A supplier is a business or an individual that provides goods or services to another entity.

What Is a Supplier?

A supplier is a business or an individual that provides goods or services to another entity. Suppliers in a business provide products from a manufacturer at a good price to a retailer for resale. Essentially, a supplier is an intermediary in business who acts between the manufacturer and retailer, ensuring that the communication is smooth and the stock sufficient. 

License your business before applying for a product supplier to ensure a legitimate partnership. See more details on our supplementary resource: do you need a business license to sell on Etsy?

What Is the Importance of a Supplier?

Suppliers play a crucial role in the product life cycle. They source raw materials to expedite production and find better quality raw material in a saturated market. Every company needs to have a solid relationship with its supplier in order to create the best products. 

Role of a Supplier

Retailers need top-quality material for their products, so the role of a supplier is of immense importance. The supplier must be comfortable and flexible with the relationship to ensure that the retailers expect. Some elements of a supplier’s support include:

Supplier Relationship Management

The process of planning and managing all relationships with vendors who supply any products or services to a business is called supplier relationship management. The process can include raw material suppliers, utility suppliers, cleaning suppliers, etc. Managing these relationships is important to ensure an efficient supply of products and services for a company. 

You must maintain a supplier management process that outlines all necessary details so that it’s easy to onboard a supplier. The management process goes beyond choosing the right supplier and typically extends to building trust with the vendor and improving the customer experience.

Benefits of Supplier Relationship Management

Managing relationships is a big part of any business, but it is far more important for suppliers as they’re not internal to a company. Suppliers exist outside the company, so you must be careful with the information you share with them. Try striking a balance as the supplier needs to feel you value them before they attempt to deliver excellent products and service. 

The benefits of supplier relationship management include:

Supplier - Glossary 1

Supplier Relationship Management Best Practices

  1. Build relationships that last, where you can pick up the phone and converse with the supplier easily. The strength of your relationship will ensure the quality of work with the supplier. 
  2. Invest in technology that is tailored to your exact needs. Companies can track suppliers and create a list of how everything is doing. 
  3. Pay suppliers on time because cash flow is everyone’s priority when doing business. Using tracking software, companies can ensure that the suppliers are paid on time.
  4. Streamline agreements regardless of what service the supplier provides. Everyone in the department should know what your agreement with the supplier looks like.
  5. Research the supplier thoroughly to evaluate the risk and make sure they are financially stable. Do not hesitate to ask for references for a supplier’s performance and consistency.

Difference Between a Supplier and Vendor

In the retail and ecommerce world, you will often find people using the terms “supplier” and “vendor” interchangeably. However, certain attributes make each one a distinct party.

Yes, both suppliers and vendors provide goods and services, but vendors are not involved in the distribution process. On the other hand, suppliers distribute goods to businesses in need of inventory. Another difference is that the term supplier is typically only used for B2B relationships, whereas the term vendor can be used for both B2B and B2C relationships.

Vendors also keep a wide assortment of products in stock, which end users purchase in small quantities. In contrast, suppliers typically offer goods in bulk quantities with a discount. 

Supplies often have a direct connection with manufacturers, which allows them to buy goods wholesale at a reduced price and pass on some savings to their customers. Meanwhile, vendors do not have a direct connection with the factory and rely on customer relationships to keep their business afloat.

You could also differentiate a vendor from a supplier by looking at the type of items they offer to customers. Suppliers typically supply raw materials that are later converted to something else, while vendors deal more in ready-to-go items. As a result, supplier relationships are usually focused on how the supplying party can affect the quality of the product, while vendor relationships are focused on price comparisons.

Quick Tips for Negotiating with Suppliers

1. Get Creative With Negotiations

Some suppliers won’t budge on price, but you can still make them agree to other things that will help reduce your costs. For instance, you could ask for a discount when ordering in bulk, request free shipping, or ask them to extend the length of the warranty. If the supplier agrees to any of these things, it will help improve your cash flow.

2. Offer Bigger Deposits to Get More Discounts

Suppliers, like other business owners, are concerned about the health of their accounts receivable. What you can do is offer a large deposit on your orders to secure discounts. When suppliers realize you will pay them 50-70 percent of the deposit upfront, they are more likely to go easy on the prices and hear out your offers. Taking this step will improve your bargaining power.

3. Skip the First Offer

The rules for negotiating with suppliers are the same as for other business negotiations. One tip is never to accept the first offer. Instead, tell them to get back to you with a better price or offer a counter offer. Justify your offer with the amount of business you’re planning to give them and the fact that you’re looking to build a long-term relationship. Mentioning products and services that are not useful to your customers can also make a strong case. 

4. Consider Giving All Your Business to a Certain Supplier

Suppliers adore businesses that place lots of orders with them. Often, those companies get larger discounts and other benefits from the supplier. To become that business, consider transferring all your business to one supplier. Stop using multiple suppliers to fulfill your store’s orders. To ensure this will bring benefits for your business, call the supplier and ask about bigger discounts and benefits in exchange for all your orders. 

5. Make Suppliers Want to Work With You

Suppliers will never give the best deal to difficult customers. That’s because it’s too much work to do business with them. So it’s critical to remember that while you want suppliers to treat you well, they need the same kind of treatment in order to do business efficiently. Be sure to maintain open communication, clear your invoices on time, and treat suppliers as partners, where both of you work towards building satisfying the end customer. 


A supplier provides products or services to a company, and this relationship is important. Researching your suppliers beforehand and having a solid relationship management process will help you get the best vendors for your business.