The internet has given customers the tools to quickly find a huge variety of possible suppliers. Sometimes however, this breadth of choice is more of a curse than a blessing and it can be hard to figure out who you should do business with and who you should avoid. But worry not! That’s where our handy guide to finding the trustworthy wholesalers comes in.
If you want a really quick summary take a look at our checklist - it’s intended to be filled out before you put in an order with a wholesaler. Either print it out or tick it off on Microsoft Word.
A Quick Checklist:
- Find their business registration number, VAT number or UTR number
- Find their contact details and verify whether they are real
- Check their payment methods – can you work with what they offer?
- Do they have the right certifications for what they are selling?
- Do they have proof of insurance?
- Prices – too good to be true?
- Can you reach them on the phone?
- Can they give you precise answers?
- Can you meet them?
- What are their independent reviews like?
- What’s their returns policy?
- Are you happy with the profit margin?
Find Proof that they are an Actual Company
Find their business registration number, VAT number or UTR number
Ask the supplier if they have a business registration number that they can send you. If they are a limited company they should be able to supply you with one. Some wholesalers may not be limited companies and in this case they won’t have a business registration number. What they should have is a VAT number, or if they are a sole trader or partnership a UTR number with the tax office. If you’re unable to find any evidence of the supplier functioning as a business and interacting with government institutions then it’s probably not worth the risk of working with them.
The best way to get hold of these numbers is to simply request them from the supplier. Once sent over you can then verify whether the number is legitimate. Every country, and often provinces or states within that country, will have their own organisation that looks after registered businesses; most will have an online search engine that allows you to verify whether the business is legitimate. A huge list of company registers by country can be found here.
Be aware that the registration number might be called something different depending on where the company is registered. In China, for example it’s called an AIC.
Do they have contact details and are the details real?
When you verify the business number you might also be given access to contact details such as the address of the company and an associated name. Try to also search around for a telephone number and make sure that the prefix for the phone number is for the same area that the company is registered to. If they don’t have a telephone number and they won’t give you one when you email them then they could be untrustworthy. It might be that they prefer to do business via email, but they should be willing to at least have an initial phone conversation with you so that you can verify who they are.
You should also try to establish whether the address given is definitely a business address and not a residential address or an address for another business.
Are They a Safe Company to Work With?
What payment methods do they offer?
A particular payment method doesn’t necessarily indicate anything about the legitimacy of a supplier, after all, when it comes to payment, especially when it is done online and internationally, there is a risk for both the supplier and the buyer. That being said, a decent wholesaler should be willing to negotiate payment methods depending on the value of your order and the size of the supplier. At Puckator our minimum value orders are £100 for UK Mainland, 150 Euros for Eire and Europe and $250 for US and ROW and we offer credit/debit card payments via SagePay and Cheque or Bank Transfers. We also offer credit accounts if you’re in the UK and Ireland (if you want to find out more check out our page on payments). For smaller suppliers, credit cards might not be the desirable method of payment because it puts a lot of risk on them in terms of chargebacks and the like. Instead they might prefer methods such as Escrow, Telegraphic Transfer or PayPal. Most of these options are also pretty safe for the buyer.
When taking into account payment methods make sure you keep sight of who is putting themselves most at risk. If all the risk is on you, try and negotiate another method, if the supplier is reluctant and you already have your doubts about their legitimacy, look elsewhere. This is a great page discussing the different payment methods available when importing from China that has information applicable to other countries.
What certifications do they have?
Some products require the wholesaler to have accompanying safety certificates. For example, we sell some toys so we have to comply with the EN 71 EU. We also sell some electronic and electrical equipment which must comply with the RoHS EU Directive. Other regulations include:
- MSDS Certification
- Candle Safety Requirements
- Anti-Dumping Duty
- Social Audits and the SA8000 Standard
This is by no means an exhaustive list! It is important to check your wholesaler has every certification they should (note that not all products require certificates) as once you purchase goods from them you are then considered an “economic operator” involved with the product and therefore become responsible for the product’s compliance.
If you can prove you have done due diligence and requested the certificates from the wholesaler then you should be covered (though do your research to ensure you’re meeting legal requirements).
