How to look big
Using bad cop – good cop
Mistakes to avoid when approaching suppliers
How to negotiate with your factory
Today you’ll learn how to look serious in front of factories, and why you pay a higher price than locals. First, thanks for subscribing, and thanks for the comments and feedback. If you have a question, go to EasyPeasySourcing.com/ask. Nils will read and answer it on the next episode.
To get better prices, look serious and get the factory to believe you’re a big client. The factories want the biggest clients because the real money is in those large orders. Make an impression that you are serious and have a huge company behind you.
(01:50) It all starts with little things. First, don’t send an inquiry to a factory from a Gmail or Hotmail address. Get your own domain name, website, hosting, then setup that email address. When sending the email to that factory, send a “CC” to sales1@name or sales2@name so that it looks like you’re CC’ing your boss.
Have an email signature with a logo, your title, phone numbers, email addresses, and website links to look big.
(03:20) Every big company has a website that shows how to contact them, where to find them, and an about us page to represent the company. The factory will check that out to see if you’re serious. You can still set this up if you are a one-man show. Nils uses DreamHosting and DreamPress to setup WordPress and your SSL certificate.
Nils prefers the Designer theme that has several templates. Enter text and insert images you find on the internet. Be careful of copyrights and take the time to set it up, because they’ll take you more seriously.
(05:00) When you reach out to factories, appear that you are serious. Build a relationship with that factory. Avoid using a template with a long list of questions. Ask the main questions, and when they reply, ask more questions. It’s a slight hassle but worthwhile.
When you ask for the Minimum Order Quantities, you don’t want to appear small. Ask for more first. If you want to order 500, ask for the prices for 10,000 units, 5,000 units, and 3,000 units. They’ll think you’re a big company. When it comes time to place the order, tell them you want to place a test order first and you’d like a quantity of 500 units just to try in the beginning to see if the product is good. Also, mention company policies, because that makes you look bigger.
(06:30) If you were not the boss, but a salesperson, you’d have to ask the boss first. You can always blame things on your boss if you don’t like the price or think the delivery time is too long. You can also use different email addresses and create conversations with different departments. You can send an email from your account, and have the “manager” email account respond. This gives the impression that you are a larger company.
(07:30) If you only go through Alibaba and you’re searching for one product, you’ll find that there are hundreds of companies who have that product. Don’t send just 5 or 6 inquiries. Send 100 or all listings there. You can hire someone to get all the contacts and email them one by one.
Please be sure you don’t send the same inquiry to two the same factory twice. This can happen with Alibaba because the same company could have 2 to 5 listings for the same product. Cross-check the names.
(08:30) At one point, you’ll get an offer. A factory will send you a quote, but always tell them it’s too expensive. Your boss says the price is too high and he would like to see a BOM (Bill of Material). This is a sheet with all parts of that item and the costs of each part.
For example, if you’re sourcing a bottle, the parts are the glass and the lid. You can tell them the lid is acceptable but the glass is too expensive. You can always negotiate and it’s expected of you. There is wiggle room for negations built into the price.
This applies if you are dealing with the factory directly or with an agent. Ask the agent for the BOM since the agent isn’t working under any pressure. He’s not paying the bill, so as long as you’re happy, he’s happy. It is more in your interest to get the best price possible. Always let him know it’s too expensive and the BOM is too high.
(10:10) It’s not common to negotiate so hard in the Western culture. You can’t move the price more than 5 or 10 percent. In China, negotiation is expected of you and you can sometimes get the price down to half. If you ask around, you’ll get many different prices. Start with the cheapest and work up to the more expensive ones. Let them know they are not the only one in the race and your boss likes someone else better because they’re cheaper.
(10:55) Don’t fear to negotiate. Factories know that the Western retail price is much higher. You might pay 10 dollars in your country, and get it for 5 dollars in China, but the factory quotes you 6 or 7 dollars and you’re still happy.
Ikea in China is so cheap that you could go there, buy everything off the shelf, ship it to another country and sell it online for 20 to 30 percent margin. The prices you’re paying in Europe are higher due to taxes, importing, and because they can charge it.
(12:00) Try to get the BOM, apply a little pressure, let them know they’re too expensive but you like them very much, look big, and negotiate. Follow these steps and you’ll get a better price, be taken more seriously, have more success, and have an easier time sourcing from China.
Try split testing different emails and follow-up templates to see what the result is. Try creating different email addresses from different companies. Treat it the same way you treat split testing of your sales copy.
(12:55) To wrap up, look at the three biggest points: 1. Look big. Always look serious to your agent or directory with the factory. 2. Always negotiate with the factory no matter what price they give you. 3. Test and contact as many factories (hundreds) as you can.
Question for you: What happened in your attempts to get quotations? What tricks did you use? Let us know in the comments below this episode. Also, find us on iTunes under the Easy Peasy Sourcing Podcast. We appreciate your review. Go to EasyPeasySourcing.com/ask and fill in the form or send a voice message.
Next episode, we’ll answer a listener who is considering moving to China to speed up business.