Day 4: How to find overseas suppliers to manufacture your profitable product?
Reading Time: 15 Minutes
Timeline Goal: By the end of Week 2, your aim is to have 3-5 suppliers shortlisted and have sent them a buy request for your product
Notes: All resources and links mentioned will also be made available at the end.
Overseas Product Sourcing
Sourcing! This is the fun part :). In the previous post on researching profitable private label products, we picked 10 product candidates that we think has great potential. Now we want to pick 1 out of that 10 and see if we can find 3-5 suppliers who can give us a buy request for them so that we can assess the true profitability of this product.
This lesson is going to be focused on importing your products from China as that’s where the large manufacturers are setup, good profit margins exist, and where most of the goods sold on FBA in the amazon marketplace are imported from.
Firstly, we’ll need to register for an account on Alibaba.com. After the account registration, we’ll search for our product using its main keywords and start filtering through the list of suppliers based on our criteria.
In that screenshot, you’ll see 2 important filters to always choose when searching for potential suppliers for your product:
Trade Assurance: Trade Assurance protects buyers’ orders; it minimizes risk by guaranteeing money back in the event of a supplier failing to meet the terms of the order contract – including delivery delays, quality, quantity discrepancies, or other processing problems. Trade Assurance applies a credit-rating system that incentivizes suppliers to produce and deliver high-quality goods on time and according to the buyers’ specifications.
Gold Supplier: Gold Supplier is a premium membership for suppliers on Alibaba.com. I recommend working with Gold Suppliers that are at least 3 years old.
We then browse through all the suppliers in the first few pages, shortlist 5 suppliers that we like and take a note of their details ( Name, Price, Miniumum order, Supply Ability, Port) and direct link to contact them with your request to manufacture.
Alibaba provides 2 options: you can use their built-in email system to send an email or their text-chat option. We prefer the email system as you can personalize it more and only use the chat option for more detailed Q&A later in the communication process. Sometimes manufacturers will also list their Whatsapp contact if you want to take the communication outside Alibaba.
Now, your first contact with a supplier needs to be short and to the point. You don’t want to overwhelm them with details – just a simple intro email that asks if they sell the product you are looking for, if so – for them to kindly send their specs. You want to use simple English here with their reps. They’re smart and know just enough English to handle an order. Lastly, you need to be respectful of them in your communications.
Here’s a sample intro email:
Hi <Supplier Name>
I am seeking a supplier for the Eggs Bites Molds product. Do you currently sell this? If yes, can you send me the specifications and pricing?
Thanks in advance,
<Your Company’s Name> [ If you don’t have an LLC setup think of a name that you’d want and just make it up – of course at some point you need to actually have an LLC up and running to run your business out of]
Ph: <Phone Number>
Make sure to also text chat with them after their first response and ask what their lead time is. The lead time is essentially how much time the manufacturer requires after you make payment for them to ship your order to the Amazon warehouse.
Product Still Profitable?
Remember we want to purchase this product ONLY if it is still profitable. That’s why we’re doing this remember? 🙂
In the last lesson, we discovered how much it would net us to sell this product type (after Amazon’s FBA fees, etc) but we didn’t take into account how much it would cost to manufacture each unit or to get it shipped from the manufacturer to Amazon’s warehouse. This is the final piece of the puzzle to determine if we’re profitable for the product we chose. If it doesn’t pan out, we simply cross that product off our list and move on to the 2nd product. Good think we have 10, eh? ?
Making sure you have enough buffer in your estimated margins is absolute key. Subtract the best price of each suppliers per piece quote from the net amount to get the potential profit. What we want here is to have around at least 40% true profit margin if not better. So if the supplier quoted us $2/ piece and our net as per the previous lesson was $18.76 – this leaves us with $16.76. That’s still not the potential profit.
We also need to get quotes from at least 5-10 freight forwarders. A $4/kg price for air freight (if your shipment is not charged by volumetric weight) is a nice competitive rate that you should be looking for. It might be challenging to get the carton size and weight for a product you haven’t even started making yet, but due-diligence here will pay off and is crucial to your business. A good freight forwarder will make all the difference in your importing to your warehouse and would take care of customs & any other duties on your behalf. Once you have the numbers, then we subtract that from the $16.76 to get a closer look at what our potential profit would be.
Want to fast track your Supplier research and have it done-for-you? FosterFBA has partnered with specialists in China that not only speak very good English but understand the ins and outs of choosing the best supplier to work with and can reach out to the supplier on your behalf, contact us for more details.
Great! Let’s assume we found 5 suppliers by searching with our filter criteria and then contacting them all with our intro email. Some of them might reply and some might not depending on how busy they are. If the suppliers you reached out to are not responding then we reach out to a few more until we have around 3-5 responses saying that they carry our product and gives us specs with pricing.
Go through all the specs and their “MOQ” (i.e. minimum order quantity). The MOQ is usually not strict and you can almost always assume that you can order shipments of units under that MOQ number but it’s a ball park figure. If a supplier quotes a MOQ of 2000 pieces, we cannot request for a shipment of 10 pieces obviously!
Before we choose our perfect supplier – we need to vet their quality. The only way to do that would be to request they send us a few samples of the product.
Here’s what you will need to have in place before your first sample & buy request:
A shipping account with Fedex, UPS or DHL. They all have easy free sign ups online.
A Paypal account (connected to your local bank)
$1000 atleast in your paypal account to buy inventory
Below is a simple email template to request for samples, that we can send to our 3-5 suppliers:
“Hi <Rep Name>,
That’s great to hear! We are very interested in your product “<Egg Bites Mold Silicone BPA free>”. Can you send us a few samples?
Please ship using our FEDEX account number: <account number>
Ship to Address:
Thank you very much,
<Your Company’s Name>
Ph: <Phone Number>”
Now, if you are lucky the product will appear at your doorstep a few days later and your fedex account has been charged for the shipping costs only.
Typically we can get up to $20 of product for free as samples. So if each unit cost is $4 to manufacture, you could request for 5 samples. If its an expensive product, they might just write back saying that we need to pay for the product samples and send us a quote.
Once the samples arrive, make sure to TEST them for quality over a couple of days. You need to have your quality assurance hat on and critique the product as much as you can as you will be staking your brand & business on them! Nothing like a bad manufacturer/product to ruin your business no matter how profitable the niche was.
Picking the Winner
Exciting! We’ve assessed the winner sample by testing it thoroughly and picked our go-to supplier. Now we do our 1st test order using our freight forwarder to make sure everything is setup correctly and goes to the Amazon Warehouse so it can be labeled and added to our inventory. We’re officially off to the races from here!
P.S: If you don’t want to spend 7 days figuring out your Amazon FBA business, then we have THE BEST step-by-step course for selling on Amazon FBA by a top mentor. You can join that course right now! Psst. we’ve even got a $50 off coupon just for you! Use: FOSTERFBA50 🙂
P.P.S: Need help sourcing and want to fast track the process? Please contact us, we have highly experienced English speaking partners on the ground in China that can help you with the complete supplier contact, negotiation, quality inspection and even shipping, if needed. Just contact us and someone from the team will reach out to you to get you started!
How to Find Overseas Suppliers – [Day 4 of 7] How To Find & Launch A Profitable Product On Amazon2018-05-042018-07-31https://fosterfba.com/wp-content/uploads/2018/07/logo.pngFosterFBAhttps://amzfosterdotcom-qvfplct.netdna-ssl.com/wp-content/uploads/2018/05/4-1.png200px200px