SIZE MATTERS: Protecting your market
The size of your supplier is an important factor in determining the dynamics of your relationship and it can have a big impact on many aspects of your business.
Protecting Your Market
Whether you already have an established customer base and you want to find a supplier to manufacture a new product, or you are just starting out and are hustling like crazy for your first sale, one thing is for sure, once you have your customers you will not want to loose them.
If your supplier is a large company that already has a lot of international customers, protecting your market can be difficult. A manufacturer that has an international sales department, in a bid to quickly inflate their sales numbers, may actively sell a cheaper, lower quality but superficially similar product, into a market where they already have a successful customer. The resultant price war with another importer who is riding on the coat tails of your success and hard work is going to give you big problems. Depending on your product, it may be tough for customers to look further than the unit price and the difference in quality may be difficult to identify at first glance.
“What about an exclusivity agreement?” I hear you cry! The reality is that they are easily ignored and a breach of contract can be justified by any number of excuses. The “rogue agent” excuse is popular. It goes something like this... Someone who is an agent of the company acted on their own accord and the manufacturer didn’t realise that the agent was supplying another company that just happens to be in direct competition to you... So it was an accident.
An exclusivity agreement can be useful in negotiations after things have gone wrong, but in my experience they don’t stop things from going wrong in the first place.
If your supplier is relatively small, protecting your market should be somewhat easier. The thinking being that whilst the smaller company is producing your orders, they don’t have any extra capacity to produce the same or similar products for your competition. Therefore, they are unlikely to risk the relationship with you and loose your business. In the short to medium term, a smaller supplier is more likely to see your success as a chance to get more orders directly from you and to grow with you. That being said, some suppliers will take on orders that end up being way behind schedule because they physically don’t have enough resources to make all of the products on time. If you have enough demand you can get around this problem by buying from multiple small suppliers. As we will see in later blog posts, this strategy has its own pros and cons that need to be taken into account.
USE YOUR EYES
This may seem like an obvious point to make but it’s worth bearing in mind that if you are buying from a smaller manufacturer you can physically see what’s being made on their factory floor. In a bigger company the factories can span many locations, some of which you may not even be aware of, in this situation it’s difficult to keep an eye on which products are being made for other customers.
HOW TO FIND THE RIGHT SUPPLIER FOR YOUR BUSINESS
The supplier that is the right fit for your business is determined by many factors, each company is unique and identifying the right match requires a tailor made approach. We specialise in affordable in-depth product and supplier searches, physical face to face “with our own eyes” supplier reports and product quality control. We are not a trade company, an import/export company or a “middle man”, we work directly for you. We can connect you to off-the grid specialist manufacturers that the trade companies don’t want you to talk to. We started Buy From China to address problems that we ourselves have encountered when buying and manufacturing in China. To find out how you can tap into our knowledge and over 15 years of experience, visit www.buyfromchina.co or email us at email@example.com
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