by T. Higgins 

Drop-Shipping.com staff industry editor 

As many business owners already know, one of the keys to success in their industry is good contacts and this is even more important when forming supply relationships with drop-shippers.  Many merchants may not realize this but a manufacturer/supplier gets inundated with requests to drop-ship their products with hundreds of emails, phone calls and trade show requests.  You may have even attempted to contact a supplier but your emails, and repeated calls were never returned.  Is it that these companies dont want more business? or is it that your messages may not be read by the right person? or maybe they dont know anything about your company or its sales potential?  all these could be true, but let me share with you the main reason the manufacturers that I have asked, tell me why.

In my business I deal with many drop-shippers, I would say about 1/5th of my buisness is strickly done through drop-shipping relationships.  So at a trade show I recently had a chance to ask some of my longstanding drop-ship relationships how they determine who to do business with, as this directly affects my own business.  I needed to know. 

The answer should be obvious, its the reason we do business with you my largest partner told me.  We get hundreds of requests a month, everyone with a website wants to sell my products, he told me.  And in the begining when the internet was hot, we signed lots of new companies, but we got burnt.  One of the most public internet bankruptsies in 2001 had cost him dearly even Amazon invested in the very same company so he felt he was safe with the debt on the books.  But that was an extream example, I have also signed partnerships with companies that were not ready to do business with me, I just didnt know it yet.  The website looked pretty, but they didnt know how to deal with returns, or customer service issues, in the end this cuased me lots of new headaches and bad press on the internet that I didnt need.  What I prioritze most is the reputation of the company that is the main factor in determining if they sign a distribution agreement or even a drop-ship agreement with a new firm.  A companys reputation and track record was the main factor he took into account when deciding if he signed a new company or not. 

In our case we already had a reputation in the industry and had relationships with some of his compeditors already and he knew about us before we contacted him for a partnership.  We do sign several new partnerships every year, most are trial partnership and we give it a year to see if it makes sense for us.     

I've been in business for over 20 years in my industry and and have formed some great contacts new and old.  With estabished manufacturers that I have for over 10years they all tell me that the internet has make it more difficult to identify a good partner.  Before the internet, mailorder companies have traditionally created the bulk of the transactions and requests that manufacturers have fulfilled via the drop-ship program, and it was easier to qualify a successful mailorder company. The internet has changed the dynamics of how to reach the consumer nationwide, even worldwide, all my manufacturers agree that the new distribution channel have helped improved business, but its also made it more difficult to identify a good partner.

New manufacturers are still learning the industry and they are just forming their own network, so they are more open to new relationships.  But even a new manufacturer is looking for a reason to partner with you, so the obvious first question you must answer is why they should do business with you.  What benefit or advantage will your company offer a manufacturer if you did carry their product line?  What other related products do you currently carry and represent on your website?  and finally, what is your track record in your business segment?

I'd like to open this topic up for discussion as my business does have existing sales relationships and the last thing I would want from my partners is to sign more competition, but on the other hand, I am always trying to form new business contacts to expand my own business with new drop-ship relationships. The decision making process of signing the right partner wether they are drop-ship ones or distributorships is a delicate balance for manufacturers.  I have seen some manufactures who have caused terrible price presures on its product line by signingup everyone and then discovered that this caused a profit margin dialution in the product line.  So I'd like to end this article with just two questions to our suppliers here, How do you qualify a good drop-ship partner or distributor? and How do you determin the sales potential of this new partnership for your product line?