Last Updated on September 14, 2022
How do I find a manufacturer or supplier for my product idea? Definitely, questions will pop up like, is it better to work with manufacturers around or abroad? How do I source for products? How do I know if a manufacturer is legitimate and can bring my product plan or idea into reality?
The transition of making an idea to a physical product isn’t necessarily quick as you may seem but finding the right product manufacturer in today’s global economy projects your idea into becoming real which requires a lot of research.
Whether you plan on manufacturing something of your own or finding suppliers to purchase from wholesale, good products aren’t always easy to find.
Have you also been thinking about starting an E-commerce and may have searched for some ideas of your own, like the most demanding products in the online market that will yield income and productivity likely, you still have questions,
This article will help you with the basics of sourcing for a manufacturer as well as ensuring that they produce high-quality products that will allow you to maximize profitability.
Before we continue to see how you can find a manufacturer or supplier for your product idea, let’s consider a few things.
Table of Contents
What Product Are You Looking Out For?
Before you start searching for product manufacturers, you should have an outline of the items you want to sell to the public. You’ll need a fully formed idea of what your product is and know exactly how it’ll look and function.
Your product should already be designed or even have a prototype. A proper design would include the materials, dimensions, and functionality you envision. If you’re not sure how to approach this, you can always hire a designer to help you structure the idea.
It is quite necessary to have a design on templates before sourcing for a manufacturer so it won’t lead to manufacturing flawed products and eventually losing money.
Who Is A Manufacturer And Who Do They Sell To?
A manufacturer is any person that produces finished goods from raw materials. They sell these goods to consumers, wholesalers, distributors, retailers, and other manufacturers wanting to create more complex items.
There are different kinds of manufacturers that produce different products. They stick to one type of product so as to avoid technical complications and misproduction.
Now the question is what type of manufacturer are you looking for?
Knowing the type of manufacturer will help determine the terminology you need to use in your research. The most common manufacturers are:
- A manufacturer who produces your own product idea
- A supplier (who may also be a manufacturer), wholesaler, or distributor who purchases already-existing brands and products
- A drop shipping company that supplies products and fulfills orders of already-existing brands and products
Domestic And Overseas Manufacturer
You’ll have to make decisions about whether to source for manufacturers locally or abroad and which one of them is the best to source for.
Domestic manufacturers evolve around you so you don’t have to travel far to source for them. In other words, they are local manufacturers whereas overseas manufacturers are sourced abroad. Examples of overseas manufacturers are; the United States and most Asian countries like China, Taiwan, and India.
It’s often cheaper and affordable to source your products overseas, especially in Asian countries as mentioned above due to the relatively low manufacturing cost as well as Latin America, Eastern Europe or Africa but there’s a lot more to the decision than just the upfront investment and cost per unit.
Certain products may be easier and cheaper to produce in certain regions, depending on source of raw materials, expertise, etc therefore your type of product can also affect your manufacturing location options.
Both manufacturers have their advantages and disadvantages which must be taken into consideration before choosing which one of them to source for;
DOMESTIC SOURCING
ADVANTAGES
- High-quality manufacturing and labor standards
- Easy to communicate with no language barrier
- Easy to verify reputable manufacturers or suppliers
- Faster shipping and delivery time
- High intellectual property right protection
- Greater payment security and recourse
- Locally manufactured products have an increased marketing appeal
DISADVANTAGES
- Costs of manufacturing is always high
- Low number of manufacturers
- The choice of product are less (Some products aren’t manufactured at all in North America)
OVERSEAS SOURCING
ADVANTAGES
- The cost of manufacturing is low
- High number of manufacturers to choose from
- One-stop services like “Alibaba”, an easy to navigation service.
DISADVANTAGES
- Lower perceived quality from customers before time
- Usually the standard of manufacturing is low
- Language, communication, and time-zone barriers can be difficult to navigate
- Difficult/costly to verify manufacturer on-site
- Longer shipping and delivery time
- Cultural differences in business practices
- Importation of products and customs clearance
- Less payment, recourse and little intellectual property security
How To Find A Manufacturer To Exhibit Your Product Idea
Having decided whether you want to manufacture your product locally or abroad, below are the steps to find a proficient manufacturer.
- Research
- Referrals
- Verify your manufacturer’s quality
- Communicate your design
- Ask for a product sample
- Request a quote
- Maintain your profitability
RESEARCH
It is good to search for the right manufacturer for your product which is crucial to your profitability because manufacturers control your product’s cost, quality, packaging, and shipping. Here’s how to find the perfect manufacturer
Alibaba
Alibaba is a site that connects you with manufacturers from China. It’s a common marketplace to find existing products. You can as well use Alibaba to connect with manufacturers to create custom products.
