Working With Vendors: The Golden Rule

This article is an excerpt from the Shortform book guide to "Delivering Happiness" by Tony Hsieh. Shortform has the world's best summaries and analyses of books you should be reading.

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What are the standards for working with vendors? How can you build a strong relationship with your vendors?

Like customers you work with, vendors require the utmost respect and attention. Former CEO of Zappos Tony Hsieh claims that a positive relationship with your vendors is important for your company’s mission and reputation, and all it takes is to follow the Golden Rule.

Let’s explore how working with vendors is similar to customer service, and how to treat your vendors with the highest regard.

Provide Great Service to Vendors

The principle that great service comes first should also apply to your vendors, Hsieh says. Depending on the kind of company you run, the vendors you work with can be either people you buy goods from or the people who sell products on your behalf. Zappos’s vendors are the shoe brands that Zappos purchases its inventory from, like Nike.

Regardless of what kind of vendor you’re interacting with, Hsieh emphasizes the importance of giving them great service, as this helps form strong and profitable vendor relationships. However, many companies fail to do this, focusing on short-term profits instead of nurturing long-term relationships. Vendors rely on company purchases to survive, and many companies leverage this advantage to take as much money from (or give as little money to) their vendors as possible, ruining their relationships in the process.

Hsieh says there’s no need to abuse your vendors. Service that is lacking in respect and kindness will only hurt both of you. While working with vendors, both of you should have the same goal: making money. Instead of fighting each other, work together by sharing information on market trends and innovative ideas. Focus on your mutual goals and how you can fulfill them.

Fulfilling good vendor service has two benefits: First, the vendors will help you reach your goals, making your job easier. Vendors are valuable resources; they know their products best, and working with them means you can use that knowledge for your benefit. For example, your vendors may be familiar with which marketing techniques are best for their products. If you have a healthy relationship with these vendors, they’ll be more inclined to share this information. In turn, you can use this knowledge to improve your marketing and boost your profits.

Second, treating your vendors with respect and collaborating will make them happier, Hsieh points out. The happier your vendors are, the more likely they are to help you be profitable. Good, working relationships with vendors can lead to perks such as exclusive products and deals for your company.

(Shortform note: In The Art of Thinking Clearly, Rolf Dobelli calls this give-and-take relationship “reciprocity.” If someone does something for you, you’re more likely to do something for them in return. Reciprocity can be used to manipulate people—for instance, if you help someone for the sole purpose of putting them in your debt. However, reciprocity is also a vital component of collaboration and community building. Thus, as long as you intend to build healthy collaborations with vendors, reciprocity can be a valuable tool for your company.)

How Zappos Works With Vendors

Hsieh’s main advice for upstanding vendor service follows the Golden Rule: Treat your vendors as you want to be treated. People think you must be aggressive to negotiate and run a successful business, but mutual respect is much more effective. This includes being polite and respectful, showing appreciation through dinner or gifts, and building relationships through positive experiences.

(Shortform note: Roger Fisher and William Ury explain in Getting to Yes that when negotiating with someone, it’s easy to forget that you’re talking to a person rather than a company. This may cause you to treat vendors poorly as you focus on outwitting a competing company instead of treating the vendor respectfully. Improve your vendor relationships by constantly evaluating if you’re accommodating their humanity as well as their professional identity.)

Part of being respectful and working with vendors is communication. Services that deal in sales require communication more than anything else, and a lack of such can lead to issues. You and your vendors are collaborators, Hsieh explains, and to effectively collaborate, you must freely share information. To this end, Zappos practices radical transparency with its vendors. The company gives its vendors almost complete access to its systems, letting them observe and offer their opinions on everything from profits to inventory and web design.

This information is usually hoarded by other companies, Hsieh adds. However, sharing information lets Zappos form stronger relationships with its vendors and become more successful.

Working With Vendors: The Golden Rule

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  • Former Zappos CEO Tony Hsieh's guide to workplace happiness
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  • An exploration of the psychology behind happiness and why it leads to success

Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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