If you have made the decision to start a small online business selling products, then you need to read this piece. Sourcing Nova has worked hard to provide you with plenty of information that you need before starting sourcing products from Chinese manufacturers and the manufacturing process.
Sourcing Nova is dedicated to making you as informed as possible when it comes to products from China. This brings us to the next important phase of your online business. Ordering products is one thing, as we can help you with that process. You need to have an understanding of the manufacturing process – particularly if you are looking into new product ideas or making considerable upgrades on another product.
Let’s get started with one exceptionally important piece of advice. This, above all else, is something that you need to take into deep consideration when it comes to products and the manufacturing processes.
Take the price out of your product plan – completely
It is completely understandable if you are trying to save money, particularly if you are beginning a new business selling products online. There are plenty of factories in China that can make a product for less than another, and you may be considering this as an important decision before starting on your new product idea. This is completely understandable.
However, you are familiar with the saying: “Good, fast and cheap. Choose two.”
This means your products may be good and cheap, but neither is going to do you any good if the manufacturer cannot get your products to you in a timely manner. Also, you can work up a great price on a full container of products. This is great until you find what you have is a container of junk destined for a landfill.
Sourcing Nova is dedicated to finding you the best manufacturer. This means you may pay more for the products, but you will be getting products that your customers will want. We are not going to dig through manufacturers trying to get you the cheapest price. We have a list of stories of customers who did this and ended up with nothing to show for it.
When it comes to the manufacturing process, our goal is simple – find you the best manufacturer who can create a quality product, a reasonable cost and reliable delivery times. If the manufacturer we find offers the lowest prices, that is a plus in our book and your wallet.
Sourcing Nova wants you to start and run a profitable business with products built from Chinese manufacturing.
Anything else is irrelevant.
This first section is something we felt compelled to have as part of this blog. Now, onto the information you need to know.
What is the manufacturing process?
The manufacturing process are the steps of taking raw materials that arrive at the factory and turning them into completed products for the customer. The customer can be anyone from a wholesaler, major corporation or even a small business owner such as yourself.
Sourcing Nova takes your prototype design and specifications to the manufacturer and go from there.
What is outsource manufacturing?
Outsource manufacturing, or more simply, outsourcing, is when you hire a third party to create your products. The manufacturer can be domestic or overseas.
What is contract manufacturing?
A contract manufacturer outsources a purchasing company, such as Sourcing Nova, for the product components or the final product.
We would approach a variety of manufacturers with your prototype. The manufacturers in turn provide us with a quote based on labor, raw materials and profit.
When a final decision is made, the manufacturer will begin the manufacturing process on your behalf. If assembly or packaging is required, this step is next. The last step is shipping. Products are then sent to a freight forwarding company on your behalf for shipment to your destination.
There are a variety of industries who employ contract manufacturing:
• Food and cosmetics
Contract manufacturing has proven as one of the most successful business models. The cost savings in taxes and labor are considerable.
What are the manufacturing processes available for me in China?
There are a few different processes. Most manufacturers working with private label business owners typically specialize in one of these:
• Casting – pouring a liquid into a pre-formed mold – like candles for example
• Stamping – Punching and stretching metals into a certain shape, often with many steps – moka pots are often stamped
• Rolling – Thick sheets of raw material are rolled, often with progressively smaller sizes
• Forging – Hot metal hammered with heavy machinery into certain shapes
• Extruding – Softer materials pushed through a pre-determined shape
• Molding – Softer materials are pushed or pulled via vacuum into a mold
• Machining – Removing pieces of raw material for a defined shape
• Cutting – Cutting larger pieces of material into smaller ones
• Joining – Fusing, welding, gluing, pressing, co-molding, riveting, sewing, screwing or bolting two more more materials together
• 3D Printing – Computers create and render a physical model
• Finishing – Heating, grinding, plating, anodizing, passivating, electrocoating, polishing and painting
• Final assembly – All individual parts are put together for a final product
• Inventory/Supply Chain management – Ensuring parts are on hand when needed for cost-effective production
Sourcing Nova is going to consider your product and match it to the best manufacturer we can find.
The Concept – The first step
There are two ways to approach the manufacturing process for your product. You can elect to take a currently designed, built and manufacturered products and redesign it. You can also create something new that people will want to buy. You should have a sketched plan, notes, explanation and details on how the customer will use the product.
You and your team, if you have one, should consider the following general questions about your product:
• Who is your specific target audience?
• What is your end goal with your products and business?
• Are you willing to devote unlimited time to the success of your business?
• Will the product resolve an issue for the customer?
