On today’s episode we will discuss how to find a high quality supplier or manufacturer for your product and discuss alternatives to sourcing items from Chinese manufacturers on Alibaba.
Be sure to stay tuned for 6 websites other than Alibaba you can source products from and find suppliers/manufacturers.
Lastly, we cover 7 questions to ask every supplier!
Anyway, that’s the story about almost gettin punched in the face by a supplier.
But then you also tie up cash flow because sea shipping takes, you know, two months, you know, on average.
At the end of the day if your product sucks, life is going to be tough.
Is this a legit factory, is it a trading company? Are they shady?
welcome everyone to the firingtheman.com Podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more than join us, this show will help you build a business and grow your passive income streams in just a few short hours per day. And now your host serial entrepreneurs, David Schomer and Ken Wilson.
So welcome David. Uh, this is episode seven, how to find a supplier. Um, welcome. We’re here in the podcast studio and we’re going to drop some knowledge for the guests on, on how to find a supplier. Uh, you know, it’s kind of a scary topic, you know, when you’re first starting out or if you’re thinking about building a business, um, you know, but at the end of the day, it’s, it’s, you know, you just have to trust the process.
How are you?
I’m doing great. I’m doing great. Business is going well and I’m excited to talk about this because it was really intimidating for me when I first got started. Um, so much so that I even considered doing manufacturing on my own, which we can get into that and why that may be a bad idea. Um, but, you know, reaching out to factories, especially, you know, overseas, it was something that I’d never done. And, and after doing it, you know, hundreds of times now, uh, navigating tariffs and, and language barriers and a number of other things, it isn’t as bad as as I had initially thought. So, um, anyway, looking forward to getting into this topic for sure. So, you know, one thing, you had mentioned this before, but, uh, we talk about building a team. You know, why is having a good supplier important
supplier’s kind of the heartbeat of your business, right? Like you need inventory and if you don’t have inventory, you don’t have sales. And if you know what, I’m sales, you don’t have the business, right. And having a good relationship with the suppliers is really important and it, and it takes time to develop that. Um, you know, but first you have to find them. Right? And that’s wha we’re here to talk about today. And you know, for the, for anybody that may be selling already, you know, or maybe you’ve, you’ve started and, and you’re, you know, sourcing on Alibaba, you know, something that we’re going to share later on in the show is, you know, six alternative supply, six other places to find suppliers other than Alibaba. We’re going to cover those as well, you know? But yeah, you know, I’m having a really good suppliers is crucial, you know, a couple of instances, you know I’ve had some suppliers where they say, ah, you know, I’m gonna have your products ready in 30 days.
You know, and then 35 days later, 40 days later, they’re like, Oh, you know, this excuse that excuse. You know, but at the end of the day, I’m running out of supply. Right. And that, that, that hurts my business. So, yeah, that’s, that’s, that’s kind of one example. Another example is if they’re really difficult to, to communicate with, you know, if, if they don’t, you know, they don’t produce what they say they’re gonna produce. Uh, you know, there’s, there’s a, a myriad of, of issues that I’ve had, you know, the supplier swapping out raw materials, making a cheaper product to save money. You know, there’s, there’s a ton of, there’s a ton of stuff. What are some of your, you know, your experiences with suppliers.
You know, this business is selling physical products online. So when you talk about building a team, uh, you can have an awesome, uh, person doing photo editing for you. You can have an awesome person doing video, you can have the best PPC person in America, but at the end of the day, if your product sucks, life is going to be tough. And so, and when you think about having a good product, that all starts with the manufacturing process. And unless you’re doing your own manufacturing, you need to put faith in somebody else to help you come up with a good product and you know, deliver that, that great product to your customers. So I have, I think having solid relationships with suppliers is, is incredibly important. Uh, more so than probably any other member of your team, especially, you know, this is physical products. They make the physical products.
