in a different category than the products I'm currently selling. 

Just like the first time when you start learning how to buy products or services, you'll go through a very similar learning path.

I start telling them something like "I'm interested in this product and I want to know more." and that's it! I just start asking questions when they come back to me.

I usually tell them that we* are going to launch a new brand in this category (whatever the category is) and that I don't know all the characteristics that the product should have (I obviously do some research beforehand) but, when they know that you don't know, they teach you. 

They take the time to explain to you whatever you need because they want to do business with you.

Usually, you start learning what characteristics they need to know to give you the quote just by talking with the first supplier. 

When you talk to the second supplier, you already have the answer to the same questions that you did the research for (just a moment ago) to answer the questions of the first supplier. 

And you start building your knowledge base from there.

If you are buying in bulk, ask for the price of 500, 1000, and 3000 units (if 500 units is a good starting point for you), so you'll know how low your prices can go when you scale up. 

This also gives you a way to compare prices between the different suppliers and, by comparing them, you'll know what's best for you.

Don't think that they will take advantage of you. Unless you say "yes" to the first supplier that asks you whatever they want, there's no way that they take advantage.

It's YOU who controls the buying, not them.

YOU are the one with the money.

It's YOUR decision whom to choose.

I love talking to my suppliers. I usually become very familiar with them, and this helps a lot to get better prices and great quality.

I'm not saying that you should be friends with them but a great business relationship makes them pay more attention to you and many times, it can get you better prices so you can grow faster and, as a result, they are able to sell more too.

Another thing that you can do is to act as an employee of your company, for example, you can be the "Sourcing Director", "Supply Chain Director", or a "Partner" so you don't have to make decisions right in the spot (* this is why I highlighted the "we" before). 

You can tell them that you have to give the information to "your boss" or "your partners" and that you have to run all the decisions by them.

This gives you time to think, search for other suppliers, do more research if you need to, and takes the pressure off from making rushed decisions.

I almost never make a decision right there while I talk to them. 

I give myself at least one day to think about it. 

But I make sure I make the decision and keep moving because procrastination is another big issue if you let it get you.

My advice: start talking to your suppliers, start learning from them... this is the only way to move forward.

Let me know in the comments what are your main issues when negotiating with suppliers and I'll tell you some tips to solve them. 😊