If you’ve been thinking about starting an online store, you may have brainstormed some ideas of your own, like capitalizing on one of the many in-demand products already on the market. But likely, you still have questions. Show
How do I find a manufacturer or supplier for my product idea? Is it better to work with manufacturers near me, or abroad? How do I know if a manufacturer is legitimate? Many entrepreneurs find themselves hitting a brick wall when it comes time to actually source products. Whether you plan on manufacturing something of your own or finding suppliers to purchase from wholesale, good products aren’t always easy to find. In this post, we’ll look at the basics of sourcing a supplier for your next project. We’ll give you ideas for some places to search, and examine how you should approach suppliers and what to ask them when developing a product for your ecommerce business. What is a manufacturer?A manufacturer is any business that produces finished goods from raw materials. They sell these goods to consumers, wholesalers, distributors, retailers, and other manufacturers wanting to create more complex items. Manufacturers typically stick to one type of product. For example, you could work with a glassware manufacturer who creates glass bottles and jars. You could work with one manufacturer for boxes and another for plastic or natural products. Retailers often work with multiple manufacturers at once to create an inventory for their store. Is a manufacturer a supplier?Suppliers and manufacturers are pretty much synonyms. For the purpose of this post, when we refer to suppliers, we’re referring to anyone who has the capability to provide you with products and inventory. This encompasses manufacturers, wholesalers, and distributors. There are a ton of helpful resources online that you can find through Google. But before you begin, there are a few things you need to know and decide. First, you should figure out what type of supplier you’re looking for. This will help determine the terminology you need to use in your research. Check out our post on ecommerce business models to help you get started. There are several supplier options, the most common being:
Free Webinar: How to Get Started with Dropshipping in 2022 Learn how to find high-margin products, add them into your store, and start selling—fast. Domestic vs. overseas suppliersIf you plan to manufacture or wholesale, when looking for suppliers you’ll need to decide whether you want to source domestically or from overseas. Overseas can refer to any location abroad. You might be asking, "are companies near me better to work with than companies overseas?" The answer is a bit complex. It’s a good idea to secure two manufacturers: one domestic and one overseas. Your local manufacturer can be used as a backup. So, if orders from overseas are late or incorrect, you can fall back on your local supplier. They are often more expensive, but it’s better to keep products stocked and customers happy than having them wait for overseas shipments. It’s often cheaper to source your products overseas, especially in Asian countries, like China, India, and Taiwan because of lower labor costs. But there’s a lot more to the decision than just the upfront investment and cost per unit. Both domestic and overseas sourcing have their advantages and disadvantages: Domestic sourcingAdvantages
Disadvantages
Overseas sourcingAdvantages
Disadvantages
When working with overseas manufacturers and suppliers, it’s a good idea to hire a manufacturing manager. These contractors are locals who live near your manufacturers and handle negotiations, orders, and managing your partners. They can also be the in between for your business and manufacturing companies. Think of them as the central hub for your overseas supply chain. If there’s an issue, the manager will work directly with the manufacturer to solve it. Managers also speak the local language, which helps improve communication and make production smooth for your business. It’s easy to safely buy from Alibaba. The marketplace lets you vet manufacturers upfront to get the best products at a fair price. When researching manufacturers on Alibaba, make sure they have the following qualifications:
You can continue to search by applying filters. You can sort by certifications (such as SA8000, which ensures humane working conditions) to find a manufacturer that aligns with your business values. Another thing to consider when sourcing from Alibaba: make sure your manufacturer is not a trading company. A trading company is a middleman and won’t be able to produce your products. DirectoriesAnother place to research manufacturers is free online supplier directories. These directories act as manufacturer catalogs that contain profiles for hundreds or thousands of manufacturers, wholesalers, and suppliers. Below, we’ve listed a few of the most popular ones for both domestic and overseas suppliers: Online domestic directories
Online overseas directories