Without them, you don’t have a business. And so I think it’s really important to spend a lot of time here and, and really cultivate those relationships. I know early on I got on Alibaba, I found a couple, you know, I did a search, I found some suppliers on the first page. I contacted them, but I didn’t really invest a lot of time into this and that came back to bite me in the ass. When we talk about finding a supplier, I think casting a broad net, you know, if you can find 25 suppliers that could potentially manufacture your product, if you contact all 25 of them, you are going to be better off than picking two or three and contacting them. You’re going to learn, you’re going to learn more about pricing, you know, and oftentimes the manufacturer has great ideas on how to improve a product. You know, we talk about, you know, on check out episode for how to pick a product to sell online. We talked a lot about improving a product. Well the manufacturer should understand the nuts and bolts of, of that particular product and when it comes to improving it, they may have some great ideas. And so I try to treat my supplier relationships as a collaborative relationship and really get feedback them and see what they think.
I’ll share one experience that I’ve had recently in terms of, you know, finding a good supplier and how a good supplier can actually help your business grow. You know, what, just that one relationship, you know, relationships are everything in business. And I recently had a supplier that they came to the, their team came to the U S and visit my company and you know, we had a, a couple of meetings and they brought their, their other, some of their other um, products in their catalog and they showed me you know, Hey, these might be a good fit, this might not be a good fit. And you know, at the end of the day I’m actually going to launch two of those products that they, that they brought. And just like you just mentioned, you know, one, one of the products that I currently sell uh, you know, I was having some issues with customer complaints.
Uh, you know, and we talked about ways to improve that product. You know, and one of the team members they brought with them was a designer and we actually came up with the design, a draft design right there in that meeting. They went back, they modified the product, they sent me samples and I’m actually launching that in that new version next month. So you know, the relationships you have with, uh, if you have a good supplier and you have a good relationship, it will, it will really grow your business.
So this particular supplier you’re talking about, how did you find them?
So this particular supplier I found on Alibaba, I’ll explain the process that I used when I first started and then the process that I use now to find a supplier. And so the process that I used early on, what I would go on Alibaba and I would just look up, you know, three or four suppliers.
I would reach out and get samples and I would kinda, you know, go through the samples, find a good one and then start negotiating pricing and then go from there. So that, that’s, that’s what I did early on. Now the process that I use now is a little bit different in that I will go to multiple places, multiple sources, Alibaba and others and find probably close to 10 potential suppliers. And I will turn that list over to a sourcing agent and the sourcing agent, uh, my sourcing agent lives in China and he will get, he will reach out to those 10 suppliers and normally two or three of them are trading companies or they won’t respond to him. And they’d automatically get wiped off the list. And then the remaining, he’ll get samples all shipped to him and he’ll, he’ll look at them and he might weed out a few automatically.
And then any ones that pass his checks, he will, his has experience and quality control. And he will, he’ll box him up, he’ll ship them to me, all in one box. It saves, it saves, you know, express fees, everything else. Right. And I’ll get that box, go through them and I’ll pick two or three [inaudible] of my favorite ones and he’ll, and then, so we’ll go from there. So then we have a list of two or three good suppliers. I’ll send that list to him and he’ll do factory audits. He’ll go to the factory, check out the factory. Okay. Is this a legit factory? Is it a trading company? Are they shady? You know, uh, I have a lot of good relationships with my suppliers in China, but at the end of the day, there’s a lot, you know, business is shady and people want to make a buck. People want to, they sit, you know, you’ll, you might run across where a supplier will say, yes, I can make you know, 10,000 units a week.
And you know, at the end of the day you go visit and it’s like, Oh well my factories over in this city, or it’s over in this town. And, and they actually are making it out of a garage somewhere in, in a, in a, in a village. Right? Well that’s the kind of stuff that you need to weed out, right? Cause if you want to scale your business and you need, you’re selling a hundred products a week and then in a few months you’re going to sell 5,000 products a month. You have to scale that you and you and you want to find a good supplier out of the gate that can, that can scale. That.
One phrase that you used a couple of times that I want to dive into deeper is trading company. Can you explain the difference between a trading company and a manufacturer?
Yeah, that’s a good, good point. You know, so a trading company is basically a sales rep and they have a catalog of factories and that they, they’re a front for the factories. So they’ll say, Hey, I can, you know, let’s say their catalog is 300 products. Well that’s probably, you know, 30 different factories and 10 products each. And they say, okay, well I can make that happen and you would actually order from the trading company and they then they’d turn around and place the order with the actual factory and the trading company takes a percentage of commission.
