China has been the home of many Amazon suppliers.
In fact, if you look at the U.S. import records, you’ll see that China-sourced products dominate every import category accounting for over 41% of all U.S. imports!
And with this data, it isn’t a surprise that most Amazon sellers turn to Chinese suppliers to manufacture their first Amazon products.
For one, it’s very easy to find them.
All you need to do is go to Alibaba and you’ll find thousands of Chinese suppliers willing to cater to your sourcing needs.
Two, it’s cheap.
China has the lowest labor costs in the manufacturing business which makes it possible to offer goods at a very low price.
And finally, almost every Amazon seller is sourcing from China so why bother looking somewhere else if this option works?
I know. I know.
At the surface, sourcing from Chinese suppliers sounds like the only viable solution.
But if you really think about it…
This isn’t always the case.
In fact, product sourcing from China isn’t as smooth and seamless as you think!
Take a look at this Amazon seller’s experience for example:
I did my first product 4 years ago, and it was an absolute nightmare.
Error No. 1 I found my manufacturer on Alibaba.
The communication was pretty responsive initially, but once they had my deposit, it was damn near impossible getting responses in a timely manner. I eventually learned that 95% of the “Factories” you are dealing with on Alibaba are just english speaking agents working for many different factories who have no clue what they are talking about in regards to manufacturing.
Error No. 2 Unrealistic tolerances in China are rarely discovered until it is too late.
“Yes” from Alibaba agents means it MIGHT be theoretically possible. Your tolerance requests might be accepted, but in reality it would increase production cost by 30% and might just be ignored in the process.
Error number 3. Late stage QC
My initial prototyping phase was almost useless because it was near impossible to manufacture from the start. I would have saved so much time and money if I was working with someone who knew the ins and out of manufacturing and factory limitations from the start.
I wouldn’t wish for this to happen to any Amazon seller.
And if I’m being honest…
This kind of experience dealing with Chinese manufacturers is just the tip of the iceberg.
Cause there are TONS of other reasons why sourcing from China may not always be the best option after all.
Disadvantages of Sourcing from China
As mentioned earlier, product sourcing from Chinese factories isn’t all butterflies and rainbows!
And truth be told, Amazon sellers face several difficulties when dealing with Chinese suppliers and here are some of them.
- Language barrier.
Although China has opened its doors to international trade, this doesn’t imply that every Chinese has become proficient in English. And when a language barrier exists, it becomes difficult for manufacturers to accurately comprehend and understand the customers’ specifications – the correct materials to use, the right molds to fabricate, and the testing and inspection criteria needed to come up with a quality product. Miscommunication often happens which then leads to manufacturing mistakes, wasted resources, and loss of money.
- Finding a trusted manufacturer is a challenge.
Sure, it’s easy to just go to Alibaba and source whatever product you like. But in the end, it becomes so hard to find GOOD suppliers who will treat you as a partner rather than a mere business transaction. Plus, visiting factories overseas involves added costs, stress, and time. Which makes it even more difficult to audit a manufacturing site properly – since you’re only doing it through emails, phone calls, and online meetings.
- Securing product samples is expensive.
Before you place a bulk order to any supplier, it’s imperative that you get product samples so you’ll be able to see and feel them first-hand before you invest in them. However, samples aren’t usually given for FREE.
Why? On the manufacturer’s side, producing samples involves planning, sourcing of components, assembling, testing, and documentation which all require money to get completed. And on top of the item costs, you have to shell out some funds for shipping too.
- They require high minimum order quantities (MOQ).
MOQ is the minimum quantity of a product that’s still profitable for a factory to produce. Chinese manufacturers require a high minimum order quantity (thousand units or more) due to many many factors such as product complexity, cost of mould fabrication, customization, rare raw materials, and unique parts.
And if you’re a new Amazon seller, you’re only allowed to bring in 200 units to the Amazon warehouse. And this poses A LOT of problems – additional product cost, shipping cost, storage cost, and excess inventory. All these unnecessary costs for a product you haven’t even tested yet.
- Transit and customs clearances take time.
