Sourcing from China works well for products that sell consistently. Validating your product is a necessary first step before looking at suppliers and requesting samples. If you're unclear about the sale ability of the product, you run the risk of making a loss. So, it’s important to choose the right items for bulk buying from China.
Buying in bulk usually saves you money by lowering the unit price of the product. How to negotiate with Chinese suppliers for a lower overall price for a larger quantity of goods is easier, as suppliers are certain of a sale even if they must take a smaller profit. A returning customer is valuable to long-term sustainability.
Bulk buying is the purchase of multiple units of a product for a lower unit price. It is a common practice among Amazon sellers as it offers benefits such as:
Cheaper price: When you consider to get products made in China, wholesalers and factories will be willing to give you a discounted rate on your purchase of bulk items. Selling more helps to increase their profits, as the production and transportation cost per unit is lower at a larger quantity.
Sufficient inventory: Buying big quantities of a product makes sense when the lead time for production is long, or you cannot wait for the slow ocean transportation. You can keep reliable inventory and fulfill customer orders efficiently.
Discounts on repeat purchases: Bulk buying from the same supplier can make you eligible for discounts on repeat purchases. If kept regular purchasing, the factory is able to properly plan their materials and production facility, so as to keep operational cost low. Then, the factory owner is happy to offer discounts to you.
Online sellers must get know the right product to source from China. What are people interested to buy and why? What is the competition like? How can I differentiate my product? Do I need to conduct a China supplier reliability audit? Occupying yourself with these questions early on will help you avoid regrets later. You can consider it in a couple of ways:
Choose a product category: On Amazon USA, consumer electronics is the most popular product category, followed by apparel, jewelry, homeware, and kitchen utensils. The tons of research information can be found on Amazon, it is helpful in recognizing what people buy. You can choose a category which you have better understanding and experience.
Use Google Trends: Google Trends tells you about the popular products people are searching for online. Knowing which ones are in demand is a helpful starting point during market validation. See the search volumes for the product over time to identify whether there are seasonal changes in its market demand.
Test your idea: With a few product ideas to go with, it's time for market validation before proceeding to buy the items from China in bulk. Your focus group can include friends, relatives, colleagues, and people on forums and social media. Ask them about their experience using your prospective product.
Also, look back at your own experiences using the product. If it isn't a product you've used, you may have better understanding about it and add more viewpoints to your findings.
With a defined product validation process, you can always go back to find new products to sell. You'll have a ready system to use to test alternative product ideas if the initial ones are economically unviable.
Calculate unit cost: Can you get the product made at a price that assures you a good profit margin? Is the product light and easy to ship? Shipping accounts for a significant part of overall cost. Also, you need to calculate taxes and duties for the products imported to the destination country.
Amazon sellers tend to opt for a small order volume to help them get started. You can ramp up volume when you build sales momentum. That said, avoid purchasing for a large quantity at beginning. You need to always test the water first.
One of the risks of placing a bulk order is receiving many defective products that you cannot sell. It leaves you with lesser sellable products and prevents you from getting the desired returns from your bigger investment. China supplier quality management is an important basis for you to ensure product quality. Please pay attention to whether your supplier has its own quality assurance mechanism.
There are practical ways to reduce risks: get a sample first and inspect product quality, ideally throughout production.
The sample indicates how the final product will look, feel, and function. It is the litmus test for your product idea. If you're not okay with it, you can tweak the design and bring it up to your target market's expectations first.
If the sample doesn't look like the one shown on the supplier's pricelist, continue searching for another supplier rather than giving the previous business another chance, unless the products are custom made, and you know there are reasonable deviations because of the design is not mature, or the manufacturing parameters are not tested and defined.
Amazon FBA sellers need to pay closer attention to product quality. While this fulfillment method is a hands-off way of doing business, it reduces some of the control you have over quality as the products are shipped directly to your customers. Get a sample and carefully check the quality. Remember, you need to find a way to control quality despite the geographical distances. Increasingly, western importers are engaging QC companies for assistance with quality inspection.
Your supplier can be a factory, wholesaler, or trading company. Each has its pros and cons.
A factory directly manufactures the products in mass quantity.
Pros:
- Best prices
- More control over quality
- Choices for customization
Cons:
- High MOQ
- Language barriers
- Communication errors
A wholesaler buys, imports, and warehouses the product.
Pros:
- Easy communication
- Short delivery time
- Low shipping cost
Cons:
- Cannot do product customization
- Charge a higher price
- Hard to replace defective units
A trading company buys products from the manufacturer and holds them in stock to sell to importers.
Pros:
- Good at English communication
- More product options
- Can do shipment consolidation
Cons:
- Markups on price
- No control over quality
- Vague source of products
Working directly with a factory gives you more control over quality, but the geographical distances and language barriers come in the way of smooth communication. Also, the high MOQ required by factories may set you back.
A middleman reduces your profit margin. Sorting out quality issues can be impossible or unproductive as wholesalers and trading companies have no control over production.
A sourcing agent is a company that handles the full procurement process for western importers. The agent has an office in China and may even maintain one in the importer's home country.
Sourcing agents help connect you to a manufacturer from their network. They work on product sourcing and assist with negotiation and cost evaluation. This apart, their services cover quality control and other aspects of procurement, such as:
- Product prototyping
- Sample preparation
- Factory checks
- POrder monitoring
- Quality inspection
- Package customization
Also, the sourcing agent helps you fill the documents for importing process. Their staff speaks fluent English, making communication easy and ensuring that things don't get lost in translation between you and the manufacturer. They keep open communication and keep you up to date on your order.
For quality-obsessed Amazon sellers, sourcing agents help find a manufacturer with the capability to make your products. Their engineering team's inputs speed up designing and sampling. Factory audits, in-process tests, and quality inspections reduce possibility of a large defect rate. A reputable sourcing agent keeps everything transparent and ultimately helps you build a mutually rewarding partnership with the manufacturer.
China bulk wholesale suppliers keep the final price open. They expect buyers to negotiate the price on bulk orders, so asking for a reasonable discount should be on the table. That said, guard against driving the price too low as it will only result in the manufacturer losing interest in you and paying attention to other prospective buyers. Trading companies may be able to source for cheaper, but you will be in the dark about the factory in which the products will be made.
Successful price setting, along with good product quality, a real demand for the product, positive reviews, on-time fulfillment, and effective marketing lead to an increase in profit. A China sourcing agent can help you negotiate the best price for your product, without impact on quality or delivery time, ultimately help you buy bulk items from China at competitive prices.
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