How to Find A Supplier For Your Product

If you are disappointed by low-profit margins and the low autonomy offered by Dropshipping and Affiliate Marketing business models, then selling products with your brand, whether on Amazon, your personal online store or elsewhere is the best choice.

The cons, however, are the cost to get started (apx. USD$2000/product) and the work it requires (Note – this information relates to costing for selling a product on Amazon but the process is similar to finding a product for your online store).

You will need to determine a profitable niche, the right product to create, and reliable, efficient suppliers.

It is important to note, you can create and sell your own products and still operate similarly to the dropshipping model, by using a 3PL (3rd party logistics company). This way they handle inventory storage, fulfillment, and shipping.

That having been said, here are product guidelines in order to ensure success and save you from a lot of frustrations.

Where to Find Suppliers

You may have found a great niche and great products, but unless you know where to get them manufactured at low cost, you won’t be able to sell at a competitive price.

In old days, finding suppliers was a challenge in itself. But today it’s a lot easier. Here are some places where you can find trusted suppliers and manufacturers for product sourcing:

  1. Alibaba: It’s a directory of Chinese manufacturers and trading companies.
  2. AliExpress: It’s owned by Alibaba and is a place where manufacturers liquidate their products.
  3. GlobalSources.net: It’s again a directory of Chinese manufacturers just like Alibaba.
  4. India Mart: It’s a directory of Indian manufacturers and factories.

How to Find Suppliers for Your Products on Alibaba.com

 

What Suppliers Want

Before diving deep, let’s look at what Chinese suppliers are looking for in a potential buyer. This will help you understand why we are doing what we are doing.

✓ Main Points

All Chinese business people care about is:

  1. You will buy from them in large quantities.
  2. You will buy from them often.

✓ Supplement Points

  1. Product Knowledge – Be specific in your requirements. This signals them that you know what you are doing and you are serious.
  2. Experience in the Industry – Your experience and expertise in the industry gain their respect.
  3. Fair Pricing – Everyone wants to make money in the business and a fair pricing is a win-win deal for both parties.
  4. On-Time Payments – They have expenses as well and on-time payments further build trust and respect.

 

Our Goals

Now that you know what they want, let’s look at what we want:

  1. You are looking for long-term suppliers with a mutually beneficial relationship.
  2. You want high-quality products at the right price.
  3. You are looking for suppliers that understand your industry.

Process to Find Good Suppliers

Here is a simple process to follow:

  1. Go to Alibaba.com.
  2. In the search box, put your product name     e.g scuba mask ==> Search.
  3. Click on “Gold Supplier” and “Assessed Supplier” button. In gold suppliers, suppliers with more than 3 years of Gold membership are more trustful than suppliers with 1 year of gold membership.

4. This will narrow down the list and you will have only those vendors left who are serious about their business.
5. Now, get past “Sponsored Listing” and get to the “organic listings”.

6. Look at the product images and if it fits what you are looking for, select product to open product specifications.
7. Select “Company Profile” ==> “Business Type”  – Trading Company: They are the middle man. They don’t actually manufacture products.
8. “Business Type” – Manufacturer: They have a factory and actually manufacture the products.

Select products only from Trading Company

9.Look at the “Product Categories”. Are they manufacturing the products similar to the one you are looking for? If you are looking for towels, are they manufacturing different towels?

Once you have a good supplier, it’s time to contact him. Also, contact as many suppliers as possible.

9.Look at the “Product Categories”. Are they manufacturing the products similar to the one you are looking for? If you are looking for towels, are they manufacturing different towels?

Once you have a good supplier, it’s time to contact him. Also, contact as many suppliers as possible.

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Get Started…

You want to be systematic about your initial messages. Here is the layout:

  1. Introduce yourself

Tell them your name, basic info about your company, what you are looking for and estimated quantities you will need a year.

  1. Define your product and be specific

Tell them exactly what you need. From product dimensions to material, everything should be included in this section.

  1. Call to action

Ask them specific questions (lead time, logo use etc.) and request pricing for 500, 1000 and 5000 unit of items.

Tracking the Responses

Not immediately, but eventually you will get responses back from the vendors you contacted. Track them in a spreadsheet so that it will be easier to evaluate them. Here is what to track:

  1. Supplier name and location
  2. Contact person’s name and contact info
  3. Date RFQ sent and reply
  4. Price quotation for 500, 1000 and 5000 items
  5. Notes

Once you have the responses in your spreadsheet, it’s time to evaluate the suppliers. You won’t work with all of the suppliers, you need to find “the one”. Here are some points to keep in mind.

✓ Signs of a Good Supplier

  1. Manufacturer: A lot of trading companies are on Alibaba. They don’t manufacture, they are just a middleman. You want actual manufacturers.
  2. Product Fit: He manufactures products that meet your criteria and manufacturers high-quality products.
  3. Industry Experience: You want a supplier that knows your industry in and out. You don’t want to place your linen orders to wood manufacturers.
  4. Fair Pricing: A manufacturer which is not too expensive and not too cheap. He should be in the middle of the pricing curve.
  5. Good Communication: Good communication is key. The supplier should be cooperative and responsible.

