The Quarantine Times 20 – How To Find A Supplier For Your New Business

              These are crazy times we’re living in. Unemployment has skyrocketed and has put millions of Americans out of work. With this unfortunate incline of jobless claims, there’s been another rise in something that is perhaps a little more positive. Due to the coronavirus, there has been a surge in people launching their own businesses. Shopify has shown that numbers for new ecommerce sites have shot up recently as a result of the pandemic’s effect on unemployment and the working from home policy. Believe what you want, but that is some great news that people are taking a step towards financial independence. Of course, not all of the new sites will become winners, but we can still be happy about the ones that emerge from this pandemic.

              When starting a new business, especially during a time like this, there will be more challenges than ever. From pushing product to immobile customers, to fighting for saturated online ad space, to doing all of this from the confines of your home. However, there is another issue that will be the biggest burden for those entrepreneurs going into retail. Whether it’s a one product or multiple product business, there is no doubt that finding a manufacturer in this era is going to be tough. Not only are many suppliers overseas and stateside either closed or working with massive limitations, they are also seeing a shortage on their raw materials. In other words, costs may be very high. Supplies may also simply have a pandemic policy of not taking on any new clients, as they have their hands full trying to please their current clients. All of these are reasons that will discourage many people and to give up. However, times are changing. It’s unclear to us how long this pandemic will last, but things will get better eventually. Businesses will reopen eventually. People will go back to work eventually. Every similar pandemic-like case of this in the past, we have gotten through it and new technologies have emerge out of the chaos. In other words, this is an ideal time for a new entrepreneur to be planning to be prepared for when things finally get better.

              How do we get a supplier or manufacturer for your product idea, especially during a pandemic? Well it is no different than if it were normal times. Sure, we may have limited options at the moment. But as things get better, more options will arise. Finding a supplier can be one of the most important and difficult parts about getting into the ecommerce retail business. Finding a supplier that fits your cost, quality, and workability requirements can be difficult. You may have read that and wondered what I meant by workability. Workability, to me, means how easy or difficult someone or an organization is to work with. For example, if a supplier is a pain in the ass to work with, then think hard about whether you want to keep doing business with them.

              Your strategy for finding a supplier really depends on your product. The three main types of products are existing products, brand new products (invention), or an improvement or redesign of an existing product (which is ultimately a new product). The last option is the one I recommend the most, especially for beginners entering into the entrepreneurial world. You don’t want to build a business around an existing product because these become commodities. If you’re selling the same product as a big corporation is, the big corporation will beat you out on price, causing you to have no competitive advantage. The second option I laid out is also known as an invention. This is great if you’re up to the task. However, keep in mind that this option has the most risk and most work involved by far. The upside is huge, but I’m not sure this is the best option for someone just starting out their business. There is far too much risk involved and the amount of work may scare newbies away. A new invention or product would be a better option as an addition to an already successful business. After you’ve proved to yourself you can market your products and find your customers, then it would be wiser to try out a brand new product. Now we come to the final option and the best option for those eager to become an entrepreneur. Making an improvement or redesigning an already existing product is the best way to start your ecommerce retail business. There are many reasons for this. You are piggy-backing off of products that you already know have demand. In other words, the product has already validated to you that there is a market. This takes care of a crucial step that keeps businesses from succeeding. Taking this approach is also easier from marketing standpoint as you are showing an improvement to something else which implies your product is better. Make sure customers can clearly tell the difference of why your product is better by a video or pictures. It’s important to aesthetically look like it is better and offers more value. This is your competitive advantage and why you can charge more for this. Because you are providing more value to the customer. It is also why you will have less competition since you’ve essentially created a new product that no one else sells but you. Customers will affiliate this new product with your brand, boosting your brand’s image. Another benefit of this strategy is that it is less effort than inventing a product, but with more upside than selling an existing product. You get best of both worlds with this strategy.

              Now that we’ve discussed the most practical strategies, the next step is to find a manufacturer. There are a number of sites that are at your dispose to find a supplier. Sits like Alibaba and ThomasNet are supplier directories that put you in touch with thousands of suppliers around the world and in the U.S. Once you have your product idea locked down and perhaps a few sketches of it, look for suppliers that are in the space you are trying to enter. If you made an improvement on an existing product, then reach out to those suppliers that make that existing product. Then, work with them to discuss the redesign and whether they’re willing to work with you. This process could be a long and frustrating one as some suppliers are more stubborn than others. That’s why this step can be most cumbersome at times, because it’s crucial to find a good fit. The more redesign there is to a product, the more difficult it may be to find the right supplier. However, this is not necessarily a bad thing. It may take longer to find the right supplier, but there will be more upside since your product is more differentiated. Reach out to a long list of suppliers that are already in the space and tell them about your redesign. If they are willing to work with your with your redesigned product, then great. Then that supplier passes the first checkpoint. The next step in the process after you have a list of potential suppliers that are able to meet your requirements is to get quotes and samples. In the early stages, it’s smart to have the quantity for the quotes to be on the lower sides because it is less risky and less work to sell what you buy. Once the business matures and demand is more transparent, then it’s smart to get higher order quantities. But for now, we want to know their MOQ (minimum order quantity) and quotes. MOQs can always be negotiable, even if it says otherwise on the supplier’s website. Depending on the size and cost of your product, you want enough product to get some savings, but you don’t want to get too much since you’ll be left with it all to sell in a market that you don’t know that will for sure sell yet. It’s a smart idea to get quotes before samples because if the quotes are way too high, then there will be no reason to get samples and you can scratch that supplier off the list. Once you narrow down your list of suppliers to fit your specs, cost, and quantity, then order samples. Test the samples out. See which ones you like best. Perhaps offer the sample to friends you trust and get their insights. They may have good ideas that you could use. If that’s the case, go back to the suppliers and see if they can accommodate the new change. This is common to go back and forth with suppliers to refine your product. After doing this process for as many times it takes for you to feel comfortable ordering a bunch of them, then place your order and start selling.

The next challenge along the way is getting the word out and marketing your new product. If you made it this far then congrats. You have basically created something brand new. Be smart about how you spend your marketing dollars as there are millions of ways you can throw money down the toilet with. I will post another blog on marketing the product once you have it in weeks to come. But for now, congrats. In my opinion, you just got by the most frustrating part of ecommerce retail, the sourcing portion. Now, the fun part begins…Sales.

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