Category: Policy

Best Tips for How to import from China to United States
Recently, with the increasing popularity of the US Internet, the opportunities for importers have also increased. Many Americans are engaged in trading business in opening companies. Most of them are in Guangzhou, Shenzhen, Foshan and Yiwu.
However, not everyone knows the most common questions about the import process. Various products require different quality requirements and certifications. The import process requires various certificates, and Chinese suppliers require different labels. If you are importing for the first time, importing from China can be a daunting task, but in this article, we will guide you through the process of exporting goods from China to the United States.
In addition, in the final section, we will also discuss some of the new ideas for popular American products and their consumption trends.
Part 1: Things to know before importing from China
There are a few things you should keep in mind before importing goods from China.
First, we will discuss the legal licenses required for import.
⇒ You must register your legal entity in the United States. It works for all types of business. For export business, you must include a legal entity in your company or your brand name or company name. You can register for any of the 5 legal entities:
Sole proprietorship
Partnership
Limited liability partnership
Private limited company
One person company
⇒ You must apply for tax registration of a legal entity. It is also known as the federal tax number and is the state government’s tax number. Even if you don’t import goods from China, you still need this number to sell products in the US.
After registering a US company, each company must apply for a federal tax number, which is unique and is the number that the US company actually operates and must file for tax returns. This tax identification number is used to identify US companies. EIN is one of the materials to be provided after the establishment of the company to open a bank company account and to file tax returns in the future.
If there is no corporate federal tax number, it will be impossible to open an account at a local bank, file tax returns, make money from deposits, or hire employees and carry out a series of business activities, which is necessary for the development of American businesses.
Part 2: Find the best Chinese supplier for your product
There are a variety of ways to find Chinese suppliers. You can search online, you can go to an exhibition or wholesale market, or you can find many suppliers through a purchasing agent, but the problem is that people don’t know how to find the right supplier for them. You can find the right supplier in the following ways.
2.1.China Wholesale Market
China’s main trading cities are Guangzhou, Shenzhen, Foshan and Yiwu. Every city gathers suppliers from neighboring industry belts.
Let us look at the market distribution of these four cities:
2.1.1 Guangzhou
Guangzhou has the largest wholesale market for clothing and luggage in China. So, if your business involves clothes, bags or luggage, please go to Guangzhou. This wholesale market is spread throughout the city.
2.1.2 Shenzhen
Shenzhen has one of the largest electronics markets, where you can find a wide range of electronics. Most affordable and stylish electronic devices come from Shenzhen and surrounding cities of Dongguan and Huizhou.
2.1.3 Foshan
Foshan has the largest furniture market, where you can find a wide range of furniture products, most of which are affordable and of good quality.
2.1.4 Yiwu
With more than 70,000 booths, Yiwu is the largest wholesale market in the world. It has five main areas, each with 3-4 floors. In addition, all areas are connected, but the layout of the store is very standard. You can easily find products in this market and compare the quality and price of the products.
2.2 Online supplier
You can also find many suppliers on online platforms such as Alibaba, Made in China, Global Sources, DHgate and Aliexpress.
2.2.1 ⇒Alibaba
In Alibaba, you will find many products and suppliers much more than other B2B websites. This is a great website for finding suppliers, but you should be aware of some of the issues related to this website. If you are looking for a supplier, the supplier labeled “Gold Supplier” is not necessarily an excellent supplier. As long as the supplier pays an annual fee of $4,000, they will be marked as a “gold supplier.” Therefore, this is not the best criterion for judging suppliers. In addition, Alibaba’s search ranking mechanism is different from Google. The best supplier to search for products may not be the best supplier, because good rankings are based on expensive advertising rates, Alibaba’s ranking is the bidding mechanism, the higher the bid, the higher the ranking.
2.2.2 ⇒Global Sources and Made in China
If you find that Alibaba is daunting, you can choose Global Sources and Made in China. Although the number of suppliers on these sites is less than Alibaba, it will definitely be better. This is because members have higher auditing standards and fees. So, here you will screen some of the more powerful suppliers and find it more likely to find a direct factory.
2.2.3 ⇒Chinabrands, DHgate and AliExpress
The minimum order quantity for these three sites is very small and you can place orders at a reasonable price. However, when you order again from the same supplier, the product may differ from your first order. Since the suppliers of the three websites go to many factories to buy the same products, they cannot guarantee your quality. Therefore, if you are engaged in long-term business, you should avoid obtaining products from these websites. Many suppliers of Chinabrands, DHgate and AliExpress sell their own branded products. In addition, they focus on the quality of the product. The only problem is that other people also buy from these sites. Therefore, you are no different from the products of your other competitors.
2.3 Exhibition in China
You can also buy products from exhibitions and fairs in China. There are two types of exhibitions in China – professional exhibitions and comprehensive exhibitions. The comprehensive exhibition is easy to understand. The Canton Fair is one of the most famous comprehensive exhibitions in China. You will find many product categories at this exhibition.
There are also many professional exhibitions such as furniture and lighting to showcase similar products. The main advantage of a professional exhibition is the concentration of resources in a category of suppliers.
2.4 Purchasing agent in China
Dealing with suppliers is very time consuming and costly, and a particularly complex supply chain. If you are engaged in complex electronic products and machinery transactions, you should purchase from a purchasing agent. Efficient and professional Chinese purchasing agents can reduce unnecessary risks and save a lot of time and cost.
Part 3: How to ship from China to the US
In terms of transportation, there are three main modes of logistics from China to the United States:
3.1 Shipping
Shipping is the cheapest way to ship products from China to the United States. It involves the transport of goods by ship and the port of discharge. This process is complex but more cost effective than air transport.
3.2. Air transportation
Air transport can transport goods from our Chinese factory to your US warehouse within a few days, as this is a fast way to transport. Therefore, if you are looking for shorter lead times, transporting goods by air will be your best bet. However, it’s important to note that although you will save a lot of time, you will cost more because air freight is much more expensive than shipping.
3.3 Express
If you need door-to-door goods from China to the US, the courier service is your best choice, but the courier service is only suitable for small batches and the price is very expensive.
Label requirement
As an importer in the United States, you must comply with marketing and labeling requirements. Importers who do not do so may be detained by customs authorities. You can find a list of items to include below:
Production Date
Product name and description
net weight
Maximum retail price, including taxes
Batch ID
your address
The month and year the product was imported
Country of birth
Custom document
Customs documents are the most important documents when importing from China to the United States. This document specifies the type of project and its value. However, it does not always have to be done by the importer and can be generated automatically upon arrival. However, you must prepare the following documents before shipment arrives:
Bill of lading (marine shipping) or air waybill (air transport)
commercial invoice
Packing list
Health/Food Safety Certificate (for food only)
Certificate of Origin (if applying for tax reduction or exemption)
Insurance policy / precautions
Product Description / Catalog
Health/Food Safety Certificate (for food only)
Certificate of Origin (if applying for tax reduction or exemption)
proforma invoice
Purchase order or letter of credit
Industrial license (if needed)
Yes, the transportation process from China to the United States is complex and requires a lot of paperwork. Therefore, it is necessary to choose a professional freight forwarder to help you.
Part 4: Product demand forecast based on US national conditions and development stages
The prices of products exported from China to the United States are quite low. Many Americans still find these products expensive. The main reason behind this is that the nature of US trade is a proxy model. This means that the goods pass through a minimum of three agents before they reach the customer.
Over time, US buyers can easily import from China and launch online sales. With the increasing number of Internet users, the US e-commerce market is also constantly upgrading. Due to the popularity of the Internet, the e-commerce market is booming.
The following statistics explain the same point:
According to the US Internet report released by APUS in April 2018, 85% of the population is under 60 years old, and the proportion of 0-35 years old is much higher than that of China. According to IBEM’s analysis of US Internet users, the younger generation is the most commonly used Internet user in urban and rural areas of the United States. It also shows that there are 260 million Internet users in the United States and 300 million smartphone users. Moreover, the Internet penetration rate in the United States is 85%.
This will bring huge market potential.
Now, the problem has arisen. What products do Americans like? This can be displayed along with the data.
According to a survey, about 38% of the 8,689 respondents said they mainly buy durable consumer goods such as clothing and other electronic products produced in China. 15% said they would buy Chinese household items and decorations. 10% of respondents buy Chinese gifts, while others say they like to buy a variety of Chinese products.
In addition, Chinese fashion products are very popular in the United States.
According to a report released by Facebook in March 2017, more than 30% of first-time online shoppers started buying clothes and shoes, and 70-75% of online shoppers bought clothes, shoes, hats and accessories.
Fashion is one of the most popular categories in the United States. In addition, on Instagram, one out of every two US users is interested in fashion. ”
As the middle class grows, so does the demand for consumers, so new opportunities arise. The US middle class population is growing, and the growth in disposable income has led to a surge in consumer demand for electronic products such as advanced television, mobile phones and computers.
Another example, the middle class has enough money, and the first thing they do is to buy a new house. Therefore, the US home building materials and hardware industry is booming. Most importantly, it contains many business opportunities.
