In order to start an online business, you need two things, a product idea and supply. If you already have your ecommerce product idea and your business plan in place, the next step is finding the perfect supplier. In our global village, it has never been easier to find a manufacturing or wholesaling partner halfway around the world, however sourcing your products from overseas can still seem like a daunting task for new online entrepreneurs.
In today’s post, we’re going to look at how to effectively and safely source a supplier for your product idea using the popular business directory Alibaba. We’ll introduce you to the pros and cons of going overseas and show you how to navigate this new terrain so you can lock onto the perfect supplier for your product idea and get started selling online.
Let’s jump right into it.
Advantages & disadvantages of sourcing overseas
The most common reason many entrepreneurs look to Asia, and in particular China for product suppliers is to take advantage of the low manufacturing costs. Costs of manufacturing in Asia can be significantly lower than North America and other parts of the world, so much so that for many businesses, it could be quite difficult to be profitable if it wasn’t for overseas manufacturing.
Cheaper product costs are great, but they aren’t the only reason Asia is an attractive place to find a supplier, there are some additional benefits as well:
- Lower manufacturing costs
- Suppliers are (generally) much more open to working with smaller businesses and providing smaller quantities
- High number of suppliers to choose from
- For many products, Asia might be the only place that produces the item
- One-stop services like Alibaba have made it very easy to navigate and purchase from suppliers
Along with the advantages of sourcing from overseas suppliers also comes several disadvantages that you should be equally aware of. Some of the biggest disadvantages include:
- Perceived lower quality from customers
- (Usually) lower manufacturing and labor standards
- Almost no intellectual property protection
- Language and communication barrier can be difficult to overcome
- Difficult/costly to verify manufacturer and visit on-site
- Longer shipping time
- Cultural differences in business practices
- Product importation and customs clearance
- Lower level of payment security and recourse