I think one, one piece here that’s really important is the customization piece. Say you want to add a logo, say you want to add a handle, change the product. Oftentimes the trading company isn’t going to have that type of flexibility, whereas a manufacturer will, they’re the ones that are actually assembling the product, getting the raw materials and you know, in addition that that trading company’s going to collect some markup on each item. And so if you want to get the best deal, oftentimes going to a manufacturer is, is the way to go.
If you, if you do use a trading company, you’re giving up margin.
So David, you’re, you know, I, I know you source locally and internationally and, and you’re not a huge fan of Alibaba, you know, for, for all of the, you know, experienced sellers that are, that are out there now, or even the ones that want to start a business. Uh, I, I know you have a six, you know, six other suppliers or six other sources to find products. Can you go through them for our audience?
Yeah, absolutely. And what I’ll say about Alibaba is it seems like a, a good first stop for a lot of people just to see what’s out there. But when you look at people, especially newer people come into Amazon, they often go to Alibaba and that’s the only spot that they’re checking. And because of that, they’re sourcing products from Alibaba. It’s going to be same manufacturers that are coming up.
And when you’re trying to get something unique, going to the same spot where everybody else is. Finding a supplier makes things difficult. And so I will oftentimes check Alibaba at night, still order through Alibaba. There’s a lot of advantages there. Uh, namely I really like their trade assurance. You know, there’s part of me that is very uncomfortable wiring 10 grand to China to a wiring number and a person that I’ve never met. And so they have trade assurance and they have a number of other things that are really helpful. I have come up with a list over the years of uh, other spots to source product and I’m going to go through these now to our listeners. If you’re driving in the car, please do not take out your phone and write this in your notes app as I sometimes do when I’m at a stop sign. Obviously if you go to www.firingtheman.com/suppliers we have those lists here for you.
The first one is www.1688.com and this is a way for you to know if you are getting the best price from Chinese manufacturers in particular. So what 1688.com Does is you can take the URL from a product and it’ll go and pull prices, uh, from all other Chinese websites. And this just allows you to see what price did they quote me and how does that stack up to the other prices that are being offered on Chinese platforms. The one thing about this is it is in Chinese, so I always use a Google translate just to, you know, effectively navigate this website, but the, there’s a Chrome extension and that makes this website easier.
The next five websites I’m going to mention are just solid platforms that I would use in addition to Alibaba. So the first is www.made-in-china.com the second is www.globalsources.com The third is www.DHGate.com. The fourth is www.Zentrade.eu and the last one is www.KoleImports.com and I throw these out there just as alternatives to Alibaba. If you have a particular product in mind, it does not hurt to check out all seven of these websites and just see what’s out there. Like I said, that the broader you can cast your net as when it comes to finding a manufacturer, the better off you’re going to be in, the more options you’re ultimately going to have.
Yeah, David, that’s huge. You know, I really wish I would’ve had this list when I first started, you know, I kinda, you know, was pigeonholed into, you know, Alibaba. Um, so yeah, this is a gem and I just wanna remind the audience, you know, if you’re listening to podcasts on a road, that’s what I normally do in a car, you know, just, uh, go to www.firingtheman.com/suppliers and we have this download there for you.
So now that we say, okay, here’s all these places where you know, you can go a supplier for your products, what’s next, David?
So there are seven questions that I ask every supplier and I try to be as complete as I can in a message. So whether I’m sending them an email or sending them a message through whatever platform I found them on, I always ask these same seven questions. And I think that this limits the back and forth. Um, I tried to lay it all out there on my, my first, uh, point of contact. And then based on their response, uh, I can make a decision whether this is a company I want to continue my conversation with or not. So the first question I ask is, is minimum order quantity in MOQ. This is a phrase that I was not familiar with when I first got started, but MOQ is very important because, and let me, let me give you the definition first.