✓ Signs of a Bad Supplier

  1. Lack of Experience: You want a supplier that understands your industry and has an established track record.
  2. Lack of Product Fit: Their products should meet your requirements.
  3. Pricing is way off: They are either too expensive or too cheap.

Don’t negotiate the price during the first encounter. Initially, try to contact as many vendors as possible and get as many responses back as possible. Track them in a sheet.

You will find that some companies quoted higher than average and some lower than average. What you want to do is contact the middle ones.

For now, try to find the right vendor with right quality and fair price. Once you get the samples and you think this is what you are looking for, it’s time to negotiate.

By this time, you will get quotes from a lot of suppliers and you will know what the lowest price you can get with quality being same.

Place sample order first. Check the sample quality and sell the sample items on Ebay. Once you feel comfortable selling those products, place a slightly high order and this time sell the products on Amazon. You should start small and work your way up.

While contacting manufacturers, come across as “Purchase Manager” or “Secretary”. Pretend as if you don’t have the final decision making power. Always be polite and professional. Use please and thanks often.

Good communication is the key to good business relationships. Here is the process to follow:

  1. Initial Contact through Alibaba

Send then RFQ email. Once you get their response, take the communication over to email.

  1. Follow up by Email

This helps you to track all your messages at one place. Email communication also allows you to send and receive images and files.

  1. WeChat for quick questions, pictures and videos

WeChat is an app just like Whatsapp. It’s very popular in China and having WeChat on your phone, you can quickly communicate with your manufacturers. It will also help you take your professional relationship to a new level.

If everything goes fine, it’s time to place an order. Here are the recommended payment methods to use:

  1. PayPal

Use PayPal to pay for sample orders and small orders. Once the supplier has built some trust, use other forms of payments. It’s hard for manufacturers to withdraw their payments from PayPal in China and PayPal charges them 5% payment processing fee.

  1. Bank Transfer or “T/T” (Telegraphic Transfer)

Use this type of fund transfer method for medium and large orders. Ask your bank about the charges involved and the time it will take the funds to get transferred. Confirm all the details before starting the fund transfer process.

Some manufacturers will happily accept credit cards at a slightly high price. Never pay by western union. You can also use Alibaba’s escrow service for secure payments.

Here are the general delivery times you should expect when shipping from China to the US:

  1. Shipping By Sea – 20 to 40 days (including sea transit, load-unload, and customs delay)
  2. Shipping by Air – 3 to 5 days (expensive)

You want to aim 100% return on investment. Here are some steps to reduce your risk:

  1. Sell samples on EBay

Test the initial samples you buy on EBay. This is the best way to make sure that your product sells and there are people looking for your product.

  1. Place larger order and start selling on Amazon

The next step is to place a slightly large order and start selling on Amazon. Amazon takes 30% of your revenue in exchange for allowing you to sell on their platform.

  1. Once you cross $1000/month, start your own website and build your own brand

You don’t want to depend on Amazon too much. They can raise prices at any time, change their algorithm or do many other things that can directly affect your revenues. So, the sooner you start your own website the better.

  1. Use Alibaba’s escrow service

If you are concerned about PayPal and Bank Transfers, you can use Alibaba’s escrow service. It’s a secure payment system in which they clear the money when the manufacturer ships products.

  1. Pay 20% advance and 80% after inspection and final delivery

This is ideal situation. You can pay 20% at the time of placing orders and pay the other 80% after getting the final delivery.

Negotiate for it. Your risk is only 20% of the order cost. And be assured that you won’t be cheated, if you have followed this guide, done your research and contacted only “Gold and Assessed Suppliers”.

How to Find Where Your Competitors Are Sourcing Their Products From?

Have you wished to answer this question? If you have followed the steps above, it’s likely that this question popped up in your mind at some point. Let me answer this question:

1. Panjiva

It’s a global trade data company. They have import and export details of commercial shipments worldwide. You can access all their data by subscribing to their service.

Website: https://panjiva.com/

2. Import Genius

This is another website similar to Panjiva. They have their eyes on all the imports and exports entering and leaving US and some other countries. They even detected the arrival of an Apple product even before announcements 😉

Website: https://www.importgenius.com/

Here’s What to do Next…

Congratulations, you almost read 3600 words. It clearly shows your dedication. Now, it’s time to test the waters. Start reading this guide again and this time take action on every step shown.

For more free information, advice and a purchase order template, Sign-Up with Gary Huang who is an American presently based in Shanghai specializing in connecting hundreds of entrepreneurs with prospective Chinese Suppliers.

The complete process of selecting a profitable product, finding & choosing a supplier, design & packaging and more can be obtained from A Million Dollar Case Study with Greg Mercer.

Alright, if you enjoyed reading this article and found it helpful, please share this guide on your favorite social media platform.

To your e-commerce success!

How To Find A Supplier For Your Product
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