Merchants are legally obligated to obtain a supplier’s agreement if they are reselling goods through any channel. However, often times, the last thing on a merchant’s mind when thinking ahead to driving revenue is the chance of encountering a wholesale supplier scam — but it can, and does, happen. Wholesale supplier scams can occur in many ways, but the most important thing to remember is that your supplier is ripping off you AND your customers. Today we’re going to take a look at a few common types of scams and offer tips on how to spot and avoid them to protect yourself and your business.
Types of supplier scams
In the process of buying wholesale goods, there are a few key opportunities where suppliers can take advantage of your business to boost their own profits.
The dropshipping scam
Today, most wholesale suppliers also offer dropshipping in order to better accommodate the online channel and take advantage of demand outside their traditional stock and carry houses.
However, some suppliers offer to dropship in order to scam buyers — they accept their payment without shipping the orders. Here is how a dropshipping wholesaler scam works:
A customer purchases an item from your website or online marketplace channel.
Your wholesale supplier receives notice of the purchase and does not ship the goods.
Your customer contacts his or her credit card–issuing bank for a refund, which results in a chargeback for your company.
You pay chargeback fees, refund the money and continue to pay your wholesale supplier who is scamming you out of money.
When dropshipping suppliers fail to send out your goods, you not only lose the money you paid to the supplier for the goods but also the fees you paid for failing to ship.
The replica goods scam
In the replica goods scam, you sign a supplier agreement with a company assuming the goods they provide are authentic and legitimate — a commonly seen example is fashion accessories: Louis Vuitton, Prada and Dolce and Gabbana. However, what you actually receive are replicated goods that you then ship to your customers.
There are many websites devoted to educating consumers on differentiating between real and fake high-end global brands. Legitgrails even offers services that inspect and authenticate the products in question for you.
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Once your customers receive their packages, they may identify the replica and contact their issuing bank for a chargeback. A worst-case scenario — your customer may sue you for fraud.
The “pay now, get later” scam
This scampreys on small business owners who are often just starting out or who may just be naïve. The way it works is that you issue a PO with your supplier for a new shipment of goods. However, the company says that you must pay first before they will ship. There may be a variety of “reasons” for this, such as the product being back ordered, and a pre-payment is required to get in line for stock. You pay the invoice, yet you never receive your shipment to refill your own stock.
Of course, one of the challenges with this situation is that it’s not entirely uncommon for real wholesale suppliers to ask for payment early. Many retailers don’t have the option to fight Net-0 payment terms and, in reality, won’t know it’s a scam until it’s too late. Just try to make sure that, at worst, you get a shipment confirmation before you pay an invoice.
Spotting wholesale supplier scams
Now that you understand the different types of scams, it is important to learn how to spot them. Below are red flag signs that will help you avoid falling victim to scam artists.
Communication red flags
Being able to easily communicate with your wholesale distributor is a key part of doing business. You want to be able to quickly reach them if an issue occurs so that your orders can proceed.
For that very reason, suppliers who scam often have poor communication practices. They need to make it difficult for you to contact them so that they can scam you without consequence. Here are a few communication red flags to look out for:
The supplier does not have any contact information on their website, making it very easy for them to disappear with your money and leave you with no way of contacting customer service.
Similarly, the wholesale supplier may also provide phony contact information, which will also leave you with no method of contact.
When you contact the supplier, the person who answers does not state his or her name or the company name, making you feel like you are calling an individual’s private number and not a business, which you probably are.
Without notice, you can no longer contact your wholesale supplier. It is as if the company no longer exists or never existed in the first place.
You are always dealing with intermediaries rather than the formal points of contact.
Avoid suppliers with poor communication skills, as this is often a clear sign of a scammer.
Business practice red flags
Even the most skilled scammers will show small signs of fraudulent activity when doing business with you. Stay aware of these common ways that scammers deviate from standard business practices:
The wholesale supplying company does not require your business ID or tax ID number to conduct business with you. Legitimate wholesale suppliers use the number as a sign that the buyer meets government business standards and is trustworthy, while a scammer doesn’t care.
