What To Expect When Sourcing A Physical Product:
If you decided to source a physical product for your business, there's a few key things you're going to want to keep in mind.
First, just like renovating a house, it's likely to take significantly longer and cost you significantly more money than what you thought when you started the process.
Second, you can expect hiccups along the way. Because you're dealing with the creation and shipment of physical goods and services, you're really dealing with people. the fact of the matter is it's very easy for people to mess up, they can be lazy and miss something, or they can simply be overwhelmed and not do their best work.
At the end of the day what really matters is that if you have decided to Source a physical product for your business, that you approach it from the perspective of a long-term project and not something that you can do this weekend.
Even after you have identified the product and manufacturer that you want to work with, there is going to be a large variety of intricacies that come up along the way.
Long story short if you prepare yourself for this process the same way that you prepare yourself for getting married oh, you're probably approaching this with the correct mindset.
- What To Expect When Sourcing A Physical Product:
- Things To Know Before You Get Started:
- What’s The Difference Between a Patent and a Trademark?
- Running an Intellectual Property Search:
- Improving The Product, Don’t Just Copy Everyone Else
- Finding and Working With Your Manufacturer
Things To Know Before You Get Started:
What’s The Difference Between a Patent and a Trademark?
One of the biggest sticking points for people and one of the most frequently asked questions when it comes to sourcing products is the difference between patents and trademarks.
Generally speaking, patents are designed to stop other people from being able to manufacture or sell a specific product or invention
Trademarks on the other hand are designed to protect words symbols phrases slogans for other things that relate to the way products are sold or marketed.
When you're sourcing your own physical product it's important to avoid both patents and trademarks.
If you see that a product is trademarked it's substantially easier to get around then a product that has a patent.
Generally speaking unless you have a very strong legal or you invented the product yourself, you're going to want to completely avoid a product that has a granted patent related to it.
One of the biggest suggestions that I can make to anyone looking to source a product for their business, would be to run an intellectual property search before you even start looking for a manufacturer.
This process is not all that complicated and it can save you a ton of time and money, even if you hire a lawyer to do it for you, because you will know before you ever Source the product, whether or not it has protections.
Running an Intellectual Property Search:
Even saying the words “ intellectual property “ Can make a lot of people's eyes glaze over, but understanding if the product you are looking to source is patented or has trademarks related to it is one of the most important parts of the sourcing process.
Fear not, there are actually two ways that you can run an IP search fairly easily.
The Quick and Easy Way:
Because we live in the twenty-first century, at least for now, the entire database of registered intellectual property ( including all valid trademarks and patents) is available online.
If you want to run an IP search yourself, the first step is to head over to uspto.gov.
From here you will see in the upper right hand corner a little box labeled “ find it fast” with an option to find either patents or trademarks.
Clicking on the appropriate drop down for what you were looking for, will allow you to run a search for either patents or trademarks related to the product you are interested in.
Running a Patent Search:
Under the drop-down for patterns you will see two options.
The first is called “ PatFT”, Which will take you to the database of granted patents. This is ideally what you were looking for, because just because a patent has been applied for (what selecting the other option APPFT” will give you) does not necessarily mean that it will be granted.
Once you have clicked the button you'll be taken to the USPTO patent full text and image database.
Once inside you will be taken to Acer touch screen, where you will type in the keyword most relevant to the product that you are interested in, for example garlic press.
In our garlic press example, you can see that there are 124 registered patents related to or containing the term “Garlic Press”.
Each of these results give you the full title of the patent, as well as the patent number.
By clicking on either of these you are taken to the full text of the patent and are able to see exactly it covers.
Having understanding of whether or not there are patents related to the product that you were trying to Source can help you understand which specific versions of products you may be able to legally Source, without running into patent issues.
Obviously, if you return your results you can continue on with your sourcing without much worry. The problem with this method comes if you don't have an understanding of exactly what different patents
If there is something that is even close to what you are trying to Source, it's usually best to hire an attorney, which leads us to the better but slightly more expensive way of conducting a patent search.