In addition, the growth of the middle class has also spawned new living habits. For example, most American middle-class couples (husband and wife) are doing work. They don’t have time to cook at noon, which has an impact on the microwave oven industry. Many examples of these types can be found in the United States.
Therefore, this is the process of importing from China to the United States. Moreover, this is a new opportunity for your reference, maybe you can start your import journey now.
Now I want to give it to you:
What new things have you learned from this guide?
Maybe you have a problem.
Either way, comment below now.
Approaching a Foreign Company For Importing
How do you approach a manufacturer in another country to let you import it to yours? Priority No. 1 is to select a product that is successful in its present domestic operation and has the look and feel of export potential (meaning everybody, everywhere —already loves it and is likely to continue doing so even in the United States). Priority No. 2 is to go to market with what you are familiar with.
Priority No. 3 is to view the potential of the product in front of you through the eyes of consumers in your import market of choice, in this instance, the United States.
That said, let’s say the manufacturer you are interested in makes more than 12 different styles of shoelaces. Which one should you import? Easy. The one that sells like hotcakes in his market. The one you love the best. The one you know that customers in the United States will love the best. Try to choose one item that you can come close to providing an affirmative response for in regard to all of those statements!
Next, script your communication to the manufacturer. You might want to also review Finding a Supplier for the Product You Want to Import.
Lastly, nothing beats a face-to-face encountering when you want to seal a deal on representation.
Once you have gathered information on your prospective supplier’s product and reviewed the product for import readiness, you must convince the manufacturer that you are capable of importing the company’s shoelaces to your part of the world.
How do you go about it?
It goes like this: focus, explain, emphasize and stroke.
Focus on the target market. Give the manufacturer an introduction to the market conditions in an unknown country. This will intrigue him.
Explain how you do all the work and incur all the risks.
Emphasize that he will make most of the money from the transaction.
Stroke him by enumerating the benefits you can bring to his business by exploring other markets on his behalf.
Your goal is to get the manufacturer excited about the possibilities and to convince him that you’ve got the expertise to pull it off. It’s best to be prepared for a range of possible responses. Your follow-up exchange might go like this:
Importer: “Do you sell to the United States?”
Manufacturer: “Not yet.”
Importer: “Well, I think it’s a good market for your shoelaces – rich in upside potential! I’m in touch with several agents and distributors here who are looking for your type of shoelaces, and that means fast, hassle-free additional business for you!”
Manufacturer: “Sounds great! How do we get started?”
In this instance, you’re breaking totally new ground for him, so you can offer him your strategy as to how to get started. But you might find yourself dealing with a manufacturer who already has some international operations in place. If you want to get in on that action, you must convince the person you’re dealing with that you are flexible, cooperative and interested primarily in generating additional business for him. Here’s how you might work such a situation to your advantage:
Importer: “I have contacts in the United States. May I offer your products there?
Manufacturer: “We already do business there.”
Importer: “On an exclusive basis?”
Manufacturer: “No, but we are open to expanding our business there.”
Importer: “I sell through importing distributors who service the discount chain stores. Does that differ from your present customer base?”
Manufacturer: “Yes. Right now we sell only to small mom-and-pop retail outlets that are serviced by a local trading company.”
Importer: “If I generate reasonable business within a few months, will you allow me exclusivity in United States on all discount chain store business?”
Manufacturer: “If I see you generate the sales, I’ll have no problem giving you exclusivity.”
Importer: “Fair enough! I am confident that I can generate the sales you’ll want to see in six months.
At that point, if it is acceptable to you, I would like to meet with you to work up an agreement protecting my efforts.”
Manufacturer: “Fine. In the meantime, let’s get some idea of what you need to get started.”
That’s all there is to it. Now that you have gone to the trouble of finding a product to import, shoelaces, and proving to a manufacturer you can import it, it’s time to consider whether you need a written agreement as to how you will do business with the company. We’ll discuss that in a future article.
How to Choose the Right China Sourcing Agent or Buy Wholesale from China
How to Choose the Right China Sourcing Agent or Buy Wholesale from China
How to Choose the Right China Sourcing Agent or Buy Wholesale from China can be pretty a tasking job in particular if it is your first time. It requires ample training as it is time-consuming and a lot of assets are worried (monetary resources). So, to ease this undertaking one wants a China buying agent to characterize him in the actual market and be in a position to get the proper merchandise at the satisfactory manufacturing unit prices.
There are a handful of these sourcing retailers and every declare to be the pleasant in the business. However, for the reason that there are no set requirements to measure the stage of every agent, it is upon the importer to use exceptional techniques and potential to confirm their authenticity and effectivity earlier than you set up any formal work relation.
When selecting a China sourcing agent think about the following six-point verification technique to assist get the excellent who serves your desires as distinct clients have specific wishes to fulfil.
1. Make inquiries and request them to furnish you with their enterprise registration permit, criminal compliance file and their export license in China, affirm their authenticity with the neighborhood change authorities or with 0.33 birthday celebration companies.
2. Trust is the key to any robust work relation, ask the China sourcing agent in query to furnish you with at least 5 consumer reference from your region of import.
3. Let the sourcing agent give an explanation for their safety measures in case of any kickbacks from the suppliers bearing in thought that ‘kickbacks’ is a managerial challenge.
4. Choose sourcing retailers relying on the consumer need. Some china sourcing marketers will provide unique offerings over others. For instance, some sourcing dealers will no longer grant re-branding offerings and associated services.
5. Identify china sourcing sellers who are professionals in a precise type of product as they are very accurate at what they specialize in.
For instance, ‘Foshan sourcing agents’ are professionals in constructing substances and ceramics and most instances are positioned close to the manufacturing industries of your product cluster as a result lowering the value of transportation and are greater probably assist out must some thing go incorrect at some stage in production.
6. After figuring out your sourcing agent, put the agent into a take a look at with a small order to verify the skillability of his services, by no means throw in a full-size sum into your first order till you can develop some self belief with your sourcing agent.
Feel free to pose any different expert questions regarding the offerings they offer. If the above factors are totally satisfying, then you can relaxation certain you have the fine China sourcing agent.
How do sourcing businesses cost for their services?
The prices worried relies upon on the assignment at hand. However, sourcing businesses used to base their costs on a fee for the remaining order value. These days most china sourcing retailers have adopted a constant pricing strategy.
What type of offerings can you get from a Chinese sourcing agent?
When conducting a China sourcing agent ability you anticipate to get some offerings back. Some offerings accessible include;
● Product sourcing and pattern consolidation
● Procurement brain and procurement outsourcing
● Supplier lookup and contract negotiation
● Supervised manufacturing in China manufacturing facility and rebranding
● Quality manipulate and fine inspection
● Logistics and shipping
● Product evolution and dispute management
What is the minimal order extent ‘MOQ’ a sourcing agent in China can process?
The minimal order volume ‘MOQ’ of any product is calculated relying on the manufacturing unit or dealer requirements, and they vary. However, China sourcing marketers may additionally select to have their ‘MOQ’ involving the economic fee or the minimal quantity of items one can order at any given time.
For instance, a China sourcing agent may additionally have the ‘MOQ’ for product X as $500, while a distinctive sourcing agent might also have the ‘MOQ’ for the identical product as one hundred portions and every piece value $2, consequently translating to $200. The MOQ is now not steady and is variant with one-of-a-kind sourcing agents.
Can you assist me get a dependable Yiwu shopping for agent?
This is pretty easy, and yes. simply like when looking out for any different china sourcing agent, you need to have a precise product in mind.
I believe, ‘promotional merchandise’, as Yiwu is the most enormous world market for ‘inexpensive products.’ The system ought to be:
Ø Choose a phrase extra like ‘Yiwu shopping for agent’ on the search engine.
Ø Pick at least eight sourcing marketers inside the 5 districts of Yiwu or at least have an workplace there.
Ø Make an effort to contact them and time table an appointment thru a video name or any different ability like Skype.
Ø Then after figuring out a few, strive to habits thorough lookup on the offerings they provide relying on your needs.
Can you advocate a Guangzhou, sourcing agent?
Guangzhou is bright with severa sourcing sellers like; Imex sourcing services, Asiaction sourcing, and vitasin to clip on a few. ‘Foshan sourcing’ is amongst these with a legitimate foundation. However, you would like to seem to be even nearer as there are masses of them.
Do sourcing marketers in China furnish logistics and transport support?
Once they acquire a product, most china sourcing agents’ associate with freight forwarding organizations who provide logistics and different comparable services; however, most of these marketers have logistics and delivery help inclusive in their complete package deal as soon as you have interaction them.
Buying wholesale from China is pretty a system and time-consuming. However, this assignment can be effortless and exciting with resource from over fifty china sourcing marketers and suppliers.
The Reasons Why You Need A China Sourcing Agent
Basically, the main feature of a China sourcing agent is to supply and become aware of in shape suppliers primarily based on the technical standards, and character purchaser requirements. The technique of finding out a provider is no longer easy. However, with the assist of expert China wholesale sourcing suppliers, it can be a lot less complicated for a beginner to begin purchasing.
✱ Competitive Price
Believe it or not, most China sourcing dealers may additionally assist you get a a whole lot higher charge towards your own. Why? Because they can collect portions from unique clients collectively to ask for more cost effective charge from the producers and suppliers, and in lesser time as a consequence saving the client time and money.