The company denies your request for samples of products or starts acting strange when you ask for one. This is often a sign of a replica goods scam or some other issue involving low-quality goods.
Your wholesale supplier offers unbelievably low wholesale prices — so low that it seems as if the supplier probably won’t make any money from your purchase. Instead, they’ll make money by scamming you when you purchase goods.
Watch out for suppliers working around standard business practices to avoid potential scammers.
Verifying your wholesale supplier
Fortunately, there are a few ways you can verify that your wholesale supplier is legitimate. Do your due diligence by investigating their website, communication, and business practices. This will allow you to determine whether they’re legitimate or a scammer.
Check communication
A primary way of checking a supplier is verifying their contact information. Since many scammers make communication difficult, being able to contact a supplier is a sign of credibility.
Identify the supplier’s full business name and contact information on the website. Note whether the information is transparent on their website or if it’s difficult to find.
Call the supplier to see if they answer. If the listed phone number is out of service and you’re unable to contact them, don’t place an order.
Secure and trustworthy suppliers are open with their communication and maintain public records of their existence to foster long-term business.
You can verify the identity of a wholesale supplier on LinkedIn or other social media platforms. You can also look up the company on reputable wholesale websites. Or you can check EDGAR, the SEC’s database of corporate filings at a state level, for company registration info. If the wholesale supplier claims that they’re based in Georgia, there should be a record with the Georgia Secretary of State for that company.
Check business practices
Before you place a significant order, verify that the supplier has solid business practices and won’t scam you in payments or shipping goods. Start with creating a quality control inspection process for every supplier you’re considering.
As an example of quality control, you might immediately delay using dropshipping services from a wholesaler that may be prone to replica goods. Instead, you could start by sending the goods to your own warehouse first and establish some rapport before you decide to use their dropshipping service.
In addition to checking goods, you will also want to inquire about different payment methods for the merchandise. Most scammers prefer Western Union or even Bitcoin, as the payments are untraceable (although Bitcoin has become a more widely accepted payment type recently). However, if the supplier accepts credit cards or, better yet, checks, then it likely has a merchant account from a legitimate payment processor that has already verified the business.
Check business reports
There are plenty of reports for tracking scammers that you can use to check your supplier.
Research the company for wholesale scams on sites such as Better Business Bureau (BBB) or Ripoff Report. The BBB can help verify the legal status of the company and will provide information on any claims of fraud.
Complaint websites like these will show you complaints made by others on these public forums. Taking these steps will allow you to ensure that the supplier is real and trustworthy or will let you detect a scammer before they can take advantage of your business.
Preventing future fraud
If you are scammed by a supplier, don’t immediately assume you’ve lost. There are several actions you can take to potentially reverse the fraud and prevent the scammer from hurting others in the future.
Reach out to your marketplace
If you used an official marketplace to find your supplier — such as Alibaba or eBay Wholesale Lots — you might be able to reverse the issue. Many of these sites have rules to protect buyers against scams if they report the fraud.
Before reporting the scam, it’s best to familiarize yourself with your marketplace’s official rules.
If you’re using another marketplace, simply search on Google “[your marketplace’s name] fraud policy” to learn about what they define as scamming.
Once you’ve familiarized yourself with your marketplace’s policies, you can determine whether your issue qualifies as a scam, and you should be protected. If it does, report the scam to your marketplace so they can take action.
To find another marketplace’s reporting process, search in Google “[your marketplace’s name] report fraudulent seller” to learn how you can take action against your supplier.
Reach out to the manufacturer
If your fraudulent supplier is a wholesale distributor rather than the manufacturer, one course of action might be reaching out to the actual manufacturer of your goods. While it’s unlikely that the manufacturer will reimburse you for your losses, contacting them may help prevent the supplier from scamming future buyers.
Why? Manufacturers want to ensure that their distributors are conducting reliable, high-quality business. Otherwise, those distributors are likely to lose customers, be unable to buy more supply and hurt the manufacturer’s business.
