How to find great suppliers to start a product business
Wherever you source from, you need to put in the groundwork. But where do you start and how do you identify quality suppliers? Startups investigates...
You’ve had a great idea for a product business and you’re about to take the first steps towards turning that concept into a viable business reality.
From raising cash and establishing distribution channels through to marketing to your target audience, there will be a huge amount to do in the coming months and years, but perhaps the most fundamental challenge lies in finding a supplier.
And the first question is, where do you start? Let’s assume for a moment, that you’re starting from scratch, with no existing contacts. Your future supplier – which depending on your business plan might be a wholesaler or a manufacturer – could be based in Britain or Western Europe. Equally though, the company you’re looking for could be one of thousands operating out of the emerging markets of Asia, Eastern Europe, the Middle East or Latin America.
So how and where do you begin your search? And once you begin to assemble a list of names, how do you identify the suppliers who will reliably deliver the goods you need at a price you can afford?
Location, Location, Location
Many businesses will begin their search for a supplier in the UK, perhaps even confining their initial search to a specific county or region.
There are some advantages to looking close to home, not least regarding the transparency of the market. For instance, when Oliver Bridge, CEO of Cornerstone, had the idea of selling razors and shaving products on a subscription basis, his first port of call was Google. “I ran a search on suppliers who could deliver packets of razors,” he explains.
Google is particularly useful when sourcing locally or in Europe. Further afield, many factories may not have informative websites, but a simple web search pulls up the main suppliers and their contact numbers. From there, it’s a simple matter to call the sales department, explain your requirements and arrange a quote.
But it’s not always possible to source from home. The progressive shift in manufacturing from West to East has meant that capacity in the UK and some parts of Europe is limited. Depending on the product, you may not be able to get it made or supplied here. Equally important, local factories may not be able to supply you with sufficiently small quantities for the initial run or at the right price.
Put boots on the ground
However, sometimes it is necessary to put boots on the ground. Katie Canvin is the founder of cheekfrills, a lingerie company specialising in well-made, stylish and super comfortable cotton and lace products. Canvin was formulating ideas for a lingerie business while already travelling to China and Asia to source suppliers for leather goods, when she was introduced to her supplier. “I met a man who said, yes I can do leather, but I can also do underwear.”
The meeting provided a catalyst for the launch of the business, and on the basis of her own experience, Canvin found that selecting a supplier is much easier if you have a presence on the ground, not least because you can act on introductions and leads that wouldn’t be offered if you were 5,000 miles away.
However, that is not a course of action open to everyone. There is the alternative of sourcing products online through e-commerce platforms.
Many small factories in China, Asia and other emerging markets don’t necessarily have websites and even if they do, initial attempts to make contact by phone or email may fall foul of language barriers. However, many manufacturers and wholesalers are listed on e-commerce platforms such as Alibaba.com.
The platform enables an engagement process that begins with an initial contact via email through to payment and shipment arrangements. And Alibaba.com buyers are protected by trade assurance (guaranteeing quality and shipment) and a system by which the best established and reliable suppliers are awarded gold status. If a supplier does not meet the requirements in your contract regarding timely shipment and agreed-upon quality standards, Alibaba.com will refund 100% of the supplier’s Trade Assurance coverage amount.
The site allows you to search for suppliers proactively or post specifications and wait for replies.
Choose a supplier who can meet your needs
Once potential suppliers have been shortlisted, it’s important to establish whether they can deliver what you want, at a price you can afford.
There are some questions to ask. If you need a limited quantity of units, will your manufacturer agree to the numbers you require and what will that mean in terms of additional cost? It’s also important to establish the total cost, including charges for set-up and tooling and the supply of samples.
Get to know the supplier
This can be hard to pin down. As Cornerstone’s Oliver Bridge says, you need to trust that your manufacturer or wholesaler won’t bump up prices unexpectedly. Equally you need to be flexible. For instance, the development of a manufactured product may see the specs changing once the first samples are produced and delivered and alterations made. If there are a lot of changes, it would probably be unfair to try to hold the supplier to an original quote.
But what you should do is spend time getting to know your suppliers. Claire Vero, founder of skincare product company Aurelia Skincare, says she goes through a long process of vetting potential suppliers. “I spent hours online initially, talked to my newly-formed networks (where one conversation led to another), met with all suppliers and visited their premises,” she says.
“We have really strict ingredients and an ethical sourcing philosophy so it meant this process took a very long time! It was a happy day when I met PhytoTrade Africa who work with community farmers to whom we pay a fair trade price for unique botanicals.”
Anna McKenzie commends not only an extensive vetting process but also a commitment to making direct comparisons between one supplier and other. She cites her own approach. “We compile a big spreadsheet for all of the potential suppliers for each ingredient and get samples from them all and record: quality/taste, price, MOQ, lead-time to order, payment terms. We compare all against those factors and choose the best two for each thing.”
Ultimately, though, the real test of your relationship with a supplier is whether the company in question delivers in the short, medium and long-term.
For instance, if you pay for products up front – and it’s normal to do so – any slippage in the delivery time will prevent you from reselling the goods in your chosen market. So it’s important to monitor the performance of the supplier from the delivery of samples, through to the first shipment and beyond. Initially at least, don’t bet the farm. “It’s trial and error,” says Canvin. “I would never hand over a lot of money in the first instance.”
But remember that your supplier is to a great extent dependent on your input. If you don’t supply full specifications, then you increase the chance that the first sample or product delivery will not meet your expectations.
There is no reason to fear buying products from distant sources. For instance, recounting her own experience, Canvin says she has had no problems with her Chinese suppliers.
But wherever you source from, it’s vital to put in the groundwork.