Here are the five steps to finding a manufacturer
to get your product made.
If you've never done this before, this video is for
you, because we're going to go through this step-by-step and
I'm going to teach you some secret hacks on how you can save
money while you're doing this.
You're in good hands, so let's get started.
Hi everyone.
I'm your host, Michelle Bali.
I have my own e-commerce business, where I brought a brand
new makeup product to market.
Through trial and error I found my product producer and trust
me, I made all the mistakes for you so that you don't have to.
But in any case, I love that you're looking to bring a new product to
market because this is your first step in a successful business.
If your product serves a specific problem, and you can see that
there isn't already a product out there that solves it, you're
already one step ahead of the game.
Let's hop into the five steps.
Also, if after watching this video, you want even more
help finding a product, make sure that you're checking out
our free 40 minute webinar.
That's going to teach you how to find winning product
ideas, how to validate them and how to get started.
Just click the link in the description box
below to get started with this free training now.
Research.
First, you're going to need to do some research.
Here are three ways to do solid research.
So you can use Alibaba, directories, and you can take it
offline by attending conventions.
So let's start with Alibaba.
Alibaba is a place where people go to find products
that are already existing.
However, this has a bit of a life hack because you can search for
a similar product on Alibaba and start connecting with manufacturers
for your customer request.
But before we begin, let me tell you that vetting manufacturers
is extremely important.
Your manufacturer is going to control the cost of your product,
the quality control, the packaging and the shipping, and they can
really make or break your business.
Also, depending on what you're making, it can take
as long as a year to bring a new product to market.
So let's do the vetting work upfront so that we don't
have to backtrack later.
I lost five months of time working with the wrong partner.
So here's how you can learn from my mistakes.
So let's input lunchboxes and then hit search by suppliers.
First, look for the right classifications.
Look for suppliers that are gold suppliers.
This means that they're paying for their membership.
Make sure that they're assessed, meaning someone from a third
party or Alibaba themselves have been to their factory.
Also look to see that the supplier has trade assurance.
This is a free service offered by Alibaba that allows you
to dispute a purchase if the quality isn't there.
So look for that as well.
You can continue to search by applying filters.
Filter by certifications to find a manufacturer that meets quality,
safety and efficiency standards.
So let's say humane working conditions is a
non-negotiable for you.
You'll want to make sure that they have an SA8000 certificate.
I'll link a list of certifications for you in the description box.
So let's click into one here.
First thing I see is whether they are a manufacturer
or a trading company.
We want to deal directly with the manufacturer rather
than a trading company.
A trading company is essentially a middleman.
However, if it says manufacturer and trading, this is also
acceptable as it means they're able to export your products.
Now, look to see where they're located.
If they're claiming to be manufacturer and their
address says suite 201, it's unlikely that you're dealing
with a manufacturing plant.
A good sign however, is if they're located in an industrial
area, you want to make sure that the people you're working
with are honest business people.
So if you're noticing any red flags make a note of this
and then bring it up to them as the relationship evolves.
To be a hundred percent sure you can always schedule a video call
to see their production floor.
If they keep putting your meeting off, that's going
to be a red flag and you're going to want to move on.
So trust your gut and trust your instincts on this.
Look to see how many years they've been in business.
This is subjective.
So for me, I look at it as if it were a job interview.
If a candidate came to me and said, I only have one year
experience, I would not be comfortable putting the fate of
my own business in their hands.
My personal threshold is three years plus because that indicates
to me that I'm not going to have to mentor them and potentially
pay for their mistakes.
Quick tip is to also look at how niche the manufacturer is.
If they're creating lunchboxes on the one end and then
tutus on the other, you might want to think twice.
A manufacturer that focuses on one niche will reflect how much
leverage they have on the purchase of their raw materials for one.
And secondly, a niche manufacturer also means
that their workers are good.
Workers that focus on this one thing day in and day
out will reliably produce quality items consistently.
If you're keen on using Alibaba as a way to find a manufacturer, just
skip over to the outreach section timestamped in the description
box, but another way to do research is by using good old directories.
One of the best ways to find a manufacturer is through free
online supplier directories.
These directories contain hundreds if not thousands of manufacturers,
wholesalers, and suppliers.
Some popular domestic ones are ThomasNet,
maker's row, MFG Kompass.
Some overseas directories are Oberlo, Aliexpress, IndiaMart,
DH gate, and Sourcify.
Conventions and trade shows.
And the last way to find a manufacturer is
through conventions.
