What is an E-Commerce Vendor?

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e-commerce vendorMost people have wondered how new online stores are able to offer the variety of inventory that is needed to compete with established brick and mortar outlets, and the e-commerce vendor is at the heart of that answer. E-commerce vendors are needed to supply the software and services used to start and operate most online stores. However, they are more prominently known for supplying consumable and durable goods to online shop owners so that they can resell the items at a profit. As many people realize their dreams of store ownership by opening their own electronic retail stores, there is an increase in the need for suppliers for this fast paced niche sector within the retail industry. E-commerce store owners must choose suppliers that are agile, flexible and quality oriented, or they risk being driven out of business by competing e-shops that have leaner, more reliable supply chains.

Types of E-Commerce Vendors

One of the most exciting ways that online stores can get up and running very quickly and with plenty of product offerings is by using drop shipping vendors, according to Practical eCommerce. These vendors allow retailers to take orders from customers over their websites, and the vendors deliver the products directly to the purchaser. It sounds very easy, but there are some drawbacks. For instance, the online retailer must rely on the drop shipper to make appropriate deliveries of undamaged products to their customers within specified time periods. Since the vendors have many different customers, there are bound to be mistakes. The online retailer must be ready to field customer complaints when this happens. Also, the profit margins on the drop shipped items are low because the e-commerce vendors are doing most of the logistical work and inventory storage. The wholesaler is another type e-commerce vendor. Online store owners can purchase items from wholesalers that are below list prices and resell them to their online customers for a profit. Even though higher shipping costs are involved, the profit margins that online retailers gain by using overseas wholesale suppliers are almost always larger than when they use domestic wholesalers. However, online retailers must watch for quality issues when using overseas supply companies that beat out the competition through the use of cheap labor. Online retail business owners who sell specialty goods often find that the best e-commerce vendors are the manufacturers of the goods. These e-shop owners can establish purchase agreements with manufacturers, and the results are lower prices and potentially higher profits from sales.

Characteristics of Reliable E-Commerce Vendors

Reliable e-commerce vendors have quality control systems in place to ensure that purchased products are delivered without damage. The best way for online retailers to find out about the quality control practices of potential e-commerce vendors is to go through a company that pre-screens vendors. The pre-screening service helps to reduce the chances of retailers falling prey to scam artists, and they often highlight their quality control practices and past performance. Reliable e-commerce vendors also work with retailers to solve unexpected problems instead of leaving the online retailer to handle customer care nightmares on their own. Retailers can get good indicators of the quality of the vendors’ services by checking if near competitors or leaders in the market are being supplied by them. If market leaders have been serviced by the vendor for a long period of time, then the vendor probably has a sustainable track record for success.

Maintaining Good Retailer Vendor Relationships

Success with e-commerce vendors takes work just like all business and personal relationships. Online retailers can establish trust with their vendors by maintaining good payment histories. They can continue building lasting business partnerships by deviating as little as possible from their vendors’ ordering systems as possible; if the vendors have many customers, they probably do not want to waste time processing orders that do not fit their predetermined formats. Making friends with vendors is a definite positive, as it becomes easier to educate them about one’s unique product requirements; for example, vendors might be willing to go the extra mile for a friend as opposed to someone who just places online orders from them.

Related Resource: How To Invest Back in Your Business


Vendors for e-commerce retail sites have become key elements of the supply chain for many business owners. Depending on the type of products sourced and the number of customers that the vendor supplies, the process of providing the appropriate products at the right time can get complicated. Subsequently, online retailers realize that the same tried and true principles of supply chain management are applicable when doing business with an e-commerce vendor as they are when applied to a traditional supplier.

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