With that in mind, manufacturers should be eager to hear about your experience with a fraudulent distributor. Notifying them may start a conversation between the manufacturer and distributor if they are directly linked without other distributors in between. If enough complaints have been filed, it may even prompt the manufacturer to cut off their supply to the distributor.
Report supplier on major forums
To protect other buyers, you can also report fraudulent suppliers on ecommerce forums.
There are a few forums that are specifically dedicated to reporting scammers.
Econsumer.gov is for reporting international scamming incidents. There’s a category for ecommerce to report fraudulent wholesale suppliers.
Supplier Blacklist is an international, user-generated blacklist of fraudulent suppliers.
You can also try posting on industry-specific forums, but be sure to carefully check their rules. Many forums, especially ones associated with marketplaces, prohibit specific seller complaints as spam.
Sharing your experience on forums most likely won’t lead to reimbursement, but it will protect buyers from being scammed by the same fraudulent suppliers in the future.
Stay watchful to avoid supplier scams
Apply these standards for handling scams, and you’ll be prepared to protect your business against fraudulent suppliers. If something seems suspicious or odd, always investigate it. Checking requires time and effort, but it’s better to ensure the supplier is credible than risk dealing with a scam.
For more information on reporting a wholesale supplier scam, check out Wholesale Forum.
The facts are clear: Startups are finding funding increasingly difficult to secure, and even unicorns appear cornered, with many lacking both capital and a clear exit.
But equity rounds aren’t the only way for a company to raise money — alternative and other non-dilutive financing options are often overlooked. Taking on debt might be the right solution when you’re focused on growth and can see clear ROI from the capital you deploy.
Not all capital providers are equal, so seeking financing isn’t just about securing capital. It’s a matter of finding the right source of funding that matches both your business and your roadmap.
Here are four things you should consider:
Does this match my needs?
It’s easy to take for granted, but securing financing begins with a business plan. Don’t seek funding until you have a clear plan for how you’ll use it. For example, do you need capital to fund growth or for your day-to-day operations? The answer should influence not only the amount of capital you seek, but the type of funding partner you look for as well.
Start with a concrete plan and make sure it aligns with the structure of your financing:
Match repayment terms to your expected use of the debt.
Balance working capital needs with growth capital needs.
It’s understandable to hope for a one-and-done financing process that sets the next round far down the line, but that may be costlier than you realize in the long run.
Your term of repayment must be long enough so you can deploy the capital and see the returns. If it’s not, you may end up making loan payments with the principal.
Say, for example, you secure funding to enter a new market. You plan to expand your sales team to support the move and develop the cash flow necessary to pay back the loan. The problem here is, the new hire will take months to ramp up.
If there’s not enough delta between when you start ramping up and when you begin repayments, you’ll be paying back the loan before your new salesperson can bring in revenue to allow you to see ROI on the amount you borrowed.
Another issue to keep in mind: If you’re financing operations instead of growth, working capital requirements may reduce the amount you can deploy.
Let’s say you finance your ad spending and plan to deploy $200,000 over the next four months. But payments on the MCA loan you secured to fund that spending will eat into your revenue, and the loan will be further limited by a minimum cash covenant of $100,000. The result? You secured $200,000 in financing but can only deploy half of it.
With $100,000 of your financing kept in a cash account, only half the loan will be used to drive operations, which means you’re not likely to meet your growth target. What’s worse, as you’re only able to deploy half of the loan, your cost of capital is effectively double what you’d planned for.
Is this the right amount for me at this time?
The second consideration is balancing how much capital you need to act on your near-term goals against what you can reasonably expect to secure. If the funding amount you can get is not enough to move the needle, it might not be worth the effort required.
Elon Musk said Sunday he “somewhat agonized” over the font designs for his companies Tesla and SpaceX.
The billionaire businessman added he “loves fonts” and has tweaked the logos over the years.
He revealed the SpaceX logo also holds a hidden meaning, representing a rocket’s arc to orbit.
