Here are some practical tips you can implement right now when you search for suppliers.
As you search for suppliers for your business, you need to be on the lookout for red flags. Suppliers are an important part of the equation. Search for a competitive price and freight charges need to be competitive.
If you’re sourcing overseas, especially in Asia, India, the Middle East, I think the best place for the source is Alibaba.com.
They are user friendly. Alibaba is organized, and there are so many vendors.
If I go to Alibaba and want to find a hairbrush to sell, for example, there will be tens of thousands of different search results, and I will actually be unable to go through each of them.
Adding a filter to your search is the key. Now, the first thing you need to know is that although there are tens of thousands of search results, it doesn’t mean tens of thousands of suppliers.
Sometimes one supplier who has one hairbrush lists several different listings for the same hairbrush because that increases your chance to click on them.
However, if you filter them out you can actually click suppliers by show a listing per supplier, then you may have fewer search results.
The next thing you do is click on the Gold Supplier. A Gold Supplier is someone who paid Alibaba to be identified. This will show they ‘re more serious. If it’s not a high piece the supplier will batch a number of products in the one listing.
If you still have a tonne of search results, I ‘d recommend clicking on the supplier evaluation.
Like this supplier, there are actually far fewer manufacturers who are A set suppliers, because it means somebody actually went to the manufacturing facility, went to the warehouse, and inspected things. They saw it’s legitimate. They see, you know, what’s going on. So Alibaba evaluated them.
Fewer suppliers have that badge, and when they have it, it’s a really good sign.
The next thing you should know is that a manufacturer and trading company can differ. So remember that a manufacturer is an individual, the company that makes the products, they make them right there. They have a warehouse, a manufacturing facility where they create from scratch.
The trade is like a supplier. However, a supplier is the kind of middleman between the producer and between you and the manufacturer. They’ll find goods in China or elsewhere, and list them on their website.
The trading companies can lead you to believe they ‘re a supplier, so you’ll buy from them. Just be aware there is a difference as the trading company will add their mark-up. It is best to try to buy straight from the manufacturer itself as you will likely get the best price.
Now, how do you know if Alibaba’s just a trading firm or a manufacturer? Okay, one thing ‘s actually on their page. If you click the company, it’ll say. Whether it’s a trading company, a manufacturer, or both, they ‘re both. The manufacturer is also a trading company sometimes. The best thing you can do is go to the manufacturer for the best rates and quality.
Sometimes you may end up buying from a trading company.
The next thing you want to do is ask the supplier.
is very important at this stage. You have to contact the suppliers themselves. Initiate contact and ask questions. Here are some questions to ask to determine credibility.
- Ask for these items first;
- Business License,
- International Trade Registration, and
- Bank Account Certification.
- 900 Certificate, which helps you understand they have good quality management systems.
- A Customs Certificate of Registration and
- Any test reports for the goods you will need for example for toys and electronics.
- If you’re exporting to another country, customs will actually ask you to have some checks and reports, and an invoice for goods that will make sure you ‘re investing yours, the money that’s coming out of your account will go to their appropriate bank and company details.
If a supplier hesitates to give you them or show them to you, that’s a red flag for me.
You know, most suppliers need all these certificates.
State to the companies in advance that, they know before you pay the rest of the money and before you ship the products to me, you will ask them to produce to be inspected for quality through your insurer. If you tell them that in advance, they ‘re likely to be on their best behavior. This will happen when they produce the products because they don’t want any problems with third-party inspection agencies.
They’ll send you high-quality goods, but if they come back and say no, “we don’t want you to have a third-party inspection service”. It’s a red flag. That’s normal practice and they should be able to accommodate the order. And if they don’t want anything else in their facility, that might mean some bad manufacturing practices are going on.
The next thing you should do is sign a contract between you and the supplier. There’ll be a few things we’ll get as specific as possible. The contract should specify the duration. They told you that producing goods takes 45 days. These terms normally are in the contract. It’ll say 45 days plus seven days, if they have delays, you’ll owe them seven days extra.
If the goods aren’t ready within the contracts specified terms, the supplier will have to start paying a daily penalty.
There is an amount you owe when goods are ready. When the supplier knows they ‘re losing money every day, they ‘re more likely to hurry up and finish producing your product.