✱ Quality Control
Most sourcing agent in China are expert in product sampling, manufacturing facility audit and mass manufacturing inspection. They are well-educated how to supply items at certified standard. Hence, limit the hazard of discovering terrible first-rate wholesale suppliers throughout purchasing.
✱ Wide Range of Products Availablity
Different from Chinese wholesale factories who can solely supply restrained product range, with the assist of a China sourcing agent, you will without difficulty get get right of entry to to the contemporary items and apprehend the market style due to the fact they are managing hundreds of merchandise in a whole.
✱ Shipping and Logistics Assist
The Chinese wholesale sourcing businesses additionally cowl the logistics strategies involved, provider verification, warehousing and act as a hyperlink between the patron and the dealer in China.
Generally, they assist the patron perceive real healthy suppliers based totally on patron desires accordingly informing the patron on the tariffs, taxes and any import/export adjustments involve.
To sum up, China sourcing agents assist you a lot on furnish chain management.
How to Develop and Price a New Product for the Global Marketplace
Have a new product idea that shocked the world? what are you waiting for? When developing and pricing new products overseas, the first step should be to check whether similar products already exist on the market and what the prices are. If there are similar products, check out how to differentiate your ideas and use the prices of competing products as a starting point. This is needed to bring products to market and price them fairly.
Let me first sketch that many people sourcing products from abroad will be relevant. like this
You want to launch a good idea on the market: large, durable, lightweight high-style eco-friendly canvas tote bag with waterproof function, adjustable shoulder straps, which can be adjusted according to your comfort, and has multiple internal and external Pocket and can hold baby items and computer equipment at the same time. For user convenience, the bag will include a replacement pad, a tablet pouch, a smartphone case and a laptop case.
With a pencil in your hand, you can draft your idea on paper and prepare it for submission to a potential supplier who can make your product meet specifications. At the same time, you tore off photos from magazines, newspapers and catalogs that look similar to your tote bag style. In addition, you have captured website screenshots of some products that capture the essence of your idea, or combine parts of your idea (baby tote and computer gear tote) or almost all components (color canvas tote )combine it all toghther.
Congratulations! You are ready to show your ideas to the supplier! You are ready to draw sketches, photos and screenshots in a neat and organized way. But wait. You forgot to consider the price. What price are you looking for on this product? What price does the market offer for your products-retail price is $ 25, $ 35 or $ 60 (excluding shipping) of course?
Once you’ve identified a reasonable retail price point, step back from there to see what price you need from your supplier when importing your product. Assume that based on the initial 1,000-bag order, the price per bag is approximately $ 5. Then, when you take into account taxes, duties, customs clearance, transportation and insurance, its landing price (ie home delivery) is $ 11 per bag. This way, your profit per bag is between $ 14 and $ 59. But wait. There is more to consider.
After you import the bags, you must store them somewhere, unless you think you can temporarily store 1,000 bags in the basement. However, if the number of imports is large, you must set up a warehouse, order boxes for luggage, establish a direct transportation process (when someone orders luggage, they must be shipped in stages), and a transportation method. All these steps add extra cost to the product. So now that you’ve deducted an additional $ 7 from the cost of $ 11 per bag to cover all other incidental but significant costs associated with bringing the bag to the customer, you now have a cost of $ 18 per bag. Yes, fortunately, you can still make money. Oh, who will sell the product once it is available on the market?
This is an additional cost for you and others. Now your fees are up to $ 20 per bag, including sales costs, and depending on the retail price, your profit will range between $ 5 and $ 39 per bag. Other factors to consider: Are you going to sell business-to-business (B2B) or business-to-consumer (B2C)? If you sell B2B, the retailer selling the tote will add a high markup (its profit) to your price, making the retail price higher. By selling B2C, you can keep your profits steady and maintain most of your profits, but you will most likely end up selling a small number of bags because you sell one bag at a time instead of selling a bunch of tote bags to a retailer for resale.
Now that you’ve considered pricing and profit, you can start purchasing products and eagerly waiting for product samples.
I will cover these two key steps more fully in another article. Be careful!
Request for Proposal (RFP) and for Quotation (RFQ)
Now that you have analyzed your business requirements and completed your vendor search, you are ready to start the meat-and-potatoes of the vendor selection process. A well-written Request for Proposal (RFP) or Request for Quotation (RFQ) is the key for selecting the best vendor at the best value for your company. Writing a RFP or RFQ is not difficult if you understand the objectives and function of the document.
Decide: Request for Proposal or Request for Quotation
Request for Proposal (RFP)
An RFP is used for services or complex products where quality, service or the engineered final product will be different from each vendor that is responding.
Request for Quotation (RFQ)
An RFQ is used for commodities, simple services or straightforward/uncomplicated parts with little or no room for product or service differentiation between responding vendors. Negotiation points could include delivery schedules, packaging options, etc.
Objectives of a RFP or RFQ
Obtain detailed proposals in order to evaluate each vendors’ response so that the best interests of your company are met on all fronts
Leverage the competitive nature of the vendor selection process to negotiate the best possible deal
Ensure that the interests of all stakeholders within your company will be met and a consensus reached
Puts your company in control of the entire vendor selection process and sets the selection rules up front
Starts building the partnership between you and the vendor right from the start
Sections of the Request for Proposal or Request for Quotation
The RFP or RFQ should contain the following sections. Keep in mind, that each document will be different depending upon the type of company and product you are searching for.
Tailor each section for your individual needs.
Submission Details
Deadlines, mailing address of your company, contact person for questions and clarifications
Introduction and Executive Summary
Write this section last after the entire document is finished. This is used to provide prospective vendors with a brief overview of your company and the requirements for your product or service.
Business Overview & Background
Give a brief overview of your business, products and market sector that you cater to. This will help your prospective vendors understand what business needs you are trying to fill with the vendor selection process. Also, provide important background information that will benefit the vendor when responding.
Detailed Specifications
This should be the longest section of the document. For an RFP, it will contain the qualitative measures and requirements that will drive the vendor selection decision. For an RFQ this section should provide the quantitative measures that you will be looking for in the vendor’s response. Example criterion includes:
Product drawings
Engineering tolerances
Service levels
Milestones
Deliverables & Timelines
Technical or Business Requirements
Software functionality
Hardware requirements
Assumptions & Constraints
Any assumptions and/or constraints that the prospective vendors need to be made aware of must be listed here. Failure to be forthright and upfront with the vendor will open the door to renegotiation of the agreement at a later date and runs the possibility of straining the relationship you have with your vendor. Possible topics include travel expenses, upgrade/modification costs, licensing rights, etc.
Terms and Conditions
Any terms and conditions of the contract must be listed in order for the vendor to make a fair and honest response. These may include financing options, contract length, renewal options, warranties, delivery penalties, service levels, etc.
Selection Criteria
The final section should be an overview of the selection criteria that you will be using to make your decision. Some companies prefer to keep this information totally confidential; while other companies believe this will help prospective vendors focus on what is important to your company.
Distribute the RFP/RFQ to Selected Vendors
Finally, compose a cover letter and send two copies of your RFP or RFQ to each of the vendors that you selected from your search process. Make sure that appropriate contact information is included in order to provide assistance to any vendor that needs it.
6 Step Vendor Selection Process
The vendor selection process can be a very complicated and emotional undertaking if you don’t know how to approach it from the very start. Here are five steps to help you select the right vendor for your business. This guide will show you how to analyze your business requirements, search for prospective vendors, lead the team in selecting the winning vendor and provide you with insight on contract negotiations and avoid negotiation mistakes.
Analyze the Business Requirements
Before you begin to gather data or perform interviews, assemble a team of people who have a vested interest in this particular vendor selection process. The first task that the vendor selection team needs accomplish is to define, in writing, the product, material or service that you are searching for a vendor. Next, define the technical and business requirements. Also, define the vendor requirements. Finally, publish your document to the areas relevant to this vendor selection process and seek their input. Have the team analyze the comments and create a final document. In summary:
Assemble an Evaluation Team
Define the Product, Material or Service
Define the Technical and Business Requirements
Define the Vendor Requirements
Publish a Requirements Document for Approval
Vendor Search
Now that you have agreement on the business and vendor requirements, the team now must start to search for possible vendors that will be able to deliver the material, product or service.
The larger the scope of the vendor selection process the more vendors you should put on the table. Of course, not all vendors will meet your minimum requirements and the team will have to decide which vendors you will seek more information from. Next, write a Request for Information (RFI) and send it to the selected vendors.