Shipping from China by sea often takes 30-40 days. And when the shipment arrives in the US port, it has to undergo custom clearances that take a few more days to complete. So if your items become out of stock, it takes time to replenish and have your products delivered to the Amazon warehouse which in effect will drive your customers to go elsewhere.
- You have to deal with expensive freight forwarding.
Importing your products to the US requires the help of freight forwarders who will arrange the logistics. They decide how the goods will be moved and stored during transit and gather all documentation needed for customs clearance. Employing them to move your inventory across the world to your destination (i.e. the Amazon warehouse) involves significant costs.
- Some manufacturers have quality issues.
Truth be told, some Chinese manufacturers produce good products while some manufacture BAD ones. And so it is your job to find suppliers who are capable, trusted and quality-driven. Just imagine being in business with poor quality makers who shipped defective products to the Amazon warehouse…
Aren’t you gonna go ballistic about it?
- It’s hard to send back products with defects to China.
Imagine how much money it took you to ship your items from your factory in China to the Amazon warehouse. Well it’s gonna take the same amount (or even more) if you’ll send them back to your manufacturer because of product defects.
All these paint a whole different picture…
That sourcing from China may not be the best solution after all, especially if you’re a new Amazon seller.
So what’s the better alternative then?
Product Sourcing from Local (US-based) Manufacturers
Now that you know the challenges of overseas manufacturing particularly in China…
Why not start sourcing locally from US-based manufacturers especially if you’re just starting out?
Yep. There are local suppliers willing to work with you in producing your Amazon products.
In fact, I tried sourcing in the US for some of the items I sell on Amazon stores and the experience I got was a whole lot different (in a good way).
- Speed. Lead time is significantly cut down when sourcing locally. Since the factory could be down the road or just over in another state, you can get a product from them quicker.
- Lower MOQ. Local suppliers often give more flexibility when it comes to MOQ hence giving more wiggle room to negotiate for lower numbers.
- Ease of communication. Now that both Amazon sellers and manufacturers are English speakers, it becomes easier to communicate.
- Ease of factory audit and request of samples. Since their manufacturing plants are in the US, you can easily visit their factory to assess their capacity and get a better understanding of their manufacturing process. It’s also easier and less expensive to request samples from them since there will be no international shipping costs involved.
- Shipping costs savings. A perk of being in the US is they can send your inventory directly to Amazon saving you from freight forwarding, shipping, and customs clearances costs.
- Ease of product returns. For products that don’t meet your agreed standards, you can send them back to the factory without worrying much about the costs associated with it.
And the best part?
I was treated as a business partner right from the very beginning!
Isn’t that more assuring?
So instead of finding solutions to the problems associated with overseas manufacturing…
Why not start with local sources instead?
Where Do You Find US-based suppliers?
There are several leading directories of US manufacturers which connect them to small and medium-sized businesses. Among them are ThomasNet, MFG.com and Maker’s Row.
- ThomasNet. This is a free supplier directory that allows customers to find manufacturers by name, category, or brand.
- MFG.com. This is an excellent marketplace to find a manufacturing company for your new product design which allows users to search for suppliers based on location.
- Maker’s Row. This is best for sourcing apparel & accessories, furniture & home decor, and packaging. Unlike ThomasNet and MFG.com, Maker’s Row is not free and comes at a $35/month subscription fee.
And once tradeshows are allowed to convene, you can attend and see for yourself the numerous local manufacturers you can turn to in manufacturing your Amazon products.
So after discussing the DOs and DONTs of product sourcing overseas, what I’m really trying to say is this…
Don’t be boxed on the idea that your ONLY option in running an Amazon business is to go Alibaba and look for Chinese suppliers.
Cause the truth is, you can easily start working with suppliers locally and avoid the headache of overseas sourcing, especially if you’re just starting out.
Doing so lets you work with manufacturers hand-in-hand while developing your product, gets your items at a much faster speed, and brings you TONS of savings from unnecessary shipping, freight, and storage costs.
Isn’t that a better alternative?
And if you ever need a helping hand when it comes to your Amazon store’s product research, keyword research, market analysis, launch and PPC marketing…
The ZonBase team is always here to help you!