If you plan to manufacture or wholesale, when looking for suppliers you’ll need to decide whether you want to source domestically or from overseas. Overseas can refer to any location abroad. 

You might be asking, "are companies near me better to work with than companies overseas?" The answer is a bit complex.

It’s a good idea to secure two manufacturers: one domestic and one overseas. Your local manufacturer can be used as a backup. So, if orders from overseas are late or incorrect, you can fall back on your local supplier. They are often more expensive, but it’s better to keep products stocked and customers happy than having them wait for overseas shipments. 

It’s often cheaper to source your products overseas, especially in Asian countries, like China, India, and Taiwan because of lower labor costs. But there’s a lot more to the decision than just the upfront investment and cost per unit.

Both domestic and overseas sourcing have their advantages and disadvantages:

Advantages

◆ High-quality manufacturing and labor standards

◆ Easier communication with no language barrier

◆ Marketing appeal of being made in North America

◆ Easier to verify reputable manufacturers

◆ Faster shipping time

◆ High intellectual property right protection

◆ Greater payment security and recourse

Disadvantages

◆ Higher manufacturing costs

◆ Less product choice (there are many items that just aren’t made in North America anymore)

Overseas sourcing

Advantages

◆ Lower manufacturing costs

◆ High number of manufacturers to choose from

◆ One-stop services like Alibaba have made it easy to navigate suppliers

Disadvantages

◆ Lower perceived quality from customers

◆ (Usually) lower manufacturing and labor standards

◆ Little intellectual property protection

◆ Language, communication, and time-zone barriers can be difficult to navigate

◆ Difficult/costly to verify manufacturer and visit on-site

◆ Longer shipping time

◆ Cultural differences in business practices

◆ Product importation and customs clearance

◆ Less payment security and recourse

When working with overseas manufacturers and suppliers, it’s a good idea to hire a manufacturing manager. These contractors are locals who live near your manufacturers and handle negotiations, orders, and managing your partners. They can also be the in between for your business and manufacturing companies. Think of them as the central hub for your overseas supply chain. 

If there’s an issue, the manager will work directly with the manufacturer to solve it. Managers also speak the local language, which helps improve communication and make production smooth for your business. 

Another place to research manufacturers is free online supplier directories. These directories act as manufacturer catalogs that contain profiles for hundreds or thousands of manufacturers, wholesalers, and suppliers. Below, we’ve listed a few of the most popular ones for both domestic and overseas suppliers:

Online domestic directories

◆ ThomasNet

◆ Maker’s Row

◆ MFG

◆ Kompass

◆ Council of Manufacturing Associations Member Organizations

Online overseas directories

◆ AliExpress 

◆ Indiamart

◆ Sourcify

Google

In recent years, we’ve become accustomed to being able to easily search Google and find what we’re looking for in the first few search results. 

So how do you find suppliers on Google? For possibly the first time ever, you’ll need to explore page two of Google search results and beyond. You’ll also want to use a variety of search terms. For example, words like “wholesale,” “wholesaler,” and “distributor” may be used interchangeably, so you should search for all of them. 

It may help to make yourself familiar with Google’s search shortcuts to improve the quality of your searches and, thus, your results.

Referrals

Some of the best leads can come from referrals. Don’t be afraid to ask connections in your professional networks if they have any recommendations or if they know someone who might. Look for individuals who’ve found success in an area you’d like to pursue and see if they’re willing to share their contacts. 

Social networks have made it much easier to get the word out, so make sure to use these channels. Join Facebook groups and other online communities of ecommerce business owners and see if anyone there has a glowing review. 

As you do start to uncover suppliers, even if they aren’t the right fit for you, be sure to ask them if they can point you in the right direction. Being in the industry means they’ll likely have great contacts and would be happy to refer you to an option that might be a better fit.

Once you’ve got a few manufacturers on your radar, you’ll want to get quotes. Aim to get a minimum of three quotes to compare options. 

Now, the biggest question you’ll likely have for a supplier is “How much will this cost?” But before you hastily send quote requests, you’ll want answers to the following questions: 

Can they accommodate custom orders? Assess if the supplier or equipment manufacturer can create the product you want. Do they have the skills? The resources? Do they have automation features?

◆ What are their leads times? How long will it take to produce and ship items? You don’t want to work with manufacturers who take three months to deliver your products. If a product goes out of stock, you don’t want to leave customers waiting months to receive their orders.

