How to avoid risks when choosing a supplier
Why you always need a backup factory
Why a good product price is not the only criteria for a good supplier
Every Wednesday, Nils gives you answers to your questions. If you have a question about sourcing or launching a product, fairs in China, or anything else, go to EasyPeasySourcing.com/ask to send a question. Today, Nils is answering a more general question, which is, “How do I find a good supplier?” This didn’t come from one single person, but rather it appears over and over again on social media.
This fits very well with six phase sourcing from Episode 9 which explains every essential step for sourcing. The first step is to find which products you want to source. The second step is finding a supplier. Don’t choose the first supplier you see just because he has a good price. You should pay attention to more criteria than that. Having a great supplier minimizes your risk.
Find a supplier you control, who’s reliable (they don’t over-promise a shorter lead-time, for example) and you want one that gives you as few headaches as possible. If you have a good supplier for one product, you can get more products from that supplier. It’s easy to go back to the same supplier (and saves costs) to order another product through that person. You get more order volume and you become more important to them.
(03:15) You also want to reduce sample costs. You could order just 1-2 samples instead of approaching ten other suppliers. It’s important to maintain the product quality throughout multiple orders.
(04:10) How do you find a good supplier? First, prepare. Have an Alibaba or Globalsources account so you can compare the prices you would normally pay with the prices the agents get for you, and judge whether or not that supplier did a good job.
(05:00) Have a website. Get WeChat, which is Chinese WhatsApp combined with Facebook and Apple Pay. You can use it to book services. Everyone uses WeChat. It’s easier to use WeChat to talk to suppliers since they don’t all use email.
(05:40) Create a PDF document that is clear about your product specifications. They won’t click links. Make it clean and clear. Know what documents you need. Clarify what quality you need, since every product has a different quality. Details that might seem obvious to you are not obvious to others.
(07:10) Research what certificates are required for your product in the country you want to sell it. For example, is an FDA approval enough, or do you need any other certificates? Make it clear what you need. Send those requirements to your agent as well for them to use to find a supplier.
Ask plenty of suppliers for information. You may reach out to 100+ supplier, as many as you can find. However, ensure that on Alibaba, you never contact the same supplier twice. This can be tricky since one supplier can have several listings for the same item. Avoid accidentally contact the same company twice. This looks very unprofessional.
(08:15) Make a list and contact 100 to 1000 suppliers. Many suppliers with the same product have wildly different prices, even if the quality is the same. Reach out yourself or hire someone to reach out to these people. Create a simple Excel spreadsheet with all your criteria: the price, minimum order quantity, lead time, anything that’s important for the product. Also add responsiveness, reliability, and things you think are important in a supplier.
(09:00) Funnel suppliers down based on your criteria. For example, if you require a lead time of 30 days and a supplier can’t deliver, cut them out from your list. Don’t only look at the cheapest price. Then, ask those suppliers you are the most interested in for their WeChat information. Just like with WeChat, you can use the app and connect it to your computer as well on your web browser.
(09:50) In WeChat, find out more about them. Ask about the factory, how many products they have, how long they’ve been in business, do they have more variations of the products and do they have new products that aren’t on the market (prototypes only) that they want to share with you?
(10:30) Ask about their Chinese New Year holiday, lead times around Christmas, payment methods and sample order quantities. Get to know the salesperson, because it makes negotiation much easier. Make sure they think you’re a big company with lots of experience. Narrow it down to your favorite and second-favorite suppliers, and work with those people.
(11:00) After ordering samples from different suppliers, make your final decision on your number one and number two suppliers.
The third phase is product development, and you’ll develop your product with both of these suppliers. You always need a backup supplier in case your representative quits or your factory wants to change terms. If you develop a near-identical item with another factory, you can switch to them if you need to.
(12:30) After building a relationship on WeChat, you may find the salesperson to be a great agent. Scott Voelker from the Amazing Seller Podcast mentioned that did exactly that in one of his early episodes.
If you want to find an agent, go to EasyPeasySourcing.com to find plenty of materials explaining how to find an agent. If you have more questions about this topic, go to EasyPeasySourcing.com/ask or join our Facebook group by searching “Easy Peasy Sourcing” on Facebook. Let us know what you want to know more about. If you found value, we are grateful for an iTunes review at EasyPeasySourcing.com/itunes. Don’t miss any future hack or trick by subscribing to the mailing list below this episode.