Amazon wholesale suppliers abound in China. You can discover thousands of them on the Google and Baidu search engines, Alibaba, Global Sources and Made in China. That part’s easy. Partnering with a reliable supplier and motivating them to contribute their best efforts to your business isn’t exactly a cakewalk. Here are some useful insights garnered from working with Amazon sellers and Chinese manufacturers.
Assessing quality
Quality looks different at different Chinese factories. If the supplier agrees to a price substantially lower than the market price, the result is typically inferior quality.
Quality across the suppliers you’ve shortlisted can be alike but minimum order quantities (MOQs) and lead times may differ substantially. A comparison on various parameters is necessary to understand who can offer a better overall deal.
Experience working with western suppliers is an advantage. The supplier will be familiar with applicable product quality and safety requirements. If your product needs to be tested at a lab, you don’t have to be overwhelmed by the process.
The sample you order will give you additional information on comparing suppliers. Some amount of skepticism is needed as the sample may be exceptional yet without diligent scrutiny during the process, that same quality may not be reflected in your order. Discrepancy in quality is particularly noticeable when the supplier has cut corners to match the price or the manufacturer is actually a middleman.
The latter case is a result of partnering with a trading company, a risk arising from not vetting suppliers thoroughly. The middleman may send you a sample from one supplier but once you’ve given the go-ahead, turn around and use a cheaper factory to increase their own margins while saddling you with an inferior quality product at an inflated price tag.
Precautions from your side should include the following:
– Do a background check of suppliers, even if you found them on leading online directories. Ask the right questions (ex: factory headcount, what is subcontracted), and copies of their business license, customs registration certification and ISO 9001 certificate/internal quality check documents.
– Visit the factory if you can. If you can’t, engage a third-party quality inspection service. If this is also not possible, see if you can verify the factory’s reputation and credentials with one of your contacts in China.
– An inspection of finished goods prior to shipment will tell you if the order meets your requirements. You can have a trusted associate or a sourcing agent carry out the inspection. Any issue with the order can be brought to the supplier’s notice because once shipment is out, you’re ultimately stuck with sub-par products that never sell, leaving you no choice but to either reorder with the same or find a different supplier.
Getting a good price
There are differing opinions on how to negotiate prices with your Chinese suppliers and to what extent you should persist in getting the best possible price. Although suppliers expect you to negotiate prices, not everyone will give you what you’re hoping for, and some will agree but at the expense of providing terrible quality.
Suppliers often ask for your target price. Some may ask for it before they even provide a quote. You can determine your target price by contacting different suppliers and getting quotations. Factor in the costs of the main raw materials and components needed to build a quality product. This will help you judge what a reasonable price for the product looks like.
You will see many similar quotes. You can disregard prices that are 10-20% higher or lower than the baseline price. Unless you are interested in higher quotes – as they can imply better quality – set your target price from this list.
When you cannot get the first pricing from a supplier, share your target price. You can ask the supplier to match this price or give you a better price. The alternative is not to provide your target price, and ask the supplier to give you their best price. If you plan to stick to one supplier for the long-term and anticipate large order quantities, you can make this known in your email. This may encourage the supplier to adjust the quote downwards.
Is the supplier unresponsive? Send a follow-up email saying you’re interested in their company but you’re getting compelling pricing from other manufacturers. Do share an Excel spreadsheet of supplier comparisons to indicate the overall value offered by the competition.
If the suppliers you are interested in give you a quote that is very different from your target price, ask them to justify their pricing. It is possible that they may be taking a chance hoping to see if you will accept this price.
It is advantageous to have an associate with boots on the ground in the location where many of your shortlisted candidates are based. If this is not possible, continue negotiating via email and phone, and finalize 2-3 candidates for a factory audit.
Unscrupulous suppliers may attempt to rip you off by jacking up the price just when you’re ready to place your first order. If it feels wrong, don’t give in just because you’ve come so far. If this happens, continue to do your search, because with a little more effort an honest supplier can be found waiting in the wings.