This is the minimum amount of products that they will manufacture in one batch for you. So for instance, uh, some suppliers will have a, an MOQ of 10,000 units. Well, if you’re just wanting to test a product and see if it actually works, you’re going to tie up a ton of cash with 10,000 units. And so I prefer to have low MOQ suppliers. In fact, I have one domestic supplier that I can, they don’t have an MOQ. If I want one unit, I can order one unit. Now, I don’t know why they run their business that way, but it’s super convenient for me and I don’t ties up as much cash as I would with my other suppliers that have MOQ of say, 500 or a thousand units. So first right out of the gate I always ask about MOQ. The second question I ask is, can I customize this product by changing colors, adding a logo, or modifying this size?
This is a very subtle way to ask, are you a manufacturer or a trading company? Now, sometimes trading companies can interact with the manufacturers and do customizations, but oftentimes when I identify a product, I am wanting to improve it and set it apart from what is commercially available. And so this customization piece is really important to me. And if the answer to this is no, I can’t customize this, often I won’t move forward with that supplier. So I want someone that’s going to be flexible and work with me. And that’s where this customization question comes in.
David, I just want to jump into real quick and say that is actually a very crucial piece that I kind of want to highlight here. I’m on, you know, on your second bit where your asking them if they can modify the product or change it in any certain way. I would always recommend to, to modify or change your product to make it better from any other competitors. Right. So this is, that is a really crucial piece in, and I just wanted to highlight that.
Yeah, absolutely. Or you know, even add an add a logo. I mean you talk about getting your listings ripped off. That’s an easy way. It’s a, it’s hurdle that if someone wanted to rip off your listings and sell your product, um, that’s a hurdle that they would need to, to overcome.
Yeah. Branding is, is crucial. Must have.
The third question I ask is, are you a manufacturer or a trading company? And you already discussed this, but I like to have relationship relationships with manufacturers. Ken you had mentioned a positive relationship with the trading company. So I don’t think that if someone responds, yes, I’m a trading company, I don’t think that that’s a total turnoff. But, um, you know, in the pros and cons column, that would be something I definitely want to consider. The fourth question I ask is how much would a sample be? And for people that are doing this the first time for the first time, don’t be surprised if they come back with 250 or $300 even if the product would sell for 15 or 20 bucks. And the reason for that is if they need to set up their machine or they need to make a mold or just getting a product, one product from China to the United States costs some money.
And so you had talked about using a sourcing agent, and I think that’s huge. You know, if I’m contacting 10 suppliers, having the source sourcing agent look at those first before they’re shipped over here, that’s a great way to save, you know, a couple of thousand bucks.
Yeah. And something for our listeners, you know, that that price, that sticker shock of $250 – $300, you know, it it’s kind of a, you know, it’s all over the place, really depends on the size of the weight of your product. And you obviously want to want to get it shipped express, meaning it’s going to be on an airplane and it’s going to be coming in, you know, three to five days. But you know, I have experienced, you know, fees of getting samples anywhere from on the low end, 50 bucks all the way up to like David mentioned $250 – $300 If it’s a large heavy product.
Absolutely and don’t let that sticker shock prevent you from getting a sample. I mean, there are many instances where I’ve seen something in a picture that looks great and then it shows up and it’s terrible. It’s just a poor, poorly constructed product. And so.
the okie-doke is what I like to call that.
Exactly, exactly. And so, uh, that’s uh, you know, sample costs. It’s, it is a sunk cost, but I do think it’s, it’s definitely worth it. And if you’re going to move forward with the supplier, analyze how they build one unit before you order a thousand.
The fourth question I ask is, uh, are there any shipping costs, packaging costs or tariffs that you are aware of? And the answer to this is typically yes, I, what I am looking for is a fully loaded cost. So if something is, is $4 a unit just for manufacturing, there’s going to be some costs incurred to get that from wherever it’s manufactured to either a fulfillment center or to you to your warehouse. And packaging costs, tariffs. I like to know all of my costs. And so I talk a lot about margin. The per unit cost is important in this example $4 dollars. But oftentimes when you consider shipping packaging tariffs, thirst, 10 or 15% more costs there, then what’s accounted for in the per unit cost. So that $4 product may actually be, you know, 4.50 Or $5. And knowing that on the front end is really important.