Different industries will have a handful of go-to conventions.
So right now with COVID actually going is impossible, but normally
you would want to go in person and to meet the right people.
Until we get this COVID mess sorted out, check out the convention
exhibitor list to start getting in touch with manufacturers online.
This actually ends up being more time efficient in the long run.
There are two schools of thought when it comes to how
you should present yourself.
On the one hand, you can introduce yourself as a small business,
introduce yourself as a business owner who is extremely passionate
about getting up and running, taking that approach leaves you
a little bit more vulnerable to being taken advantage of.
But on the plus side, you can also leave yourself open to allowing
your manufacturer to be an amazing mentor and growing together.
The second school of thought is presenting yourself
as a large business.
Introduce yourself as a purchasing agent or a chief operations
officer, rather than the founder.
This makes your company appear established, which gives you
leverage in negotiations.
So when you're negotiating, you could pass off blame and
say, Oh, sorry, my boss didn't approve of those numbers.
This keeps your relationship with the manufacturer in good standing.
And they're less likely to take negotiations personally.
So now you know how to find a manufacturer from Alibaba,
directories and conventions.
What I would recommend is securing two manufacturers, establish
an emergency vendor so that if you're overseas manufacturer
is late, or they send you the wrong order, you can always
use your local manufacturer.
Local might be more expensive, but it's important to have a
backup option, even if it does eat into your profit margins.
Just make sure that you know, that they're locally
manufacturing, because if they're also getting their stuff from
overseas, then you might run into the same problem twice.
Having a backup manufacturer also gives you leverage in negotiations.
Shopify is offering a free 14 day trial.
All you have to do is click the link in the description box to
take action so that you can level up your e-commerce business.
So you'll want at least three quotes.
Once you have your manufacturers on your radar, you're going
to want to ask them these nine important questions.
So first of all, can they accommodate your custom order?
Do they have the resources?
Do they have the skill level to produce what it
is that you're looking for?
Secondly, what are their MOQ's?
So MOQ stands for minimum order quantity.
Most manufacturers will only fill a certain order
over a certain amount.
So depending on who you talk to, this could be a thousand,
or it can be 20,000, but you're going to want to make sure that
you're negotiating these terms.
Generally speaking, it's better to start with less inventory.
That way you can test the market.
And you're not going to have to worry about storing or selling an
unmanageable amount of products.
I would also recommend that you don't lead with this question.
Okay.
Don't lead with what are your MOQs?
Because this is a telltale sign of an amateur.
What are the lead times?
Find out how long it will take to produce and to ship your items?
This is important because you don't want to work with the manufacturer
that's going to take three months to produce and ship your products.
That's because a long lead times leads to unhappy customers.
People don't want to have to wait for their order and
they don't want to have to wait for products to restock.
How much does it cost to ship your items?
So if you're ordering from China, for example, manufacturers that
are closer to the coast will have less expensive shipping costs.
For most shipping makes up a large portion of a businesses expenses,
so you want to know this right off the bat so that you can be
clear on how it might affect your bottom line and how it will
affect the cost of your product.
Number five is what is the cost per unit.
So as you're negotiating the minimum order quantities, you
also want to simultaneously negotiate the cost per unit.
Remember that the larger the order, the lower the unit cost will be.
Next, can they grant you exclusivity if there's tooling
involved and you pay for that tooling, be sure that they aren't
allowing other clients to use the equipment that you've paid for.
Other forms of exclusivity include territorial, market
and total exclusivity.
You should also determine who owns the mold and other equipment should
you need to switch manufacturers.
Are there any setup fees involved?
If you're doing injection molding, there will often be a setup fee
so you want to make sure that you're asking this upfront.
What is their defect policy?
Find out what the terms are if you receive an incorrect
or ineffective shipment.
Are you eating the cost of replacing the shipment
or is it manufacturer accepting responsibility?
Who should pay for the extra shipping and duties?
You want to make sure that you're getting a general sense of this
to start, and then once you get more detailed in the contract,
you can hash these details out.
Is a manufacturer sustainable and ethical.
Find out about the factory working conditions.
How old are the people working there?
Do they get regular breaks?
What's your manufacturer's policy on discrimination?
In addition to your manufacturer being socially ethical, you
also want to know how they impact the environment.
How do they manage waste?
Do they safely dispose of dirty water or are they just
dumping it back into the ocean?
Each industry will have a unique impact on the
environment and humankind.
So make sure that you're doing your research and
asking tons of questions.
