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How to Choose the Right Supplier

Choosing the right supplier requires more than knowing the product you want. It involves knowing your business’ priorities and strategy. You must also define your target customer.

There are a few key factors that need to be weighed to help you choose the supplier that is right for you and your business. Having a clear idea of these variables is imperative to successfully selecting a supplier. This strategic approach can also help to guide your end customer to make their purchasing decision with you.

Here is an outline of six criteria to consider while choosing the right supplier.

Brand Position

This is arguably the most important of the six criteria as it is the one that sets you apart.

What is your brand’s price position in relation to the market and your key competition? You must have deep knowledge of the competitive landscape to answer this question. In understanding your competitors, you can identify gaps that become opportunities you can take advantage of. Look at who is excelling and gaining market share. Ask yourself what they are doing well that you can emulate? What is their assortment? Where are the gaps in their product mix? What is their price position in relation to the competition? Are they positioned at the top, middle or bottom compared to the market? Equally, look at your competitors who are struggling to make a name for themselves. What would you do differently?

The balance of price and quality help determine your brand position and influence choosing your supply base. Do you want to be cheap and accessible, or premium and exclusive? Answering this question will narrow your pick of suppliers. Most suppliers will pick a lane and stick with it. One that offers low cost is likely not investing resources on R&D, so if you are looking for innovation, you will likely have to pay more. Differentiation is a key success factor for any brand, so access to innovation is important.

Dealing with Distributors

Be cautious about suppliers that offer a broad range of products. These are often cannabis accessoriesdistributors who are paying wholesale and then adding a markup and profit that are reflected in the price you pay.  In choosing a distributor, you will be paying a premium for breadth of assortment and low order quantities. Another drawback of buying from distributors is that you are purchasing from the same pool of products as your competitors and therefore not building your brand or creating differentiation. However, distributors can be a great option if you are still building scale or testing your strategy, in which case small order quantities are important.

If you are planning on buying a larger quantity, see if you can go directly to the manufacturer to eliminate the distributor fees and increase your profit.

Sharing Vision & Values

Understanding your brand look and feel is also important. Whether buying store fixtures or accessories, your suppliers need to understand your vision. If there isn’t a connection to your vision pretty early on in the conversation, this is probably not the right partnership. As the markets open and new brands emerge, each store will be jockeying for prime position. This is your opportunity to set yourself apart. Picking the wrong supplier who doesn’t share your vision can waste valuable time and money!

Whether buying store fixtures or accessories, your suppliers need to understand your vision.

Knowing your values are shared with your suppliers and that your goals are the same or similar is also important. If quality is an important priority as an example, knowing your supplier has a quality control protocol in place shows they share your commitment and values. If they don’t, this could be a red flag.

Process & Troubleshooting

Ensure there is a binding agreement between your store and your supplier that defines responsibility for both sides. Understand the processes that protect your vision and give you visibility throughout execution. A good supplier should be able to provide you with key milestone dates like delivery that are committed to in your purchase agreement or purchase order.

Inventory Strategy

What is your inventory strategy in the short term and long term?

Do you need to turn your inventory quickly? If cash flow is an issue, then inventory turnover and payment terms will be important. If you can negotiate favourable terms that allow you to get goods on the floor for some time before full payment, it is a benefit. But, extended terms cost money, so you will be paying more. In the unstable financial environment that the cannabis industry is currently experiencing, most suppliers are not willing to risk extended terms.

Unfortunately, as is typical in most retail markets, the same 20% of cannabis brands and formats are in greatest demand in all stores. And, since cannabis distribution is for the most part controlled by the provinces, most retailers have access to the same selection. It is important to watch that your inventory isn’t locked up in slow moving SKUs stalling cash flow. Create an assortment that includes fast turning items that could be impulse driven. Always manage lead times with a reliable vendor partner—this could help with cash flow.

Create an assortment that includes fast turning items that could be impulse driven.

Ask yourself, “Is price important”? Cheap and fast are not often synonymous. How much inventory are you willing to hold? Knowing your optimal order quantity will help determine your supply base. The closer you are to working directly with the source or factory supplier, the higher the minimum order quantity will likely be. The upside is if you want, you can have greater control and access to information.


Your timeline for having inventory will define whether you buy direct or from a distributor. If you need something immediately, you will have to buy through distributors that have on-hand inventory, but add the cost of their investment and profit to your cost. If you have time, you will have better priced, more profitable options. In this case as well, the closer you are to working directly with the manufacturer, the faster you will get product.

How important is speed to market? Delivery timelines are often important. Do you have a hard launch date or are you constantly onboarding new stores? Each scenario requires completely different inventory strategies. If your supplier can meet or exceed your needs on delivery, they are likely the right partner.

If you take all these criteria into consideration while picking a supplier, you are well positioned for success.

Tags: cannabis distributors (1), cannabis suppliers (2), Kathy Vurinaris (1), retail inventory strategy (1), supplier negotiations (1)