Why does a wholesale supplier need a “trade reference”?”
They want to know that you are a legitimate business, rather than someone who is simply wanting to buy things at wholesale prices. I have had them ask for photos of my storefront (when I had one) or my yellow pages ads and as you mentioned, other places that I have ordered from. In addition, trade references can be used to determine that you are a safe credit risk, as oftentimes when buying wholesale you have 30 days to pay. They want to know that you’ve been reliable with others that you have purchased from. Trade references aren’t, generally, the phone company or the person you rent/lease your building from, but are other companies that you purchase whatever you are selling from. It doesn’t matter if they are the competition.
Trade reference is normally a company or companies that you have a healthy business relationship with, and doesn’t necessarily have to be the competition of the company you’re seeking to setup as a supplier. Depending on your circumstances, that may be all you have — but normally it might be okay to use your bank, shipping organizations, or other varieties of suppliers if you have that available. The company you’re looking to setup as a supplier has any number of reasons to ask — most of which relate to their financial risk in the case of credit, and perhaps time commitment in the volume of business you represent. It’s not normally an issue of prying into your other business dealings, or making things unnecessarily difficult for you. If you’re new or small, state that up front and see where they’ll work with you. If your volume or credit doesn’t match their requirements, you might need to seek other suppliers or wait until you have the necessary volume or time in service to negotiate
This is pretty standard practice prior to extending credit. All they want to see is a previous, established history of you paying other vendors according to terms – for obvious reasons. You don’t necessarily need to supply another direct competitor with the supplier in question. Any supplier you have a credit account with should serve adequately for these purposes – assuming of course that your payments have been made according to terms. Hope that helps some. Best to you.