◆ What are shipping costs? Shipping makes up a massive portion of small business expenses. Learn a manufacturer’s shipping costs to determine how it’ll affect your bottom line.

◆ What are their minimum order quantities (MOQs)? Don’t lead with this question. It’ll make you look like a beginner and deter manufacturers from working with you. However, you’ll want to know the minimum amount of items you have to order before they start producing your product. This is highly negotiable. 

◆ What is the cost per unit? While you’re negotiating MOQs, you’ll also want to negotiate cost per unit. The larger the order, the lower your cost per unit can be. 

◆ Can they grant you exclusivity? If there’s tooling involved (i.e., you buying a tool for them to manufacture your product), make sure they aren’t allowing others to use it. You can also ask for territorial, market, or total exclusivity. Some service providers may even offer private label goods. 

◆ Are there setup fees involved? Sometimes manufacturers will charge a fee to get equipment ready to produce your goods. 

◆ What’s their defect policy? Find out who eats the cost for incorrect or defective items. Who pays for the shipping and duties? 

◆ Is the manufacturer sustainable and ethical? Find out about the factory conditions, and see how they impact the environment and the workers. 

Negotiating minimum order quantities

If you’re looking for a supplier for the first time, you’re going to quickly learn about minimum order quantities (MOQs). It’s not uncommon for a manufacturer to require a commitment to purchase hundreds or even thousands of units for your first order, depending on the product and manufacturer.

MOQs make it difficult when you have limited funds or want to start small and test the market before making larger purchases. The good thing is that MOQs are almost always negotiable.

Before you negotiate, understand why the supplier has imposed a minimum. Is it because there’s a lot of work upfront? Or maybe it’s because they prefer to work with larger buyers. Understanding the reasons behind the minimum will help you better understand their position and allow you to negotiate and propose the best counter offer.

Discussing payment terms

Many suppliers will require new businesses to pay for the full order upfront. This is important to know, since inventory is a major cost for ecommerce businesses. You may want to also ask if they provide payment terms on future orders.

Suppliers get bombarded with email quote requests all the time from flaky buyers who are just “kicking the tires,” so it's not unusual for many suppliers not to reply to every request. A lack of supplier responsiveness is a common complaint from new ecommerce entrepreneurs.

So how do you ensure you don’t get ignored? There are a few things you should avoid when you reach out to suppliers for the first time:

◆ Long emails: Your first email to a manufacturer should be clear and concise. Avoid telling too much about your story and background. The first email should purely assess potential fit at a high level. Focus on what suppliers care about the most, like the details of what you’re trying to source. 

◆ Asking for too much: Requests aren’t always easy for the supplier to produce. It’s important to ask about pricing for multiple quantities, but avoid asking for too much or too many quotes. Stick to what you absolutely need to know to assess fit between you and the supplier.

◆ Asking for too little: If you ask for a quote well below the supplier’s minimum order you risk being met with silence. If you’re unsure whether your request is too small, consider giving them a quick call or send a one-question email prior to ask what their minimum order is.

A good manufacturing supplier will be open to negotiating payment terms. They won’t ask for 100% upfront before shipping (and if they do, that’s a huge red flag). You can work out a deal with them. Ask for 50% upfront, 50% after shipment is received. This holds both parties responsible for the order and doesn’t leave too much risk on either side. 

Communicating with manufacturers and suppliers

Chances are you won’t use a manufacturing manager when starting your online business. You’ll have to communicate with suppliers on your own. There are three main ways to do this:

◆ Skype calls

◆ Email

◆ WeChat

Look for companies that are responsive and eager to work together. If someone is slow out the gate with your emails and samples, do you want to trust them with your business? Probably not.

Negotiate

Between the time you get a sample and when you place your order, it’s still possible to negotiate terms such as payment or MOQ. When negotiating, put yourself in the manufacturer’s shoes. The goal isn’t to exploit your manufacturing partner to get the best price. It’s to work together so both parties profit and are happy. It’s the only way to build a long-term, healthy relationship. 

Place your order

Last up, place your order. Do a 100% quality control check first. Check every product they’ve sent you to make sure it meets your standards. And if you’re happy with everything, send your order and get the production process started!

Finding your supply partners

Sourcing suppliers and manufacturers is a unique process but it’s one of the costs of starting a business. Trying to locate suppliers that are a good fit is a critical decision for your new business, and they aren't always easy to find.

It’s easy to get frustrated when you hit dead ends or brick walls, but in most cases, it just requires a little more patience and perseverance to find the perfect partner for your new venture.