• Is there a need for this product?
• What is your biggest competition?
• Do you have the manpower to complete the development process?
• What is the roadmap from concept to customer delivery?
• What is the market size?
• Are there moving trends?
• Do you have the funding to make it until you turn a profit?
• Have you selected a name for the final product?
Some of these questions require a big gut check. Are you willing to take these chances?
Building the background to your products – the research
Many people want to jump right into finding a manufacturer and do. They are making a fundamental mistake – they are not researching the product before deciding on anything. Research is absolutely vital to success with your product because there are so many different factors to take into consideration.
Research is not difficult. Research takes time and lots of it. Here is the approach Sourcing Nova recommends for the best success.
Become the customer
Sourcing Nova mentioned previously on why it is important for you to forget about what you like and want to sell. The focus should be on what a customer is wanting to buy from Amazon or another location you are considering.
It is okay for you to think about yourself as the target customer initially. Everyone does that to a degree. Do it, and then stop. Immediately.
You need to discover what the customer wants and needs. It is completely irrelevant what you want in a product or think you want in a product. The purpose of research is to determine what the customer wants to see, and not see, in a product.
This way, when you are done with the research process and ready to move to having your products made in China, you are a strong step ahead.
Your idea – think long and hard
This may seem silly. It is also absolutely imperative to consider before spending money on the prototypes and manufacturing itself. You need to look and look deep. Here is how to get a good start.
Three big considerations and questions to boot
When considering your idea, there are three major considerations you need to think about before digging too deeply. Each of these is vital to your product and getting products made in China.
The issue at hand is …?
Your product needs to do something, and that something is often resolving an issue, providing better way to do something or problem that people face and need a resolution. Questions like:
• What prompted you to come up with your idea?
• Is this part of a bigger issue or problem you have seen?
• Is it part of some work you were doing initially?
• What benefits does the product offer?
• What are the key features?
Who is your competition?
Chances are you will have some competition in your niche. Toss out the idea of believing no one else has already done your idea. They have. Here is what you need to consider:
• What is already there that is solving part of the issue at hand?
• Is there success in the product? Can you qualify that success?
• What is the market share? Do you have a chance on getting into it?
• What is your local and global competition?
What you can do different and better?
This is where you need to stand out and above your competition. If you are considering selling coffee beans, then you need to think:
• What makes your products different?
• Why would a customer elect your brand or product over another? (Brand loyalty)
• Will your product do more, have more or produce more at a lesser price?
• Are the materials used of a better quality?
• Is there something about your product that is unique and different?
• How can you realistically commercialize your product?
Talk to someone who has been there; done that
Japan is a world leader in electronics manufacturing processes and production. Why? They did not suffer the growing pains of the Industrial Revolution like the rest of the world. Instead, they watched and learned. What did not work well was thrown out, and what did work well was improved on considerably.
It is the same idea with starting a business selling products. The people who originate selling products are great with that element of the business. There is no need for anyone else to come in and help – even with the manufacturing process.
Learning at this point shows you are willing to learn and do the work. Asking around is certainly going to help at least to some degree, particularly about manufacturing.
You stand a chance of paying dearly across the board for trying to cut corners with any steps you are not familiar with in starting your business. Speaking to those who have startup or business experience, not even related to your business, gives you a leg up. Take what is said seriously, including the difficult parts.
Crowdfunding – A secret weapon
Gut check – the vast majority of crowdfunding programs never make it. This is good for you.
Chances are, someone else tried to do what you are doing, and you can become like Japan in your niche industry.
Of the crowdfunding sources available, Indiegogo is the best one. Indiegogo does not clear unfunded campaigns. You can search the site for similar ideas as yours. Learn what failed and succeeded, and leverage that to your advantage.
Here is an example.
You are interested in coffee beans as an add on to your Moka pot or French press business. A quick search of ‘coffee beans’ will turn up plenty of information you can use. This will include what potential customers want in a coffee bean, and more importantly, what they do not want in a coffee bean.
The two most valuable things you have – time and money
As you can see, there are some big background steps to manufacturing your products and finding easy things to make and sell, particularly with new product ideas.
You need to start thinking more about your business model. More than likely you are looking to sell on Amazon, and that is a great decision. Sourcing Nova has plenty of pieces on Amazon and its requirements.
You should have set aside time and money already, but there is one more element you need to start the manufacturing process.
Skill – You have it or not
What can you do? If you know how to design an incredible website but have no clue on what copy to put into it, that is a skill you lack. When it comes to skills, you need to consider your strengths and weaknesses:
• What are your skills that you have to make this business a success?
