The Pros and Cons of Overseas
One of the first questions I had was....How do I outsource product creation overseas, and ensure that I get quality goods?
After having the best product idea, what you need next is get the right supplier.
In today's world, a global village, there has never been an easier way of finding a manufacturing or wholesaling partner, though sourcing products from overseas can still appear a difficult task for new online entrepreneurs.
This article "Alibaba 101: Pros & Cons of Sourcing Overseas" will give you insight on how you can source suppliers across the world. The popular business directory Alibaba provides businesses with ways to efficiently and safely source suppliers for their products.
Pros and Cons of Sourcing Overseas
Many entrepreneurs look to some overseas destinations, for example, Asia for product suppliers because they want to take advantage of the low manufacturing costs. Manufacturing costs in Asia can be significantly lower than many parts of the world including North America so much that it could be almost impossible to engage in lucrative business if it were not for overseas manufacturing.
Though cheaper product cost is making Asia an attractive place to find suppliers, it is not the only reason working in Asia's favor. Other benefits include the following:
•Ability of vendors to be very willing to work with small businesses and provide enough small quantities of supplies
•Existence of variety of suppliers to choose from
•Asia is the only manufacturer of many of the products in demand
•One-stop services including Alibaba make is easy to navigate and purchase from suppliers
Along the advantages also come numerous disadvantages that you should be aware of for better trade in future. They include the following:
•Perceived lower quality products from suppliers
•Alleged lower manufacturing and labor standards
•Lack of comprehensive intellectual property protection
•Difficult to overcome language and communication barrier
•Problems to verify manufacturer and visit on-site
•Difficulties related to cultural differences in business practices
•Longer shipping time
•Complex product importation and clearing procedures
•Lack of sufficient payment security and recourse
How to Dominate Alibaba for success
10 Things you should know about Alibaba before you get started
HOw to Use Alibaba for Ecommerce
Your competition: The first thing that you should do is search your key terms and know if you have a unique offering or your competitors are already dealing in the same products.
The cost of buying: Next, you should consider whether your Gold Membership is placing you at the top of the list or if many years of Gold Membership buyers will still appear ahead of you in the search results.
I have heard that Alibaba will not consider Gold Level suppliers until they are at least seven years active. While this is not a universal rule, it shows there is still a high level of mistrust about Alibaba. You should consider whether your company is ready to commit to marketing costs for a long-term instead of merely analyzing results and making a decision annually.
Think about the methods you are willing to let your clients use to place orders: As at now, Alibaba does not allow the use of third-party escrow for secure money transfer. They use their service, AliPay, which unfortunately does not have a high reputation. So it is also prudent to evaluate whether such a lack of option could harm your customer relationships.
Internet marketing is quite resourceful, but some sites like Alibaba immediately display your results next to the lowest competitor: Finally, note that Alibaba is treasured in comparing price than value. So, you may be creating an opportunity for tougher negotiations and low-profit margins if your product is not the cheapest.
Alibaba may be a fantastic opportunity for your business success, but ensure you do adequate research before committing.
What is Alibaba and how do you use it?
So what is Alibaba? It's basically a very comprehensive directory connecting buyers and suppliers (mainly Asian suppliers) all across the world. They have literally millions of products to choose from and tons of suppliers ready to fill your orders.
Start Your Search
Purchasing items on Alibaba using their directory is pretty well self-explanatory. It is not so much different from a marketplace like eBay. You can browse through the categories of perform a more 'item -specific' search to find what you want.
You have 2 options when performing a search on Alibaba. One is to utilize the product descriptions for your search, like with 'dog collars'. That will bring up lots of results in the dog collar category.
The second option is to utilize their drop-down menu and search for suppliers rather than for products. That way you can find the manufacturers who specialize in whatever type of products you're looking for.
How to Use the Product Pages
Before you begin searching around on Alibaba you should know a few things about those product pages. As our former example was 'dog collar' we'll keep that as our example here as well.
This will be one of the first pieces of information you'll want to have. Price is always a good place to start. We can see that this listing has a price of $2 - $3 USD FOB. The 'FOB' is the abbreviation of 'Free on Board', which means that the seller is also going to pay the costs associated with getting this product to the marine port (For Asian products this is the cheapest way to go) and you (as the buyer) will pay costs associated with the actual transporting of your goods across the ocean blue to its final destination.
MOQ (Minimum Order Quantity)
The next source of information you'll need is the MOQ, or 'minimum order quantity'. This is the smallest number of items this particular manufacturer is willing to sell on one order. The thing to remember about MOQs is they're not chiseled in stone and are usually negotiable. The MOQ in our 'dog collar' example is 200 units. When we multiply that using the high-end side of the price, which was $3.00 we are looking at an overall figure of around $600 plus the shipping if we choose to go with this supplier. This is a good thing to know going in so you have a starting place for your negotiations.
Once you understand how the MOQ and pricing work, you'll probably need to know how to make payment to a suppler. There are pros and cons to the methods of payment available, so it would be your decision to choose the one that works best for you.
Learning the Ropes about Drop Shipping
Although I would never use drop shipping as the sole base for my online store, the top platform for locating quality dropshippers is a service known as Worldwide Brands.
Dropshippers get pre-vetted by Worldwide Brands so that you can rest assured that you won't get scammed.
Purchasing Wholesale Goods Domestically
"Wholesale" is a word that I hear often. A lot of people reach out to us about wholesale prices and they want to know where they can buy products wholesale. "Wholesale" apparently means purchasing items at the lowest possible price.
Do you want to hear something surprising? This could not be further from the actual truth. When I shopped vendors for our online sales, every US wholesale dealer had incredibly high prices.
Yes, these companies were less costly than MSRP, but their prices were still so high that we wouldn't have been able to attain or maintain a high profit margin on any of the items that we were truly interested in selling.
More than this, there were countless companies that already had the same items for sale at deeply discounted prices. So what is the benefit in buying from US wholesale vendors?
Given that very few things are currently being made in the US, wholesalers can handle all of the problems in importing and storing items from product manufacturers.
It won't be necessary for you to go to a foreign location. There is no need to deal with customs or shipping. You simply submit orders and wait for your merchandise to arrive.
Another benefit gained by buying wholesale is the ability to sidestep time-consuming quality control measures given that your wholesaler will have made these checks on your behalf.
Buying Direct From Manufacturers Overseas
Purchasing from the manufacturer direct is by no means the holy grail of this industry, but it additionally requires the greatest amount of dedication, work and time. Currently, nearly all products are being made overseas due to cheaper labor costs.
My general rule for textiles and other goods is that if you're working with a US vendor, you probably aren't going to get the absolute lowest price. I will even say that if you're working with someone who speaks excellent English, the prices aren't likely to be good (All right, that may be pushing things a bit too far).
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