Here are the six steps to finding a manufacturer to get your product made. If you’ve never done this before, this article is for you, because we’re going to go through this step-by-step, and I’m going to teach you some secret hacks on how you can save money while you’re doing this. You’re in good hands, so let’s get started.
I have my own e-commerce business, where I brought a brand new makeup product to market. Through trial and error I found my product producer and trust me, I made all the mistakes for you so that you don’t have to. But in any case, I love that you’re looking to bring a new product to market because this is your first step in a successful business. If your product serves a specific problem, and you can see that there isn’t already a product out there that solves it, you’re already one step ahead of the game. Let’s hop into the six steps.
First, you’re going to need to do some research. Here are three ways to do solid research.
Alibaba is a place where people go to find products that are already existing. However, this has a bit of a life hack because you can search for a similar product on Alibaba and start connecting with manufacturers for your customer request. But before we begin, let me tell you that vetting manufacturers is extremely important.
Your manufacturer is going to control,
- The cost of your product
- The quality control
- The packaging and the shipping
So they can really make or break your business. Also, depending on what you’re making, it can take as long as a year to bring a new product to market. So let’s do the vetting work upfront so that we don’t have to backtrack later. I lost five months of time working with the wrong partner. So here’s how you can learn from my mistakes.
First, look for the right classifications. Look for suppliers that are gold suppliers. This means that they’re paying for their membership. Make sure that they’re assessed, meaning someone from a third party or Alibaba themselves have been to their factory.
Also look to see that the supplier has trade assurance. This is a free service offered by Alibaba that allows you to dispute a purchase if the quality isn’t there. So look for that as well.
You can continue to search by applying filters. Filter by certifications to find a manufacturer that meets quality, safety and efficiency standards. So let’s say humane working conditions is a non-negotiable for you. You’ll want to make sure that they have an SA8000 certificate.
Once you click the product, firstly look at whether they are a manufacturer or a trading company. We want to deal directly with the manufacturer rather than a trading company. A trading company is essentially a middleman. However, if it says manufacturer and trading, this is also acceptable as it means they’re able to export your products.
Then, look to see where they’re located. If they’re claiming to be manufacturer and their address says suite 201, it’s unlikely that you’re dealing with a manufacturing plant. A good sign however, is if they’re located in an industrial area, you want to make sure that the people you’re working with are honest business people. So if you’re noticing any red flags make a note of this and then bring it up to them as the relationship evolves.
To be a hundred percent sure you can always schedule a video call to see their production floor. If they keep putting your meeting off, that’s going to be a red flag and you’re going to want to move on. So trust your gut and trust your instincts on this.
Look to see how many years they’ve been in business. This is subjective. So for me, I look at it as if it were a job interview. If a candidate came to me and said, I only have one year experience, I would not be comfortable putting the fate of my own business in their hands. My personal threshold is three years plus because that indicates to me that I’m not going to have to mentor them and potentially pay for their mistakes.
Quick tip is to also look at how niche the manufacturer is. If they’re creating lunchboxes on the one end and then tutus on the other, you might want to think twice. A manufacturer that focuses on one niche will reflect how much leverage they have on the purchase of their raw materials for one. And secondly, a niche manufacturer also means that their workers are good. Workers that focus on this one thing day in and day out will reliably produce quality items consistently.
One of the best ways to find a manufacturer is through free online supplier directories. These directories contain hundreds if not thousands of manufacturers, wholesalers, and suppliers. Some popular domestic ones are ThomasNet, maker’s row, MFG Kompass. Some overseas directories are Spocket, Oberlo, Aliexpress, IndiaMart, DH gate, and Sourcify.
Spocket and Oberlo also integrated with Shopify. If you build your business with Shopify, you can automatically fulfill your orders by your manufacturer. That provides a huge time saving for you, and avoid wrong fulfillments.
1c. Conventions and Tradeshows
And the last way to find a manufacturer is through conventions. Different industries will have a handful of go-to conventions. So right now with COVID actually going is impossible, but normally you would want to go in person and to meet the right people. Until we get this COVID mess sorted out, check out the convention exhibitor list to start getting in touch with manufacturers online. This actually ends up being more time efficient in the long run.