How do you get to this? Simply search for the products you’re looking for and browse through the various suppliers and manufacturers.
It’s easy to safely buy from Alibaba because the marketplace lets you vet manufacturers upfront to get the best products at a fair and affordable price.
You can continue to search by applying filters. You can sort by certifications (such as SA8000, which ensures humane working conditions) to find a manufacturer that aligns with your business values.
When sourcing from Alibaba, your manufacturer should not be a trading company because a trading company is a middleman and such won’t be able to produce your products.
Directories
This is another place to research manufacturers freely online. These directories act as manufacturer catalogs that contain profiles for hundreds or thousands of manufacturers, wholesalers, and suppliers. Below are a list of a few of the most popular domestic and overseas manufacturers;
Online domestic directories
- ThomasNet
- Maker’s Row
- MFG
- Kompass
- Council of Manufacturing Associations Member Organizations
Online overseas directories
- AliExpress
- Indiamart
- Sourcify
This is one of the most used search engine. In recent years, we’ve become accustomed to being able to easily search Google and find what we’re looking for in the first few search results. However, many suppliers haven’t kept pace with the internet or Google’s algorithm changes. Their websites are usually old, sparse on information, and have poor search engine optimization.
So how do you find manufacturers on Google? You’ll need to explore page two of Google search results and beyond. You’ll also want to use a variety of search terms. For example, words like “wholesale,” “wholesaler,” and “distributor” may be used interchangeably, so you should search for all of them.
REFERRAL
Look for individuals who have found success in an area you’d like to pursue and see if they’re willing to share their contacts.
Social networks as a whole have made it much easier so make sure to use these channels. Simply Join Facebook, what’sapp groups and other online communities of e-commerce business owners and see if anyone there has a stunning review.
As you do start to uncover suppliers, even if they aren’t the right fit for you, be sure to ask them if they can point you in the right direction. Being in the industry means they’ll likely have great contacts and would be happy to refer you to an option that might be a better fit.
NAICS codes
This is another possible way to look for product manufacturer. You can search for your products by their NAICS code.
NAICS is the North American Industry Classification System, and every manufacturing industry and product is linked to a NAICS code. Almost every product in the U.S has a NAICS code. Manufacturers can be easy to find by their NAICS code.
The NAICS directory can be found at your local library or online. Here is the link for the United States’ NAICS code and the link for Canada’s NAICS code.
With this method, you may be able to find the manufacturers of products you already know, ensuring the quality and professionalism beforehand. You can then reach out to these manufacturers and request a quote for the product you’re looking to create.
You’ll also want to make sure you properly vet your potential manufacturer. Once you’ve narrowed it down to a few possibilities, dig deeper in your research to make sure they’re credible.
VERIFY YOUR MANUFACTURER’S QUALITY
One of the biggest apprehensions small business owners have, especially when manufacturing a product for the first time, is the credibility of the factory and the quality of the final product. This is entirely understandable, as working with an unprofessional manufacturer can be extremely detrimental to your business.
Check with the Better Business Bureau
The Better Business Bureau (BBB) is an organization set up to ensure trust between buyers and sellers. Any scam or mistreatment in the marketplace is usually reported to the BBB.
You can use their website to look up any business and see their rating and accreditation, customer reviews and customer complaints.
As the BBB only operates in North America, manufacturers outside of the U.S., Canada or Mexico must be vetted elsewhere.
Inquire about experience with your type of product
After doing your online research, it’s time to approach manufacturers.
First, you’ll want to ensure that they can actually manufacture your product. Inquire about their experience with similar products and make sure they understand your needs.
Your potential suppliers may be able to refer you to satisfied customers of theirs.
Request a copy of the manufacturer’s business license
Requesting a copy of your manufacturer’s business license will give you a few vital pieces of information:
- You’ll be able to ensure that they’re a legitimate business with proper credentials. This may sound extreme, but is especially crucial overseas.
- Most business licenses include a scope of operation. This is a range of activities the business is legally allowed to participate in.
- A business license will include additional information on the manufacturer, such as a license number. You can use this info to do some more in-depth online research.
COMMUNICATE YOUR DESIGN
Once you talk with a potential manufacturer, ask if they can create your design. Some manufacturers have a product development process with prototyping and 3D modeling—but it can get expensive quickly.
