If you’ve been reading our previous posts on dropshipping and evaluating products to sell online, you may be starting to come up with some of your own ideas. This can be an interesting time for an entrepreneur because that’s when the momentum begins to build and enthusiasm grows as you think more about your idea.
However, many entrepreneurs often find themselves paralyzed and lose momentum when it comes to defining the source of the products. Whether it is through the manufacture of your own product or the search of suppliers for wholesale purchases, it is not always easy to find such a source.
In this post, we’ll look at the basic questions regarding finding a supplier for your next project. We will check out a few places to research and talk about how to approach them and what to ask them.
Let’s go deeper.
Fundamentals – What Do You Look For?
For the purposes of this post, when referring to suppliers, we are talking about anyone who can provide you with products and stocks. Included are manufacturers, wholesalers, and distributors.
There are several useful resources available online through a brief Google search. However, before you start, there are a few things you need to know and also decide.
First, you need to define what type of vendor you are looking for. This will help determine which terminology you should use in your search.
There are some options, among which the most common are:
- One manufacturer, to produce their own product idea
- A supplier, who may also be a manufacturer, wholesaler or distributor, to acquire existing brands and products
- A dropshipper, to supply products and process purchase orders for existing brands and products
National and International Suppliers
A classic question during the search of suppliers, in case you want to have your wholesale product manufactured or purchased, is whether you prefer a national or international source. “International” refers to any location outside the country, but usually (and for the purposes of this post) the term refers to Asian countries like China, India, and Taiwan.
You probably already know that it is almost always cheaper to get your products from an international source, but there are many other issues inherent in that decision, not just the initial investment and cost per unit.
Both national and international sources have their advantages and disadvantages, which we will see below:
- Quality of manufacturing and higher work standards
- Easy communication, no language barrier
- Marketing appeal due to production in North America
- Easier to check reputable manufacturers
- Faster delivery
- High protection of intellectual property rights
- Payment security and superior features
- Higher manufacturing cost
- A smaller variety of products (many items simply are no longer produced in North America)
- Minor manufacturing costs
- More manufacturers available
- Complete services like Alibaba facilitate navigation between suppliers
- Lower quality perceived by customers
- Quality of manufacturing and lower working standards (usually)
- Low intellectual property protection
- The language and communication barrier can be difficult to overcome
- Difficulty / high cost to check a manufacturer or visit it in person
- Delayed delivery
- Cultural differences in business practices
- Import of product and release by customs
- Payment security and lower resources
Where to Start Your Search
Now that you have an accurate idea of what you are looking for and the advantages and disadvantages between national and international sources, where should you start your research? Of course, the internet is the best place to start, but there are some places in particular that can help you with your research.
Free online directories from suppliers can be some of the best sources. These directories can contain profiles from hundreds or even thousands of manufacturers, wholesalers, and suppliers. Below, we list some of the most popular directories for both national and international suppliers. Please note that we are not endorsing any of these providers, we are simply providing you with some options:
National Directories Online
- Wholesale Central
International Online Directories
- All Rights Reserved.
The Depths of Google
In recent years, we have become accustomed to being able to search on Google and easily find what we wanted in the first results. However, many vendors have not kept pace with the Internet, and particularly with changes to Google’s algorithm. Their sites are usually old, have little information and are often not optimized for search engines.
So how do you find suppliers on Google? For the first time in life, you will have to explore page ten of Google’s search results and go further. You should also use a wide variety of search terms. For example, words like wholesale, wholesaler, and distributor can be used interchangeably. Therefore, it is necessary to search them all.
Familiarizing yourself with Google’s search shortcut keys can also help you improve the quality of your searches – and therefore the results.
You may also consider dusting your card and stopping by the local library. Many libraries pay monthly subscriptions to directories of online companies and manufacturers that you would not normally have access to, or for which you would have to pay large sums, such as Scott’s Online Business Directories. They contain profiles from numerous North American manufacturers, wholesalers, and distributors, depending on the directory in question.
Be sure to call ahead to your local library and ask if they have access to these types of private directories. For larger libraries, you may need to talk to the commercial and technology departments.
Some of the best leads can emerge from referrals from friends and family. Social networks have made it much easier to spread news, so be sure to use these channels.
As you begin to discover suppliers, even if they are not ideal, ask if they can guide you in the right direction. Being part of the industry means they probably have great contacts, and many would be happy to refer you to someone who might be more in line with your profile.
Extra Search Tips
Another possible way to search for suppliers is to search for their products according to their NAICS code.
The term NAICS stands for the North American Industry Classification System, and basically, every industry and product you can imagine is tied to a NAICS code. Sometimes manufacturers and suppliers can link their products to the NAICS code, which may make it easier for you to find the manufacturers and suppliers of your products, especially if you are using professional directories.
The NAICS directory can be found in your local library or on the internet at the following addresses:
USA – NAICS Code
Canada – NAICS Code
Requesting a Code
When to find a suitable supplier, how should you approach it?
