Creating a purchasing strategy

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Many FBA sellers get started with a single product. They spend a lot of time researching suppliers, get a shortlist, get samples and T&Cs, choose their supplier, and get the product shipped. And then for their next product they go through the whole process all over again.

That can be really time-consuming. Imagine if you spent hours going through your shopping list and deciding which supermarket to visit for each item. You’d never get anything else done! So you need a long-term purchasing strategy.

First of all, unless you’re a very fast-moving business trying to grab trends quick and exploit them fast, it makes sense to build long-term relationships with your supplier. That’s the same whether you’re buying through Alibaba, from a Chinese manufacturer directly, or in the US or elsewhere.

Even if you’re only making your first deal, a long term contract setting the terms for future business is a good idea. It gives your supplier an incentive to work on any problems or product improvement ideas, and it gives you security that if you have a winning product, you can keep your sales flowing.

But you’ll also want to build in regular performance assessments of quality, price, on-time delivery, responsiveness to changes, packaging, and freight costs. Quality check each shipment and watch out for prices or freight costs gradually creeping up or quality declining over time.

Make sure you know whether you’re competing just on price, or on quality, or on fashion or a focus niche. Your requirements may be different depending on your product strategy. A supplier who’s great at high volume, low cost product might not be good for higher specification, high priced product.

You may need more than one supplier. For instance, if you’re a yoga and wellness based business, you might need one supplier for yoga clothes, one for yoga mats, and another for gear like exercise balls. Your yoga clothes supplier might be sending you twenty or thirty different products, your yoga mat supplier just two products in various color ways, but you have a relationship with each that is long term.

If you’re in kitchen equipment you might be able to use just one supplier for all your products. On the other end of the spectrum, if you pick up products that are trending right now, you may end up with quite a few suppliers – but you should still make the most of each supplier by going to them first if you’re considering extension products or variants.

Ask your suppliers if you can see their other products. Maybe they have top sellers that would work for you! Maybe they have products that you could improve for your brand and make distinctive enough that you’re not simply slapping a label on a generic product. Maybe they have products that would make great product bundles with stuff you’re already selling.

This should build your business with them, and that will help keep them motivated to do their very best to keep the business flowing. They’ll appreciate that you want to carry more of their product, and you’ll gain diversity of product which enables you to reduce the risk on any single product or order (if, for example, the blue version of your product is a flop, or regulations change unexpectedly making your inventory obsolete).

However, you should also ensure that you keep in touch with second and third choice suppliers you didn’t use. And while dual supply for each product isn’t very workable for FBA, you should definitely aim to have multiple suppliers once your business gets to the stage of being a full-time living for you (and others). If you only have one supplier and it goes out of business, you’re stuck. Less dramatically, it might have inventory issues or bottlenecks, be unable to adapt quickly to new regulatory requirements, or it might become unreliable. Always have backup!

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