Building

Idea! > Prototype > Building

Building

“You can’t wait for inspiration, you have to go after it with a club.” --Jack London

Conduct outreach and collect information

Once you have a few manufacturers on your radar, it’s time to clearly communicate your plans and gather quotes. Please remember, good manufacturers are very busy and may ignore inquiries that don’t include detailed requests or come across as a waste of their time.

In addition to pricing information, you’ll want answers to the following questions:

• Can they accommodate custom orders? Assess if the supplier or equipment manufacturer can create the product you want. Do they have the skills and resources? Do they have automation features?
• What are their lead times? How long will it take to produce and ship items?
• What are shipping costs? Shipping makes up a massive portion of small business expenses. Learn a manufacturer’s shipping costs to determine how it’ll affect your bottom line.
• What are their minimum order quantities (MOQs)? You’ll need to understand the minimum amount of items you have to order before they start producing your product. This is often negotiable.
• What is the cost per unit? While you’re negotiating MOQs, you’ll also want to negotiate cost per unit. The larger the order, the lower your cost per unit can be.
• Are there setup fees involved? Sometimes manufacturers will charge a fee to get equipment ready to produce your goods.
• What’s their defect policy? Find out who eats the cost for incorrect or defective items. Who pays for the shipping and duties?
• Click here to read our Glossary of Manufacturing terms.

Negotiating minimum order quantities

If you’re looking for a supplier for the first time, you’re going to quickly learn about MOQs. It’s not uncommon for a manufacturer to require a commitment to purchase hundreds or even thousands of units for your first order, depending on the product and manufacturer.

MOQs make it difficult when you have limited funds or want to start small and test the market before making larger purchases. MOQs are almost always negotiable.

Before you negotiate, understand why the supplier has imposed a minimum. Is it because there’s a lot of work upfront? Is it because they prefer to work with larger buyers? Understanding the reasons for the minimum will help you better understand their position and allow you to negotiate and propose the best counter offer.

Discussing payment terms

Many suppliers will require new businesses to pay for a full order upfront. This is important to know, since inventory is a major cost for ecommerce businesses.

Suppliers get bombarded with email quote requests all the time from flaky buyers, so it’s not unusual for suppliers to ignore your request. Suppliers’ lack of responsiveness is a common complaint from new ecommerce entrepreneurs.

So how do you ensure you’re not ignored? There are a few things you should do when you reach out to suppliers for the first time:

• Focused emails. Your first email to a manufacturer should be clear and concise. Avoid telling too much about your story and background. The first email should purely assess potential fit at a high level. Focus on what suppliers care about the most, like the details of what you’re trying to source.
   
• Asking for what you need. Requests aren’t always easy for the supplier to satisfy. It’s important to ask about pricing for multiple quantities, but avoid asking for too much or too many quotes. Stick to what you absolutely need to know to assess fit between you and the supplier.

Communicate your designs

If you haven’t already read about the design process here.

Order samples and compare

Get samples to test before going into production. Once the sample is to your standard, you should date and sign the sample. Save one or two for yourself. These are called your control samples: forensic samples used to assure quality and get consistent consumer products.