When working with wholesale suppliers you will typically deal with companies in developing countries. This leads to a large range of different suppliers and wholesalers that come with an even larger range in the quality, price, and time for your products. So when choosing the right supplier the first thing you need to do is establish what your expectations for these. It is important to have these identified before even starting your journey to finding the right companies to partner with. If you go into your search without even a rough idea of these three categories you will waste your time dealing with a multitude of different companies, sample times, quotes and headaches.
Establishing Your Price:
Assuming you already know the type of product you are wanting to offer and in what market you will be selling in, the first step in choosing the right supplier is establishing your price. Although the other two parts are important, the price will be the driving factor on what your expectations should be for those two categories. The easiest way to establish your price is to research online. Research both what online wholesalers are offering your product for on sites such as alibaba.com and what competitors in your markets are selling similar products for. This research will give you an idea of where the product prices need to be for you to be able to sell them in your market.
And while this seems obvious many small business fail to look at the entire costs of importing products into consideration before looking to partner with wholesalers abroad. It is easy enough to look on alibaba.com to give you an idea of what the products will costs. However, these estimates do not include taxes and shipping which can be large amounts of money, significantly affecting the final price. So while doing your research on the product prices be sure to research your applicable taxes and shipping costs so you can factor this in your decision on price.
Bonus tip: A quick way to give you an idea of what you can sell a product for is to multiply the wholesale cost by 5. Although there are a ton of other variables this is a quick math way of taking into the various costs that will need to cover to make a profit. This will let you quickly navigate wholesale websites and trade shows to see if products and their prices will work for your markets.
Establishing Quality Expectations:
When we discuss quality it is important to note that we are not just talking about the quality of the product but also of the service the wholesaler or manufacturer provide as well. Things to think about in the quality expectation should be:
- What product quality standards need to be met?
- Are there specific manufacturing certificates your product need?
- Are there product quality processes in place from the wholesaler?
- What are the industry best manufacturing practices for your product?
- What is acceptable from the quality of the services provided from the wholesaler?
- Are they able to communicate in an effective and timely manner?
- Are they negotiable on payment terms that fit your needs?
- Will they work with you on product design and samples?
Answering these questions upfront will help you eliminate potential wholesalers that could hurt your business model in the long run. And by establishing what is acceptable and what is not will help you narrow down on your price range.
Next you need to establish the time frame you need your products. Are you trying to be the first to market with a new idea? Or are you looking to complete the next seasons collection with new products? Establishing a time frame for receiving your products will be necessary to know when you are discussing with potential suppliers. Longer lead times can lead to lowering costs and can help in maintaining product quality. By determining this you will be able to further narrow down your price expectation.
Looking at it all together:
Once you have a rough idea of all three categories, price, quality, and time, you will be able to effectively navigate through trade shows and online. You won’t waste your time on with companies that cannot meet one or more of your expectations.
Next week we will discuss step two of choosing the right supplier which is identifying things to look for in a wholesale or manufacturer and signs that you should avoid that company like the plague.