Are you worried about sourcing products from China?
There are some inherent risks to importing, especially when it comes to picking your supplier. Don’t let this risk stop you from importing your first product.
In this article, we’re going to tell you how to source like a pro.
We mean it.
Don’t let your budget or the costs quoted for production by the determining factor for selecting your supplier. Letting price driving your sourcing strategy is a colossal mistake a pro would never make.
I don’t think we need to tell you what can happen if you go with the cheapest supplier. As the old saying goes, you get what you pay for, and the same couldn’t be more true in China.
By the same token, assuming the most expensive supplier is your best option is also a mistake.
We’ll get back to these ideas later in the article because they’re that important.
Remember, the guiding principle when DIY souring is to never let price drive your sourcing strategy.
Now, let’s look at the signs pros use to start vetting their suppliers and whittle down their list of prospects to the best options.
The initial step when vetting a supplier is to look for signs of unreliability and there are six key signs that a supplier is unreliable that we’ll be sharing with you below.
Knowing how to find signs of unreliability will help you eliminate the worst candidates first. And most signs of unreliability come up during conversations with your supplier, so make sure you speak to them directly.
When a China supplier is unable or unwilling to answer vital product information, there should be a cause for concern.
Don’t expect your sales agent to know every answer to every question, but between them and the production team, technical questions should be able to be answered quickly. If providing an answer to a key product question is avoided or given incorrectly, it is always worth taking a step back. Not being able to answer your key product questions is a #1 sign of a China supplier being unreliable.
If your supplier is slow at responding to communication attempts, it may be a sign that your supplier is too busy or does not value your business. Either way, it’s a sign of unreliability and they should be removed from your list.
Response times in China range from 1 hour on the short side, and 16 hours on the long side. Anything longer that’s not explained by holidays should result in the immediate removal of the supplier from your list.
If a factory skirts around your questions or flat out refuses to answer them it’s a sign of unreliability. Even worse is if they get visibly annoyed by your questions.
While we don’t suggest you bombard a China supplier with questions, they are expected to answer all questions you might reasonably have.
Of course your supplier needs to expect a profit but if their communication is heavily focused on order quantity or payment this a sign of unreliability. You want to be certain that your supplier has carefully chosen to understand your needs first. Remove all suppliers from your list who appear more focused on the money than building a last relationship.
Lead time is the amount of time to complete production and a supplier should always be willing to guarantee that in writing.
Of course, it helps if you know average lead time from past experience sourcing but if supplier is not giving you a clear timeframe it’s a major red flag. Remove any supplier from your list immediately who is proving unable to provide you with guaranteed lead times.
Prices can change when dealing with factories, especially when the importer is unknowledgeable about providing essential details like product size or specification and logo or packaging requirements than can impact product cost upfront.
But also bear in mind that suppliers are sometimes dealing with commodities like steel and plastic whose price rates may be outside of their control.
Knowing about these fluctuations in the market is why a reliable sourcing company can help. But if a quote has not been honored for at least two weeks, this is a sign of unreliability. Remove them from your list.
As you begin weeding out unqualified China suppliers through your communications using these six signs, the next step is to top list those remaining supplier who are showing signs of reliability.
As you speak with suppliers, those who show common these three signs of reliability should bubble up to the top of your list.
A supplier on your list should earn points for:
These signs are all factors that indicate a supplier is both competent and serious about building a relationship with you.
Any factory whose agent has demonstrated these traits deserves your consideration and should be moved towards the top of your list.
Of course a supplier should be willing to answer your questions, we already mentioned if they don’t it’s a sign of unreliability.
But better yet is a supplier asking you a series of detailed questions regarding the product you are interested in producing.
Asking detailed questions about your product is a great indicator they have experience with your product’s production because they’re already aware about pertinent issues and are clarifying them with you upfront.
Top list a supplier who makes the effort to purposefully ask detailed product questions, especially with regards to anything like compliance and country regulatory standards and their opinions on size and specifications based on previous production runs.
A supplier who is showing off their factory with the smiling faces of their customers online is worthy of being top-listed.
And if the China supplier has photos of their booths at various trade shows, it’s a great indicator of the importance they place on being a competitor in the industry. Top list suppliers who have photos of customers at the factory or at trade shows.
Okay, so we’ve given you some signs of unreliability like refusing to answer questions to help you weed out suppliers. And we’ve also given you some signs of reliability like asking detailed product questions to start top-listing suppliers.