If you don’t have a contract and you’re told 45 days the goods may not be finished in time, the supplier might delay the order. They have no need to hurry anything. It is best for both parties to have a contract specifying all the terms of trade and delivery of the order.
Another thing you want to mention in advance is that you would like the deposit to be 30%. Usually, 30% is paid in advance.
70% is usually paid after the goods are finished. Sometimes producers will say, no, we want to accept 50 percent in advance. Sometimes they say 70% ahead of time. This is not reasonable. Let them know in advance, you will only pay 30% and no more as a deposit. And be specific about that. And if the maker doesn’t like that, you ‘re going to the next supplier.
Communication is all you’ll see in two small case studies.
I’m about to share with you when you don’t communicate with your supplier, things go on and on.
And it gets delayed, particularly if they’re overseas, and you’re in a time zone totally opposite. You know, you might send them one email, and they might return with another email a day later. And then you return with another email a day later, it takes too long. So you want fast communication.
The best thing is to create a spreadsheet and track all your suppliers on the spreadsheet and monitor how quickly they ‘re getting back to you because it’s really important. They respect your time and you respect theirs.
Case Study A
Two manufacturers, I’ve worked in the past, are lessons in learning what NOT to do.
So the first was a manufacturer for custom packaging and printing.
The 1st company supplier made cards and made tissue paper, bags, poly bags, and things like that. And so the first problem with them was that I never explained to them, you know I will pay a 30% deposit in advance and 70% later. They told me to pay a 70% deposit, and 30 percent later. I was like, what?
My lack of communication with the supplier, cause the process to be much more drawn out than intended. I knew that was not standard practice. I told them, no, that’s not going to happen. We debated for some time. Supplier would say “that’s our new rule” and that’s how it is. In the end, we agreed on 50% ahead of time.
The next red flag was just that there was such unprofessional communication. I think that you know, the thing is when you’re sourcing overseas and there is a language barrier, you can’t expect perfect English from someone whose native language is not English, that’s unreasonable, but there are ways of communicating in a professional manner.
People in Asia have very high standards of professionalism. They’ve got great manners. So when I noticed that my supplier was communicating with me very unprofessionally, I should’ve taken that as a red flag. My supplier was talking to me like a friend and at the same time could negotiate with me and convince me to do certain things I knew was not what I wanted.
You know, trust your gut when it comes to that.
I think oftentimes we just brush it off and say that’s just their style of communicating. But no, I think there are standards that it comes to. A business relationship needs to be a priority in mind.
The next red flag was when they asked me to pay on PayPal instead of using Trade Assurance. I had an order that was about $5,000 with them and they were saying they don’t want to use trade assurance because it’s going to cost them more money. They prefer me to use PayPal, which is strange.
Usually, the suppliers actually want you to use wire transfers instead of PayPal because PayPal has higher fees. But for some reason, they were avoiding Trade Assurance. That was a little bit uncomfortable for me.
I like using Alibaba Trade Assurance. PayPal is fine, but it’s better for lower cost orders.
You know, things are under a thousand dollars under $2,000, but it’s a $5,000 order. So I would have preferred to send a wire transfer. So they were kind of negotiating with me about that, which I felt a little bit uncomfortable about.
The next issue we had is that, when she printed the initial order, the quality was poor. My bag order had a print on them that was peeling off. I could see that from the picture they sent me. There’s was a quality issue here but she asked me to accept it anyway.
She didn’t want to fix the problem. She asked me to accept it the way it was. I said, no, it has to be a hundred percent perfect quality. I ended up having to pay more for them to fix the quality, which was strange because I was thinking, why am I paying more for the exact same product?
And then the final issue, which was the most annoying issue to me was they mucked up my order for printed tissue paper.
And this tissue paper had specific. You know, I designed it with my own words. I had like inspiring words on it and I asked them to print it and then they printed it, but they printed it wrong.
They printed all the units with my logo instead of using the actual texts that I had given them. When I said I can’t accept this error, she told me “I’m so sorry we printed the wrong design. Please accept it anyways. She kept saying, please accept the order. Because if you don’t, then this person is going to get fired.” Here again, this is such an unprofessional way to communicate with someone that you’re doing business with.
