The entrepreneur’s dilemma is usually quite simple:
You have an idea and don’t know how to turn that idea into a physical private label product.
It’s one of the most challenging parts of entrepreneurship and is what keeps most people in the idea stage.
When you create a product, it’s the first time where the outcome is in someone else’s hands. You’ve got your brand set, designed your product, and now you need to scale.
For most entrepreneurs, they’ll turn to manufacturing in China because it’s the most effective method and will give you the highest margins. The hard part about manufacturing in China is figuring out who to work with and how to manage that manufacturing process.
If you want to learn how to create your own brand, find the perfect manufacturer, and manage the manufacturing process, then continue to read below.
Ask Your Manufacturer This: Are you a Factory?
It’s a question you should be asking a lot and it’s one that I love helping people answer. You see, I faced the same problem as you seven years ago.
I had the idea to invent the first leather watch strap without holes and needed to figure out how to manufacture it. Lucky for me, I used to live in China and speak Mandarin.
Even then, I still had to go through the process of creating my own brand. That brand eventually grew to just over six figures in the first year. Before that first year of sales though, it took us about five months to manufacture a prototype.
Watch strap I invented
Now, I launch ecommerce stores with custom products that have generated over $23,000 in sales in under a week, just like we did with the Conor McGregor “F You” suits.
Helping people manufacture in China and create awesome brands is what I do full time through Sourcify, the world’s fastest growing sourcing platform.
Enough about me, let’s learn the ins and outs of creating private label products in China.
You may be wondering:
“How much will this cost?”
Figure Out Your Exact Manufacturing Costs from Multiple Sources
When you start trying to manufacture a product in China, you’ll wonder whether or not you’ve found the perfect factory.
In fact, once you get quotes in from factories, you’ll probably wonder even more as you see the price variances. Why does one factory quote me $3 while the other is quoting $6?
Here’s the deal:
The main reasons quote variances exist among factories comes down to these four reasons:
- They are utilizing a “partner” factory
- Suppliers don’t think you actually know what price you should be paying
- The factories don’t usually produce this type of product
- The quality they produce at is much lower than the standard
The only way to understand what it costs to create a product is by getting three to five price quotes per product you want to manufacture. These price quotes need to come from different factories.
Organizing logistics and getting price quotes is a month long process. It’s why many people would rather use Sourcify.
Verifying if a factory is legit is a whole different step and there are due diligence measures you need to take to confirm a factory.
Check this out:
If you’re using Alibaba to search for factories, the best tool to utilize is FactoryConfirm, a Google Chrome extension that uses data analytics to see the likelihood of a factory being legitimate. There are some main giveaways that can help you understand if a company is actually a factory:
- Does their name have the words trading, industry, or technology in it?
- How many product categories do they manufacture in?
- What does their business license say?
Chinese Business License
These questions are a good starting point for you to analyze a factory.
Ask Your Manufacturer Production Specific Questions
Communicating with factories requires an entirely different set of questions. Therefore the questions you ask a factory should be clear-cut and in very basic English. Some of my favorite questions to ask are:
- What companies have you worked with in the past? Where are most of those companies based?
Though a lot of good factories won’t disclose who they work with, if you can understand where most of those companies are located, you’ll have a good idea as to the quality standards they adhere to. Most factories that sell into America or Europe produce higher quality goods than factories that sell into Asia or Africa.
- Can I review your business license?
Though this will be in Chinese, you can get someone who speaks Mandarin to review it and check the AIC (Industrial and Commercial Administration Bureau) for each province of China to see if the company is actually registered there.
- What is your typical minimum order quantity?
Most factories want to produce more products. It’s just a matter of fact that they make more money when larger orders are placed. With that said, if you make them believe in your brand, they’ll often be willing to start at a lower order quantity. Don’t think the number they say right off the bat is finite.
- What is your average sample time?
Sample times make the process that much more exciting. Most people think it takes weeks to get a sample made. For simple apparel items like a shirt or hat, samples can literally be done in less than a week. Sample times will vary drastically depending on the type of product you are producing.
- What are your typical payment terms?
Most factories work on a 30% down to start production, 70% paid before shipment payment term. This unfortunately means you need to pay for 100% of your production before you actually receive your product. You will however be able to control the quality of products before shipment and can either go to a factory yourself or send in a quality control team. For larger production runs, it is always smart to send in a quality control team before paying the 70% remaining balance.
Now that you know what questions to ask a factory, it’s time to learn how to manage a manufacturing process.
Get Production Samples Made and The Ball is Rolling!
By this point in time, you should have enough know how to find a factory. Now it’s time to teach you about managing the actual production process.
Every product starts with at least one sample and you don’t want to go into a production run without a sample produced by the factory you’re planning to work with.
Know your specifications for a quick turnaround. What color, material, and logo do you want? When you start discussing your product with factories, you’ll soon realize the abundance of options.
As an example, for watches, you can literally customize everything from the logo on the crown to the entire watch face. Knowing what you want will save you in the long run as you don’t want to have to produce multiple samples because you forgot some design details.
If Sampling Doesn’t Slow You Down Production Will
Once you’ve confirmed a sample, it’s time to move into production. If your sampling process didn’t cause delays, production will. To stay on top of a production run, you need to realize two things:
- The factory you’re working with has it’s own supply chain. Each part in your product comes from a different factory. For shoes, the laces and soles may come from a different factory. For bracelets, the raw material and gems may come from different factories. Most ecommerce stores deal with assembly factories and until you scale to a eight figure brand, it’s probably not going to be worth your time to deal with individual factories that focus on certain parts of your product.
- You’re not the factory’s only client and probably not the most important. To stay top of mind, this means you need to keep up to date with your factory and start building a relationship with them. You’re going to be dealing with a sales rep of the factory. They have their own lives as well. Ask them how their day was sometimes, not just how your production is going.
Once you understand those two main points, you’ll have a much smoother production run.
Watch case assembly line
The next step is getting image updates like the photo above that showcase progress is being made. You’ll want to ask a factory what the timeline looks like for each part of your product. If one part gets delayed, you know the whole production of your product will be delayed.
The key to a smooth production run is staying on top of the process. Though most people manage a production run through email, you may want to consider tools that enable you to actually map out the process.
(Watch: Do I need an importing license or LLC to get started?)
What’s the bottom line?
There’s Nothing Left but To Take Action
This advice is worthless unless you take action. It’s a matter of fact, entrepreneurs are the ones who actually put in the work to turn their ideas into products. Have an idea? Find the perfect manufacturer to produce your product.
If you aren’t ready to start your own private label brand, dropshipping could be a option where you don’t hold inventory, but have lower margins.
The key to becoming a successful private label product entrepreneur is creating a brand where you can charge a premium for your products. Now that you know how to find the perfect manufacturer and manage a production run, it’s time for you to start producing your own products!