• What skills does your team need to help?
• Do you have a designer or ability to design the product you want?
• Do you know anything about marketing or advertising?
• If the product involves complex mechanics or electronics, do you have someone who can help?
• Do you have help with intellectual property? Can you search a database for information?
• Are you certain of your own limitations? List them.
Time – It is not on your side
If only you had unlimited time to learn everything you need to know. You would be in perfect position to get your products made, in circulation and turning a profit. You do not. You can, however, plan on doing the following each month:
• Using any free time you have outside of another job.
• Deciding what personal and family commitments you have that you cannot miss versus those you can miss.
• Giving up weekends and holidays because you have business details to do.
Money – It does not magically grow on trees
There is money required to develop a new product. There are some who will spend millions on development of a new product or idea that will fail completely. Many do not have investment capital. You can certainly try to raise money in a variety of ways if you do not have the investment capital laying around.
You may have checked some crowdfunding sites like we mentioned above and found that a similar product raised considerable financing. This is quite possible. It is also possible for the following could be true:
• There may be additional investment capital outside of the crowdfunding campaign.
• The entrepreneur may have the necessary subset of skills to make a success.
• Success of the production process does not necessarily translate into a sustainable business model.
By now, you may be thinking about the actual manufacturing processes, and when Sourcing Nova will discuss them. We assure you that our goal is for you to understand that. However, this background information is paramount to your overall success. Blindly jumping into contacting manufacturers with a prototype is a fast track to complete loss of your business and business idea.
Raw materials – include this in your research
A drawing, which we will discuss in more detail later on, is one thing. However, the actual, physical product your customers will buy is made from real, raw materials. If you are making a reusable straw, for example, the paper or other material should be sturdy enough to stand up against continual use and a variety of liquids.
You can ask Sourcing Nova to get you samples of you potential raw materials. We can certainly help with this.
A business plan – Fail to plan; plan to fail
Now that you are well on your way with your new product idea and have done the background work to this point, you are ready to move forward to the next step. You need a business plan.
Unless you are independently wealthy, investors and most lending institutions will want to see your business plan. It needs to have your budget, a rough time line and all of the other information about your products – like getting them to your customer from a Chinese manufacturing company.
There are places and websites that can help you with a business plan. It is not Sourcing Nova’s strong suit nor our goal in helping you with sourcing products from China.
Your product idea needs protection
Before you start bringing in more people, or even one person for that matter, it is a good idea to protect your investment with a few important documents. There are two major ones and two minor ones:
• Provisional patent – A patent is a legal instrument that keeps other from copying your products and making money from them. A provisional patent basically means you are in the process of securing a patent on your products.
• NDA – Non-disclosure agreement – This is a legal instrument that provides you some protection against others copying your products. Many manufacturers will not agree to an NDA without a patent or patent pending.
• Manufacturing Services Agreement – This sets the agreement between you and the manufacturer on your products. This includes quantities, pricing and delivery.
• Engineering Services Agreement – This is another contract that defines the work to complete on the product, the time, payment and any termination agreement.
Design to reality – The prototype
Development costs for product manufacturing come from a constantly revolving number of ideas. Most did not start with a define concept from the outset. It is far better to start with basic drawings. If you are not an artist, you can find plenty of ‘patent drawing’ sites to help you. You can also hire someone.
The goal here is not to be exactly what you want. You are creating an MVP, minimal viable product. It is something to get you started. This matters.
It matters to have a prototype MVP because it gives you time to work on things that do not work and things that work well. Here are the other considerations you should have at the prototype stage:
• What is the function?
• How reliable is what you have created?
• Will it be affordable for the customer but still earn a profit?
• Is this a single use or long lasting product?
• How does it stand out from competition?
• How is the customer experience different and better?
• Who is your target audience?
• What does your product improve on that is already available?
• What is your marketing plan?
• What are the necessary raw materials?
• Does it need batteries or any external source to function?
• What is the package design?
You are not yet ready to mass produce. You need to find what works best for your product. Is there a specific type of plastic that is better for you? What metal alloys are the strongest but most reasonably priced?
Your purpose here is to fix the minor issues before they become major issues and more importantly, costly issues.
Now is also a good time for potential customer feedback. An unfinished product is much more likely to gain you honest criticism than a completed one. You need to focus on who will be you customer base and not friends or family. Your goal is is completely honest feedback – good or bad. It is a good idea, if possible, to video responses to your product. You need to look for the following:
• Responses – positive and negative
• Body language and interaction
• Comments on the product itself
• How different ages and genders interact
• Confusion on what it does
• Understanding issues
• What they share about the product with others
There is no specific time for this. It could take as little as six weeks to years. The prototype process is the longest part of the manufacturing production process.
