When looking for products to buy, one of the most challenging things is product sourcing or product procurement. At Mondoro, we are either looking for a new product or technique for a customer. We are looking for a part or piece needed to complete our manufacturing process.
Product procurement or sourcing is an essential part of any supply chain management. Some joint product procurement or sourcing errors include 1) not fully understanding the product they are procuring or sourcing or 2) not understanding the actual product or quality requirements, 3) not properly vetting the vendor, 4) the wrong vendor, and 5) misunderstanding the vendor capabilities.
We have come up with a list of common sourcing errors because, during our last 25-plus years of sourcing products, we have made these or similar errors at one time or another. We share these errors with you so that you do not need to make the same product sourcing errors as we have.
If the product looks too good to be true, it probably is.
As the old saying goes, if something looks too good to be true, it probably is. This is especially true when looking at new product sources. We create, design, and manufacture products for the home decor and furniture industry, so we spend a lot of time looking at new designs, ideas, and sources.
I cannot tell you how many times I have looked at a potential vendor’s website, and I was amazed at their beautiful photos and products. Based on what we saw, we would then approach them and ask them to price something similar to what we saw on their website. If they had never produced the product before, they would come back with a price that was either extremely low or extremely high.
Upon further investigation, we soon discovered that they had never produced that item or anything similar to what we saw on their website or in their catalog. We soon learned that they had either pulled the photos off another website or purchased them as a stock image.
The danger for you and them is that they have no experience or ability to produce what you are asking them to produce. And if they have no experience in the kind of production you are asking for it can be an expensive problem for both of you.
You got caught up in the “Catch and Bait” pricing scheme.
The catch and bait pricing scheme is when a vendor will put a price on a site like Alibaba that is extremely low. Maybe they say something like a 20″ Vase with Mother of Pearl is only 1 USD. You may look at that and say, “Wow, that is so cheap; we need to talk to them now!” The dollar signs of how much you will make on the item add up in your head.
If you understand what the real price of a quality Mother of Pearl vase should be, you will understand that the materials to produce that vase would be way over 1 USD, unless they are selling this as a stock item – in which case you will need to take it as a deadstock item.
But the potential vendors who put up the 1 USD for every item or they will put up 1 USD to 20 USD are doing a technique called “catch and bait.” They want to catch you by getting you to contact them. Then they try first to bait you with some very low prices when finally they have no ability or no intention of ever producing at that price.
In the future, if you fall into the “catch and bait” scheme, you are probably wasting your time, especially if the quality is essential to you and your business.
You did not correctly check out the vendor.
Finding a good vendor is not easy. Especially finding one to work with long-term and have a mutually productive relationship for many years. We have found that finding that kind of vendor takes time, effort, and a lot of patience.
I have found that vendors can show you anything at a show. We have even walked around some shows in Vietnam and saw vendors with products on display that we knew they could never produce or produce with any quality. We have also heard of vendors going to a friend’s factory and “borrowing” some samples for a show.
The only way to know about a vendor is for you to go to visit them physically. This can be expensive if you live in another country; your short 30 minutes visit to a factory makes it tough to know what they can or cannot do. If you cannot be near the factory, then have someone as an agent that can help you. This will save you a lot of money, time, effort, and headaches in the long term.
Some people do not like Agents because they can handle it themselves. And sometimes, it does work out fine without an agent or without ever seeing the factory. But if your products’ quality is your concern, then find yourself a good agent to help you or be prepared to spend a lot of time at the factory checking the production.
You promise the vendor large quantity orders when you cannot place such a large promised order.
The next issue is not a factory or vendor problem but is usually a customer or client problem. I learned about this years ago when I was in the shoe business and discovered its effects and problems firsthand.
Years ago, when I was in Thailand working for a major shoe company, we had a client from Holland. He would go into the factories and bargain with them hard for a price and then tell the factories, “I will buy 100,000 pairs of each shoe, but I need to have this low price.” The factory would come back with a price he agreed upon, and then the order would come, and the quantity would only be 10 or 5% of what was promised.
The problem with this kind of game is that many factories will say, “sorry, you give us 100,000 pair orders, or we will not take the order.” Or they take the order but will never produce for you again. This is just not a good long-term product sourcing solution, and it does not build any trust with the vendor.
You do not fully understand what the vendor is capable of producing
When you are in a design and product development-driven industry as we are, there is always an excellent line between understanding what a vendor can produce and pushing that vendor to produce something unique or exciting.
In my industry, getting a vendor to try something new can be the difference between a great product and a unique one. But there is a risk associated with this, and to have this work, you need to understand what the vendor is fully capable of doing.
If you know they can do what you are asking, try to push them to do it, as you will come out with a much better product. But if they are not, you will probably have wasted a lot of time, effort, training, and money.
So it is essential that you fully understand the ability of the vendor you are working with and their strengths and weaknesses. You will both have a much better mutually beneficial working environment when you do.
You think because the vendor is your so-called friend, they will do anything for you.
Many vendors in Asia can be extremely friendly. They may take you out for a nice dinner or a night out on the town, and because of this, you may be under the impression that you will get a ton of extra favors from them.
The reality is that this kind of behavior by the vendors, especially in Asia, is quite common. Please do not mistake this that you are somehow really special to them, so you will be able to push them to always do a ton of extra things for you. Eventually, if you continue to use the so-called friendship card and push them too much, they may get tired of it, and you may find that they are now almost ignoring you. Good Business has to be mutually beneficial for both parties involved and not just one party.
Remembering these points when you are sourcing for products will help you ensure that all parties have a good sourcing relationship.
I believe that this quote by Steven Covey sums it all up
For any business relationship to work long term, there must be mutual respect and mutual benefit between both parties. This should always be your guide when looking for a new vendor relationship when sourcing products.
If you are interested in finding out more about how we can help you create, develop, and manufacture home decor and home furniture products in Asia, we would love to hear from you. Feel free to contact Mondoro and Anita by clicking here.
How do I source products from an overseas vendor?
The primary methods used to find product sources are online searches, trade shows, or referrals. One of the best methods is referrals, but it is hard to get them as most people want to keep their vendor and sourcing information confidential.
How do I know if the overseas vendor I have found is a good vendor or not?
The only sure method is to start to work with the vendor. This is why finding a new vendor is so difficult. If you find a great new one, you should hold on to them. But if you find a bad one, it can cost you a lot of money and needless expense. I have worked with vendors that started looking good, but they could not perform as expected.