How to Find a Supplier or Manufacturer for Your Online Business
Sourcing 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.
Are manufacturers also suppliers?
Suppliers and manufacturers are pretty much synonyms.This encompasses manufacturers, wholesalers, and distributors. There are a lot 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.
A supplier (who may also be a manufacturer), wholesaler, or distributor who purchases existing brands and products.
A manufacturer who produces your own product.
A dropshipper who supplies products and fulfills orders of existing brands and products.
How Do You manufacture a product
Finding a manufacturer for your product can be tricky but it’s necessary to bring your products into reality.
Finding the right manufacturer for your product is crucial to your success. Manufacturers control your product’s cost, quality, and packaging and shipping. Here’s how you can find the perfect ones.
Another place to research manufacturers is free online supplier directories. These directories contain profiles for hundreds or thousands of manufacturers, wholesalers, and suppliers.
Online domestic directories
Online overseas directories
Some 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.
In recent years it's become easy to 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 not search-engine optimized.
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.
Outreach and collection information
Once you’ve found a few manufacturers, you’ll want to get quotes. Aim to get a minimum of three quotes to compare options. The biggest question you’ll likely have for a supplier is “How much will it cost?” But before you send quote requests, you’ll want answers to the following questions:
Is the manufacturer sustainable and ethical? Find out about the factory conditions, and see how they impact the environment and the workers.
Can they grant you exclusivity? If there’s tooling involved, make sure they aren’t allowing others to use it. You can also ask for territorial, market, or total exclusivity.
Are there setup fees involved? Sometimes manufacturers will charge a fee to get equipment ready to produce your goods.
Can they accommodate custom orders? Assess if the supplier or manufacturer can create the product you want. Do they have the skills? The resources?
What are their leads times? How long will it take to produce and ship items? You don’t want to work with manufacturers who take three months to deliver your products. If a product goes out of stock, you don’t want to leave customers waiting months to receive their orders.
What are shipping costs? Shipping makes up a massive portion of your business expenses. Learn a manufacturer’s shipping costs to determine how it’ll affect your bottom line.
What are their minimum order quantities (MOQs)? Don’t lead with this question. It’ll make you look like a beginner and deter manufacturers from working with you. However, you’ll want to know the minimum amount of items you have to order before they start producing your product. This is highly negotiable.
What is the cost per unit? While you’re negotiating MOQs, you’ll also want to negotiate cost per unit. The larger the order, the lower your cost per unit can be.
What’s their defect policy? Find out who eats the cost for incorrect or defective items. Who pays for the shipping and duties?
Discussing payment terms
Many 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:
Asking for too much: Requests aren’t always easy for the supplier to produce. It’s important to ask about pricing for multiple quantities, but avoid asking for too much or too many quotes. Stick to what you absolutely need to know to assess fit between you and the supplier.
Long emails: Your first email to a manufacturer should be clear and concise. Avoid telling too much about your story and background. The first email should purely assess potential fit at a high level. Focus on what suppliers care about the most, like the details of what you’re trying to source.
Asking for too little: If you ask for a quote well below the supplier’s minimum order you risk being met with silence. If you’re unsure whether your request is too small, consider giving them a quick call or send a one-question email prior to ask what their minimum order is.
A good manufacturing supplier will be open to negotiating payment terms. They won’t ask for all the funds upfront before shipping. You can work out a deal with them, this holds both parties responsible for the order and doesn’t leave too much risk on either side.
Negotiating minimum order quantities
If you’re looking for a supplier for the first time, you’re going to quickly learn about minimum order quantities. 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.
Minimum order quantities 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 minimum order quantities 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.
Communicating with the manufacturers and suppliers
Chances 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 a few ways to do this:
Try and look for companies that are responsive and eager to work together.
Between the time you get a sample and when you place your order, it’s still possible to negotiate terms such as payment or minimum order quantities. 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.
Communicate your designs
Once 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, try and communicate your ideas with them through:
Another option is finding a local designer. You can work with them to develop prototypes and custom mockups. It’s more affordable than going through a manufacturer.
Many entrepreneurs have found themselves hitting a wall when it to actually sourcing products. Whether you plan on manufacturing something of your own or finding suppliers to purchase from wholesalers, the truth is that good products aren’t always easy to find. It's always a good idea to research the basics of sourcing a supplier before you start your project.