If a wholesaler cannot provide you with the appropriate certifications then don’t go there. It’s not only an indication that they’re not likely to be reputable, but it could also get you into trouble later down the line.
A wholesaler should be able to provide you with these certifications upon request and are used to showing them to customers.
Do they have proof of insurance?
A wholesaler should also have product liability insurance which covers the cost of compensating anyone who is injured by a faulty product that they supply to you. A wholesaler can be held responsible for a product even if they didn’t manufacture it if the wholesaler puts their business name on the product, repairs, refurbishes or changes the product, imports it from outside the European Union (which is the most common reason they could be held responsible) or if the manufacturer cannot be identified or has gone out of business.
Are their prices too good to be true?
If anything should raise your suspicion it’s if the prices advertised are just exceptionally low. Of course, there are good deals out there, but if it seems too good to be true then it probably is.
Are They Reliable?
Can you reach them on the phone?
Once you’ve sent off a few emails it’s time to test out that phone number and give them a call. As much as can be said for doing your due diligence, often the best way to tell a scammer from a legitimate supplier (and let’s be honest, this isn’t specific to our industry) is to have a live telephone conversation with the supplier to get a feel for what they are like. Firstly, you can establish whether the number actually works and whether it is owned by the same person who set up the website you’ve come across, and secondly, you can ask questions to try and establish how reliable this person seems to be.
Can they answer your questions precisely?
What you want to establish beyond doubt (or with as little doubt as possible) is that the wholesaler you are talking to actually has the goods that they are proposing to sell. If they do, and if they are used to selling them then they should be able to answer very precise questions about the exact product.
Can you meet them?
Of course, this depends on where they are based and often this won’t be practical. The wonders of modern technology however, should allow you to see them via video. See if you can set up a Skype or Facetime call to see the goods in the flesh and have a face-to-face chat.
Tradeshows are also a great opportunity to have a chat with the bigger wholesalers face-to-face. For example, Puckator attend giftware and homeware trade shows such as the NEC Spring and Autumn Fairs and Home & Gift in Harrogate. Trade fairs happen all over the world for all sorts of different sectors, so it’s worth having a search around and seeing if there are any near you that you could attend.
What’s their returns policy?
Do they have a specific returns policy? If you’re shipping from abroad products can often get damaged on the journey. Sometimes this is unpreventable no matter how much care is taken with packaging, other times it is very preventable and the supplier simply won’t have bothered to package your goods properly.
If they have a proper returns policy then you know you’re covered if you run into trouble. Again, this is something to look for specific customer experience on, as even some of the better wholesalers can dawdle when it comes to returns and reimbursement. We don’t want to blow our trumpets too much, but here at Puckator we pride ourselves on our fast returns (if you’re interested take a look at our Returns Policy, just scroll down to number seven).
Are you happy with the potential profit margin?
Don’t forget that the ultimate goal is to make a profit, so though you might be able to establish that a company is reputable, if you can’t actually make enough money because of their prices, then then they are unsuitable to work with. Of course, the name of the game is negotiation so don’t be put off immediately by price (unless it is just too good to be true, as mentioned above). There is inevitably a certain amount of subjectivity in deciding how much of a profit margin is acceptable, but as a rule of thumb, if you can’t double the price (including VAT) and sell it to a customer then you can’t really make a profit.
Companies that hold stock are better than alternatives:
Companies that actually hold their stock rather than ordering it from manufacturers as the order come are generally better as there won’t be any delays on your order. That being said, this is a difficult thing for wholesalers to manage perfectly so you’ll be hard pushed to find one that estimates demand perfectly (and if they always have excess stock lying around, chances are they’re not the most shrewd business people).
Remember your Common Sense
In many ways the signs of a good wholesaler are just the signs of any good business. Decent customer service, good independent reviews and a company that has been going for a long time are all going to indicate that the supplier can be relied on. If you can’t even establish whether it’s a legal business, then you’re probably safer staying clear. Remember that it is a combination of the above factors that should be taken into account. The nature of the internet means that there may still be scenarios where you have a bad experience, but, once you’ve found a reliable wholesaler you can normally build up a long-term relationship that will support you throughout your business’s life.