Finally, evaluate their responses and select a small number of vendors that will make the “Short List” and move on to the next round. In summary:
Compile a List of Possible Vendors
Select Vendors to Request More Information From
Write a Request for Information (RFI)
Evaluate Responses and Create a “Short List” of Vendors
Request for Proposal (RFP) and Request for Quotation (RFQ)
The business requirements are defined and you have a short list of vendors that you want to evaluate. It is now time to write a Request for Proposal or Request for Quotation. Whichever format you decide, your RFP or RFQ should contain the following sections:
Submission Details
Introduction and Executive Summary
Business Overview and Background
Detailed Specifications
Assumptions and Constraints
Terms and Conditions
Selection Criteria
Proposal Evaluation and Vendor Selection
The main objective of this phase is to minimize human emotion and political positioning in order to arrive at a decision that is in the best interest of the company. Be thorough in your investigation, seek input from all stakeholders and use the following methodology to lead the team to a unified vendor selection decision:
Preliminary Review of All Vendor Proposals
Record Business Requirements and Vendor Requirements
Assign Importance Value for Each Requirement
Assign a Performance Value for Each Requirement
Calculate a Total Performance Score
Select the Winning Vendor
Contract Negotiation Strategies
The final stage in the vendor selection process is developing a contract negotiation strategy. Remember, you want to “partner” with your vendor and not “take them to the cleaners.” Review your objectives for your contract negotiation and plan for the negotiations be covering the following items:
List Rank Your Priorities Along With Alternatives
Know the Difference Between What You Need and What You Want
Know Your Bottom Line So You Know When to Walk Away
Define Any Time Constraints and Benchmarks
Assess Potential Liabilities and Risks
Confidentiality, non-compete, dispute resolution, changes in requirements
Do the Same for Your Vendor (i.e. Walk a Mile in Their Shoes)
Contract Negotiation Mistakes
The smallest mistake can kill an otherwise productive contract negotiation process. Avoid contract negotiation mistakes and avoid jeopardizing an otherwise productive contract negotiation process
Introduction to Outsourcing
Outsourcing has seen a lot of press over the years. Some look to outsourcing as the savior of their company, while others see outsourcing as an evil, job-killing management tactic. Before you start to evaluate if an outsourcing strategy is right for your company, you need to understand what it is and what it is not.
Outsourcing Defined
Outsourcing is the contracting out of any task, operation, job or process that was originally performed by employees within your company to a third party for a significant period of time.
These outsourced functions can be performed by the third party on-site or off-site. Hiring a temporary employee while your secretary is on maternity leave is not outsourcing.
The most common story of outsourcing in the news today involves jobs that are sent overseas to countries like India or China—often manufacturing jobs, but outsourcing is not limited to this sector. It is more commonly called offshoring. Examples include customer service and tech support call center jobs, as well as computer programming jobs. Examples of jobs that are generally safe from being moved overseas are janitorial services and security services, though completely outsourcing a department or division of a company may remove the need for these jobs in that location so that they can be eliminated.
Why Outsourcing?
There are many reasons why a company may choose to outsource a particular function of their business, which may include:
Resource Shortages
A particularly strong reason to outsource involves a shortage of a critical resource. This can be available employees that possess knowledge in a certain area (e.g., engineers), the availability of raw material (e.g., petroleum or minerals) and an available labor force that possesses a necessary level of expertise at the right price.
Realignment with Core Business
Some peripheral operations are outsourced frequently. It gives the managers the ability to concentrate on the core business issues instead of devoting resources to areas that may be necessary but are not related to the business’ core competencies. A good example is a major hospital that outsources its security operations to an outside company that specializes in security.
Cost Savings
The prices of labor and/or materials keep increasing, and competition keeps forcing prices lower. If there is an outsourcing solution that can save your company money and overcomes the disadvantages of outsourcing, these areas should be investigated.
Business Flexibility
Seasonal or cyclical demands that ebb-and-flow put varying demands on the resources of the company. An outsourcing contract could provide the flexibility needed to stabilize these varying demands. Example: A business brings in extra accountants during tax season and when being audited by the holding company that owns the business.
Reduced Overhead Costs
Some functions require a large outlay of money just to get started. This expenditure could be avoided by contracting with a third party. For example, outsourcing a call center rather than undertaking a costly expansion to the telephone system and office space to meet increasing customer service demands.
Common Outsourced Areas
Although many areas and functions are outsourced, here are some of the frequently outsourced areas:
Information Technology Functions
Network and Telecommunications
Human Resources and Insurance Administration
Accounting
Marketing
Security
Things to Know Before Starting an Import/Export Business
I hope I am not dreaming. I heard you have a great product ready to import or export, now all you need to do is get it in the hands of a few good customers, and you are off to international trade nirvana. Wait, not so fast. How do you know the product will sell? Will you make money selling it? How should you price the product? All importers and exporters must face these questions at some point if they want to achieve success in the global marketplace.
Here are a few solutions to guide you in the process.
Have a Quality Product or Service
Start with a product or service that you know will sell—if not everywhere, at least somewhere. You will improve your odds of picking a winner if you cultivate a knack for tracking trends, spotting potential trends or even creating game-changing trends. Remember the popular line of stuffed animals called Beanie Babies (as shown), or the Cabbage Patch dolls? Had you realized those products’ export potential early on before they became best-selling products, you would have made yourself a millionaire four times over in a very short period. The same holds true for Japan’s Hello Kitty line of products, which is based on a fictional character produced by the Japanese company Sanrio in 1974. Had you found that product early on and asked for exclusivity from Sanrio to market it in the United States, your company name would be mentioned here as a success story.
That’s the kind of foresight needed to pick import and export winners.
Track Your Financials
No matter what form of business you run, you don’t want to wait until you get to the end of your calendar year to find out where you stand in terms of profit and loss. It’s best to prepare monthly financial—income statements, balance sheets, and cash flow statements—as you go.
If you haven’t made a sale yet, you are probably asking yourself at this point why you need to keep these detailed financial records. It’s simple: Even though you may have minimal sales, or none at all, in the first few months, you are still spending money. You have expenses. And sooner or later, every business needs working capital to grow.
Another situation that requires monitoring expenses would be one in which, after running your company for a few months, you decide to go to a bank for a loan to help grow your business. Before the bank decides if you’re a good credit prospect, it needs to see some details on your company’s financial history—namely, your year-to-date sales, expenses, profit-and-loss statement, preferably prepared by your CPA or a reputable accounting organization. This not only helps you control costs but also tells you at a glance if you are making money or losing it and where adjustments need to be made.
Develop Competitive Pricing
Whether you are importing or exporting, you must develop competitive pricing that includes your profit margin or commission, whatever the case may be. Consider the following criteria to determine just how high or low you can go on your markup:
• Uniqueness: Are you first to market—then price higher.
• Quality: Is the product quality upscale or marginal—price accordingly.
• Your cost: If it’s high, keep your markup low.
• Newness: Price higher on newer and lower on established.
• Customer contact: Did the customer ask for your product or did you approach the customer?
• Product Positioning: Place it in the best light to determine the price at which you will be able to sell it.
• Direct: You can afford a higher profit margin.
• Competition: Price to play (compete) in the global game.
• Government policies: Can have a direct and indirect impact on pricing policies.
• Are you associated with an internationally known celebrity? Consider yourself fortunate to be working with a celebrity, and go for the higher price.
Quality In The Purchasing Process – Optimized Supply Chain Impact
Introduction
Quality is an important part of the supply chain, whether it is quality inspections during the manufacturing process, quality checks before goods arrive at the customer, or checking the quality as raw materials and parts enter the factory.
Before any part or raw material is used in a manufacturer of a finished good that will be delivered to a customer, it is the responsibility of the purchasing department to ensure that the materials that arrive are of the correct quality specification.
Quality in the Purchasing Process
When the purchasing department is looking at the procurement of materials from suppliers they will have been given some guidance by the manufacturing department, research, and development, or the quality department.
This should include a variety of information about the item to be sourced, such as:
Physical description
Dimensional measurements
Chemical composition
Performance specifications
Industrial standards
Brand name
Physical Description
The purchasing department must know the physical attributes of the part they are required to source.
For example, if the required material must be made of a certain shade of a blue, then the purchasing department must be able to communicate that requirement to the potential suppliers to ensure that the specification can be met.
Chemical Composition
This is very important for sourced materials that are used in the chemical process.
The quality department should give the purchasing team a detailed list of chemical specifications of the required material. This should include a list of characteristics and specifications that the materials should conform to, as well as the ranges that the materials must lie within.
For example, a sourced chemical may be required to have a pH of between 5.6 and 5.9; otherwise, the material would not be suitable for the manufacturing processes.
Dimensional Measurements
For a part to be used in the manufacturer of a machine the part must conform to certain dimensional specifications.
For example, if the manufacture of a finished item required the use of a Pentalobe TS1 screw with a length of 4mm, then the supplier must be able to produce the item in that correct size.
Performance Specifications
If a part is required to withstand certain forces or perform in a particular manner, the purchasing department must find a supplier that can achieve those specifications.
For example, on a household item such as a washing machine, the rubber belt that is used must be bale to withstand certain forces and not fail within a certain number of revolutions. This quality measurement is key for a business if they are to produce finished goods that are reliable in the eyes of their customers. Therefore, it is important for the purchasing department to find suppliers who can provide parts that meet quality specifications.
Industrial Standards
Some parts required in the production of finished goods must conform to certain industry standards.
These standards are set by a number of trade or industry groups who try to maintain a certain level of quality.
By having an item that conforms to a particular industry standard, the customer will have a level of confidence in the product.