The Better and More Expensive Way:
In my opinion, even if it's just for peace of mind, before you ever start talking to a manufacturer I would have an intellectual property attorney run a search for you.
While this can add a few hundred dollars to the product sourcing process, it will save you several hours in many cases of reading and trying to understand patterns related to the product you were trying to source and can save you thousands of dollars down the road, by making sure that you didn't miss anything in the process.
Generally speaking you can hire a decent intellectual property attorney to run a patent search for you for around $400.
That to me is absolutely worth the Peace of Mind that comes with having a qualified professional evaluating what you are looking at.
Improving The Product, Don’t Just Copy Everyone Else
Perhaps the biggest mistake I have seen people make in the product sourcing process is to Simply Source the exact same product you see that is already selling on the market.
Not only is this potentially a problem, if the product has a patent ( which you should have discovered before you get to this portion of the process), but it also doesn't set you apart.
If you're selling the same exact product as every other brand out there there are only two ways to differentiate.
The first and most obvious would be if you have a strong brand, from most people reading this article you are not a brand at the level of somebody like Nike, so watching the same exact product as something else would leave you with only option number to differentiate, pricing.
If you and I are selling the same exact product the only way for a consumer to make the choice and the only thing they care about is going to be based on our pricing.
This typically leads to what is referred to as a “ race to the bottom”, Meaning whichever of us has the deepest pockets and can afford to sell a product for the lowest price and the longest amount of time, will win.
As a business owner, you never want to be in the position of a price being the only differentiating factor between you and your competition. After all, there's always somebody with pockets deeper than yours.
The best way around this is by differentiating your product from other people's.
Step #1 Seek Out Your Competition
In order to figure out what we want to change about a product, the very first thing we have to do is actually see, feel, and experience the existing products on the market.
Yes, what I'm talking about is actually putting your money where your mouth is and purchasing a few of your competitors products.
Typically I like to buy at least three to five of the top selling products for any vertical that I'm going into.
I know that you're probably thinking,” but Chris that can cost me anywhere from 50 up to a few hundred dollars, can't I just save the money?”.
The short answer is no, because this experience will give you a better understanding of the individual products in your market and the customer experience with each of them.
Unless your product costs a few hundred dollars for each unit, there is no better place to invest a little bit of money than understanding the different products that your competitors have to offer.
If you're not sure who the best sellers are in your Market, the easy way to shortcut this process is to Simply go to amazon.com and see which products come up when you type in the main keyword for your market.
Since Amazon ranks products, based on their likelihood to sell, chances are that you are going to see the same top three to five people as most customers will when they type in a similar search term.
Once you have a product in your hands, you need to actually use them.
Take note of everything from the unboxing experience, to the way they feel in your hand and hold up over time.
This can teach you a huge amount about what you like and don't like with each of the products
Step #2 Read The Reviews
Your personal experience with the products is a great place to start, but there's no better place to look then to the everyday consumers who are using your products.
Obviously, with the exception of the glowing five star reviews and the worst products ever one star reviews, reviews of products can be an absolute gold mine for how to create the best product on the market.
Sometimes it means rebuilding the product and rethinking it from the ground up, but in most cases a few small simple tweaks can make all the difference in the world in the eyes of the consumer.
Take the time to read and analyze each of the customer reviews on your competitors products, again discarding the best and worst reviews, and looking for the helpful advice that you will often see in these reviews.
One company that did this became an absolute Smash Hit overnight. You've probably heard the name if you don't already own one ( or two), Instant Pot.
They went from a small Canadian company, to a global name in just a few short months, because of the passion of the owner and creator of this pressure cooking company to read and understand all of the thoughts of the market about his product as well as his competitors.
He has become somewhat famous for supposedly still reading every review of the product to see if there's something that they can change or improve for their next model.
While you don't have to take it to that level of dedication, listening to the wisdom of the crowd is an easy way to come up with a good list of ideas to make your product the best product on the market.
Step #3 Decide On the Changes:
Once you've taken the time to review your competitors products and taken into consideration all of the feedback you've seen in their reviews, It's time to decide on a few things that you would like to change about the product.
