Here are 7 reasons why it’s difficult to start small scale when buying from China:
1. Limited Factory Co-operation
If your order is small the factory will never give you their full attention, time and resources. Quite simply, you’re more of an afterthought and they usually do the bare minimum to get the order done.
2. The Factory will not give you priority
When the factory is busy you will be pushed to the back of the queue. The bigger the percentage of business you are, the more priority you will get. It’s very common for factories to take on business knowing they cannot get it out in the stated lead time. They prioritize by their bottom line. Meaning bigger customers go to the front of the queue.
Easy Imex buys from a factory of which we are the largest customers. Our lead time is 50 days vs 90 days for anyone else coming in (and they only accept MOQ’s above $15,000USD). If you are trying to buy small from them, you’ll be waiting a long, long time for product.
Guess whose orders will be delayed?
3. Factories sub-suppliers have MOQ’s too
Suppliers have MOQ’s from their sub-suppliers. The supplier has to buy raw materials from their supplier and these may not be small.
So while the factory may be willing to run your order, if their raw material supplier requires a higher volume than your production run allows, then your factory will be forced to refuse your business. So this makes small production runs difficult, even with small factories.
4. Your logistics costs will be high
Because doing part container loads is expensive. You might end up paying 5-10 times the landed price doing part container load vs full container load.
5. Small buyers usually cannot afford to spend as much to do things properly
Small buyers don’t have the resources, funds or ability to locate the right factories and manage them throughout production. There’s no “on the ground” research. There’s less time ensuring the manufacturer understands their details. There’s no budget for detailed quality control during and after production, which could involve multiple days in the factory. As a result, specifications are not clear, the factory will make mistakes, and the client won’t know until too late (ie. Once the goods arrive).
Ironically, smaller buyers will have to use smaller factories. And these are the factories who require the most hands-on management.
6. Factories won’t do any customization (or minimal at best)
Chinese manufacturers do production in large volumes. They prefer products, which don’t require them to make changes to their normal way of doing things. While they will make changes for large orders, they simply will not bother for anything small.
If you have small complex, custom design orders – China is usually not for you. Most suppliers are not interested and will not co-operate. And suppliers hate complexity with small orders that force them to solve problems – unless you have a lot of money to spend.
7. Small Online sellers in a high volume product cannot compete – unless they differentiate themselves
Online sales can be very competitive. The biggest sellers with the most order volume are usually getting the best pricing. And you won’t be able to get this level of pricing and subsequently cannot compete. In fact, some sellers work off low margins and can get pricing much cheaper than you. Not only this but their established logistics network further lowers their costs. This means small buyers sometimes cannot even land the goods in your country at the price they are selling!
What do you think? Is this true? What experiences have you had?