Product sourcing in China: 8 tricks for small businesses to keep costs down

By Sky Chaz

You know clearly that well begun is half done, and I hope you will also agree with when I say: Costing down your product sourcing is already half the success for your business.

In fact, many first-time importers fail to their first step with a heavy load. So I’d like to explain how to avoid and what you should consider about, as you need to test your market first with smallest capital at this stage. And, put your investment in more important thing, sales & marketing.

So let’s move forward.

#1 Start with sourcing one product at a time

You can easily find many successfully proven cases that start with just one or a handful products, and according to the response of the market to decide the next step afterwards. Expanding a product line needs a single product to be proven at the beginning.

If you plan to start with plenty of products, it will require a lot of time and money to invest. That’s a hard and difficult path to go as a first-time importer or startup.

Investing in one product is a good option to cost down and lower risk for the first step in your China sourcing journey.

#2 Find professional suppliers who specialize in your target product

If you are focusing long term on a single category, work with a professional supplier instead of a vendor who provides a vast range of products.

Do some research about the supplier to check if it specializes in your target product or not before contacting the company. And it’s unnecessary to care too much if the supplier is a factory or a trader because a professional trader must have strong sourcing advantages that allow it to provide you a competitive prices that are even lower than a sundry goods factory.

So, find a specialist as your importing business partner to keep costs down constantly in the future.

#3 Always negotiate prices with a Chinese supplier

Remember, ANYTHING is negotiable when you dealing with Chinese suppliers.

Because a lot of suppliers, including those from other Asian countries, are showing up and are easy to find on the internet, it has become a buyer’s market nowadays. So feel free to ask for a lower price once you decide to work with a particular supplier.

But keep in mind, the seller is a person trying to earn money (just like you) – always be respectful. Just don’t be too restrictive that quality suffers. I once heard of a buyer paying for products at prices that are much lower than market levels that its supplier, not earning anything from the orders, abandoned the buyer. Obviously, the buyer suffered a greater loss.

Always negotiate a reasonable price, and don’t over-restricting.

#4 Try to keep your product design as simple as possible

In terms of design, less is more. A design will generate a certain cost because most new products require tooling (metal and plastic) to produce. In some cases, it would even cost more than the value of your total goods. It will be a high risk to invest too much in a new project which has not yet been proven in the market. So don’t require designs or functions that are too complex.

You can go with an existing product or change it slightly, perhaps in terms of color, material or packaging. Many experienced brands use this method to test the market as the first step of sourcing in China with a low cost.

#5 Consider going with the appropriate quantity

Reach a manufacturer’s MOQ as much as you can. Although it increases your total cost, it will reduce your average product cost signficantly.

Let’s check the differences of landed, including manufacturer’s markup, shipping and import duty, price on the chart below.

As you see, there is no advantage in importing from China if you go with low quantity. Moreover, you have to wait for a long time to get imports delivered.

So it’s important to consider a suitable quantity to cost down your sourcing result.

#6 Select shipping by sea, not air

Shipping by air is costly, albeit quicker, but only use it when:

a. Checking your product sample

b. You need to step into your target market as soon as possible with less quantity

c. Emergency replenishment

To cost down your product sourcing results, shipping by sea always should always be your first choice.

Ninety percent of global trade is through sea shipping. Imagine if you will, a monster importer shipping dozens, even hundreds of container at one time. This brings down shipping costs to just a few pennies for each product.

#7 Don’t expect the highest quality/material

Every brand owner hopes its product is made of the highest quality or best material. But truth is, 80 percent of major retailers uses standard level materials that just meet the requirements of the market.

You can also claim high-quality on marketing materials. This is a common way for costing down and, as I’ve observed through on-the-ground experience sourcing for successful sellers on Amazon and eBay, is used by most famous brands.

In summary, it works and is profitable to use standard level quality products, focusing instead on better marketing skills. You don’t have to chase after the highest quality before your product idea has generated sales in your target market.

#8 Go with simple & suitable packaging for your first time of product sourcing in China

It will consume quite a sum of money and time if you attempt to chase perfect packaging at the beginning. Don’t do that unless your product idea depends on unique design of packaging to generate sales and you are also experienced in design.

Product packaging also an important way to reduce your sourcing expense. It’s mainly costed by 2 points as specified below:

a. Packaging design: Oftentimes, design is the most expensive aspect in production if you ask for perfect design. So keep it as simple as possible. In addition, thanks to Apple, minimalism is now popular. That said, even a simple white or brown box with only a logo will work.

b. Packaging size: Mostly, the charge mode of shipping is about volume, so as your warehouse charges. Thus, try to make it as small or compact as possible. The smaller packaging volume you go, the lesser it will cost.

In conclusion

Keeping costs down should always be the goal of your China product sourcing journey. Again, it’s unnecessary to chasing perfect version of our product at the beginning. All of above points could be improved after you earned more revenue.

This article was originally posted in http://www.ackka.com/product-sourcing-china-tricks/.

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Sky Chaz is the founder of ACKKA. He's passionate about global trading, with the goal of helping small businesses source in China easily. Sky strives to write informative articles weekly to help importers learn more about China.