The biggest question you will have will be this: “How much does it cost?”. However, before you rush your quote request to the supplier (often known as RFQ – request for quotation), take a few minutes to plan what you intend to say and the questions you need to ask. Planning your email will increase the chances that you will receive a response, plus the right information.
Here are some important things to consider in your email:
- What is your minimum order quantity? – Also known as MOQ (minimum order quantity), you must ensure that the minimum quantities are manageable by you and that you can finance them. This minimum order quantity can vary greatly, depending on the product and supplier. Therefore, it is important to ask in advance.
- What are your prices for samples? – You will probably want to inspect the samples before making a complete order. Sample prices vary by product and supplier. Some suppliers who receive many orders may charge the full sale price, while others will offer you discounted samples – and some may even be able to ship samples for free.
- What are your production prices? – One of the most important questions concerns the price of your products. You should probably ask the prices for various quantities, in order to get a better idea, and also to know about discounts offered for higher quantities.
- What is your delivery time? – Knowing how long it will take to produce your order is an important consideration. And, depending on your particular business, time can be essential.
- What are your payment terms? – Many suppliers will require new companies to pay for the full order in advance. It is important to know this since inventory is one of the big costs for e-commerce startups. You should also ask if they offer payment terms for future purchases.
Suppliers are constantly bombarded with e-mail quote requests from eccentric customers who are just “probing,” so it’s not uncommon for many vendors to stop responding to all requests. The lack of responsiveness of suppliers is a common complaint among new e-commerce entrepreneurs.
So how do you not to be ignored? There are a few situations you should avoid when contacting suppliers for the first time:
- Long Emails – Your first email to a manufacturer should be clear and concise. Avoid telling too much about your history and context. The initial email should be purely meant to assess a potential high-level qualification. Focus on what vendors like most, such as the details of what you are trying to obtain.
- Ask too much – Orders are not always easily produced by the supplier. It is important to ask prices for multiple quantities, but avoid asking for too much or requesting too many quotes. Ask only what you absolutely need to assess whether there is an agreement between you and the supplier.
- Request too little – If you ask for a quote far below the vendor’s minimum order, you will risk getting no response. If you are in doubt as to the size of your order, consider calling or sending a short email with only one question, so that you know the minimum order in advance.
Finally, if you are contacting an international provider, please be aware that in many cases they may be using translation programs to translate your email, as well as their own response. Keeping your emails brief, concise, well-formatted and free of grammatical errors will not only help the manufacturer but will also provide you with better answers. In addition, when asking your questions, it is best to number them, so they can quickly respond to each item, keeping issues and communication clean and organized.
Here’s an example email I could send:
My name is Kristine, I work for XYZ.
I am interested in placing an order for Product A. I only need to ask a few questions first:
1. What is your minimum order quantity?
2. What is your cost per unit in the minimum order, and also the value if I order the triple of it?
3. What are your payment terms for new customers?
I would also like to request a sample of Product A, to analyze its quality. You could tell me the value of the sample, including the freight to:
2028 E Ben White Blvd,
Ste 240 78741
Thank you very much,
As you can see in the example above, it is brief and concise, and its purpose is to ensure that there is a high level of suitability between us. I also prepared to immediately order a sample unit, if there is a good fit. As soon as I receive the samples and are satisfied with them, I can begin to go into more detail, knowing that I will not be wasting their time or mine.
Negotiating Minimum Order Quantities
If you are looking for a supplier for the first time, you will quickly learn about “Minimum Order Quantities” (MOQs). It is not uncommon for a manufacturer to require you to purchase hundreds or even thousands of units on your first order, depending on the product and manufacturer.
The minimum order quantities make things difficult when you have limited resources or simply want to opt for security and start slowly to test the market before making larger purchases. The positive aspect is that the minimum quantities are almost always tradable.
Before you start trading, the first step is to understand why the manufacturer has set a minimum. Is it because there is a lot of work to be done before? Or maybe because they prefer to work with customers who buy larger volumes. Understanding the motives behind the minimum will help you better understand their position and allow you to negotiate and propose the best counteroffer.
Once you better understand the position of your suppliers, you may want to suggest a smaller number of orders. Agreements may include the deposit with the supplier of a larger purchase – but with the production of small quantities at a time – or the payment of a higher price per unit.
Did You Find Your Supplier Partner?
Defining the source of suppliers and manufacturers is a unique process, and for many, a new experience. Trying to locate suitable suppliers is an essential decision for your new business, and they are not always easy to find. It’s easy to get frustrated when faced with deadlocks or obstacles, but in most cases, it only takes a little more patience and perseverance for you to find the perfect partner for your new business.
Other part of the equation
Apart from dropshipping, you also need a thriving online presence in order to make it in e-commerce. At Nestify, we specialize in fully managed WooCommerce hosting, so you can focus on growing the business without worrying about your store.
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Originally posted on January 7, 2019 @ 7:36 am