There are a number of industry standards that are used, such as Society of Automotive Engineers (SAE), which is a global association of more than 128,000 engineers and related technical experts in the aerospace, automotive and commercial-vehicle industries. The society has hundreds of standards that relate to different technical aspects of manufacturing.
Brand Name
Sometimes the quality department or development team will inform the purchasing department to only source a particular brand name.
This may be due to the specific nature of the part made by one company or the level of quality it has over competitors.
Summary
The quality of the parts and raw materials that are used by a company makes a difference to the finished products that are sold to their customers.
By ensuring that the purchased parts are of a specific quality, as defined by the development, manufacturing, or quality departments, the purchasing department is ensuring that the quality of the finished goods is maintained.
Learn Some Great Ways to Save Money Importing
Got a great product idea? Then get ready to source and import it. The whole point of importing is to broaden your selection of suppliers worldwide, lower prices and increase profit margins, all part of a global strategy to become a competitive force in the marketplace. Let’s take a look at how to do that.
Order It on the Cheap.
Let’s say you ask a United States manufacturer to make hammers for you to complement your already existing line of hardware products; they cost $1/unit based on a minimum order of 10,000 units.
You ask a manufacturer in Korea to make the same hammer and it’s 25 cents a unit based on a minimum order of 5,000 units.
Even after adding transportation, your markup, tariffs, duties, exchange rates, and insurance fees to your price, you will still net a cheaper price per unit going with the Korean supplier versus the U.S. supplier. Shop around. This may not always be the case, but you’d be surprised at how manufacturers in countries with low labor costs can produce goods at remarkably cheap prices. And the quality is acceptable provided you keep your eye on it.
Buy Large Quantities to Keep Your Transportation Cost Down
There is a huge difference between ordering 1,000 units versus 10,000, and it’s not just in the number. It’s also in the freight savings. Say it costs $500 to ship 1,000 hammers, or $.50/unit. From the same manufacturer, to ship 10,000 units, its $700, or $.07/unit. It pays to negotiate larger orders to save money on freight costs.
Oftentimes, the price per unit also goes down when you order larger quantities.
Import From a Country Close to Yours to Save on Transportation Costs
Are you based in the United States? Then think about importing from Mexico or Canada. The proximity shortens the transportation route, reduces the freight expense and allows for faster deliveries.
Plus, NAFTA offers some nice international trade incentives.
Purchase the Same Product in Different Colors
On those hammers, most likely you will pay a one-time investment for the design and the manufacturing mold to produce it. Ask your supplier to make it in five different colors. Spread the investment over many SKUs (standard stock-keeping units) to save money. Besides, your customers will be happy with so many choices.
Track Your Imports with Online Software
There are a variety of software packages available online that will help you track your sales, inventory and order fulfillment in real time and all with the goal of boosting the delivery speed of your shipments while saving on transportation. Check out Visco Software for Importers and Industrious Software.
Establish Creative Payment Terms
Instead of paying for goods in full upon delivery, ask your supplier for a time payment, usually, 30, 60, 90, or even up to 180 days to pay the amount in full after title to the goods is transferred to you. Importers prefer this payment method, but obviously, it will compromise your supplier’s cash flow. Negotiate until it is a win-win for both parties. Check out “Methods of Payment: Terms, Conditions and Alternative Financing Sources for Export Sales” for more ideas that can equally apply to importing.
How to Source Products from Overseas
Globalization and the internet have made sourcing products from overseas more accessible than ever before. The ability to get access to products at significantly lower prices has made sourcing a very appealing option for many businesses. Small and large businesses alike are utilizing web resources to gain access to vendors that were once out of reach.
However, sourcing products overseas may seem like an overwhelming task for those who have never done it before.
To demystify the process, I’ve outlined a simple step-by-step plan to help you get started.
Difficulty: N/A
Time Required: Varies
Here’s How:
-
Choose a Product
The first step is to decide what type of product you are looking to source. A well-defined product is a key to success, efficiency, and profitability. Most people choose to source products overseas because they are looking for a way to earn a quick buck; the problem with this approach is that there are so many other variables that a person needs to think about. Ask yourself:
- Is there a target market that wants this type of product?
- Does your product fill a need within this market?
- Are you trying to source a niche product or are you looking for a variety of different products to sell?
- What are some of the benefits and drawbacks of your product?
- Does this product interest you in any way? Would you buy this product for yourself?
There are many reasons why you want to take the time to answer these questions. You will be investing time, effort and financial resources toward sourcing your products from overseas, taking the time to think through what you are trying to accomplish will only help you. For instance, does it make sense to invest in a product that has no customer base?
-
Identify Specific Countries
Not every country produces every type of product, and certain countries have advantages that keep costs to a minimum. Therefore it is essential that you figure out what countries specialize in the products that you trying to source. For instance, China has access to a great deal of metal whereas other countries don’t. Consequently, if you are trying to source a metal home furnishing product, then China would probably be the best country for sourcing.
A couple of great resources to explore are Background Notes and Country Commercial Guides. Both sites will help you hone in on the specific countries that specialize in your product.
This simple step will save you a tremendous amount of time and headache when looking for overseas suppliers.
-
Find a Supplier
Once you have identified the optimal country for production, it’s time to find a supplier. The great news is that there is an abundance of web resources to help you find the supplier that best fits your needs. Thomasnet.com and Globalsources.comare excellent resources that can help you get started quickly. Simply type in your product and country of origin and you will be shocked at the sheer number of overseas suppliers. For a more comprehensive guide to finding overseas suppliers, check out Supplier Guide to Sourcing Your Product Overseas.
-
Choose the Right Supplier
Once you’ve identified suppliers, take a moment to research each of the companies on your list. Begin with a quick Google search; look for reviews, detailed company information or problems related to this supplier. The more background information you have about the supplier, the better!
When contacting the supplier, make sure you ask the questions that matter to you. Here are some sample questions to think about:
- What specific products does the supplier offer?
- Are their minimums when ordering their product?
- What discounts do they offer for purchasing larger quantities?
- How long does it take to ship an order from time of purchase?
- Does the final price include shipping and duties/taxes?
For a comprehensive list of questions, check out the Overseas Supplier Checklist. Every supplier has their own rules and requirements. You can choose the right supplier simply by identifying the requirements that best meets your business needs. Also, be an informed consumer; don’t be afraid to contact several suppliersto compare prices.
-
Request Product Samples
Before you purchase anything from an overseas supplier, insist on receiving a product sample. The main reason to request a product sample is to ensure that you review the quality of the product. You do not want to work with any supplier that skimps on quality.
Another great reason to request product samples is to have the ability to present actual products to prospective customers.
The more ammunition you have to set yourself up for success, the better the outcome. So my advice to you is to request a product sample before you finalize any agreement!
-
Finalize Agreement with Overseas Supplier
You are now ready to finalize an agreement with an overseas supplier. Make sure you have everything in writing as issues typically arise when language barriers exist. Some key points of an agreement between an overseas supplier and a US importerare:
- Product Specifics
- Pricing
- Payment Terms
- Shipping Terms
- Delivery
For a comprehensive list of overseas supplier agreement options, check out the Overseas Contract Checklist.
-
Start Sourcing Now
As you can see, there are seemingly infinite opportunities for sourcing products overseas thanks to globalization and the internet. Just follow the simple steps above, and you will be on your way to sourcing success!
How to Outsource Your Shipping
When you run an ecommerce business, one of the most important details to handle is how you will ship your products to your customers. While shipping out of your garage works well in the startup stage, once you outgrow this phase, that model becomes unsustainable.
There comes a point in every business owner’s life when they realize they need to streamline their logistics process, said Krishna Iyer, director of strategic alliances for ShipStation. If you’ve reached that point, you may be wondering how to affordably outsource your shipping needs to third-party providers with the least disruption to your customers and to your business.
Business News Daily spoke with industry experts to help small online retailers determine whether now is the right time to outsource, and if so, how to do it. [Learn about ecommerce shipping basics in our guide.]
Should you outsource your shipping?
If you’ve been shipping products out of your home, trusting a third party can be difficult. Iyer said business owners need to take a hard look at their finances to decide if it’s time to use shipping software and/or hire another company to handle shipping for you.
“When looking to outsource shipping, business owners should consider where they are shipping products to most often, how intricate their fulfillment procedures are, what the returns experience looks like for their customers and what markets they would like to expand to,” Iyer said.
Iyer listed a few pros and cons of outsourcing.
PROS
- Outsourcing allows merchants to focus on their core competencies, such as product development, marketing and long-term growth strategy
- Third-party shippers are often better suited to handle shipping, packing and fulfillment
- You can decrease your business’s order-fulfillment time and possibly save your customers money
CONS
- If you sell large products, it may cost more in the long run because of the extra warehouse space needed to store your products
- Some third parties have complex pricing structures that can be difficult for merchants to understand
- Sometimes the returns process suffers when using a third-party shipping company. (Some customer service functions are out of your hands.)
Options for outsourcing
Online retailers have a few different options to consider when outsourcing, including renting warehouses, drop-shipping and using third-party logistics (3PL) companies.
“It really depends on your business and what you’re selling, and the materials you need to do business,” said Sam Ely, director of LTL operations at uShip.