By now your long list of prospects should be whittling down to the best options on your list. But your work is still not done! The next step to safely DIY source your products from China suppliers is to begin eliminating suppliers with False Signs of Reliability.
The reason false signs of reliability are so dangerous is they can trick you into losing a lot of money. Why? Because an inexperienced importer often mistakes these false signs as positives and enters in to business deals that backfires later on.
Knowing how to spot these false signs of reliability is a crucial step in becoming an importing pro. Bear in mind, a false sign of reliability can appear at any stage of the sourcing process but is often used as a tactic to get you to close a deal.
As your list gets shorter and you near production negotiations, this is when you’re the most vulnerable to scams and frauds. Be vigilant and immediately discard suppliers who show any of these false sings of reliability.
Don’t be a Walmart shopper when sourcing products from China! [tweetable]
A China supplier offering a lowest price guarantee is usually a big sign of disaster ahead.
You’re already sourcing from China to save on production costs, but as we covered at the beginning of this article, do not let low pricing be your determining factor.
China suppliers who sell themselves based on their low price are giving false signs of reliability and should be immediately eliminated from your list.
If a sales agent is acting like a “Yes man” it’ a false sign of reliability, not one that you’re great at driving a good deal.
Pros know this from experience. Don’t make this mistake. If you suspect your supplier contact may just be saying whatever it takes to close the deal, it’s best to engage him or her in an in-depth technical conversation.
Do they suddenly dry up when the conversation turns technical? If sourcing a Bluetooth enabled product, when asking them what the Bluetooth chipset they plan to use, are they able to answer this? A factory who claims to produce tents for the American market is asked about which flammability certifications they have and are unaware of California State Fire Marshal (CSFM) Title 19, NFPA 701, or ASTM E84.
If so, this is a sign for immediate elimination from your list.
While we touched on this at the beginning of the article, it’s important enough that we’ll repeat it here again.
A supplier having the highest price is not a sign of quality or reliability. In fact, it’s a false sign of reliability and reason for immediate removal from your list.
We get this might sound controversial to a Westerner who often correlates cost with quality. But in China a reliable supplier is always competing on price!
We always tell our clients, never look at the extremes when it comes to manufacturing.Neither the highest or lowest priced China suppliers on your list are the one’s you want to be doing business with. Remove them from your list!
This one is huge and could derail your importing dreams! So read this section twice.
Be extra wary of factories who offer things like:
Any China supplier using infomerical marketing tactics is not reliable! [tweetable]
Never work with a company that is offering discounts like this upfront. They are merely trying to trigger your Western appetite for upfront savings. If you fall for these false sign of reliability, we can GUARANTEE you will pay for it down the road!
Once you’ve fallen for these tactics and your production underway, the supplier will begin tacking on additional fees after the fact. And because your production is already underway, you either pay up or don’t get a product.
We’ve heard this story from so many of our clients who were DIY sourcing! Pros know not to let excitement get the best of them.
When a supplier starts making big promises and discounts upfront, remove them from your list.
We’ve already given you a lot of great signs you should be using to eliminate or validate China suppliers. But now we’re going to cover something even more important.
We’re going to share with you one of the biggest importing mistakes we see importers make over-and-over again.
Many importers don’t even know they’re making this mistake. And sadly, some folks have paid up to $3,000 to be told to make this mistake over-and-over again, costing them big time! And that mistake is using Paypal as a means to qualify a reliable supplier.
Eliminating a supplier from your sourcing list because they don’t accept PayPal is a huge mistake and we’re going to tell you why.
Many of China’s best suppliers don’t accept PayPal simply because they have never had to. Importing from China has been an industry a lot longer than Paypal been a company. And why would any cost-sensitive China supplier want to pay variable fees to an American corporation like Paypal when equally safe and less expensive payment alternatives exist?
Using Paypal to pay suppliers is common advice all over the internet. And it’s one of the biggest mistakes you can make that will keep you from becoming a pro importer. Plus, it will costs you thousands, if not tens of thousands of dollars, over the life of your business.
If a supplier who accepts Paypal is covering Paypals fees, they’re more than making up for it in their product price they’re charging you. And if you’re covering the Paypal fees, that money adds up fast. Especially over the life of your business.
You don’t need to be Chinese to see the logic in that!
Controversial? We don’t think so. Never qualify a China supplier based on whether they accept Paypal.
At Guided Imports, we are building a community of importers guiding importers to success. Your questions and feedback are always welcome in the comments.
If you have a great sourcing strategy our readers can learn from, please share it in the comments below!