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In a series of Sunday tweets, Elon Musk said he “somewhat agonized” over his choice of fonts for his businesses and revealed a hidden meaning behind the SpaceX logo.
Responding to a tweet about serif and sans-serif fonts, the billionaire businessman took a break from posting cryptic memes and discussing politics to say he loves fonts and put significant consideration into how his companies are presented to consumers.
“I somewhat agonized over the Tesla & SpaceX font design (love fonts tbh),” Musk tweeted. “There are some similarities, particularly use of negative space. We’ve made many little tweaks over the years.”
The Tesla logo — a T-shaped design with a custom, sans-serif font spelling out the brand name — is meant to resemble a cross-section of an electric motor. The SpaceX logo, written in a similar font with an extended X, references the reusable rockets made by the company.
“The swoop of the X is meant to represent the rocket’s arc to orbit,” Musk tweeted.
Other business logos have also held hidden messages: Baskin Robbins, a chain that sells 31 flavors of ice cream, has a secret ’31’ hidden in the letters of its logo. Likewise, Amazon’s arrow logo is meant to represent a smile, while the circular ‘B’ logo for Beats by Dre represents a person wearing the popular headphones.
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The internet has revolutionized the business world and changed how we conduct business. Any business that aims to increase its visibility and boost profit needs to pay much attention to top ranking factors, including local SEO — which introduces the topic of the local search algorithm.
Local SEO is one of the top practices that help boost a business’s visibility and generates more sales.
However, achieving better local SEO rankings is not a walk in the park, especially due to increased competition. To appear higher on local results, businesses and marketers need to understand how the local search algorithm works.
Knowing this helps guide the steps for improving rankings in the local pack.
The competition gets stiffer as more businesses open and optimize for local searching. Besides, Google is updating its algorithm consistently, meaning only businesses that can keep up with these updates can appear at the top of local search results.
Luckily, you have come to this post as this article looks at everything you need to know about Google’s local search algorithm and what you can do to get that top spot in the local pack.
Understanding the local search algorithm
Google aims to provide the best results that match a specific local search query. It constantly updates the local search algorithm to determine which business to rank on top of local search results.
Ideally, Google wants to provide local content that is relevant and valuable to users. As with search engine optimization, keyword stuffing cannot give you that top spot in local search results.
SEO specialists and marketers should consider Google’s local search algorithm updates and make the necessary changes to rank higher. Failure to consider these updates means losing your local search presence, resulting in fewer leads and conversions.
Local algorithms check the Google My Business (GMB) listings to determine where to rank a business in local search rankings.
Ideally, Google’s local algorithm ranks businesses with information that matches a searcher’s query. And the higher a business ranks in local search results, the more chances a potential customer will click on it.
This post looks at the three major pillars that determine local search results to better understand the local search algorithm: proximity, prominence and relevance.
Of course, other factors make up Google’s local search algorithm, but since we cannot identify all of them, we’ll focus on the most crucial ones in this post.
By understanding these pillars, marketers can better position themselves for local search success.
1. Proximity
Proximity is one of the major ranking factors when it comes to local search. That means the distance between a business and a searcher is a ranking factor in local search.
When a searcher searches for something, Google considers how far the searcher is from the location of the term they use in the search. When a searcher doesn’t specify the location, Google calculates the distance based on the information they have regarding their location.
Ideally, Google aims to provide the most relevant results to a search query. For instance, why would Google provide a list of coffee shops in Los Angeles if the searcher is searching from Colombia?
That would be irrelevant local search results that won’t benefit the searcher.
Unfortunately, while proximity is a major local search pillar, it’s one of the factors that businesses have little control over. After all, you cannot change where your business is located, right?