At that point, I was just so fed up. I had such a headache with that supplier and I was just like, you know what, I’m just going to pay extra for a new one. And so I learned my lesson at this point that this was not the right supplier for me.
I’m finding someone else to create future orders with. Even though the supplier is cheaper, the supplier delivers the products we printed were up to my standard. However the hassle they went through and all the communication problems, it just wasn’t worth it.
Case Study B
In August 2017, I ordered my products and didn’t get them shipped until May 18th, 2018. It took them nine months to finish my order. That is just not acceptable.
And people are like, what is taking so long? And why was it just a bad experience? So what were the warning signs with the supplier?
First of all, there were times, you know, the supplier was a supplier that had 10 years of experience a supplier that was a Gold Badge assessed supplier on Alibaba.
The person, the initial contact with the supplier was very fast. They were very fast to communicate with me. So I really didn’t see any issues with them. It wasn’t until later on that things got bad.
So there really weren’t many warning signs for me. Nothing I can really share with you to help you avoid this situation. The supplier wanted to move to our conversation on Skype or WhatsApp.
This is common when you’re talking to suppliers on Alibaba.
Eventually, when they know they’re will work with you. They’re want to communicate on Skype or WhatsApp. It is faster that way. You know, it’s faster than going back and forth via email. It’s faster than Alibaba’s sometimes. So it’s good for you, but it’s also can be the reason they could be asking you to do this is that on Alibaba, they have a response rate.
In order for them to maintain their high response rate, they need to respond to you as soon as possible on Alibaba. But if they don’t want to continue to respond to you as soon as possible, they might now ask to move the conversation off to Skype. They might now converse with you on Skype, where the response rate is not calculated.
Production time was quoted for one month. It’s not ideal but OK with me. I would say, it depends on the nature of the product, however, I would recommend 20 days is a good amount of time for production.
My mistake here was with the original sample with the supplier, instead of ordering a sample, which they already had in stock. If, for example, I’m sourcing underwear, this is what the case was, the supplier already has a similar style of underwear. I could just request that sample to be sent to me because all I want to know at this point is I want to feel the quality of the product. I want to see the quality of the material, I want to see color options. I want to see how they do with their stitching.
Could I see if they were professional with the seams in the garments? I don’t know what the word is for that.
That was my main goal with the sample. But instead, I asked them for a custom sample, so custom sample, they quoted me 20 days to make so for me to wait 20 days just to receive the sample was too long.
If I had just asked them for a basic sample, whatever they had in the warehouse sent it to me today, it could have been delivered to my house in four days with air shipping.
So that was a mistake I made. My initial test sample should just be whatever they have just to see if they’re good. And then if I find that the sample quality was good, then I can proceed with them with a second sample. That is customized.
When I received the sample, I noticed that the color of the band was not accurate. It’s not what I wanted. And also the stitching was not well done. I didn’t like the way they stitched it. The sample looked unprofessional. I then expressed my opinion to the supplier, but basically they didn’t say that they could fix that.
At that point, I should have proceeded with another supplier who could have better quality stitching and the colors that I wanted.
The reason it took so long was that after I received the samples, I told the supplier, all the things I wanted them to change. I expected the supplier to start working on that improves another sample for me.
And then 20, 30 days later, I’m messaging them constantly. They’re were saying, I emailed you and you never responded. And it was this lack of communication on both parts and ended up wasting 30 days of time. They never started with all the edits for 30 days.
Then we had issues with the bank when I sent them my deposit. They never received it.
It took like three months for them to receive it. There were some issues, the wire transfer. I’m trying to communicate with the supplier, placing another order, which I don’t actually intend to do with them, but I just wanted to see if they would actually respond to me and it’s been over a month and they haven’t responded.
If I’m in a situation now where I need to place a second order with the supplier, I’m going to have to find someone really quick to replenish my inventory because the supplier is no longer responsive.
The delays were caused by both myself and the supplier.
I have learned to be really aware of things and be conscious of your communication of what’s going on. If you feel it is not to your standard then best to cut ties early. Find a supplier you can trust.
Hopefully, these tips help you when you’re picking your supplier.