So, you’ve found your American Based suppliers and you are ready to go! Not quite. Finding suppliers is a great achievement, but you still have to manage the suppliers you bring in. As the Supplier Relationship Manager at Shop1, part of my responsibilities is to manage almost everything about our suppliers here in the United States. There is more to that than you would think. Let me explain.
Each supplier has different policies when it comes to how they work with companies. We mentioned this in our article talking about How to Find American Based Suppliers. Oftentimes they will charge a monthly or yearly fee to use them as a supplier. When looking at this there are a few factors to evaluate if the supplier is worth (a). using, but also (b). maintaining. Let me explain. Sometimes there are suppliers who charge a yearly fee. One supplier we looked into wanted $1200 for the first year and $1000 per year after that. They did not have a monthly plan. People often break this cost down per month to see if it is justified. However, if you’ve never worked with a supplier, you don’t know how their products will sell or how reliable they are. So if you’ve paid $1200 for a year’s worth of service from a supplier that you only use for 3 months due to performance reasons, you’ve just paid $400 per month for that supplier. This is why when you are first starting your supplier searches you want to think ahead to how the managing process works. This analysis is ongoing. Before onboarding your supplier, you have to try and figure out whether this supplier will work for you based on other sources. After onboarding a supplier, you get to see the results first hand. For this reason, you want to track the performance of your suppliers’ products. However, when you use Shop1, my team and I take care of all this for you and you don’t pay any of these supplier fees!
Something else you want to keep an eye on is shipping charges. Suppliers will give you what their shipping fees are upfront. Usually they have shipping cost tiers depending on the size and weight of the product. I like to track how much their shipping charges are compared to the profits gained from their products. Some suppliers also charge dropshipping processing fees. Pay attention to this, because you want to make sure it is per order and not per item. If you have 2 items being purchased and sent in the same box, but are paying two processing fees, that eats up profits. Notice I said products and not product in regards to shipping. This is because not all products offered by a supplier will necessarily make a profit, but other products can. So if you are making profits off of a supplier as a whole, then you will want to keep them.
Something that is well known in the consumer market is that when you buy in volume, you tend to get bigger discounts. Instead of buying one of something for $2, you could buy 3 for 1.25. This is how wholesale pricing works. The dropshipping industry is currently worth billions of dollars, and the suppliers most definitely want a piece of that pie. This means suppliers had to reevaluate their pricing tiers and provide discounted rates for dropshippers. Like wholesale pricing, dropshipping prices have discounted tiers as well. Pay attention to these price tiers because it influences the entire supplier evaluation process. A supplier that may have previously been too expensive to maintain or not making you much money could suddenly become one of your better suppliers due to the increased volume discounts. You will hear them make that point all the time when you question them about their pricing specifically because they know that their bottom tier pricing is not that attractive.
With the emergence of dropshipping, suppliers had to reevaluate their pricing tiers. Shop1 is able to get these increased product discounts due to the high volume of orders we bring to the suppliers through our network of entrepreneurs/dropshippers.
Product CSV Files
Ok, so you’ve onboarded your suppliers and you feel ready to go. Not quite. You still have to get those products listed on your eCommerce store. So how is this done? Well, the suppliers give you either a CSV or an excel file with a list of all of their products and specifications. Exciting, right? However, this creates some new problems. The first is that some suppliers will not give you all of the information unless you pay extra money. This includes product images and descriptions of the products. The second problem is that each suppliers’ CSV files are in different formats. I can tell you from personal experience that I have not come across the same format twice, and this causes problems when you try to upload product listings into your system.
You may be thinking that this isn’t really a big deal because you can create a custom CSV sheet and just put the fields that are important in and upload it in. Nope! I wish that was the case. There are a couple of reasons for this. The first is that the products for the different suppliers can be very different. The majority of your pet product specifications will not be found in the CSV of a clothing supplier and vice versa. There are multiple variants and attributes for products, such as size, color, materials used, and more. Additionally, suppliers rarely have proper categorizations for the products, so you have to create and manually enter these on your own. And if your system can’t handle showing 1 item and giving options for the sizing, color, materials, etc. as options, then you will have multiple listings of the same product under different SKUs (Stock Keeping Unit). This means they have different fields for different relevant information. I will show some examples shortly.
What is the second problem? Stock and price updates. Because guess what format you are getting those in? Yup, right back to different formatted sheets. And because new products can be introduced and old products removed, the old sheet will have changed. This means that you have to re-format and re-upload your suppliers’ catalog files every few days to ensure that you don’t sell products that have gone out-of-stock and that you’re not missing out on the newly added products from your suppliers. Imagine if your supplier increases the pricing on an item, and you don’t have the right costs on your website when a customer places the order; you’re now at a loss on an order you could have been profiting. Take a look at a snippet of these files. Do you see how different they are? Yeah, this is what you don’t have to format with Shop1, because we do that for you!
You have the suppliers lined up, you have the product files uploaded into your system, and you are ready to start selling. Almost, but no cigar quite yet. Whenever someone places an order on your dropshipping store you need to let the supplier know what products to ship and where to ship them from. For each order. For each product. Imagine someone placing an order and buying 4 products, each from a different supplier. You would have to manually reach out to these suppliers and place your order with them. Now imagine 5000 someones do the exact same thing. There isn’t enough time in the day to fulfil those orders and still handle the marketing of your business. When it comes to customer orders, any delay in processing the order with the supplier can cause extra shipping time. Shop1’s system automatically fulfills the order with the suppliers and gets the order shipped out to your customers as soon as orders come in. You literally have to do nothing. Shop1 goes as far as emailing your customers on your behalf and providing them with the tracking and shipment information. So, you get all the credit and none of the hassle.
Paying the Suppliers
Suppliers require the money up front before they will ship the product, which means your credit card has to be on file with all of the different suppliers being used. That is a lot of transactions to try and keep track of! Additionally, suppliers are not always very flexible with payment methods. Because you have a Shop1 store, the payment for the products is already handled along with the automatic fulfillment process. Since you don’t have to pay the supplier first, you aren’t floating that balance on your card waiting for the full payment. You get the profits deposited into your account weekly. This gives you even more time to drive traffic to your store and convert more sales.
With Shopify, this works differently. They process the payment from the customer, you receive the order notification, and you must go and pay the supplier directly with your payment method and get the item shipped. Then Shopify takes 2.9% of the purchase plus a 30 cent transaction fee out of that. It takes up to 3 business days for Shopify to pay you the transaction amount minus fees. From there, banks oftentimes have a 2 business day processing period. This means it can take 5 business days to get your payment. processing and deposit to your bank account. Shopify takes 3 days for processing transactions and banks take an average of 2 business days to process.2.9% + 30 cents.
This all takes time, effort, and money. The good news is that you do not need to do this yourself. Shop1 has done this for you. We take our supplier sheets, format them, and then upload them directly into our system. This way all you have to do is add that product to your store through your dashboard and BAM, you can start to advertise and sell it. Saves quite a bit of time, doesn’t it? We take care of this for you because you have more important things to do with your time when it comes to your business, like advertise, create traffic to your store, and start selling. What are you waiting for? Start your Shop1 account today!
Get your American dropshipping business started in less than 3 minutes!