The unfortunate truth is that large manufacturers sometimes see working
with small businesses as a burden.
Because they're so used to dealing with large orders of thousands and
thousands of units, manufacturers see working with small businesses
as tedious, time-consuming and a low return on time investment.
It's important to keep that in mind so that when you're reaching
out, you're not discouraged when they turn you down.
Keep in mind that if you're starting out with a smaller
project, there will be someone that's going to
want to work with you.
You just have to find them.
Once you collect your three quotes, choose the best fit.
Obviously don't use the most expensive option, but
also be cautious about going with the cheapest quote.
You get what you pay for, so try going with the middle option here.
Communicate your designs.
You've done your research.
You found the manufacturer that you want to engage with, and now it's
time to get into the nitty-gritty about your design requirements.
Start by asking your manufacturer if they can create your designs.
These people are smart, well-equipped professionals
that can often handle the design of your products as well.
Communicate your ideas through sketches, written instructions
and reference photos.
If a manufacturer has done something similar to
what you need, you should also be referencing those.
In the case of the design aspect is beyond their capabilities, you
can visit fiverr.com or Upwork to find freelance professionals.
Search for industrial designers, product designers, and cat experts.
Let them know that the deliverable you require is a
3d rendering of your product.
For my packaging design, I went to a local 3d print shop and I
worked with the designer there.
This was useful because he not only made me the 3d file that I
could send to my manufacturer, but he also did a 3d print.
This made me feel confident before going into production,
because I could see that the design and the dimensions were
correct, so you might want to consider doing this as well.
Order samples.
Before placing an order, you're going to want to get your
manufacturer to send you samples.
That way you can test the product before going into full production.
So there might be a bit of back and forth on this, but once the
sample comes out right, you'll date and you'll sign the sample.
I recommend you keep two for you and send two back to them, do
this so that if they send you a batch and the color or the
size isn't right, you can both refer to the approved sample.
This is what's called a control sample.
I made the mistake of not doing this.
What happened with me is that my manufacturer sent me a shipment
that wasn't what I wanted, but it was still close enough.
The next batch again was similar, but now even further away from
our first approved sample.
By the time I got my fourth batch, the colors and the dimensions
were completely different from the approved sample.
And then before I knew it, I was buying green
packaging instead of blue.
What I should have done was issued a product approval waiver.
A waiver or a conditional acceptance is an email or a
document which communicates that there is a discrepancy
with the order that should be fixed next time, but
it's still acceptable now.
It States what's wrong with the batch and also notes that if
there's any further deviation, the order will not be accepted.
This is a record of acknowledgement that the order wasn't what you
wanted, but it's still usable.
Negotiation.
Between the time that you get your sample and place
your final order, there's time to negotiate the terms.
Here's some tips when it comes to negotiation.
So first of all, have everything in writing.
Having a record and contract eliminates any
room for, he said, she said.
Secondly, make sure you put yourself in the other person's
shoes when negotiating, this will ensure that the deal
is fair for both parties.
The point of your relationship isn't to see how much you can
squeeze out of your partner, but rather how do you mutually benefit?
A mutually beneficial business relationship is a
long-term healthy choice.
Place your order.
The final step is to place your order.
So here are a couple of tips to make sure that this goes smoothly.
At the beginning, you're going to want to do a 100%
quality control inspection.
What I mean by this is you're going to want to look at
every single item that they shipped to you, to ensure
that it meets your standards.
After you know them for about a year, you can start
relaxing the quality control.
At that point, you're going to pick out, say 50 from each box.
And if they're all good, then you accept the order.
If there are one or two that are off, then you're going to
have to inspect the whole thing.
Now, if you have a huge order and there's a massive amount
that are bad, you're going to want to ship it back entirely,
so not to waste your time.
Here's my final piece of advice.
And it might be the most important piece.
When you're starting out, you might be thinking to yourself, I
don't really know what I'm doing.
Should I be negotiating?
I'm confused.
I'm unsure.
But I want to tell you this, you're going to make mistakes.
It's not a question of whether you will or won't,
it's guaranteed that you will make mistakes, but the most
important part is that you enjoy.
Ofcourse, you want to keep your eyes open and you want to perform
as best as you can, but if we take a minute to enjoy what it is
that we're actually involved in and be present for the journey,
we'll find that the opportunities and the success to us.
If you thought that this video is packed with tons
of value, make sure that you're giving it a thumbs up.
That's going to help our channel and the community grow.
Thank you so much for watching.
I'm your host Michelle Bali, and I will see you in the next one.