6 Best Practices for Seamless eCommerce Vendor Management

Running a successful eCommerce business is all about the right relationships, learn how to have a streamlined eCommerce vendor management system in place.

Photo by Tiger Lily

When running your own eCommerce business, there are many factors to consider for success and one of the primary ones is eCommerce vendor management.

One vital piece of this puzzle to customer satisfaction is ensuring your vendor management is unified, and you’re in constant contact. Building the right relationships with your vendors as an eCommerce business is essential to long-term sustainability and growth, but since eCommerce is so highly focused online, doing so requires a human touch. 

It’s also important to have the right tools to ensure communication is cohesive and that working relationships are built on trust and driven by data. But how can you implement these best practices? 

And how can you work together with these vendors while also managing your business? We’re going to find out.

Vendor Management 101

What is vendor management?

It involves working with partners, suppliers, and other vendors for an exchange of knowledge or products. Mutually beneficial relationships are often the key to a successful business. Some eCommerce sites, like Etsy or Amazon, are unaffiliated with the company but sell their goods on the marketplace.

To start, let’s look at what vendor management entails. With eCommerce businesses, most or all of your vendor relationships could be strictly online. Therefore, it’s important to forge strong relationships with your existing vendors and source the right ones by researching.

Strong vendor relationships are the backbone of a powerful eCommerce operation. Without these relationships in place, it will be very difficult to slowly build momentum which will help you easily protect cash flow, and go from trying to breakeven, to eventually running a profitable business.

When onboarding newer people, you want to verify their identities and information for legal purposes. It’s crucial to work with verified vendors who are within your budget and can provide the type of services or products your business needs. Marketplace sellers may likely approach you, so it’s important to vet these prospects, too. So let’s look at what vendor management tools and tricks can keep your process seamless and smooth sailing.

Establishing Your Goals with Vendors

As with any professional relationship, setting goals or expectations at the start will help give a blueprint for the job. What do you hope to accomplish with this particular vendor? Communicate from the jump about what you want from this relationship in clear and definable terms. 

Are they targeting a specific market in which you’re interested?

Do they have a high rating and positive reviews you appreciate?

Whatever makes them your ideal partner, build on that and express how you both can benefit from the relationship down the line.

Another important aspect of this partnership is creating a cohesive flow of content for both parties to use to represent your business. Be clear on design elements, language, and other guidelines, especially for vendors selling on your website. You set yourself up for better brand recognition and unity by crafting the right aesthetic.

When the relationship on the offset has clear goals, there’s a much more straightforward path for both manager and vendor. Ensure all your agreements and contracts include these terms for easy future reference and full legal compliance.

Utilizing Communication Software and Tools

If your vendors are in other locations and hard to reach daily, you must have communication channels that work for both of you. People are accustomed to asynchronous communication, now, so it’s your responsibility to facilitate that with your vendors. People want to be able to communicate how and when they want, and when you establish this as a standard for your business relationships, you’ll be better off in doing so.

Thankfully, many tools and software are available, such as Slack, WhatsApp, and even chat functions built into your eCommerce site. Find a method that guarantees prompt responses from both parties should anything emergent arise. 

Typically email or phone calls can still be viable methods for vendors who are providing a service. Just be mindful of their working hours and availability. They may also be open to these software tools, but ensuring you’re both on the same page will be instrumental in your open communication.

For marketplace sellers, the best option is likely through your website. Etsy, Shopify, Amazon, and eBay have messaging platforms for sellers and managers, so double-check that your hosting site offers these communication tools for effective contact.

Offering Exclusive Perks and Benefits

Vendor relationships should be reciprocal, so offering exclusive benefits and perks is a great eCommerce Vendor Management practice. People appreciate being appreciated, and management requires a human touch to be effective. Rewards provide incentives for long-term partnerships as part of this human touch.

Here’s a list of potential ideas to entice vendors:

• Discounts on products or services
• Personalized gifts or offers
• Referral rewards
• Wellness programs
• Holiday promotions
• Exclusive sales and low-price days
• Price matching
• Awards or other recognition

Managing your vendors should involve showing your acknowledgment and gratitude, especially when there are few or no face-to-face interactions. When you’re in charge of managing eCommerce vendors, remember that for it to work, you will need to profit from each other collectively. Work toward useful outcomes, so one side never feels undervalued or as if they’re receiving less than the other.

Be Smart About Your Cash Flow

As your eCommerce business rides the wave of the massive uptick in online sales post-COVID, you must have the right accounts payable tech stack in place to effectively and efficiently manage relationships with your vendors. Paying on time and in the right quantities will solidify these connections, so research the best tools and software for your payment transactions.

Using software not only helps to streamline the process but also automates it for fewer mistakes and errors. Running an eCommerce shop requires many moving parts; unfortunately, one person can’t handle everything. That’s where these tools help. From dealing with duplicates, returns or exchanges, and even cash flow, financial tech tools help ease the process while getting it done in fewer steps.

Create trust between yourself and your vendors through these systems and practices. There are so many options available, you’ll undoubtedly find something that works efficiently for your particular business and its vendors while saving yourself a headache or compliance issues.

Monitoring Performance

One of the advantages of eCommerce sites is they allow for easy data collection and analysis. An example of digging into the data to see what it tells you? Performance monitoring. When working with vendors, especially as marketplace sellers, you can track their sales, buyer demographics, and other useful information to determine how they’re performing. 

You can use these numbers to draw conclusions about future growth, sales, or other potential vendors you’d like to contact to scale your brand.

When monitoring performance, it’s important to also put into practice the exclusive perks and benefits as touched on previously. How can you encourage vendors to do more? What techniques will drive sales while boosting morale? Part of management is the management of people, so even while observing your site’s data, consider how your vendors are enhancing their performance.

Building the Right Sales Plan for Your Unique Niche

When you approach prospecting for new vendors – and client relationships – using data as your foundation, it’s much easier to win new business with the right vendors, making them much easier to manage for the long haul. Choosing the right strategies and tactics for sales prospecting will rely heavily on what your business offers and which approaches you’re comfortable with using.

Step one is to determine who you want to prospect and what you plan to achieve with their patronage. One effective way to sort this information out is by looking at your past data, especially with vendors who have worked well with your brand. You can also use referrals since previous relationships can help amplify new ones. 

Reach out to past or current vendors and inform them of any referral programs or perks if they recommend you to a client. This approach works for both parties and assists with word-of-mouth.

Step two involves figuring out your clients’ needs and your solution for that problem. If your eCommerce shop sells jewelry and other high-quality goods, for example, decide what you want from future vendors and what they can offer.

Step three is putting these into practice. Take cold calls and warm calls, for example. Cold calls could be a promising technique if your business is more focused on just getting their foot in the door. With warm calls, however, they are more personalized and focused on subsequent stages of your marketing. 

So which would work best for your goals? 

Hone in on the right tactic, and approach vendors and clients accordingly.

Conclusion

Managing an eCommerce shop has a lot of moving pieces, eCommerce Vendor Management included. With so many useful tools at your disposal, you want to be certain you’re taking full advantage of them so that the experience is as seamless and effortless as possible for all parties involved. 

Vendors, whatever service or product they’re providing you, should be set up with clear expectations, helpful resources for the process, and all the necessary tools and software to pave the way for their success on your site.