As an E-commerce seller, the obvious competitive advantages you can cultivate to drive sales are a great product idea and effective marketing.
Sourcing is an element of the process which is necessary, and sometimes cumbersome, but if managed well can also provide a competitive advantage.
In this article we will take a high level look at the 6 general steps in the sourcing process when purchasing a product from a China based supplier.
Product Idea and Differentiation
Before sourcing, the most creative and important step is having a product idea. Identifying or creating the right product justifies all the work getting and selling it.
Unless you are developing a completely new product from scratch, you are going to be using an existing product and putting your own spin on it.
If you don’t you’re going to be competing solely on price, a race to the bottom that you are likely not going to win out against sellers based in China.
Step 1 – Identify Potential Suppliers
Once the product vision is clear, the next task becomes getting that product as reliably, inexpensively, and quickly as possible. Identifying the right supplier opens the door for long term success.
You’re going to want to first reach out to as many contacts as you can find with a general Request for Quote (RFQ) and eventually narrow that down to one supplier.
Step 2 – Sampling
From the shortlisted suppliers you can request a sample to compare the quality and decide which one is the best to move forward with.
It’s not uncommon that you’ll need to pay a higher price for the sample than the unit price quoted for the volume order. International shipping of the samples is also not cheap, but it’s a good idea to check at least 3 different samples to gauge the different quality levels of the products relative to their unit prices.
You’ll want to check these samples carefully and start to note in detail your own product and packaging requirements. This will form the basis for your order once you choose the final supplier to go ahead with.
Step 3 – Verify the Supplier
Finding suppliers and finding the right supplier are different tasks, and must be treated as such. They require different skill sets. Finding suppliers is like finding apples in a supermarket. Finding the right supplier is knowing exactly which is the best apple to pick. Verifying a supplier takes experience to make the right judgement and knowledge to know what to investigate.
Decisions should not be made on price alone, other factors such as: communication ability (both professionalism and responsiveness), flexibility on MOQ, and lead times are all things that should be considered.
While difficult from abroad due to time difference and language barriers, it’s a good idea to try and have a video call with the supplier if they are receptive to it, so that you can put a face to the name you’ve been talking to, be comfortable that they understand the specifications you have given, and also validate their banking information before you send them a deposit.
Step 4 – Confirm specifications and place your Order
The most reliable way to get quality products is to provide detailed specifications that outline exactly what you want. You’ll have an idea if you found the right supplier by how they respond to your detailed product specifications. Don’t ask for “good quality”, make things measurable to eliminate subjectivity. If they ask questions when they get your requirements, that’s a good sign, as it means they are paying attention.
If you’ve been discussing specifications at this stage with multiple suppliers, you’ll want to make your final decision on which one to proceed with and place an order.
Create a detailed Purchase Order (PO) that includes all the customizations you’ve confirmed. Don’t simply list out the item name, quantity and price – this is the only document you really have to fall back on if there is a problem with the order later.
Step 5 – Mass production
Depending on whether you’re dealing with a trading company or a manufacturer directly, if you’re ordering a product with customization there is generally going to be a lead time of at least 2 weeks until the production order is ready.
Checking in with the supplier a couple of times during this period is a good idea to be sure that things are on track and the goods will be supplied on-time.
Step 6 – Quality Control
Once mass production has been completed the products, ideally, match your quality and specification requirements if all the previous steps have been completed successfully. Many buyers incorrectly think that final product (right before shipping) inspection is the most important part of quality control. It’s not. This inspection shouldn’t even be necessary. It’s like checking your car’s brakes after getting on the highway. At that point it may be too late to find out that they don’t work. That being said we still recommend giving the goods a final check. Just know that finding problems at this point can mean a decision between a delayed shipment, shipping non-conforming goods, or not shipping at all and forfeiting your deposit.
With improvements in communication by factories, and purchasing platforms such as Alibaba, it’s definitely possible for you to do all of this by yourself, but at each step there are inherent risks. We’ll deep dive into each of these steps in other blog posts.
Sourcing is time consuming and by saving the time it takes to source successfully you have more time to focus on product research, marketing and managing your e-commerce business. Arriving at the most reliable, highest quality, competitively priced product quicker than your competitors provides a distinct competitive advantage. That’s what Checkpoint provides to you.