CAD and CAM
CAD and CAM are computer programs that help you get an idea of your product. Each one is different.
• CAD – Computer-aided design – This program uses 3D software to make a model of your final design. You can find potential issues you did not see before and return to planning to deal with those issues.
• CAM – Computer-aided manufacturing – Now you will get a physical prototype made by the computer and computer program.
There are places on the Internet where you can find CAD/CAM professionals to help you. Expect to pay handsomely for their assistance.
Allowing the manufacturer to make a prototype
If Sourcing Nova has found a potential manufacturer for your product, it is not a bad idea to let them work with you on your product design and prototype. Two good reasons for this:
• They can make your product on their equipment – a cost-effective measure.
• If your product has potential long term value on the market and you as a customer, you can leverage that fact for a lower MOQ.
At last, Sourcing Nova is done with the background information on the production process we feel is important for you. It is time.
How to find a manufacturer – The details you need
It has taken some time, but Sourcing Nova has gotten you here. It is time to learn about how to choose a manufacturer to make your products in China.
The first thing you need to remember about how to find a manufacturer to help you as a part of the production process is really important.
You are finding a business partner.
Think about this for a moment. You are not just finding easy things to make and sell. You are finding someone who will be integral to your business success. This is vital.
You want someone who shares your goals, is flexible, reliable, trustworthy and many other characteristics that you have mulled over and, hopefully, made a list. It is a wise point for a start.
Finding an appropriate manufacturer is not a sprint. It is a marathon. There are plenty of manufacturers in China following through with new product ideas for their customers. Sourcing Nova will look for the following when finding an appropriate manufacturer for your products made in China:
• Fully licensed
• Solid Reputation
• Good legal record
• Certificates from 3rd party auditors (important for product testing)
• Reasonable pricing
• Consistent, quality products
• Fair MOQ
• Can and will scale production if necessary
• Positive guanxi
Sourcing Nova is going to consider each of these when we make the decision. It is important to remember, as we started this blog, Sourcing Nova is looking for the best manufacturer for the manufacturing processes for your products made in China. This does not mean the cheapest.
Common tips to remember during this process
These tips are important. Some of these Sourcing Nova is vital to success. Our understanding of our fellow countrymen, customs and business practices are always going to be superior to your own.
• Communication – There will be a communication barrier between you and the manufacturer. Sourcing Nova has a team that is completely fluent in English and Mandarin. We do not have issue with communication, and in the event of idioms and difficult to translate terms, we have partners who can bridge that gap.
• Have a list of questions – Writing things down to ask later is not only a good way to remember things, but it is an incredible time saver. You will not have down time getting your needs across.
• Use all technology at your disposal – This means email, phone, Skype, WeChat or any other communication methods you have. Of these, Sourcing Nova recommends WeChat, the Chinese messaging system. It is free and available across the world.
• Know your contact – Sourcing Nova will assign a single point of contact to you and your product order. If you have questions, need help or anything else, this will be your first point of contact. You will get a response within 24 hours on average.
• References – New product ideas may require Sourcing Nova to find a different manufacturer than ones we have worked with previously. We will ask for references to check.
• NDA – We discussed the NDA previously in the blog. Sourcing Nova expects the manufacturer will have at least one on file for a business they have worked with previously.
• Holidays and festivals – Sourcing Nova discussed Chinese holidays previously and their importance.
All of these will help make the manufacturing process much easier and smoother for you.
Export license – It matters
An export license is important. Problem, serious ones, can occur if the manufacturer does not have one. Problems like:
• They are small – Your products may lack quality across the board.
• Limited English proficiency – If they have anyone who can understand English. Some may not.
• Stalled shipments – Your products will not leave China.
• Exportation process – You will be expected to navigate the Chinese governmental requirements rather than having a Chinese partner handle it for you.
Sourcing Nova handles the export license for you.
The biggest mistake you can make
Sourcing Nova will help you along the way with your new product ideas. There is one mistake that many new businesses make, and it is one Sourcing Nova cannot help you with.
These plans should be written to objective standards for the manufacturer’s accountabilty. If you do not have a detailed, tested and ready prototype with a set of drawings and plans, you are setting yourself and your business for a catastrophic failure.
There are some products these details are not as important. Simple products, like a stuffed toy, only require a simple sample of what you want the toy to look like. A flash drive you want custom designed would only need a few pictures of the style you want.
