Online Retailing 101: How to Source Product from China Without Any Middlemen
If you run a home-based online retail business, I believe you understand that one of the most important keys to your success is product sourcing.
Online retail business has always been a price-sensitive business, as people already assume that when your business is online, that means your price tag is (much) lower than your off line counterparts.
In effect, looking for the best product quality at the lowest price is probably every retail business owner product sourcing endeavour, although many believe that quality always come at a price.
Where to source products?
You, of course, need to find dropshippers and/or wholesalers that will sell you products at a bulk in a lower price tag. To learn more about dropshipping and wholesaling, please consult my blog post about bootstrapping your product sourcing.
If you asked me where I would source products to sell in, say eBay, my answer would always be: China!
Like it or not, Chinese manufacturers make good products at much lower price tags. Sure, there are some scammers and under-performed manufacturers in China, but the risk vs. gain consideration is, in my opinion, better than sourcing for products in other countries.
How to look for product manufacturers in China
Although I’ve never been involved with any product sourcing to China, I’ve heard many stories from sources I trust that language and geographical barriers will always impose a certain amount of risk to source your product to China. That’s why scams happen.
Unless you travel yourself to China to visit the manufacturers yourself, the only other way possible is to have a product sourcing ‘team.’
What about middlemen? Although they are indeed being helpful, the fee and margin they took are often too expensive. There is another, better, way.
According to the sources I have, you need at least 2 components to make product sourcing to China (and other countries, in general) works:
- Local representatives
- A trusted directory or database of product manufacturers in China
Local representatives are those individuals or companies that act on your behalf to communicate and negotiate with the local producers and manufacturers. A local rep is often regarded as a buyer, although there is a slight difference in job description.
Don’t mistakenly identify local representatives as middlemen. They are not (and they shouldn’t be one). If you encounter a local rep that happens to be a middleman, run away from him/her.
The only money you spend on rep is for their negotiation fee (some do offer their services on regular basis (monthly paid) and some other offer theirs on contract (The fee is usually calculated as a percentage of the transaction total)
Why using a local rep? The main consideration is his/her understanding in local customaries, habits, and rituals – the do’s and don’ts, the good and bad, and the most important: the best practices.
Local rep’s role in your product sourcing is very important. You should choose one carefully. Or else, you might hire a scammer yourself!
A trusted directory or database of product manufacturers in China
Local representatives are usually having their own list of manufacturers to recommend. However, you should in some way control your own list of manufacturers, to avoid bias and subjective manufacturer recommendations.
I do have a product to recommend, if I may (I just got it a while ago):
It’s basically a list of manufacturers – a huge list of 500,000+ Chinese manufacturers, with a full contact information, such as address, phone/fax/email/website, and the manufacturers profile.
The big plus of the product is the 500,000+ manufacturer database. However, I actually want to see the level of trust of those manufacturers have, measured with a certain metric, such as paid listing to screen ‘unwanted’ manufacturers.
If you are interested, you can learn more about the product from the China Trade Database website.
Good luck on your product sourcing :)