Warehouse rentals
This practice is common among growing online retailers. Merchants rent warehouse space near high-population areas so goods can be delivered to consumers faster and cheaper than they otherwise could from business owner’s or the manufacturer’s location. (Shipping software can help you remotely manage your inventory and orders.)
Drop shipping
If you don’t want the hassles that come with renting warehouse space, drop shipping bypasses warehousing and allows you to ship orders and track inventory directly from the drop shipper. Instead, when a customer buys a product, you, the merchant, buys the inventory from the drop shipping company that then ships the products to the customer directly.
Third-party logistics
3PL is a broad term that encompasses many different services, but, essentially, it’s hiring another business to optimize your supply chain. This could mean everything from handling the entire shipping process to warehousing, controlling the inventory process, providing in-depth reporting, etc.
Going with a 3PL over the other outsourcing options comes with a hefty price tag, which might be difficult for some small businesses to handle. As a business owner, you need to weigh the pros – not having to deal with the nightmarish web of shipping duties – with the cons, like the large upfront investment these services require.
How to choose a provider
As you weigh your options, Iyer offered some tips for finding an outsourcing partner.
Understand your business’s needs. Envision the customer-fulfillment and delivery experience you want your customers to have, then communicate your business’s needs to the providers you are considering. It also helps to involve your company’s various departments early on, which can mitigate potential issues later.
Shop around. “Understand the line-item costs for each item fulfilled,” Iyer said. “Don’t be afraid to ask for a sample invoice breakdown and a projection of what a bill will look like.”
Iyer noted that most 3PLs (if that is what you choose) are locally owned and operated, so they can be fairly flexible with invoicing structures. Find one that really fits your needs, and ask for references with companies that are in similar industries if possible, he said.
Ask questions. As cliche as “open communication” and “asking lots of questions” may seem, it is crucial to find the right provider, because it can save you a lot of headaches further down the road.
“[Third-party shippers] should … have a lot of transparency in what they are doing, how they are doing it and why they are doing it,” Iyer told Business News Daily. “After all, it is your product and why a customer is buying from you.”
One important area to consider is how a third-party vendor might handle customer returns.
“How much do they put on the customer versus utilizing tools, i.e., printing a return label on the front end for a product or having the capability to print and email a return label?” Iyer said. “How does the third party process the return when it comes in? Can they utilize low-cost return methods? These are critical questions [to ask] in keeping costs down and ensuring a better customer experience.”
The future of logistics
To get a glimpse into the future of ecommerce logistics for retailers, one needs only to look at the industry’s biggest player: Amazon.
In 2015, Amazon spent $11.5 billion on shipping, which, at the time, amounted to 10.8 percent of its sales. Last year, the ecommerce giant created an in-house shipping company, quite possibly changing the game for everyone.
“All eyes are on Amazon given its enormous investment in logistics and desire to control the supply chain, from sourcing to transoceanic movement to warehousing to final mile delivery to the home,” Ely said. “Technology will play a big part in optimizing that effort for them.”
“Products are getting from the manufacturer/vendor to the customer faster than ever,” Iyer added. “It will be interesting to see if the creation of more shipping options then creates new products, modes of transport or other levels of innovation that we have not foreseen yet.”
How to Turn Your Idea Into a Product and Launch It
Every product out on the market today started as an idea in someone’s head. From a mobile device to a software platform or a kitchen gadget, most items you can purchase came to life through the process of invention.
The road from concept to finished product can be a long one, and those who travel it often face numerous obstacles and setbacks. But armed with the right information and resources, you can put yourself on the path to bringing your invention to market. Here’s what you need to know to get started.
What you need to do
Turning your idea into a reality is a bit more complicated than just handing your design over to a manufacturer or developer and waiting for the profits to roll in. In an article on Entrepreneur.com, author Tamara Monosoff outlined some of the basic steps you’ll need to take before your product hits the shelves.
Market research. Before you spend a lot of time and money creating a product, you should know if anyone will want to buy it. Look at what’s out there and size up the competition. Do products that are similar to your idea exist, and if so, where are they sold and who’s buying them? Answering these questions will give you an idea of your target market, as well as what you’ll need to do differently to stand out from your competitors.
Patent research. Would your design infringe upon someone else’s copyright or intellectual property (IP)? Visit the U.S. Patent and Trademark Office (USPTO) website and investigate any patents on items like the one you want to invent. If you have questions or want to be sure your invention is legal for you to create and sell, consult with an attorney specializing in patents and IP law.
Develop a prototype. Once you’ve found your market and ensured that your legal path is clear, it’s time to start bringing your idea to fruition. Monosoff said a good prototype can be as basic as a drawing or diagram, or as complex as a working, professional product.
At this point, you’ll need to decide if you’re going to have your product manufactured or licensed. The former means you’ll create and sell your product yourself (this includes paying a third party to manufacture your product); the latter means you’ll sell another company the rights to make, use and sell your products, granting that right in exchange for a license fee and royalty payments. More information about the pros and cons of each method can be found in these articles on FindLaw and IP Watchdog.
The challenges of inventing
Success in the world of innovation is all about getting your timing right. If you wait too long, someone else will have capitalized on a similar idea and captured your niche already. On the other hand, if your invention is the first of its kind, the market might not be ready — and you’ll have to fight an uphill battle to carve out a place for your product.
Henry Helgeson, CEO and co-founder of Cayan, faced this issue as a mobile payments technology company in 2011, several years before mobile payments became mainstream. For other startups on the “too early” side of innovation, he advised perseverance, to get ahead of your competitors when the market does catch up.
“Peers in our industry [said mobile payments] would never happen, but we kept moving and got a three- to four-year jump on everyone,” Helgeson said. “It takes a while … it’s not something you can build up overnight. But once you have momentum going, it’s very powerful.”
If you’re on the later end, Helgeson said you’ll need to take a look at your competition and decide if it’s something you want to continue with, or if you’d be better off going in another direction with your invention.
“There [should always be] a sense of urgency, to fix what you need to, make the change and [get the product] back out to market,” he said. “As long as you do it quickly, it’s OK.”
Another big challenge for inventors is figuring out how to get their product out to the public. It may not even be something you consider at first — your idea may be great, but without a marketing plan, no one will ever know about it.
“In hindsight, we were too focused on our product, and thought it would sell itself,” Helgeson said. “You need a plan to [market it].”
Nicole Lininger, director of corporate communications at InventHelp, an inventor service company, said that many entrepreneurs who are just starting out don’t have a large advertising budget to promote their inventions. But that doesn’t have to stand in their way, she said. Lininger recommended starting off with a strong social media marketing plan, which is cost-effective and wide-reaching.
Tips for success
Ready to turn your product idea into a reality? Helgeson and Lininger offered the following advice for aspiring inventors and entrepreneurs.
Take time to research. Inventing a product requires a lot of initial investigation, patience and resilience, Lininger said. Before you begin the process, make sure you have the time to dedicate to due-diligence research. This is especially true when you’re looking at patent protection for your idea.
“Do some research into intellectual property and familiarize themselves with the process and the jargon used in the field, including patent, copyright, trademark, etc.,” Lininger said. “There are numerous reputable sites you can learn from, such as the United States Patent and Trademark Office, World Intellectual Property Organization and World Trade Organization. If patent protection is something you are interested in, contact a patent lawyer.”
Continually test your product. Helgeson reminded entrepreneurs that their products are not going to be perfect in their first iterations. You’ll have to tweak the product and make some changes along the way, and the best way to figure out those changes is by testing your invention with real consumers. Get honest feedback from test groups as a way to validate your idea, he said.
“The validation process needs to happen on a regular basis,” Helgeson told Business News Daily. “If you’re trying to do something, and the market tells you [they want] something else, you might be going down the wrong path. Be out there in the field … talking to people, being part of industry conversations. You can’t sit in a room and try to dream something up.”
Work on your elevator pitch. Even before you have a finished product to sell, you’ll need to start talking it up to your friends and professional contacts. Lininger emphasized the importance of developing a great elevator pitch — a short, concise sales pitch that includes a hook, a value statement, statistics and other data, your product’s uniqueness, and a call to action. Learn more about creating such a pitch here.
Don’t go it alone. There are a lot of steps involved in the invention process, and it can be overwhelming to try to take care of everything yourself. Lininger advised seeking out professional assistance so you can be assured that certain elements of the process will be in capable, experienced hands. For instance, you may want to turn to a service like InventHelp if you’re looking for a way to get your idea in front of companies or develop your prototype, or Rocket Lawyer if you’re looking for a qualified, on-demand patent attorney.
How to Find a Good Sourcing Agent in China
Are you looking for an overseas factory to manufacture your products? Rather than searching for a factory yourself – a task akin …
Are you looking for an overseas factory to manufacture your products? Rather than searching for a factory yourself – a task akin to the proverbial needle in a haystack, especially from afar — look for a good sourcing agent or sourcing company to do that work for you. A good sourcing agent, either in the U.S. or in country, can:
1. Locate factories that have equipment and talent that matches your needs.
2. Determine which factories or suppliers will meet deadlines and provide efficient service.
3. Negotiate good prices.
4. Place orders, handle currency issues and pay suppliers.
5. Inspect factories for quality and ethical practices.
6. In some cases, inspect your finished goods before they’re shipped to you.
Here’s what you need to know about choosing a sourcing agent:
Visit trade shows
A good sourcing agent will have a deep understanding of your industry and of the country in which you want to do business. As a result, your industry’s trade shows may be the best places at which to locate a sourcing agent. Like the quality of products made by a colleague in the same industry? Ask him or her for sourcing agent recommendations.