Packaging is equally important. The manufacturer will need the graphic files in PDF or AI, Adobe Illustrator, files. You can find a graphic artist very easily to help design packaging.
You need to have spent time working out the details, laying out the drawings of the prototype, made the necessary changes and have things 100 percent correct at the outset. This is going to include:
• Finish requirements
• Materials required
Examples of prototype shortcomings
Sourcing Nova has gotten prototypes of new product ideas from customers with the instructions of ‘plastic.’ Which plastic is necessary? There are several types of plastic:
• PP (polypropylene)
• PVC (polyvinyl chloride)
• PET (polyethylene terephthalate)
• PE (polyethylene)
• PC (polycarbonate)
• Food grade plastics
• Non BPA plastics
• And countless others.
We can say the same thing about metal. We have gotten prototypes listing, ‘aluminum.’ Aluminum has many characteristics:
• Tensile strengths
• Purity levels
• Finish characteristics
• Food grade
• and more.
Other metals, such as steel, are even more complicated.
If you fail to lay exactly what you want and expect, many manufacturers are going to use what is on hand and cheapest. This means sub-par products on your part, and no one to blame but yourself.
Your products made in China will come to down to the quality and price. A good manufacturer is a major investment in the business. This is why Sourcing Nova is explaining how to find a manufacturer for your products to you in such detail.
Important to take away
We talked about the big three choices you have to make above: good, fast and cheap. You will have to compromise on one of the three. You do not have a choice. Wanting all three is an impossible utopia that simply does not exist.
Sourcing Nova has compiled a list of the best websites to check for manufacturers. This is the most comprehensive overview of your options.
Requesting a quote
Sourcing Nova has a complete blog dedicated to requesting a quote on products. Please read this blog for the more detailed answer. Here are a few quick questions we will ask the manufacturer when sourcing you a sample product:
• Do you have any large orders that have priority?
• Can we lower the MOQ as part of the first order?
• What are payment options?
• Can you scale production?
Choosing your manufacturer
Sourcing Nova will compile a list of potential manufacturers on your behalf. You can narrow down your choices from that point. Once done, you are ready for the next step.
Manufacturing and assembly
Now that you have finalized your prototype, cleared bugs and hiccups it is time to manufacture. This is when you need to start thinking:
• Costs and pricing
• Time necessary
Under no circumstances is this time to cut corners and make sacrifices. You do not want your products made in the cheapest way available.
It is important to take a representative sample of your products during the production run. The prototype is one thing, but it is only through checking a full sample of randomized products that you will see if the products meet your production standards.
The first test needs to happen with your first MOQ.
A product test of a random sample helps you find pain points that may turn customers away. This is an absolutely critical point of the manufacturing process.
After all, if you are not satisfied, you can have the manufacturer restart your product run. It happens more frequently than you may realize.
If you are happy with the random sample, great. You are not ready to sell. You need to return to the same group you had for the prototype and perform those same steps with your random samples. Again, you want the honest and forthright answers. This is when you need to make any more adjustments in your product run.
Product testing is a crucial step that should not be overlooked and having your partner in China oversee this step for you is ideal. This piece from Sourcing Nova explains the importance of product inspection and testing.
Where you can reduce some costs
It is acceptable to want to cut costs. This will raise your profit margin after all. It is not easy – labor, raw materials, packaging, shipping and quality add up and do so quickly.
There are a few things you can do to reduce costs without sacrificing quality. It is important to note that this is not something you want to do to a large degree or more than one to two of each of the choices. Doing so will sabotage your order.
Technology has certainly streamlined much of how labor is completed and doing so without compromising quality standards.
Making small adjustments in your product can cut costs. Can you change something minor, like a color on the package, that will save a few pennies? This can add up over thousands of products at a time.
One of the nice things about online sales is you can reduce packaging. Customers have made their decision based on the product – not the package.
The product should speak for the quality.
Labor is a major component of your business. You can elect for different methods of getting products to customers depending on your products. Sourcing Nova has a blog on shipping with Amazon, for example.
Planning for issues
In a perfect world, there would be good, fast and cheap. Sadly, this is not the case. There is always a chance you will have a problem with your products, particularly in shipping and importing. This is why you have Sourcing Nova at your side. We will make sure any issues you may have are minimal and the process of getting the products made in China to you free from as many headaches as possible.
This is another comprehensive piece for you, our reader and customer. What is a product you have in mind or have a prototype of you want us to find a manufacturer for? Leave us a comment below and some information about your product. We will respond to your request as soon as possible.