As we’ve mentioned before, finding suppliers, and finding the right supplier, are two different things. Thanks to platforms like Alibaba, it’s relatively easy to find potential suppliers these days. But finding the right supplier takes some care and consideration to avoid problems.

The three main steps of the sourcing process involved in selecting the right supplier are: Supplier Identification (finding apples in the supermarket), Sampling (selecting some apples), Supplier validation (identifying the best selected apple).

This article will touch on each step, with the main objective for you to gain better insights into how to find the RIGHT supplier for your product.

Identifying Potential Suppliers

At this stage you generate a broad list of potential suppliers. To do this, you want to prepare and send a Request for Quote (RFQ) to explain your specific requirements.

Things to include in the RFQ:

1. Information about you / your company: if you’re a new seller, you might not have a lot to say, but share what you can such as where you are based and what kind of products you have been selling. Consider that suppliers get hundreds of inquiries every day, so you want them to feel that you are serious. Though you are the customer, you also want to sell yourself to the supplier – this will motivate them to be more responsive to you at this early stage.
2. Information about the product you want to purchase: you can be general at this stage, you don’t need to go into specific technical details yet, just give enough information that the supplier feels confident that they have the capability to make or supply the product. Giving them a picture or a link to a similar item is a good idea.
3. Request for pricing: don’t be the person that promises huge volume to get a low price. Many buyers do this, and suppliers know that large orders rarely come quickly, so you are not likely to get a significant discount, and it will damage your credibility if you don’t deliver. To get an idea of the discount that you’ll be able to get for volume, you can request them to fill a pricing table with different quantities. This will also test their flexibility on MOQ.

The quality of your RFQ shows that you take yourself seriously. This is the first step to having a supplier take you seriously. Send the RFQ to as many potential suppliers as possible; aim for at least 20 if possible – you can either use an RFQ tool in Alibaba or try to get email addresses and send a tailored email to each supplier by addressing the person or company by name.

Depending on how many responses you receive from the initial RFQ, and to be efficient with the time spent on the sourcing process, you will want to narrow the list down to 3 options to move forward with. Factors you can consider to narrow down the list:

1. Communication – responsiveness and professional language.
2. Price – naturally, you’ll want to be wary of the cheapest and most expensive options. Generally, suppliers with the middle to lower pricing are the ones to focus on.
3. Product – check out the product listings on their page and choose ones that are most similar to what you want to purchase.

Sampling

Sampling products from potential suppliers might happen before, after or concurrently with the Supplier Validation step. This will depend on how expensive your product is and how complex the modifications you require are.

For example, if you are purchasing a low cost product which only requires small modifications, like printing a logo or custom coloring, it’s worth requesting a customized sample at the first step to check your requirements earlier to save time later.

For products that are more expensive, such as an electronic item, or is going to require some engineering to create a customized sample, you may at this stage request a generic sample from the supplier so that you can see what their products are like, and leave the customizations to a later stage if you decide to work with the supplier.

In any case, you’ll generally want to see a sample from each of the shortlisted suppliers to gauge their product quality, start building your product checklist or purchase order, and help make the decision on which supplier to ultimately go ahead with.

Supplier Validation

Of all the steps in the Sourcing process, this is the one where a certain level of experience and knowledge is required, and this will at first be somewhat challenging especially for new sellers or those based outside of China. This step is holding the apple in your hand – feeling it and making sure there are no obvious issues before you buy.

Traditionally importers would validate suppliers by visiting themselves on visits to Asia and/or engage professional audit or QC companies to perform a supplier audit. Audits generally cost $300~500 USD, making them cost prohibitive for smaller Ecommerce orders.

Our recommended method of validating a supplier is to stay with a video chat with the point of contact. Even their willingness to do this is a small test, as avoidance should be taken as a red flag.

The call will have two main objectives:

1. To validate their company, such as:
   • Company name and address – asking them to provide a copy of their business registration certificate is a way to determine this, and this should be the company you contract with in your Purchase Order. Inconsistencies on the business registration with the online listing should be explained.
   • Contact person – if the person listed online is not the person you are talking to – who are they?
   • If they are a trading company or a factory – many suppliers will say they are a factory, but actually are intermediaries – not necessarily an issue if they can supply the right product at the right price, but still better if they are open about this point. You could ask them to guide you through a video walkthrough of their factory operations or simply judge their response when you ask the question.
   • Bank account information – if you are going to make a direct transfer and not work through a platform like Alibaba, you should double check their bank account information. There have been scams in the past where incorrect bank account details are provided by suppliers and buyers have lost their deposits.

2. To open the negotiations for your order:
   • Discuss your product customization requirements
   • How those customizations will impact the pricing provided.
   • Understand any potential manufacturing challenges from your requested customizations.
   • Double check payment terms – almost always this will be 30% down and 70% before shipping if customization is minor – however, more customized products usually require a higher deposit.

The idea is to feel out the supplier with a mix of objective and subjective points to gauge their cooperativeness, their interest in your business, and to see that the information they have listed online matches with reality.

This step can be challenging and is not mandatory in terms of being able to place an order, but it will go a long way to reducing risks, and providing peace of mind. Consider it as due diligence, and not blindly putting apples into your shopping cart without looking at them closely.

In summary, these three first steps of the sourcing process are extremely important to having a successful product. They can be time consuming and not all steps are absolutely mandatory, but by following them you will reduce the chance of facing supplier or product issues down the line.

Checkpoint can also handle these steps on your behalf so you can focus your time on generating product ideas and selling instead of dealing with supplier issues. With packages that cover several steps of the process, or modular individual services, you choose the level of support you need from us to boost your sourcing activities.