Yeah, absolutely. So, as of right now, we’re taping this podcast, you know, January 25th and the current tariffs are on most of my products, if not all of them that I import from China are 30% so that has to be baked into the cost of a, of launching a new product or you run the risk of not knowing your numbers, which is, which is not good at all.
So Ken, I’m glad you brought up the tariffs and there’s one phrase I’ve heard and I’m not sure who said it, but it was fail on paper. And by only considering your unit costs and by not considering your shipping costs or your tariffs, uh, you really are setting yourself up for failure. For instance, a product may look great and have a 30 or 40% margin, but once you consider a shipping costs and tariffs that 30% or 40% margin disappears. And so get a really good understanding of your costs and fail on paper first before you, you lay out the cash for your initial order.
The fifth question I ask every supplier is, do you ship via air sea or both? And what I really like the response to be here is both. Now sea shipping is less expensive, but it, it takes longer and air shipping obviously is faster and it’s more expensive. And so what I often do, if I am, have my inventory management under control, I like to see ship as much as I can. It just, it’s more money in my pocket. But as happens with most businesses, I will not have great control over my inventory. I’ll sell out or I am anticipating selling out in August my supplier, Hey, can 20% of this order, can we air ship it? And then the other 80% of it can we sea ship it. And that’s how that kind of is a way to expedite the shipping process. So your items aren’t stuck on a boat and you’re sitting with a listing with no inventory for a month or two. That really, really kills ranking. And uh, so I, I really like manufacturers that will do both sea and air shipping.
Before we move on I want to really highlight what you just said, David that was kind of a higher level technique. So, so, uh, you know, early on in my business I used air shipping mostly, right? You want the product to market, get it launched and then once the product’s launched, you know, okay, I am selling five a day. You can kind of forecast out for your inventory for a few months and then you might want to move into sea shipping. And the reason you would want to do that as the cost is way cheaper. You know, I don’t have any figures in front of me right now, but I would, I would say that probably 75% cheaper for sea shipping. Right. But then you also tie up cash flow because see shipping takes, you know, two months, you know, on average from, from factory to you know, warehouse shelf. So, but you know, if you’re out of inventory and you haven’t ordered that’s due, you can ship, you know, 20% like you said, air, right? And then the other 80% by sea and it’s, you’re going to be in stock quicker, you’re going to be making profit more. And then you have the other one coming in and saving costs. So that was, that was a, I wanted to highlight that. That’s, that was a really good advanced kind of technique to, you know, make more profit. That’s what it’s all about. Right.
The last question I ask is, what is your preferred method of communication? Uh, typically in the US this is email I found, especially with international suppliers, email is not the preferred method of communication. Uh, I use WeChat a lot to communicate with my Chinese suppliers and that seems to work really well. I was unfamiliar with WeChat, but it interfaces with your phone and you can download the desktop application and it’s pretty slick. And so again, this is, you’re trying to form a relationship and you know, the, the more you can cater to your supplier and make things easy on them, the more likely they’re going to cater to you and make things easy on you.
And one thing I’d like to highlight, David, you WeChat translates from Mandarin to U S English. So when suppliers communicating and Mandarin, we get the message in WeChat and it’s in English, right? So you can communicate in it and it’s done automatically for you.
Those are seven questions I ask every supplier. Again, if you want this list, uh, go ahead and go to www.firingtheman.com/suppliers and next time you reach out to a supplier, you can give these a try.
One piece that you have a lot of experience with that I do not is sourcing locally here in the U. S can you, you know, share with the listeners your experience with that and, and, and dive into that a little bit.
Absolutely. So like anything, there’s pros and cons. Um, let me go through the pros first. One advantage I like of us manufacturers is the amount of time it takes to get from the manufacturing plant to the fulfillment center. Uh, so with the suppliers that I work with from the time I place an order to, the time it shows up at the fulfillment center is about two weeks. And so what this allows me to do is, uh, order more frequently and order less items. So instead of ordering, say 5,000 units every or three months, uh, I am making weekly orders for just a couple hundred units and that allows me to, to tie up much less cash. And, you know, cash flow is the name of the game. And so that allows me to tie up less cash, turn my inventory over faster. And you know, when you have inventory sitting on a shelf, it’s not making you any money. And so I like to tie up the least amount of cash as I can in inventory, uh, without going out of stock. And that’s kind of a delicate balancing act, but that’s a huge advantage of having a U S supplier.
