HOW DO I MITIGATE RISK FOR AN E-COMMERCE RETAIL BUSINESS WITH A SINGLE MANUFACTURER?
(UPDATE to clarify the single manufacturer issue) I'm working on the acquisition of an ecommerce business that retails products produced by one manufacturer at one location in China. I'm concerned about a potential supply shortfall if the manufacturer had a fire or other event that disrupted production and/or distribution. I've talked to a couple of business insurance brokers about this and they didn't provide any useful solutions. Building up a large amount of inventory is definitely a way to hedge the risk, but it's obviously costly and ties up cash. Does anyone have experience with this issue and/or advice on how to mitigate the risk of a major supply disruption from a catastrophic event affecting the product manufacturer?
Additional detail: The business is a retail store that carries the same name as the branded product. For analogy purposes, think of something like "Teva-store.com" which would sell Teva products and related gear but couldn't really sell another brand nor go out and hire another manufacturer to produce the product. The brand name is owned by the manufacturer and the ecom store markets and sells the product under license from the manufacturer. Because of this, the ecom business is largely stuck with one manufacturer and one brand (other than the complementing products that can be sold in conjunction with the main brand name product).
Thank you much!