In recent years, we’ve become accustomed to being able to easily search Google and find what we’re looking for in the first few search results. However, many suppliers haven’t kept pace with the internet or Google’s algorithm changes. Their websites are usually old, sparse on information, and have poor search engine optimization. So how do you find suppliers on Google? For possibly the first time ever, you’ll need to explore page two of Google search results and beyond. You’ll also want to use a variety of search terms. For example, words like “wholesale,” “wholesaler,” and “distributor” may be used interchangeably, so you should search for all of them. It may help to make yourself familiar with Google’s search shortcuts to improve the quality of your searches and, thus, your results. ReferralsSome of the best leads can come from referrals. Don’t be afraid to ask connections in your professional networks if they have any recommendations or if they know someone who might. Look for individuals who’ve found success in an area you’d like to pursue and see if they’re willing to share their contacts. Social networks have made it much easier to get the word out, so make sure to use these channels. Join Facebook groups and other online communities of ecommerce business owners and see if anyone there has a glowing review. As you do start to uncover suppliers, even if they aren’t the right fit for you, be sure to ask them if they can point you in the right direction. Being in the industry means they’ll likely have great contacts and would be happy to refer you to an option that might be a better fit. NAICS codesAnother possible way to look for product suppliers is by searching for your products by their NAICS code. NAICS is the North American Industry Classification System, and pretty much every single manufacturing industry and product you can think of is attached to a NAICS code. Sometimes manufacturers and suppliers list products by their NAICS code, which can make manufacturers and suppliers easier to find, especially if you’re using professional directories. The NAICS directory can be found at your local library or online. Here is the link for the United States’ NAICS code and the link for Canada’s NAICS code. You’ll also want to make sure you properly vet your potential manufacturer. Once you’ve narrowed it down to a few possibilities, dig deeper in your research to make sure they’re credible. Check the Better Business Bureau (BBB) to see if there have been any complaints filed, browse the manufacturer’s Facebook page reviews, and use those Google search tricks to query the company name + reviews to see if any red flags come up. Outreach and collection informationOnce you’ve got a few manufacturers on your radar, you’ll want to get quotes. Aim to get a minimum of three quotes to compare options. Now, the biggest question you’ll likely have for a supplier is “How much will this cost?” But before you hastily send quote requests, you’ll want answers to the following questions:
Negotiating minimum order quantitiesIf you’re looking for a supplier for the first time, you’re going to quickly learn about minimum order quantities (MOQs). It’s not uncommon for a manufacturer to require a commitment to purchase hundreds or even thousands of units for your first order, depending on the product and manufacturer. MOQs make it difficult when you have limited funds or want to start small and test the market before making larger purchases. The good thing is that MOQs are almost always negotiable. Before you negotiate, understand why the supplier has imposed a minimum. Is it because there’s a lot of work upfront? Or maybe it’s because they prefer to work with larger buyers. Understanding the reasons behind the minimum will help you better understand their position and allow you to negotiate and propose the best counter offer. Discussing payment termsMany suppliers will require new businesses to pay for the full order upfront. This is important to know, since inventory is a major cost for ecommerce businesses. You may want to also ask if they provide payment terms on future orders. Suppliers get bombarded with email quote requests all the time from flaky buyers who are just “kicking the tires,” so it's not unusual for many suppliers not to reply to every request. A lack of supplier responsiveness is a common complaint from new ecommerce entrepreneurs. So how do you ensure you don’t get ignored? There are a few things you should avoid when you reach out to suppliers for the first time:
A good manufacturing supplier will be open to negotiating payment terms. They won’t ask for 100% upfront before shipping (and if they do, that’s a huge red flag). You can work out a deal with them. Ask for 50% upfront, 50% after shipment is received. This holds both parties responsible for the order and doesn’t leave too much risk on either side. Communicating with manufacturers and suppliersChances are you won’t use a manufacturing manager when starting your online business. You’ll have to communicate with suppliers on your own. There are three main ways to do this:
Look for companies that are responsive and eager to work together. If someone is slow out the gate with your emails and samples, do you want to trust them with your business? Probably not. Free Guide: Shipping and Fulfillment 101From deciding what to charge your customers, to figuring out insurance and tracking, this comprehensive guide will walk you step-by-step through the entire process Get our Shipping and Fulfillment 101 guide delivered right to your inbox.Almost there: please enter your email below to gain instant access. We'll also send you updates on new educational guides and success stories from the Shopify newsletter. We hate SPAM and promise to keep your email address safe. Communicate your designsOnce you talk with a potential manufacturer, ask if they can create your design. Some manufacturers have a product development process with prototyping and 3D modeling—but it can get expensive quickly. As an alternative, communicate your ideas with them through:
If they don’t do design, you can use Fiverr or Upwork to find freelancers to create drawings for you. Look to hire:
Another option is finding a local designer. You can work with them to develop prototypes and custom molds. It’s more affordable than going through a manufacturer. Order samplesBefore placing a full order, get samples to test before going into productions. Once the sample is right, date and sign the sample. Save one or two for yourself. These are called your control samples and are any type of forensic sample used to assure quality and get consistent consumer products.
For example, say a manufacturer sends you an order. You open the package and find the colors are completely wrong. You’ll likely chat with your manufacturing partner to fix the mistake. If they have any doubts about the order, you can reference the control sample. This shows that the products you received are not what was previously agreed upon. NegotiateBetween the time you get a sample and when you place your order, it’s still possible to negotiate terms such as payment or MOQ. When negotiating, put yourself in the manufacturer’s shoes. The goal isn’t to exploit your manufacturing partner to get the best price. It’s to work together so both parties profit and are happy. It’s the only way to build a long-term, healthy relationship. Place your orderLast up, place your order. Do a 100% quality control check first. Check every product they’ve sent you to make sure it meets your standards. And if you’re happy with everything, send your order and get the production process started! Finding your supply partnersSourcing suppliers and manufacturers is a unique process but it’s one of the costs of starting a business. Trying to locate suppliers that are a good fit is a critical decision for your new business, and they aren't always easy to find. It’s easy to get frustrated when you hit dead ends or brick walls, but in most cases, it just requires a little more patience and perseverance to find the perfect partner for your new venture. Illustration by Pete Ryan Ready to create your online store? Start your free trial of Shopify—no credit card required.Manufacturers FAQWhat does manufacturing mean?“Manufacturing” refers to turning raw materials into finished products through tools, labor, and machinery. It’s an industrial process that allows for the mass production of goods using advanced technologies and assembly processes. What are the types of manufacturing?Types of manufacturing include:
What is an example of manufacturing?The clothing industry has many different manufacturing processes. For example, a clothing manufacturer’s process could include fabrics receiving and relaxing, form layout, laying, marketing, cutting, screen printing, sewing, and quality check before creating a single garment. How do I find a manufacturer?You can find a manufacturer via the directories and suppliers listed above. Some of the most common places to find manufacturers include:
Who sells products directly to the?The correct answer is Retailers.
What are the 4 channels of distribution?Distribution channels include wholesalers, retailers, distributors, and the Internet. In a direct distribution channel, the manufacturer sells directly to the consumer. Indirect channels involve multiple intermediaries before the product ends up in the hands of the consumer.
Who buys the products from the manufacturer?A manufacturer is any business that produces finished goods from raw materials. They sell these goods to consumers, wholesalers, distributors, retailers, and other manufacturers wanting to create more complex items. Manufacturers typically stick to one type of product.
What is the difference between a manufacturer a wholesaler and a retailer?Manufacturers produce goods from raw materials, wholesalers then purchase these goods from manufacturers at a reasonable price, then retailers purchase the goods from wholesalers in large quantities at low prices. Retailers sell goods in small quantities to end-consumers, and consumers purchase goods for personal use.
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