Decision time: a U.S.-based, global, or in-country sourcing agent?
There are advantages and disadvantages to both domestic and in-country agents. A domestic sourcing agent may be larger and broader in scope – for instance, if you want to manufacture products in several countries, a domestic sourcing company with access to, say, factories in China and Vietnam may provide you with a single point of contact. On the other hand, local representatives can help small companies get started for relatively affordable prices; they’re often paid on commission, as opposed to larger domestic companies, which typically work on contract and expect a portion of the fee up front. In either case, ensure that representatives are fully bilingual.
Globus & NTDB.
Get the best prices
A good sourcing agent should get bids from several different factories for you. In addition, make sure that the agent doesn’t have financial ties to any particular factories. Also be aware that in some countries, sourcing agents receive commissions or kickbacks from the factories they choose; this practice can compromise their objectivity, to say the least.
Maintain ethical practices
These days, it’s important to ensure that overseas factories aren’t employing underage workers or treating their employees poorly. You’ll need to inspect factories before you sign a contract, but you can also do business with sourcing agents who make a point of doing business responsibly.
- Have a sourcing agent sign a non-disclosure agreement before you give him or her information about your new product.
- Once he or she has signed an NDA, give the agent as much information as possible, including specifications, measurements, and drawings, about the product you want produced.
- Once you’ve chosen a factory, start with a small product run and inspect it before it leaves the factory.
- Once you’ve chosen a factory, start with a small product run and inspect it before it leaves the factory.
How to Find an Overseas Manufacturer: A Primer on Global Sourcing
You have a great new product that you want to take global. Now, you need to find someone to manufacture that product. Do you know where to find a manufacturer overseas? I do.
Contract manufacturing is when a company arranges to have a local or overseas manufacturer make all or part of the product. Typically, the hiring firm provides a design or formula to the contract manufacturer to replicate or improve. The selling and marketing of the product is left to the hiring company, unless other arrangements have been made. Now, this same process tends to be referred to as outsourcing if it involves a business function, especially if it’s done across borders, or global sourcing if it involves finding an overseas manufacturer.
Factors to consider before you select an overseas manufacturer
Before you start the process of finding an overseas manufacturer, you need to determine if you are ready. That said, I suggest that first, you read the following two articles:
- “Is Global Sourcing For You,” which discusses 20 questions to ask before you begin. Is global sourcing a good fit for your business? Make sure you have determined that global sourcing is right for you before proceeding any further.
- “How to Develop and Price a New Product for the Global Marketplace” because it emphasizes why it is important to check if there is a similar product to yours already on the market. If there is a similar product, see how your idea can be differentiated and, of course, use the competing product’s price point as a starting point for yours.
As you assess a potential overseas manufacturer, make sure it has most—if not all—of the following characteristics:
- A good, clean, well-managed facility
- It is ISO-certified, meaning the company is meeting quality standards
- It has drop-ship capabilities (direct to customers)
- It has the ability to be flexible and absorb market fluctuations
- It can keep up with demand on product
- It has synergies with your company
- It is highly reputable in the marketplace
- It is financially sound
- It solves your specific production challenges
As you analyze supplier pros and cons, it helps to address some other key questions. For instance, how far away is the supplier? Does the U.S. have any trade agreements with the country, and how do you plan to pay for the goods? What is the product quality like, is it satisfactory? Are you in a hurry, and will the supplier be able to meet your demands on time? For a more in-depth look at some deciding factors when choosing a supplier, see my article on Factors to Consider When Outsourcing.
Many business owners turn to overseas suppliers to curb rising production costs and to boost global competitiveness. To ensure you’re on the right track to success, keep the following things in mind:
- Source to a country with low labor costs and good quality control
- Source to a country where you can take a plane ride with comfort and ease
- Source to a country where you can understand the language
- Source to a country where you can respect and abide by the laws
- Source to a country where you can trust the people you do business with
Where to look for help in finding a product manufacturer overseas:
Now that you know the ins and outs to selecting an overseas manufacturer, it’s time to find one. Each of these resources provides a wealth of information on potential manufacturers.
1. Global Sources
A B2B marketplace connecting buyers, suppliers and manufacturers. For more information on what Global Sources can and can’t do, read “An Inside Guide on Sourcing in China.”
2. Alibaba
Here you can find manufacturers, suppliers, exporters, importers, buyers and wholesalers. For more information on Alibaba’s capabilities, read “A Short Course on Alibaba.”
3. ThomasNet.com
A product sourcing and supplier discovery platform for procurement professionals, engineers, plant and facility management.
For additional information relating to sourcing and product quality, read, “Where to Source Products and What To Do If You Receive Crappy Product Samples From Overseas.”
Am I missing anything? If so, please leave a comment and share your thoughts.
How To Find a Manufacturer or Supplier for Your Product Idea with China sourcing agent
If you’ve been reading our previous posts on finding niche ideas and evaluatingg products to sell online, you may have started coming up with some ideas of your own. This can be an interesting time for an entrepreneur as momentum begins to build and excitement grows the more you think about your idea.
However, time and time again, many entrepreneurs find themselves hitting a brick wall and losing momentum when it comes time to actually source products. Whether it be manufacturing your own product or finding suppliers to purchase wholesale from, they aren’t always easy to find.
In this post, we’re going to look at the basics of sourcing a supplier for your next project. We will look at some places to search, how you should approach them and what to ask.
Let’s dive in.
The Basics – What Are You Looking For?
For the purpose of this post when we refer to suppliers, we are referring to anyone that has the capability to provide you with products and inventory. This encompasses manufacturers, wholesalers and distributors.
There are a ton of helpful resources to be found online just by searching Google. However before you begin, there are a few things you should know and decide.
First, you should determine what type of supplier you’re looking for. This will help determine the terminology you need to use in your research. I would highly suggest you start by reading our post on Make, Manufacturer, Wholesale or Dropship.
There are several options, with the most common being:
- A manufacturer to produce your own product idea
- A supplier, who may also be a manufacturer, wholesaler or distributor to purchase already existing brands and products
- A dropshipper to supply products and fulfill orders of already existing brands and products
Domestic vs. Overseas Suppliers
A classic question when looking for suppliers if you plan to manufacture or wholesale is whether you want to source domestically or from overseas. Overseas can refer to any location overseas but usually, and for the purpose of this post, refers to Asian countries like China, India and Taiwan.
You likely already know that it’s almost always cheaper to source your products overseas but there’s a lot more to that decision than just the upfront investment and cost per unit.
Both domestic and overseas sourcing have their advantages as well as disadvantages which we will take a look at below:
Domestic Sourcing
Advantages
- Higher manufacturing quality and labor standards
- Easier communication with no language barrier
- Marketing appeal of being made in North America
- Easier to verify reputable manufacturers
- Faster shipping time
- High intellectual property right protection
- Greater payment security and recourse
Disadvantages
- Higher manufacturing costs
- Less product choice (There are many items that just aren’t made in North America anymore)
Overseas Sourcing
Advantages
- Lower manufacturing costs
- High number of manufacturers to choose from
- One-stop services like Alibaba have made it easy to navigate suppliers
Disadvantages
- Lower perceived quality from customers
- (Usually) lower manufacturing and labor standards
- Little intellectual property protection
- Language and communication barrier can be difficult to navigate
- Difficulty/costly to verify manufacturer and visit on-site
- Longer shipping time
- Cultural differences in business practices
- Product importation and customs clearance
- Less payment security and recourse
Where To Begin Your Search
Now that you have a better idea of exactly what you’re looking for, as well as the advantages and disadvantages of domestic vs. overseas sourcing, where do you begin your search? Naturally, the internet is the best place to start, but there are a few places in particular that can help with your search.
Directories
Some of the best sources can be free online supplier directories. These directories can contain profiles for hundreds or thousands of manufacturers, wholesalers and suppliers. Below, we have listed out a few of the most popular ones below for both domestic and overseas suppliers:
Online Domestic Directories
Online Overseas Directories
The Depths of Google
Over the last handful of 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 and in particular, Google’s algorithm changes. Their websites are usually old, sparse on information and most certainly are not search engine optimized.
So how do you find suppliers on Google? For the first time ever, you’ll need to explore page ten 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 you make yourself familiar with Google’s search shortcuts to improve the quality of your searches, thus the results.
Local Library
You may also want to consider dusting off your library card and heading to your local library. Many libraries pay monthly subscription fees for online business and manufacturer directories that you normally wouldn’t have access to, or you would have to pay a large amount of money for, like the Scotts Online Business Directory. These directories contain profiles for many manufacturers, wholesalers and distributors in North America, depending on the exact directory.
Make sure to give your local library a call ahead of time and ask them if they have access to these types of private directories. For larger libraries, you may need to chat with the business and technology department.