Generally speaking, keeping these things simple will make the product sourcing process much easier.
For example rather than redesigning a garlic press from the ground up, you may notice that a few people mentioned in the reviews that a rubber grip would be nicer around the handle of the garlic press, than just the bare metal that is currently there.
If you have the same experience, when using your competitor's product to yourself, this would be something that would be easy to add as an imperfect product and would be something simple for your manufacturer to do for you as well.
Things like changing colors, adding small accessories, improving or removing moving parts, are all simple changes that can make a huge difference for your product when it launches.
Try to come up with a list of three to five changes that you would like to make to the product, before you move on to the next stage.
Finding and Working With Your Manufacturer
Once you've decided on the exact product that you want to source and the changes that you want to make in order to improve upon these products in the market, it's finally time to actually find a manufacturing partner to work with.
Where To Find Someone To Manufacture Your Product
One of the most frequently asked questions that we get related to finding a manufacturing partner is where to look. Here, we're going to cover for different places where you can find the ideal partner to work with for your next physical product.
The first, and most obvious, place to get started is by simply going to our trusty friend Google.
In virtually every Market, you will be able to find at least a handful of Manufacturers by going to Google and simply searching for the product you are looking for plus the word manufacturer.
You can also run a few searches for the name of your product plus the phrase white label or private label, which is technically the name for what most people will be doing when they are sourcing a product ( unless you are bringing a brand new product to Market that no one has ever brought to Market before, chances are you fall into this group).
From here, simply click on the relevant search results and contact the manufacturers via the contact form on their website.
A second place you may want to look to find a supplier has a website called thomasnet.com, they house a database of suppliers for a wide variety of products and are used for sourcing by a variety of large companies including places like NASA.
Thomasnet can be an extremely useful resource especially if you're looking for North american-based suppliers or have a more technical product that you need some help with.
While they don't have as extensive a database of some of the other options that we will cover, their suppliers are generally well vetted and know exactly what they're doing.
The next place you may want to consider looking for suppliers is globalsources.com.
This site is one of the largest International databases of suppliers and will allow you to search anybody that has products available for wholesale, many of these suppliers will also be able to private or white label a product for you and assist with changes, but it's not as common on this site as something like Thomasnet.
If you're looking for an uncommon product or you're simply looking for additional suppliers after you found a few using one of the other locations we've mentioned, Global Sources can be a great resource to help bolster the number of suppliers that you are looking at.
Alibaba is considered to be the gold standard of product sourcing, at least for now. While they are based in China, they do have manufacturers from all over the world and you can sort by a variety of things including locations (if you have a specific reason to be concerned about the geography of your supplier
There are a few reasons to absolutely fall in love with Alibaba, chief among them is there is a huge database of suppliers, I've never not found at least two to three suppliers of whatever product I'm looking for when searching within Alibaba.
Additionally they make the communication process and ordering process very simple, so that even a first-time product sorcerer can feel confident throughout the entire process.
We are going to be using Alibaba moving forward, to help show you how to search for, find, and communicate with your supplier, but keep in mind that the process is relatively similar no matter what site you are using.
How Search for And Communicate With Your Supplier on Alibaba
While you can browse Alibaba like a typical ecommerce website, we suggest using it like a search engine, in order to narrow down the products you are looking for and speed up the process.
Get started by simply typing your product keyword directly into the search bar and hitting search.
Unlike a traditional ecommerce site, Alibaba will show you the price per piece and the minimum quantity needed to order from that manufacturer (This quantity is often flexible, but you have to ask!).
If you want to narrow down your search a bit, start by using the “related searches” at the top of the search page.
Once you’ve found a listing that catches your attention, it’s time to dig a little deeper.
One of the first things we suggest looking for is the “gold supplier badge”.
This little yellow token currently appears on the right-hand side of the listing.
This badge is a trust symbol that is part of a paid program through Alibaba, chances are if they’ve been a part of the program for several years, they are a trustworthy supplier.
The next thing you want to look for, is to see if they are a part of Alibaba’s trade assurance program.
