(This is a guest post from our friends over at Private Label Sk.In, a private label manufacturer for high quality skin care solutions.)
Building a strong business depends on making a steady profit while also meeting your customers’ expectations for a good product and a positive buying experience. Selecting the right manufacturer or supplier is one of the most important steps you can take toward meeting these goals – and making a less than ideal choice can drag down your profits. These tips below can guide you through the process of finding the best source of products for your business.
Know What You Want to Sell
Different suppliers specialize in different kinds of items. Before you begin comparing companies, first become clear on what you want to sell and how you want to sell it. Do your research to find items that are in demand in a market that still has room to grow. Then decide if you want to sell products already produced under another label, create your own private label brand, or some combination of the two.
One of the best methods for finding new products is using Google Trends data to pinpoint niches that are growing. This data is direct from the search giant and can give you insight into exactly what people are searching. What you’re looking for is a trend line that continues to rise without a significant recent drop off.
Seek Out Potential Suppliers
Use these steps to put together a list of manufacturers and suppliers who specialize in your product:
- Search Google with the term “[your product] manufacturer.” Be prepared to go beyond the first few pages of results to find smaller, more focused producers who might be just right for you. (For example, you search “skin care manufacturer,” you can find a healthy list of companies specializing in this segment.
- Try online directories such as MFG, Thomas, Maker’s Row, Alibaba or Indiamart . (A search for “contract manufacturers directory” will turn up more sources, including some that are industry-specific.)
- Attend trade conventions. This will give you the opportunity to see the quality of their products in person and talk to their representatives one-on-one.
- Find similar products. Although other sellers will probably not want to share their supplier information with you, with a little investigation you may find a manufacturer’s name right on a product similar to the one you would like to sell.
Consider Overseas vs. Domestic
For sellers in the United States, the main advantage to working with a supplier or manufacturer located overseas (usually in Asia) is that the cost of labor is significantly lower than what can be found elsewhere, which reduces expenses overall. Some of the better overseas manufacturers will create quality products and send them out in a timely manner. However, the downsides of using manufacturers located abroad can be daunting, especially for less-experienced sellers. The extra time involved and the greater potential for loss may negate the advantages of cheaper labor costs. Some potential risks to watch out for include:
- Lower quality products. If you don’t verify the quality of the products, you may find yourself with many returns that need to be processed.
- Counterfeit items and other copyright infringement issues.
- Consumer rejection of poor workplace conditions.
- Limited hours of the day for communications, plus possible difficulties relating to language and cultural differences.
- Longer time needed to ship products, which is especially important to consider if your competitors are offering fast delivery.
- Some overseas manufacturers will require a larger minimum order before accepting your business.
American manufacturers offer the advantages of dependable quality standards, easier communication, stronger consumer protection and the appeal of a “made in America” brand. Especially in the case of customization, a domestic manufacturer is more likely to be flexible in adapting their products to meet your needs, even if it involves going back and forth several times. In the long run, the advantages of staying in the U.S. may make up for any difference in labor cost.
Narrow Down Your Candidates
Once you have created a list of manufacturers or suppliers who specialize in creating products similar to yours, you can narrow down the field further by getting some quotes from them, so you can make comparisons. Begin by introducing yourself as a serious potential client with a brief, professional email query. In it, describe your product and ask: a. what is their minimum order quantity (MOQ), b. how much would each unit cost at the minimum order, c. how much would each unit cost in bulk, d. how fast is their turn-around time, and e. what are their payment terms.
While it may be tempting to only compare manufacturers based on their unit prices, be sure to include their answers to the other questions and consider how they may also impact your profit margin. Price is a determining factor for many businesses, but it’s a common myth in manufacturing that this should be the sole factor for making a decision.
See Them Up Close
When you find a manufacturer or supplier who seems to meet your needs, get to know them better before making a commitment. If possible, tour their factory and meet with their representatives. If an in-person visit is not possible, try to arrange a meeting using Skype or another video chat platform. Request samples of the products you want to sell or ask them to create a prototype of your custom product. Try to get a sense for how it would be to work with them, and put effort into building a long-term partnership for greater business success.
Check Out the Extras
Some manufacturers offer extra services that you may find valuable. If they are willing to handle fulfillment, including customer service and returns, that could potentially save you many hours a week. Some might also help you create custom packaging and labels for your own brand, and others that focus on your industry may be available to meet regularly to discuss trends and sourcing issues.
The time spent researching suppliers and manufacturers for your business goes a long way toward helping you build a strong foundation for your business. Next, learn how to integrate your suppliers’ data with the rest of your business.
About the author:
Philip Murphy is the Digital Marketing Manager at Private Label Sk.in. Phil is passionate about helping eCommerce sellers succeed by providing manufacturing and fulfillment services for skin care businesses. In his free time, he spends his time seeing live music, traveling, and finding new restaurants.