You can communicate your ideas with them through:
- Sketches
- Instructions
- Reference photos
If they don’t do design, you can use Fiverr or Upwork to find freelancers to create drawings for you. Look to hire:
- Indstrustial designers
- Product designers
- CAD experts
Finding a local designer is another option. You can work with them to develop prototypes and custom molds which is more affordable than going through a manufacturer.
ASK FOR PRODUCT SAMPLE
Even after deciding on a reputable manufacturer, you’ll want to ensure the quality of the product before you go ahead and make an order. Get samples to test before going into productions. Once the sample is right, date and signs the sample. Save one or two for yourself. These are called your control samples and are any type of forensic sample used to assure quality and get consistent consumer product.
There are often misunderstandings when it comes to the actual manufacturing process. Your product design may be incomplete or the factory may take certain liberties on design decisions.
REQUEST A QUOTE
After landing on a few manufacturers, it’s time to request formal quotes.
There are a few vital pieces of information you need to make sure you receive which are;
- Minimum order quantity
- Price per unit
- Turnaround time
- Payment terms
MINIMUM ORDER QUANTITY
You may be thinking that the most important thing is the price of manufacturing. In fact, it’s often much more critical to find out the minimum order quantity.
Make sure you can handle the minimal quantity or move on to other suppliers.
Price per unit
The price per unit is extremely important. This is the basis of your expenses and it has a huge effect on your profit margins.
Make sure to inquire about prices for different order sizes as well. Ordering 50 units and ordering 500 units will likely result in wildly different prices. You’ll need to manufacture your products in the most effective way possible.
Turnaround time
The turnaround time is the time it takes to manufacture your order. Make sure to ask about the duration for different bulk sizes as well. Knowing this will help you better manage your inventory for seasonal shifts in the market.
Payment terms
When making large orders, the terms of your payment can have an impact on your decision.
Often, you’ll only start generating income after your products have arrived. Some manufacturers may allow you to pay in increments, while others may require full payment upfront.
Make sure to know how you’ll be paying before making an order.
How do you ensure you don’t get ignored by your manufacturer? There are a few things you should avoid when you reach out to suppliers for the first time:
- Long emails: Your first email to a manufacturer should be clear and concise. Focus on what suppliers care about the most, like the details of what you’re trying to source.
- Asking for too much: Requests aren’t always easy for the supplier to produce. 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.
- Asking for too little: If you ask for a quote well below the supplier’s minimum order you risk being met with silence. If you’re unsure whether your request is too small, consider giving them a quick call or sending a one-question email prior to ask what their minimum order is.
MAINTAIN YOUR PROFITABILITY
You need to ensure your business remains profitable after all is said and done. The best way to do that is to crunch some numbers before you choose your manufacturer.
Here are five calculations you should make before partnering with a manufacturer:
1. Compare Quotes
To get the best deal, you should request quotes from several manufacturers. This will help you make the right decision and ensure you don’t get overcharged.
Make sure it’s not a misunderstanding or a product of different quality.
2. Calculate Manufacturing and Shipping or Delivery Costs
The last thing you want is to create a product, manufacture it and market it, only to discover you’re losing money.
Make sure to calculate every single cost associated with the manufacturing process. Take into consideration extra costs like shipping and handling, insurance and customs tax.
3. Determine Your Quantities and find your Product’s Market Price
Ensuring you don’t operate at a loss which includes calculating your potential income.
Do your market research on the product you plan to manufacture. Find out the average market price and gauge the amount of units you’ll be able to sell.
Note that it’s always a good idea to research your competition and target audience as well, preferably before entering into a new business venture. This is what most crashed business owners failed to understand.
4. Consider Dropshipping
Dropshipping is a good way to cut cost and increase profitability
Finding a manufacturer that dropships means they’ll take care of storage, fulfillment, and shipping for you. This is especially useful for new businesses. Dropshipping lets you start out with less overhead and investment because you won’t need to worry about storage space or a distribution plan.
You can find manufacturers that offer these services, as well as products to dropship, on platforms like Modalyst.
Are you new to dropshipping? Check out our dropshipping guide to set up your business.
5. Calculate Your Profit Margins
Once you’ve determined your costs and your potential revenue, you can calculate your profit margin.
The profit margin is the percentage remaining from your revenue after deducting all costs, for a unit of your product.
The formula to calculate your profit margin is;
[(Selling price – Cost per unit) / Selling price] * 100
Sourcing for a manufacturer is an awesome process but on the other side, it is one of the costs of starting a business knowing quite well that finding a legitimate manufacturer is not always easy which is most critical for new a business.