There are two schools of thought when it comes to how you should present yourself. On the one hand, you can introduce yourself as a small business, introduce yourself as a business owner who is extremely passionate about getting up and running, taking that approach leaves you a little bit more vulnerable to being taken advantage of. But on the plus side, you can also leave yourself open to allowing your manufacturer to be an amazing mentor and growing together.
The second school of thought is presenting yourself as a large business. Introduce yourself as a purchasing agent or a chief operations officer, rather than the founder. This makes your company appear established, which gives you leverage in negotiations.
So when you’re negotiating, you could pass off blame and say, Oh, sorry, my boss didn’t approve of those numbers. This keeps your relationship with the manufacturer in good standing. And they’re less likely to take negotiations personally.
Now you know how to find a manufacturer from Alibaba, directories and conventions. What I would recommend is securing two manufacturers, establish an emergency vendor so that if you’re overseas manufacturer is late, or they send you the wrong order, you can always use your local manufacturer. Local might be more expensive, but it’s important to have a backup option, even if it does eat into your profit margins. Just make sure that you know, that they’re locally manufacturing, because if they’re also getting their stuff from overseas, then you might run into the same problem twice. Having a backup manufacturer also gives you leverage in negotiations.
2. Outreach And Collecting Information
So you’ll want at least three quotes. Once you have your manufacturers on your radar, you’re going to want to ask them these nine important questions.
- Can they accommodate your custom order?
Do they have the resources or have the skill level to produce what it is that you’re looking for?
- What are their MOQ’s?
So MOQ stands for minimum order quantity. Most manufacturers will only fill a certain order over a certain amount. So depending on who you talk to, this could be a 1,000 or it can be 20,000, but you’re going to want to make sure that you’re negotiating these terms. Generally speaking, it’s better to start with less inventory. That way you can test the market. And you’re not going to have to worry about storing or selling an unmanageable amount of products. I would also recommend that you don’t lead with this question. Okay. Don’t lead with what are your MOQs? Because this is a telltale sign of an amateur.
- What are the lead times?
Find out how long it will take to produce and to ship your items? This is important because you don’t want to work with the manufacturer that’s going to take three months to produce and ship your products. That’s because a long lead times leads to unhappy customers. People don’t want to have to wait for their order and they don’t want to have to wait for products to restock. Check our How to Reduce Shipping Time article for more information.
- How much does it cost to ship your items?
So if you’re ordering from China, for example, manufacturers that are closer to the coast will have less expensive shipping costs. For most shipping makes up a large portion of a businesses expenses, so you want to know this right off the bat so that you can be clear on how it might affect your bottom line and how it will affect the cost of your product.
- What is the cost per unit?
So as you’re negotiating the minimum order quantities, you also want to simultaneously negotiate the cost per unit. Remember that the larger the order, the lower the unit cost will be.
- Can they grant you exclusivity?
If there’s tooling involved and you pay for that tooling, be sure that they aren’t allowing other clients to use the equipment that you’ve paid for. Other forms of exclusivity include territorial, market and total exclusivity. You should also determine who owns the mold and other equipment should you need to switch manufacturers.
- Are there any setup fees involved?
If you’re doing injection molding, there will often be a setup fee so you want to make sure that you’re asking this upfront.
- What is their defect policy?
Find out what the terms are if you receive an incorrect or ineffective shipment. Are you eating the cost of replacing the shipment or is it manufacturer accepting responsibility? Who should pay for the extra shipping and duties? You want to make sure that you’re getting a general sense of this to start, and then once you get more detailed in the contract, you can hash these details out.
- Is a manufacturer sustainable and ethical?
Find out about the factory working conditions. How old are the people working there? Do they get regular breaks? What’s your manufacturer’s policy on discrimination? In addition to your manufacturer being socially ethical, you also want to know how they impact the environment. How do they manage waste? Do they safely dispose of dirty water or are they just dumping it back into the ocean? Each industry will have a unique impact on the environment and humankind.