You can only ensure your business location is as clear as possible, so that it appears for related nearby queries. Here are steps you can take to achieve this:
Claim and verify the Google My Business listing
Ensure local listings are accurate and optimized for local products or services
Get the Google Maps API Key and optimize for your location and routes
Set up your profile correctly (for Service Area Businesses) to avoid violating Google’s guidelines
Users can perform several types of local searches, including:
Geo-modified searches
Users will perform geo-modified searches when they are planning to visit somewhere. For instance, a searcher in Los Angeles planning to visit Toronto, Canada, may search for a “coffee shop in Oakville.” The results will differ from if they searched for “coffee” while physically in Oakville.
To be specific, geo-modified searches are mainly based on relevance and prominence as opposed to proximity when a user searches for something when outside the city included in the search.
Non-geo searches
Searchers perform this type of search when looking for something around them. For instance, a user in Los Angeles performing a local search for “coffee.”
Ideally, the user only needs to search for something and is shown results based on proximity. They will get the results that are closest to them.
“Near me” searches
“Near me” searches have been so popular in recent years. Although their popularity has significantly declined, users still perform this type of search when looking for something locally.
For instance, some users could add “near me” when searching for a coffee shop, hoping to get the most relevant results near them. As we’ve stated, this trend has lost popularity because when you perform a local search, you are searching for something near you.
It is not necessary to add “near me” to what you’re searching.
2. Prominence
Prominence refers to how important Google thinks your business is, which gets factored into the local search algorithm.
In other words, it refers to how well a business stands from the rest in various aspects, including directories, links, reviews, mentions, among other things.
If search engines view your business as trustworthy and credible, they will likely show it on top of related search query results.
The local search algorithm views businesses/brands with a stronger online prominence as credible and trustworthy. Some of the factors that determine prominence include:
Citations
A local citation is the mention of a business’s information online. The mention can include the partial or complete name, address, and phone number (NAP) of a local business.
Citations are an excellent way for people to learn about local businesses and impact local search results.
A business with high-quality citations can rank better in local search results, although businesses must continually manage citations to ensure data accuracy.
Inbound links
Backlinks play a crucial role in local business prominence. Gaining relevant backlinks from high-quality sites is an excellent way to build a business’ online reputation.
If you’re trying to outrank your competitors without much success, your backlink profile could be the reason.
In that case, you should check your competitor’s backlinks and compare them with yours. When doing this, pay attention to the number and quality of their backlinks.
As a rule of thumb, aim to have high-quality local backlinks pointing to your site to improve your page’s authority.
Reviews
Next, you need to pay much attention to reviews to improve local prominence. Many customers look at a business’s online reviews before deciding whether to engage more with the business or not. Besides, many positive online reviews can increase a business’ ranking factors.
Consider this scenario. A potential customer is looking for a pub around Oakville. When they perform a search, they are presented with two results: one with over 100 reviews and another with less than 10 reviews.
Which business do you think the searcher would trust? The one with 100 reviews, obviously.
As with search engines, customers need to trust a business before they decide to do business with it. Similarly, search engines can view online reviews and analyze them to determine a business’s online prominence.
That said, here are strategies you can use to boost your online review signals:
Have a strategy
You won’t have a strong online prominence if your products or services are not of a high standard. So, the first step to having many great reviews is to develop great products and services.
After that, develop a strategy to encourage your happy customers to leave honest but valuable reviews of their experience doing business with you to help boost your online reputation.
Monitor and manage the reviews
Having many reviews is one thing; you need to develop a plan to engage with your customers for better results. Responding to reviews shows people that you care and are genuine about your products and services.
People will avoid businesses that don’t respond to customer reviews (whether positive or negative).
Search engines, too, can tell whether you engage with customer reviews or not and will use the information to determine where to rank on local search results.
When responding to online reviews, pay special attention to negative reviews and how you respond to them. While no business likes getting negative reviews, how you respond to them can positively impact your business — respond positively to turn the negative reviews around.
3. Relevance
As earlier stated, Google wants to provide the most relevant results to a local search query. This key ranking factor will determine a business’s position in local search results — how well does a local business match a search query?
Even if your business ticks the above pillars (prominence and proximity), if the content on your page isn’t well structured and doesn’t cover the topics that a searcher is looking for, you won’t appear on top of local search results.
