So, you’ve come up with a new product idea that’s going to take the market by storm. Your product will be flying off the digital shelves as consumers furiously click and tap to purchase the last few units before being presented with the “out of stock” message.
This is the type of scenario that every small business owner dreams of when creating a new product. Since you’re reading this article, chances are you have the same dream. However, to transform the dream into reality, you must first find someone to build it—namely, to locate a manufacturer. Even if you aren’t designing a product from scratch, you still need to find some type of supplier to make it available to your customers.
It can be challenging to find a manufacturing facility or supplier that gives you everything you’re looking for and doesn’t blow your limited budget—but it’s not impossible! Just be prepared to do your due diligence in researching and vetting suppliers before fully committing as a buyer.
You want to establish a working relationship with a supplier that lasts long term. That way, you aren’t forced to go through this process again next year or risk disrupting product availability.
To that end, we’ve put together a walkthrough below of how to get your product made. First up, though, is a collection of FAQs small business owners like yourself tend to have around this topic. Check it out before diving into the sourcing process.
7 FAQs About How to Source Products
1. What’s the difference between a manufacturer and a supplier?
In your search for how to create a product, you’ll come across pretty similar terms—the most common being manufacturer, dropshipper, and supplier:
- A manufacturer turns raw materials into finished goods. You’d seek out a manufacturer if you have a new product idea you want to take from concept to finished piece.
- A dropshipper fulfills orders of preexisting products by placing orders with manufacturers. It’s unlikely you’d seek out a dropshipper when a more direct product sourcing partner is available.
- A supplier is a broad designation for any number of sourcing partners, including manufacturers, wholesalers, distributors, and the like. Suppliers may act as manufacturers, produce goods from raw materials, or source preexisting products.
2. Should I choose a domestic or overseas supplier?
Sourcing domestically or abroad can be a difficult decision for a small business owner. While choosing either option should result in you receiving your products as ordered, there could be a difference in delivery time and quality.
You might choose domestic sourcing because it has:
- Higher manufacturing quality
- More rigorous labor standards
- Faster shipping time
- Enhanced marketing appeal to North American customers (think “Made in the USA”)
You might choose overseas sourcing because it has:
- Lower manufacturing costs
- More manufacturers to choose from
- Easier supplier navigation process
The best practice is to choose both an overseas supplier and a domestic supplier. The overseas supplier would be your primary sourcing partner, enabling you to keep costs down. The domestic supplier would act as your backup source, providing flexibility if you experience any issues with your overseas supplier—shipping delays, inaccurate order amounts, quality concerns, etc. Orders would be more expensive with your domestic supplier, but you’d at least have a fallback option for fulfilling customer orders on time.
3. What’s an MOQ, and why is it so important?
One of the most important aspects to consider when communicating with potential suppliers is their minimum order quantity (MOQ). As the name suggests, an MOQ is the smallest order size that the supplier is willing to fulfill. This may be a few hundred units, though some suppliers may require you to purchase thousands of units. An MOQ may limit which suppliers you can work with depending on your initial budget and inventory space.
Note that the MOQ may also differ for your first order versus when you become a repeat customer. Be sure to verify these amounts while researching.
Now that you have a better understanding of the sourcing landscape, let’s explore the process of finding a manufacturer that fits your needs.
How To Find the Right Manufacturer: 7 Steps
1. Research the market.
While not every supplier has a business website, most have taken strides to have a digital presence through directories and marketplaces. Most directories offer contact information upfront, but you may have to do a little digging in the marketplaces.
For overseas suppliers, you can start here:
As for domestic suppliers, try these options:
Other avenues you might explore include searching on Google. But again, some manufacturer websites may be hard to find—if they have a business website at all. Try using search terms related to your desired product and include sourcing terms such as “manufacturer,” “supplier,” and “distributor.”
Getting a referral is also an option. You may have a few people in your professional network who are already in contact with suppliers or have been in the past. Or you could join an online community centered around e-commerce and request referrals from other members.
2. Contact and shortlist potential suppliers.
Once you’ve identified a few suppliers that may be a good fit, reach out and request quotes. Don’t go with the first one you get. As with any business decision, three tends to be the magic number; be sure to get at least that many quotes so you have a good basis for comparison.
Here are a few questions you can ask when requesting a quote:
- What are your MOQs?
- What is your lead time?
- What are your shipping costs?
- What is your defect policy?
- What is your cost per unit?
In conjunction with your outreach, be sure to do some initial vetting when waiting on responses. For domestic suppliers, check the Better Business Bureau (BBB) for any complaints filed against the company. Browse their social media profiles. Search Google for company reviews.
3. Negotiate terms.
After receiving responses and narrowing down your list to the top suppliers, now’s the time to negotiate the terms of your partnership. You’ll need to discuss MOQs, payment terms, and any other factors that could impact your relationship.
Keep in mind MOQs aren’t always set in stone. Suppliers may use a higher MOQ in the initial contact to qualify buyers—only working with those who are serious about placing orders. You may be able to order less than the standard MOQ, or the supplier may allow a lower MOQ in subsequent orders.
Similarly, payment terms can often be negotiated as well. For example, some suppliers may ask for a large percentage of the payment prior to shipping. Be sure to work out a deal that’s less risky to you—say a 50% payment upfront and 50% once you receive the order.
4. Collaborate on your product designs.
Manufacturers will need a design, sketch, or another form of guidance material to produce your product. While some manufacturers will work with you on the design, some are pure order takers, which means you’ll need to find a designer yourself and deliver the final version to the manufacturer.
You can find an industrial or product designer in whatever way works for you—through an online marketplace, referral, or a Google search. Work with them to finesse your design to completion, which may include creating a prototype through 3D printing. When you’re done, send it to the manufacturer.
5. Order product samples.
With design in hand, the manufacturer can produce your product; however, before moving to full production mode, first request samples. Ideally, the first sample is exactly what you want, but it may take a few rounds to achieve perfection. Once the sample meets your standards, mark it as your control sample for later reference in case of product inaccuracies in your actual order.
Note that you still have the opportunity to negotiate here. You may be inspired to do so because of several factors. For example, at this point, your product is no longer just a concept—it’s a physical object you can see and feel. Maybe you need to order a lower quantity because you don’t have enough inventory space.
Another consideration: Perhaps the lead time was longer than expected, and you don’t want to place as large an amount down before receiving the shipment. In that case, you may want to negotiate a higher backend payment.
6. Place your first order.
Here’s the step you’ve been waiting for. It’s time to place your first order based on the terms you negotiated with your manufacturer. Once the order arrives, be sure to check every product for quality assurance. If the manufacturer makes any major mistakes—or minor mistakes the company is unwilling to resolve—you may need to revisit your supplier shortlist.
7. Maintain the sourcing partnership.
Assuming everything goes well, congratulate yourself! Also, keep in mind tips on how to work with suppliers. For example, be sure to stay in communication with them and provide feedback on your buying experience over time. You want to ensure your relationship remains strong, so the supplier is willing to work with you through any ebbs and flows of your small business.
Finding the right supplier is not a simple task, but following the above steps makes it less complex. It’s just a matter of following through to the end so you can delight customers with your soon-to-be-loved products.