So make sure that you’re doing your research and asking tons of questions. The unfortunate truth is that large manufacturers sometimes see working with small businesses as a burden. Because they’re so used to dealing with large orders of thousands and thousands of units, manufacturers see working with small businesses as tedious, time-consuming and a low return on time investment.
It’s important to keep that in mind so that when you’re reaching out, you’re not discouraged when they turn you down. Keep in mind that if you’re starting out with a smaller project, there will be someone that’s going to want to work with you. You just have to find them.
Once you collect your three quotes, choose the best fit. Obviously don’t use the most expensive option, but also be cautious about going with the cheapest quote. You get what you pay for, so try going with the middle option here.
3. Communicating Your Designs
You’ve done your research. You found the manufacturer that you want to engage with, and now it’s time to get into the nitty-gritty about your design requirements. Start by asking your manufacturer if they can create your designs. These people are smart, well-equipped professionals that can often handle the design of your products as well.
Communicate your ideas through sketches, written instructions and reference photos. If a manufacturer has done something similar to what you need, you should also be referencing those.
In the case of the design aspect is beyond their capabilities, you can visit fiverr.com or Upwork to find freelance professionals. Search for industrial designers, product designers, and cat experts. Let them know that the deliverable you require is a 3D rendering of your product.
For my packaging design, I went to a local 3D print shop and I worked with the designer there. This was useful because he not only made me the 3D file that I could send to my manufacturer, but he also did a 3D print. This made me feel confident before going into production, because I could see that the design and the dimensions were correct, so you might want to consider doing this as well.
4. Order samples
Before placing an order, you’re going to want to get your manufacturer to send you samples. That way you can test the product before going into full production. So there might be a bit of back and forth on this, but once the sample comes out right, you’ll date and you’ll sign the sample. I recommend you keep two for you and send two back to them, do this so that if they send you a batch and the color or the size isn’t right, you can both refer to the approved sample. This is what’s called a control sample.
I made the mistake of not doing this. What happened with me is that my manufacturer sent me a shipment that wasn’t what I wanted, but it was still close enough. The next batch again was similar, but now even further away from our first approved sample. By the time I got my fourth batch, the colors and the dimensions were completely different from the approved sample. And then before I knew it, I was buying green packaging instead of blue.
What I should have done was issued a product approval waiver. A waiver or a conditional acceptance is an email or a document which communicates that there is a discrepancy with the order that should be fixed next time, but it’s still acceptable now. It states what’s wrong with the batch and also notes that if there’s any further deviation, the order will not be accepted. This is a record of acknowledgement that the order wasn’t what you wanted, but it’s still usable.
Between the time that you get your sample and place your final order, there’s time to negotiate the terms. Here’s some tips when it comes to negotiation. So first of all, have everything in writing. Having a record and contract eliminates any room for, he said, she said. Secondly, make sure you put yourself in the other person’s shoes when negotiating, this will ensure that the deal is fair for both parties. The point of your relationship isn’t to see how much you can squeeze out of your partner, but rather how do you mutually benefit? A mutually beneficial business relationship is a long-term healthy choice.
6. Place Your Order
The final step is to place your order. So here are a couple of tips to make sure that this goes smoothly. At the beginning, you’re going to want to do a 100% quality control inspection. What I mean by this is you’re going to want to look at every single item that they shipped to you, to ensure that it meets your standards. After you know them for about a year, you can start relaxing the quality control. At that point, you’re going to pick out, say 50 from each box. And if they’re all good, then you accept the order. If there are one or two that are off, then you’re going to have to inspect the whole thing. Now, if you have a huge order and there’s a massive amount that are bad, you’re going to want to ship it back entirely, so not to waste your time.
Here’s my final piece of advice. And it might be the most important piece. When you’re starting out, you might be thinking to yourself, I don’t really know what I’m doing. Should I be negotiating? I’m confused. I’m unsure. But I want to tell you this, you’re going to make mistakes. It’s not a question of whether you will or won’t, it’s guaranteed that you will make mistakes, but the most important part is that you enjoy.
Of course, you want to keep your eyes open and you want to perform as best as you can, but if we take a minute to enjoy what it is that we’re actually involved in and be present for the journey, we’ll find that the opportunities and the success to us.