One of the biggest benefits of operating in a global economy with click-to-order online functionality is the fact that you’re no longer limited to working with suppliers in your region or country – you can work with overseas suppliers as well.
How to Deal With Overseas Suppliers
When it comes to sourcing materials and/or physical products for your business, you may find that overseas suppliers are much more cost-effective than onshore solutions. But in order to maximize these relationships, you must learn how to approach them.
Here are several suggestions for effectively dealing with overseas suppliers.
1. Ask for References
Manufacturers and suppliers want to earn your business. In other words, they’ll compete for you. This is especially true if you work in a smaller niche where you’re one of just a few businesses purchasing the products/materials that they have to offer. And while many suppliers will tell you anything you want to hear, there’s one objective source: past and current customers.
“The first step is to ask each potential manufacturer if they have previous experience with similar American companies,” business owner Allen Bell writes. “Then ask if they would be willing to connect you with a few of their clients to share their experiences. If a manufacturer can’t or won’t provide any solid contacts or references, you may want to pass on working with them.”
Cost is certainly a factor, but trust and reliability are even more valuable. If you don’t have suppliers you can trust, nothing else matters. To put it another way: A trustworthy supplier will always be more cost-effective than a “cheaper” but less reliable option.
2. Prioritize Relational Components
Doing business with another company is difficult enough. Doing business with a company that’s halfway around the world is even more challenging. You can avoid some of the common issues that American companies face with overseas suppliers by prioritizing relational components.
Look for companies that prioritize you and your account. Consider their availability and their willingness to answer questions. Do they make time for you? Or are you just another account in their CRM program?
3. Sell Yourself
We often approach overseas suppliers from a what-can-you-do-for-me perspective. (And rightfully so.) But it’s also important to realize that this relationship works both ways. A good supplier only wants to work with reliable customers that are going to fulfill their end of the agreement – so make sure you’re “selling” your business too.
Specifically, suppliers want to know that you have an established business, cash flow, and the ability to pay on time. If you approach your initial conversations with a posture of mutual respect, you’ll develop stronger relationships with suppliers.
4. Start Small
If you need 100,000 units per month, don’t place a full order the first time around. Instead, run a trial of 10,000 units and see how it goes. In fact, you might want to split your first order across three or four different suppliers to study factors like cost, quality, customer service, shipping time, etc.
5. Save on International Payments
Paying for international goods and services can be expensive. Make sure you factor in extra charges, fees, taxes, and third-party costs. You also have to think about security, compliance, and other factors.
If you’re looking for a safe way to transfer money that offers lower costs, better protection, airtight authentication, and full U.S. compliance, try an international money transfer solution like Airwallex. They have market-beating FX rates and no monthly account fees.
6. Ensure Contracts are Legally Binding
Make sure you take all government regulations into account when dealing with overseas suppliers. This includes aspects like contract law, customs regulations, intellectual property laws, and product safety regulations. There are multiple layers to these transactions and agreements anytime you cross borders, so it may be worth hiring an attorney to write and review contracts on your behalf.
Putting it All Together
Your relationships with your overseas suppliers have the potential to make or break your success. Take these relationships seriously and they’ll benefit you for years to come. If you undervalue the relationship and view your suppliers as dispensable, don’t be surprised when they see you in the same light.
Use this article as a starting point and let it guide how you interact with your suppliers both now and in the future. These relationships might seem small and insignificant in the grand scheme of things, but their impact is far-reaching.