Here are factors that businesses should consider to create a relevant listing:
Local page signals
Local listing categories and attributes
Social posts and responses to online reviews
Local listing signals and categories
A business GMB listing and category can impact its relevance score for local searches. As such, complete your business profile carefully and continually add quality content to the web page to ensure it is relevant for proximity searches.
More specifically, ensure that all information on all listing pages, including Yelp, Bing, and Google, is complete and accurate. Aside from these factors, here are two crucial features you should pay attention to:
Category selection
Selecting the right categories for your local business listing is among the crucial factors for ranking locally. With over 4000 GMB categories, you want to choose categories that best describe your business — ensure they are relevant and specific.
Here are guidelines to follow when selecting a category:
Describe your business as opposed to your services
Be specific to minimize competition
Reduce the number of GMB categories to describe your business better
Business description
Without a proper description, users won’t know what your business is about. This section is about adding an introduction to your business so that customers and search engines can know more about your business.
However, don’t use this section for marketing your business. Just give users and search engines descriptive info that can help determine whether your business matches their needs.
Local page signals
Another way a business can improve its standing in the local search algorithm is by optimizing web pages for specific keywords. For multi-location businesses, it’s essential to have separate, localized pages for each location, with relevant information and contact details for customers to reach you.
Performing competitor research is advisable to determine what terms or keywords to use for a specific query. Here are top on-page signals to consider when trying to gain relevance for a given topic:
Keyword research — Before creating local content, you need to find keywords that matter to your business. Perform keyword research to determine highly relevant keywords with high intent. When finding relevant terms to use in your content, base your research on the customer perspective; think about what they search for and the type of content they are looking for.
Create local content — After finding the right keywords, it’s time to create your content. Google values the quality of content more than the length of the content, so keep this in mind when creating content. Another crucial thing to pay attention to is localizing the content. For example, you can create content on local news and events or use your city’s name within your content.
The goal is to create a connection between what’s happening in your local area and your business. Also, use pictures with your specific geolocation to increase your content relevance.
Creating quality and relevant content is only the start. You need to optimize your content for on-page signals so local search algorithms can discover and rank them better. Here’s how you can optimize your local content for on-page signals:
Meta descriptions — Include keywords in your meta descriptions to encourage searchers to click through and increase visibility
Title tags — Title tags are some of the factors that search engines use to determine where to rank content. Incorporating keywords naturally in your title tags can help boost local rankings
Image tags — Another way to improve local rankings is by including relevant keywords in your image tags. Including geotags also comes with an added advantage
Headings — Users and Google value pages with clear structures. Consider creating headings within your content to capture readers’ attention and encourage them to read on. However, ensure your heading tags describe the content that comes after them well. Also, include keywords in your heading tags to help search engines understand them and their importance.
Off-page local signals
Gaining high-quality backlinks is a great way to boost credibility and trust. Backlinks refer to external links from another website to your site. Aim to have more high-quality backlinks to boost your website authority.
Ideally, having many quality backlinks shows search engines that your website or page is credible and trustworthy, which boosts the chances of ranking it higher in search engine results.
Guest posting is one of the best examples of link-building strategies you can use. Finding great guest posting opportunities provides an excellent opportunity to share your content to a new but relevant audience, which helps boost your website authority.
Another strategy you can use is to create longer and better content than what is already available on the web. When your content is high quality and relevant, it will be easier to get high-quality backlinks.
Review and social signals
Online reviews can also help boost relevance for your local business. Aim to get as many positive reviews from your happy customers as possible.
Remember, when customers perform a local search, they get not only the relevant businesses but also reviews related to the search. The more positive reviews a business has, the higher chances a potential customer will do business with them.
Closing thoughts on the local search algorithm
Ranking on top of local search results can seem daunting, but it shouldn’t when you know the vital things to focus on. As you have seen above, the local algorithm is based on three pillars: relevance, proximity, and prominence.
Of course, other factors determine local search rankings depending on your industry and competition.
