It's always exciting to find a new supplier for a product that you're interested in selling. It's particularly thrilling when it looks like you're going to be able to lower your cost of product or add some value to your product line with your new supplier.

Before you get lost in the novelty of something new, be sure to do your homework and verify that your supplier is authentic, reliable and here to stay. Too frequently, suppliers that you find through Internet searches are either scammers, out to take your money without a thought to providing product or are novices, not well organised and unable to produce on the schedule or at the cost advertised.

Here are some steps you can and should take to protect yourself.

  1. Check the address and phone number that you have been provided. There are several ways to do this:

    • Do a reverse phone number look up and see if there's a match with the address provided. If you have a UK supplier telephone number and you want to be sure that you are dealing with a legitimate business with a land line, not simply a mobile phone line, go to Numbering Plans. Enter the number and search. The results will give you the telecommunications provider. Be sure that the number is held by an authentic UK telecommunications provider, not a virtual provider that can redirect calls. UK phone providers are listed at Wikipedia and Home Phone Choices. Google the address and see:

      • if you come up with any discrepancies;

      • if the address is registered under any other company; and

      • if it checks out to be a real address that can be mapped on services like Google Maps.
    • Make sure the phone number's international code corresponds to the country where the supplier claims to be located.

    • Verify that the phone number provided is a landline.
  2. Ask for evidence of incorporation as a business such as a certificate of incorporation and a tax or business ID number (ask the company to send the documentation by email and in colour). Use this information to track the company back through the country, state or province database of corporations (for UK companies you can use Companies House, who will provide free basic information on every limited company registered in the UK, and in depth information from as little as £1 per company). Verify that the company is still active and trading. Inspect the documents received to check for forgery. If the supplier is based in the EU, use the European Union's taxation and customs site to check the authenticity of a VAT number.

  3. If the supplier has a website, use to verify who has registered the supplier's web domain name. If the contact information provided publicly in the whois differs from the contact information offered by the supplier, ask for an explanation and evaluate their response.

  4. Legitimate websites will have authentic photos of product inventory. You can check the legitimacy of photos by right clicking on a photo and selecting “properties” in the menu that opens. The images should have an address that originates within the website. If the address originates elsewhere, the actual wholesaler is probably at that base domain address.

  5. Ask them for a bank reference then check out the bank. Locate and call the bank and ask if the company does business at that bank. Be very concerned if you discover that the contact has provided a personal bank account rather than a business account; this may indicate that they are too new to have a business account or that they simply do not have a business at all. Many banks will not release information on a bank account: explain them you are trying to transfer money to the supplier's account and that you are experiencing problems sending them your payment and therefore need to verify their details.

  6. If you are dealing with an international company, you can make use of their consulate in your country or your embassy or consulate in their country. Contact the appropriate group and ask if they are familiar with the company. The representative you speak with may not have personal knowledge of the company but will likely have access to lists of legitimate companies in the country as well as scammers.

  7. Verify that the email address the company's representative is writing from is in fact owned by the company. It is not uncommon for scammers to impersonate a legitimate company by using a free email address. Contact the company from their official website and ask them to confirm that the email you are corresponding with belongs to them.

  8. Ask if the supplier has an office in your country. Larger legitimate suppliers often establish offices in major trading countries with staff who can sign contracts, accept deliveries and generally smooth the way. The lack of a local office does not necessarily mean that the wholesaler is not legitimate, however.

  9. Ask technical questions about the product you are looking to buy. Test the supplier's knowledge of the product. Ask about the features included. Be cautious when a supplier always replies positively to your requests for product features, it is often an indication the supplier only wants to get your order as quickly as possible, either because they are a scammer or because the goods you are being sold do not match your requirements.

  10. Ask the supplier for customer references from buyers in a developed country, including the reference company name, contact person, business address and contact number. Check the references by phoning them; call them at several times of the day and ask for general information. In addition to speaking with the reference company by phone, do the research to be sure they are legitimate. Search for a website. * Please note this method may not always be effective: some suppliers may be unwilling to provide information on their customers, they may feel you are a competitor trying to take business away from them. If you choose to use this method, approach the supplier kindly.

  11. Ask the supplier which trade shows they have attended in the past 2 years. Verify with the trade show organizers (by visiting their website or by sending them an email) that the supplier has attended the trade shows they have claimed to.

  12. Consider visiting the supplier even if they are overseas. The cost of a trip pales in significance if you plan to spend large sums of money buying from that supplier. An alternative is to inform the supplier you will be visiting them. Evaluate their response to your request. If you are unable to visit them in person, consider hiring a third party agent to visit the supplier on your behalf; it may cost some money but it will pay off in the longer term.

  13. Consider visiting the major trade shows in the country you want to source from; this is a great way to find new contacts and possibly source at even lower prices. Be aware though that trade shows are often frequented by factory agents, who are effectively middle men between you and the factory. While some factories will only deal with you through agents, most will accept direct orders. A very good trade show to attend is the Canton Fair.

  14. Check the payment terms. Be wary of anyone who wants you to escrow money with their lawyer or with a little known escrow company; many of these companies and people are frauds. Until you have established a firm relationship, use reliable methods such as credit card payment, letter of credit or escrow with a mutually agreeable escrow agent. Avoid methods such as telegraph transfer until you are absolutely certain that the company can produce as promised. If you must, use telegraph transfers only for sample orders or for ongoing small orders. Don't pay the full balance upfront: the norm is to pay 30% upfront when placing your order (this is often requested by T/T), then the remaining 70% only after the goods have been inspected and are ready for shipping (this is often accepted as an L/C payment). Your agent can take care of this for you.

  15. If using Western Union, make sure you are sending to a Western Union company account, and not to an individual's account. Ask the company to provide their Wester Union account number, and verify with Western Union that the account has been in place for a good period of time.

  16. Never commit to large orders without conducting a trial order first. Also be aware some manufacturers may send you a high quality sample only to supply you substandard goods once you place your main order. Consider incrementing your order size gradually.

  17. One of the many scams on the Internet is to offer websites stocked with the “wholesaler's” products. This arrangement sounds like a dream come true but it's really not true at all. Often the “wholesaler” is just a middleman, and you will find yourself hopelessly burdened with hosting and other fees while selling the same products as thousands of others.

  18. In general, legitimate wholesalers are not out on the Internet trying to entice you to do business with them. While wholesalers are usually glad to sign on new customers, you will not find them actively seeking you out (that behavior is much more typical of scammers who are spending a lot of advertising money to find you and lure you into their arrangement).

  19. One of the easiest ways to avoid spending so much time in the supplier verification process is to locate vendors through eSources does all the footwork for you so that you can be sure that any vendor you find on eSources has met its vendor qualification standards.

    Some important notes:

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