Looking to import from China? Epic Sourcing is here to teach you how. Here are 5 tips from a sourcing agency to help you get started.
It might sound obvious, but as a sourcing agency, we often see small businesses rush through this stage. We get it, you’ve found a good price on Alibaba, you’re excited to get the ball rolling, and away you go with the 1st supplier that caught your eye. We love the gung-ho attitude of small businesses in New Zealand, but taking your time and doing your due diligence will pay off long term.
It’s helpful to keep in mind at this early stage that you are searching for the ideal supplier, not the ideal price. Look to secure a trustworthy and reliable supplier that specialises in producing the product you are looking to source, and then negotiate the terms. Many small businesses sourcing for the first time are wooed by a low price or low MOQ (minimum order quantity) during supplier prospecting. Start by building a list of high-quality suppliers, then start assessing terms like price and MOQ.
Aim to build a list of at least 10 suppliers. This will enable you to thoroughly weigh the pros and cons of different suppliers, and identify any outliers who are offering terms that seem way outside the norm (for example a very low cost per unit). To help you build your supplier list, we’ve created a spreadsheet for you. It contains the most important information you should be looking for during the supplier prospecting stage.
To start building your prospective supplier list, you’ll need to make contact. Create a standard email containing as much detail as possible on your request and send it out to potential suppliers. Communication is key, so if any of the companies on your list strike you as poor communicators, this should be seen as a bad sign.
Once you have settled on a supplier (or 2) it pays to conduct 3rd party verification. This will help you corroborate information gathered in the supplier prospecting phase above.
Ultimately, it’s about being sure you know who you are working with, that they are trustworthy, and that they can deliver. If you have a supplier you would like to verify, Epic Sourcing offers a one-off Verification report.
Learn more about the Epic Verification Report here
So, you’ve settled on a supplier and you’re satisfied they can deliver, so what’s the next step? Sampling is one of the most exciting stages in the sourcing process and a very important one at that. You want to know that the product is up to scratch and that the factory can produce your product, ship it, and communicate effectively throughout the process. There is nothing like getting that product in your hand to assess whether you’re on the right track.
Sampling will allow you to test a product, and make changes if necessary. Remember that if you’re importing a ready-made product, making big changes may require creating a new mold. This is very costly and could mean you need to look for another supplier.
Ultimately, the goal is to obtain a ‘Golden Sample’. Sounds magical! The Golden Sample is the perfect version of your product. Any imperfections have been ironed out, and you’re now ready to start production.
There are a lot of trade terms and acronyms that get thrown around when sourcing. Before you go into a negotiation, it pays to understand the key components of the contract.
The MOQ (or Minimum Order Quantity) is the minimum number of units a supplier is willing to sell you at a given price. The key part here is ‘at a given price’. Suppliers and manufacturers will almost always start high, but there is usually room to move. The issue then, is how much more you are willing to pay for a smaller shipment. If you were paying attention in economics 101, you’ll know that economies of scale are at play here. So for a smaller order, expect the price to go up.
A lot of small businesses get tripped up here. You’ve done all of your homework, you’ve found the perfect supplier, you have the golden sample, and now you want your order shipped… yesterday! Ooops, your supplier has a 45 day lead time. Lead times for orders (particularly smaller ones) can be lengthy. Lead times are worth establishing early on with the supplier so you’re not surprised further down the track. Depending on the supplier, you may also be able to make this a part of the negotiation. $$ talks, and if you’re willing to part with some, many suppliers will fast track your shipment if they can.
Possibly the most important term on the list. Incoterms (International Commercial Terms) define the role of buyer and seller concerning carriage and clearance. In other words, who does what and when during an international transaction. They outline the tasks, risks and costs, and help to reduce costly misunderstandings.
Of course, no great mystery here. But, remember that haggling down to get the lowest price possible is likely to come at the expense of quality.
Ok, ok, we know what you’re thinking. “You’re a sourcing agent! Of course you think we should use your services!” Well, yes. A top sourcing agent will help you unlock all of the secrets to successfull sourcing. They will help you source with confidence, by reducing the risk, relieving you of the hassle, and negotiating pricing and terms that work for your business.
If you’re considering using a sourcing agent, we dive a little deeper into the ‘why’ here:
Why use a sourcing agent or buying agent in China?
So, there you have it, 5 tips to help you import from China like a pro. Sourcing products from a low-cost region like China can seem like a mountain to climb, but a bit of know-how goes a long way. Knowing before you go will save you time and money in the long run. Better sourcing everybody!
