5 Factors to Determine if a Supplier is Right

Whether you decide to try a sourcing agent, continue sourcing on your own, or to use an online sourcing platform, you should still understand how to properly determine if a supplier is the right match for your ecommerce store.  

Here are 5 factors you should consider when determining if a supplier is right.

1. Margin 

It seems obvious that the price per unit needs to be low enough that you have room to take a healthy profit. However, there are many factors beyond price per unit to consider when determining the actual price of your products:

Get a shipping quote: Distance, country of origin, and available shipping methods all have a major impact on the overall shipping price. Before committing to production, make sure you get quotes from your own freight forwarding partner or their internal shipping managers.

Calculate customs duties: When importing goods, you may be subject to additional fees depending on the country of origin and type of product you’re importing. Of course, these fees can be passed on to your customers, but if you’re operating in a price-sensitive industry it could make you uncompetitive. Always make sure you’re calculating customs duties accurately or it could eat your profits.

2. Reliability

“Time is money,” as the old adage goes, and if you’re working with a factory that’s often behind schedule it could lead to major financial losses on your end. To protect yourself from dealing with a completely unreliable supplier .

Ask for their business license: Requesting a copy of a factory’s business license is completely normal. Not only will it show that they’re a legally operating factory, but it will also tell you the exact scope of their production capabilities. If a factory is hesitant to give you a copy of their license, it’s probably a sign to move on.

Ask for a list of companies they have worked with: It’s not uncommon to ask factories if they’ve worked with companies similar in size to yours. If they were able to produce successfully for those other companies, it’s a good sign that your production run will go smoothly as well.

3. Product Offerings

Factories are typically limited to a specific scope of products they can produce. If you’re looking to manufacture jewelry, but the supplier you’re working with specializes in apparel, it’s probably not going to work out. Unfortunately, some factories may try to dupe you when it comes to their business scope, but how do you make sure the factory isn’t lying?

Arrange a factory audit: Hire a reliable QC company to do an onsite comprehensive audit will be important before you invest lots of money, make sure the factory is actually making the similar products when the QC is there, it’s far from enough if the factory only shows the similar products in their showrooms, the samples could be provided by other people or purchased from somewhere.

4. Minimum Order Quantity (MOQ)

Ask about the MOQ: Just ask them if they can work with your order size. Save yourself some headache and make sure you ask them as soon as possible. You wouldn’t want to order a sample and request a factory audit if they aren’t capable of working with your order size.

5. Communication and Support

Communication is the key to a successful production run. No matter how detailed your product specifications, mockups and other design materials are, there is always room for interpretation and it may not be what you had in mind. Communicating with a supplier can be difficult, especially if they’re located overseas, but there are a couple of ways you can test it.