Referrals
Some of the best leads can come from referrals by friends and family. Social networks have made it much easier to get the word out so make sure to use these channels.
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 will likely have great contacts and many would be more than happy to refer you to someone that might be a better fit.
Other Research Tips
Another possible way to search 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 industry and product you can think of is attached to a NAICS code. Sometimes manufacturers and suppliers may list their products by the NAICS code which can make your product manufactures and suppliers easier to find, especially if you’re using professional directories.
The NAICS directory can be found at your local library or on the Internet at:
USA – NAICS Code
Canada – NAICS Code
Requesting A Quote
Once you’ve found a suitable supplier, how do you approach them?
The biggest question you’re going to have is “how much?” but before you hastily send the supplier your request for quotation (many times referred to as a RFQ), take a few minutes to plan out what you want to say and the questions you need to ask. Planning your email will increase your chances that you will receive a response and the correct information.
Here are a few important questions to consider for your email:
- What is your minimum order quantity? – Also referred to as a MOQ, you want to make sure their minimums are manageable for you and that you can afford them. This minimum order quantity can vary wildly depending on the product and the supplier so it’s important to ask upfront.
- What is your sample pricing? – You’ll likely want samples to inspect before making a full order. Sample pricing ranges, depending on the product and supplier. Some suppliers that receive many requests may change the full retail pricing, others will offer you samples at a discounted rate, and some may even send you samples for free.
- What is your production pricing? – One of the most important questions is how much your products will cost. You’ll probably wan’t to ask for pricing for several quantities to get a sense of if and how they do discounted pricing at higher quantity levels.
- What is your turnaround time? – Knowing how long it will take to produce your order is an important consideration and depending your exact business, time can be critical.
- What are your 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 startups. 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 that 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 avoid being ignored? There are a few things that you should avoid when you reach out to suppliers for the first time:
- 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 be purely to 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 much – Requests aren’t always easy for the supplier to produce. It’s important to ask for a few prices for multiple quantities, but avoid asking for too much or too many quotes. Stick to asking for what you absolutely need to assess fit between you and the supplier.
- 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 are unsure if your request is too small, consider giving them a quick call or send a quick one question email prior to ask what their minimum order is.
Finally, if you’re contacting a supplier from overseas, keep in mind that in many cases, they may be using translating programs to translate your email as well as their reply. Keeping your emails short, concise, well formatted and spelling error free will not only help the manufacturer but it will ultimately provide you with better replies and answers. Also, when asking your questions, it’s best to number your questions, so that they can easily reply to each number, keeping the questions and communication clean and organized.
Here is an example of an email I might send out:
Hi,
My name is Richard and I am from XYZ company.
I am interested in placing an order for Widget A. I just have a few questions beforehand:
1. What is you minimum order quantity?
2. What is your cost per unit at the minimum order as well as if I were to order 3x your minimum order?
3. What are your payment terms for new customers?
I would also like to order a sample of Widget A to verify quality. Can you please send me the cost for the sample, including shipping to:
Richard Lazazzera
80 Spadina Avenue, Floor 4
Toronto, ON, Canada
M5V 2J4
Thank you,
Richard
As you can see from the sample above, it’s short, concise and it’s goal is to make sure at a high level that there is a fit between us. I have also set myself up to immediately order a sample unit, should there be a good fit between us. Once I have received the samples and I’m happy with them, I can then start getting into more detail knowing I’m not wasting their time, or mine.
Negotiating Minimums
If you’re looking for a supplier for the first time, you’re going to quickly learn about ‘Minimum Order Quantities’ (MOQ’s). 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.
MOQ’s make it difficult when you have limited funds, or simply want to play it safe by starting small to test the market before making larger purchases. The good thing is that MOQ’s are almost always negotiable.
Before you begin negotiating, the first step is to understand why the supplier has imposed a minimum. Is it because there is 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 to best counter offer.
After you have a better understanding of your suppliers position, you can offer a lower order quantity. Compromises can include giving the supplier a deposit for a larger order, but just producing small amounts at a time or paying a higher price per unit.
Have You Found Your Supply Partner?
Sourcing suppliers and manufacturers is a unique process, and for many, a new experience. Trying to locate suppliers that are a good fit is a critical decision for your new business and 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 business.
How to manage quality assurance and quality control in China with China sourcing agent
Everyone is concerned about how to control quality in China. In fact I often have new clients say to me “I don’t care about the price just make sure the quality is OK”. This is actually pretty wise, you are much better worrying about China quality assurance management or production issues than a 5% discount on the production cost.
Imagine your shipment is delayed from China, your product has defects which reduce customer satisfaction or in the worst case require a total product recall.
This happens all the time and even to the big boys, obviously Toys come to mind with the cases of lead paint but also Wal-Mart has had massive product recall cases where they failed to effectively manage their quality assurance processes in China.
What does China quality assurance and quality control involve?
Factories will generally expect some sort of quality assurance process to be employed by the buyer.
Either a full blown quality assurance control or a sampling process. Whatever the case you need the skills to carry out an quality assurance and quality control inspection relevant to your product.
When ChinaFind carries out quality assurance control we look at the following factors:
1. Product factors
a. Size
b. Quantity
c. Technical nature
d. Materials
e. Production process
f. Packaging requirements
2. Situational factors
a. Factory location
b. Weather
c. Language
d. Seasonal
e. China National Holidays
3. Technical Factors
a. Labour skill requirements
b. Tools, testing equipment requirements
c. Certifications required
Product Factors:
We need to know these because they can greatly impact the type and number of quality assurance inspections we carry out.
For example, an order of 1million poker chips would require a different quality assurance inspection than a single wind turbine.
Technical Factors
Such as do we need an engineer, or a person with a specific skill set, or will they be someone capable of looking for scratches on a sheet of glass for example.
The technical nature of the product and the production process often determines the type and level of the quality assurance inspection required.
Situational factors are often overlooked. A factory in central China will incur greater travel expenses, be harder to reach and require overnight stays compared to a factory near a major city.
During some seasons factories will be on skeleton staff while they could be closed or key personnel are away during national holidays.
Does your product need to be certified? I have another article which covers certifications however know that some products are required by law to be certified – are you qualified to carry out these tests or arrange someone that can?
How to arrange China Customs Brokerage and freight shipping from China
How will you get your products from China to your warehouse?
Don’t assume that the Chinese factory will do this for you or fail to include the cost in your price calculations. Did the factory quote FOB pricing – Free On Board?
You will need to find a suitable China freight forwarder to handle the shipping from China.
Firstly you should understand that China freight forwarders buy in bulk from the carriers or shipping companies. If your volume is large enough, perhaps 50 containers per year, you should look into contacting the carriers directly.
For most businesses however Chinese freight forwarders are the logical solution. Now when by buying in bulk to achieve discounts it follows that freight forwarders doing more business can achieve better discounts and therefore lower prices.
Contact at Least 10 China Freight Forwarders in Order to Find the Best Price
During this process use the same verification procedures that you used on the manufacturers to ensure they are real and capable of shipping your shipment and will not disappear while your container is half way across the Pacific – it happens!
Know the China Customs Regulations and Your Home Country’s Custom Rules
Question the China freight forwarder company on their customs procedures, ensure they aren’t making any short cuts which lower the price making them more attractive, but could lead to disastrous delays down the track.
Will your products require specialised inspections or a fumigation certificate for example?
Don’t take it for granted that the China freight forwarder will know this is required – this is how you end up with large bills for temporary storage fees while your shipment sits in customs.
Know the Shipping Route Your Shipment Will Take.
In many countries shipments will go through land borders and therefore may be faced by additional customs requirements.
For example we often ship to a client in Uganda, while researching the shipping route we discovered that during the land voyage across Kenya, the containers had a lower maximum shipping weight than they do during ocean freight.
From then on the client had to take this into account when ordering and we had to ensure containers weren’t loaded to exceed this new maximum weight.
Additional shipping checklist:
- Who will arrange shipment from the factory to the Chinese freight forwarders warehouse?
- Who will confirm that all the items arrived and they arrived undamaged?
- Who will inspect and where necessary replace packaging?
- Who will arrange replacement of damaged products?
- In the event of multiple factories for one shipment, who will coordinate the factories to ship everything during a 1-3 day free storage window?
- Who will oversee the actual loading of the container in China?
- Who will ensure cartons are labelled correctly and packed to your requirements?
I could go on and on, but I think you get the point, shipping of your product is a crucial time where a lot of things can go wrong.
A lot of the tasks are mundane but if overlooked your shipment could be delayed or rejected at customs.
Privacy Policy
In deciding whether to accept your order we may use the information you have given to us, or we already hold about you, or which we receive from any enquiry we may make with us to confirm your identity. thecrazyones will check any details we disclose to them against any data bases (public or private) to which they have access and will keep a record of that check.
thecrazyones will also retain this information and may use it in the future to assist other companies with identity verification. This assists us to protect you and us from fraudulent transactions. In summary We are committed to protecting your privacy. We use the information we collect on the site to make shopping at www.thecrazyones.cn possible and to enhance your overall shopping experience. We do not sell, trade or rent your personal information to others.