Tips on How to Work with Overseas Suppliers

by Startacus Admin

Finding the right supplier for your business can seem daunting when those you are looking at are overseas. All of the same issues with a domestic supplier apply, and more, so it is important to consider everything beforehand.

Whether you are buying retail products from a wholesaler or materials from a manufacturer, here are some things to think about when starting a relationship with and working with an overseas supplier.

Sourcing

As with so many things, a good way to find the right supplier/s is word of mouth. Shake down your contacts and see what suppliers fall out. If you are a retailer, you could even take a look at similar shops in locations far from yours and give them a call to see if they will disclose their wholesalers to you. Some will if you let them know where you are located so that they know you aren’t competition, but be prepared for a hard ‘no’.

Gauging the quality of a supplier is all the harder when they are overseas, and they know it. What looks like a good product on their website or in their trade catalogue might disintegrate under the force of a human gaze. If possible (and the viability will vary depending on your business and the value of your product/s), visit the supplier. This has a few advantages. You can make a personal impression on the supplier (which might make working with them easier, assuming you’re not an unpleasant person), you can check the quality of the product, and you can check on how the workers are treated (you don’t want to be buying from a sweatshop, after all) as well as their compliance with other laws and regulations.

Language

Language may be a barrier if you are not buying directly from a website or trade catalogue. If you do not speak your supplier’s language and they do not speak yours, the best thing is to have someone who speaks both, but a dedicated translator will rarely be viable for a startup or small business. The chances are, thankfully, that if a supplier does business overseas, they will have someone who speaks English. If you you are buying materials or supplies rather than retail products, take extra care in the requirements you provide, ensuring that you don’t end up with the wrong thing, the wrong colour, the wrong size, etc. If you are buying ready-to-retail products, be on the lookout for any signs that the descriptions, measurements, and so on, are mistranslated.

Backups

Any number of things can result in the supplier being unable to supply, or the shipment being late, or even an unexpected drop in quality necessitating a return. If this is the case, you need to have a backup in place so that your business isn’t affected by your supplier’s problems. This could take various forms: building your own backup stock by always ordering a little extra, having your schedule further forward than it needs to be so that you have room to breathe in the case of delays, or even having a second supplier on standby. The viability of the last depends a lot on your business - if you are retail, going to another wholesaler is a lot easier than if you are buying in special materials.

Payment

Suppliers will most likely want payment in their own currency. For British businesses, this could be particularly tricky for a while due to the dive in the value of the pound, but currency will always fluctuate and so you will sometimes be paying more and sometimes be paying less. If the fluctuations are significant, perhaps you can find a way around it. Are you able to keep funds in the supplier’s currency, to use in times when your currency is weak? Perhaps they will accept a letter of credit in return for an extended payment period, allowing your currency to regain some footing before you have to pay - this option should be agreed on in a contract.

It’s better for you to be able to pay upon receipt of the product, but it is better for the supplier to be paid in advance, so this will need to be agreed upon. It goes without saying, but always pay when you say you will, or you may soon find yourself sourcing a supplier all over again.

Shipping

The last thing you want is to have paid in advance for your product only to open the box and find that it’s been broken or ruined in transit, or even never receive it because it goes missing. The supplier will sometimes insist on using a specific courier that they trust, which in some ways makes things simpler for you, but you still need to ensure the courier is reliable before you agree to them being used.

Who is paying for the shipping? The more you are paying the supplier, the more likely it is they will be paying for the shipping, but make sure this is agreed upon from the start. If you are paying, make sure you are paying the courier’s fees and the supplier hasn’t inflated the price.

Insurance and risks

Who bears the risks at each stage of the process? At first glance, this might seem simple: while the product is in the supplier’s hands, they are responsible for it; while it is in transit, whoever paid for shipping insures it; and when you have it, you bear responsibility. But it goes beyond that. If you receive a product that isn’t quite what you expected, doesn’t function properly, is the wrong colour, etc., whose responsibility is it? An exaggerated example is if you request a length of ‘sea green’ satin measuring ‘24 x 54’, you’re not going to be able to blame the supplier for sending you 24cm x 54cm of the wrong green satin instead of 24cm x 54m.

Contract

A clear contract is the best way of avoiding many problems, and will ensure disputes are more easily resolved if they arise. Every area of the process should be clearly defined, with the whats, the whens, and the who’s laid out so that there is no confusion, and so both parties know exactly who is responsible for what. Most of the above needs to be included, and will subsequently cease to be an issue. Make sure the jurisdiction of the contract is defined too.

Talking, going international - If you are expanding your business’s reach into a foreign market here's some Tools & Resources To Help With International Marketing

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Published on: 15th January 2017