Chapter 3: Negotiate with Suppliers & Choose the Best Supplier

After evaluating the supplier, you need to communicate with the supplier on the product price, order quantity, quality standard, delivery time, payment method, transportation method, etc.

so that you can decide which supplier you will eventually cooperate with.

Price Negotiation

One of the most important questions is how much your product will cost.

The supplier’s quotation usually contains 3 sets of information, namely the minimum order quantity, the trade terms and the product unit price.

The price will vary depending on the order quantity and trade terms.

It is worth noting that when comparing the offers of different suppliers, do not simply be attracted by the cheapest offer.

If the quotations of a product are very different, their quality must be different.

Maybe the production quality is not as good as other products, such as thinner materials and smaller actual product size.

In addition, you also need to master some bargaining skills with Chinese suppliers.

For example, the supplier is required to provide a quotation for a variety of quantities, and the supplier is first required to provide the unit price of the product that does not include any costs, and so on.

Quantity Negotiation

Suppliers usually have minimum quantity requirements for customized products, also known as MOQ.

The minimum order quantity may vary greatly depending on the product and supplier, so it is important to ask in advance.

If the supplier’s MOQ exceeds the range you can afford, you can negotiate with the supplier to get a lower MOQ.

Recommend Read: How To Get Low MOQ on Alibaba?（Ultimate guide）

Trade Terms

When you negotiate with suppliers, you will come across the Trade terms. There are many different trade terms, which will affect the offer accordingly.

The 5 most commonly used trade terms in actual business are EXW, FOB, CIF, DDP and DDU. Under each kind of trade clause , the costs included in the quotation and the risks and responsibilities you should bear are different.

• EXW
• FOB
• CIF
• DDP
• DDU

Recommend Read: Which Trade Term Works Best?

Product Private Label Solutions

If you need to custom your own private label products, negotiating a customize solution with the supplier is the first step in communicating with the supplier.

Most start-ups differentiate their products from others in the following ways.

• Customized product packaging
• Customize LOGO on the product surface

Earlier we mentioned that suppliers have higher MOQ requirements for customized products, so customized products mean more budget.

Recommend Read: Before Reading My Article, Don’t Create Private Label Products at will

Quality

Product quality is reflected in many aspects, such as product material, weight, function, processing method, assembly method, etc.

You can compare the quality of products through the information displayed on the website or in the quotation form.

Delivery time

Delivery time refers to the time required to produce and prepare all products for shipment after you place an order.

If you have multiple suppliers to choose from and their prices are similar, then it is best to choose the one with a shorter delivery time.

Transportation Method and Cost

If you don’t have a reliable freight forwarder, you can ask the supplier to help you handle the logistics. Then you have to compare not only product prices, but also logistics costs and solutions. You can reduce transportation costs through some tricks.

Recommend Read: How to Reduce Shipping Costs From China(7 proven tips)

Payment Methods to Chinese Suppliers

7 Common payment methods

• Wire transfer
• Western Union
• Paypal
• Letter of Credit (L/C)
• Documents Against Acceptance(D/A)
• Documents against Payment (D/P)
• MoneyGram

Sample orders or small orders are usually paid by PayPal. For formal orders, the method accepted by all suppliers is wire transfer.

Recommend Read: How To Pay China Suppliers? (Avoid Scams）

Payment terms

The most common payment terms:

• 30% deposit upon the order, 70% balance before the shipment.
• 30% deposit upon the order, 70% balance against the Original bill of lading.

Generally speaking, the standard payment terms are 30% down payment prior to manufacture and the balance on completion but prior to shipment (or at least prior to the issuance of the original bill of lading). 

But for small orders, such as orders less than $500, the supplier may require you to pay a 50% or 100% deposit when placing the order.

Other details that may need to be negotiated.

• Product warranty period
• Range of after-sales service
• Sample price

 The above are all the details you need to confirm with the supplier before placing an order. You need to communicate with multiple suppliers so that you can compare and select the best supplier.

This is a long communication process. You can also use the SourcingArts Standard Plan to directly match the best supplier for your product without having to conduct complicated negotiations with multiple suppliers yourself.