Vendors play a crucial role in the success or failure of a new business. Starting a company is always a risky proposition and one of the most important choices today’s entrepreneurs make is choosing the best vendor for the products they wish to sell.

When selecting vendors, you need to consider price, quality and service. Which is more important to you will depend on your target market.

Take the health food industry, for example. Organic and low fat food is becoming increasingly popular and food vendors have a direct impact on how well a new health foods store does. Let's suppose you had to choose between using two wholesalers who offered the same products. As an owner do you automatically choose the wholesaler with the lowest cost? Not always. In this simple example, since each vendor is offering the same products, quality is constant. However, service isn't necessarily the same. If the wholesaler with the lowest prices can provide you will equal service, then it's always best to choose that company. However, if that wholesaler isn't able to consistently fill your entire order, resulting in lost sales, then it may make sense to use the more expensive wholesaler.

The relationship between vendor and merchant is complex and deeply intertwined as a result of the increasingly complex business world. The best vendor is not always the low cost vendor, but rather the one that provides you with the best value, which is at the intersection of price, quality and service. Once you've selecting your vendor partner, achieving fair profitability for both sides is the goal, and through reasoned negotiation the end result can be success for all.

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