One thing I’d like to add too is that that’s, that’s huge benefit and cashflow is a, is a, uh, the mechanism, the fuel that you use to grow your business, right? So if you’re not using the cashflow, your cashflow is not tied up in inventory for months at a time. You can use that cashflow to launch new products and grow your business faster.
For sure Uh, the second thing I like about having a local supplier is there is no language barrier and it’s often easier for me to go and visit them and start forming that personal relationship.
So David, you’ve shared a couple of the major benefits of, of having a local supplier versus an international supplier. You know, kind of after we wrap up the show, you know, you mentioned you had a, another story or something that, uh, I’m actually really excited to hear about.
Yes, sir. I’m going to share a story. It’s probably one of my worst experiences dealing with the supplier, uh, and it ends with almost getting punched in the face. And so this is a good one. So I will, I will, the story starts with my upbringing I grew up in, in Iowa, and there’s a heavy prevalence of Amish people. And if you’re unfamiliar with Amish folks, it, it’s a great group of people. It’s a type of religion. They don’t believe in electricity, they don’t have the internet. It’s a very simple way of life. And I grew up, uh, very close to an Amish community and made friends with a lot of Amish people. Now in each Amish town, there’s a blacksmith, there’s a leather worker. There are a number of different roles in the Amish community and they all work together to get food, to raise barns, to build houses.
It’s really, it’s really admirable. I really, I really like the Amish people and, and when I, when I drive by their farms, you know, you see the kids outside working and you know, they’re not sitting on an iPad or playing Xbox. I mean they’re out there working. So I, I, I just want to reinforce the fact that I have had a very good experiences with making friends with the Amish. And so when I decided to start selling physical products online, uh, I knew of a particular leather worker that made awesome products and they were Amish. And so I approached them about sourcing some product from them. And because they don’t have the internet, it is very difficult to send them orders. And so I asked, can I buy you a computer and pay for your internet? And that’ll just be an easy way for me to send you orders.
Cause before I was mailing them, I’d put them, I’d put them in an envelope and mail them.
That’s different than Wechat, right?
Oh it’s way different. And so, you know, it caused some logistical problems and it, it seemed like, uh, something that would be reasonable, at least from my standpoint, I thought that would be reasonable. And, and the, the supplier said you need to meet with our Bishop. And so I drove into the, this community. I met with the Bishop, I explained the, the benefits of, of this business. I was going to bring some, some money into the community and how, you know, one obstacle was communication because I live in Missouri and they were in Iowa and how I’d really like to buy a computer just so I can send them orders and this Bishop. I’ve never been yelled at this aggressively before he got in my face, he grabbed my shirt and pulled me in close and I thought, I thought he was going to slug me.
I thought he was going to punch me in the face. And he told me, don’t bring, uh, your technology into my community. You’re not welcome here. And he ran me out of that house. And, and I, I re I ran back to my truck. I, I really was. I mean, he really put the fear of God in me and, and I get it, you know, kinda sh shame on me for, uh, shame on me for, for not knowing better than to pose this question. Um, but it was a, it was certainly not a good experience. So I, I walked back to my truck with my tail between my legs and the neighbor to this Amish community. It was a older lady. Oh, she’s probably, she probably in her seventies. And she was out getting her mail. And so I just struck up a conversation with her and she’s Catholic.
And so I asked, uh, I asked her, you know, about the neighbors and, and, uh, so what ended up happening was I bought her a computer and I pay for her internet now. And when I need to send the Amish an order, I email her, she prints it off and walks it across the street. And so that’s how I got over that obstacle. But anyway, that’s the story about almost getting punched in the face by a supplier. If you like today’s episode and would like similar content, go to www.firingtheman.com or check us out on social media at Firing The Man on Instagram, Firing The Man Facebook page and Firing The Man on YouTube for some digital shorts. Thanks for tuning in and we’ll see you next time.