You will find this badge located below the “Gold Supplier” badge on the right-hand side of the page.
The dollar amount outlined here tells you how much the supplier stands behind your potential order.
In this case, the manufacturer is essentially willing to provide coverage for orders up to $44,000.
Think of this as product insurance.
If you want to learn a bit more about the supplier, click on their name (Next to the Gold Supplier badge) and it will take you to their profile.
Here you will see details like annual sales volume, main markets, and the number of recent transactions.
This view will also give you a breakdown of certifications (like FDA certifications) that the factory holds, which can be useful if you are in a market that needs to meet certain standards.
Filtering the Search Results:
An easy way to get exactly the type of suppliers you are looking for, is to use the search filter options that Alibaba gives you.
If we take one step back to the search page, you can see exactly what we are talking about.
As you can see, there are 4 main filter options that are available on this page (depending on your category:
Think of this like order insurance, if a manufacturer offers this, they are willing to, at least partially stand by all orders placed through them and will make an effort to fix any incorrect or damaged products.
This is a paid service that Alibaba offers to its manufacturers. It offers them a variety of different ways to promote their products, for you this serves as a gut check against their quality. If they have been a gold supplier for multiple years, chances are they are fairly reliable.
This filter allows you to weed out any suppliers that an Alibaba staff member hasn’t personally verified. During the onsite check process, a member of the Alibaba team physically inspects the factory and double checks their certification claims and takes photos of the facility. All Chinese suppliers that wish to become “Gold Suppliers” must also go through the Onsite Check process.
In addition to the Onsite Check, suppliers may opt to go through a 3 rd party verification process. If they do, Alibaba partners with an additional 3 rd party inspection agency and takes another look at the factory and what they claim to do (and not do) to ensure that everything is on the up and up. Feel free to use any or all of these to narrow down the search results.
Exploring Product Listings:
Once you find a manufacturer you feel comfortable with, open up their listing and take a few minutes to poke around.
One of the first things we like to take a look at are the photos. In many cases they will have photos of not only the product you wanted to see, but other related products as well. Note the different styles of tea infusers in the screenshot above.
This manufacturer makes at least 4 distinct styles of these “chained” infusers that you can choose from.
Next, we suggest you take a look at the “performance rating” along the right-hand side of the screen.
In this case, the supplier only has a 97% response rate (on the high side).
If you find a manufacturer above 70% they are usually worth reaching out to.
Once you have seen their response rate, take a look at the types of payments they accept, most will only list Wire Transfers, but don’t let them discourage you.
If you really want to work with the supplier, simply ask them if they will accept and escrow payment (when you’re ready to pay) and see their response.
As you start to scroll down the listing, you will find additional information (and products) that is provided by the manufacturer, including things like:
- Copies of the inspection certificates
- Photos of the factory
- Packaging options
- Customization Instructions
- Order Timelines
Any information you can’t find can usually be uncovered by sending the supplier a direct email.
What To Say To Potential Manufacturing Partners:
Once you've actually found a few manufacturing Partners, one of the biggest questions that we often get asked is what exactly should I say to them when I start to do my Outreach. Generally speaking you're going to want to repeat this process with between 10 to 20 potential suppliers. You may find a golden rainbow unicorn with the very first person that you contact, but the more manufactures you talk with the better idea you will have exactly what their Communications style is, as well as what is and isn’t acceptable in each and every niche.
For example some suppliers may charge outrageous amounts for samples, while others may only charge for shipping, you need to understand what is common in your Niche and the only way to do that is to communicate with as many suppliers as possible.
I included the template below that we found can really short cut the communications process and get you answers to all of the necessary questions in as short a time as possible.
Keep in mind that obviously this is just a template and if you have specific questions, feel free to make it your own. Additionally, make sure to change all of the fields that have any sort of information, such as zip codes.
Hi, My name is ————– and I'm the purchasing agent for XYZ Company.
We are in the process of adding a ——————— to our product line and your product seems to be what we are looking for.
I have a few questions.
1. Do you offer samples and how much, including DHL Express Shipping to United States zip code 89078?
2. How long to receive 2 samples?
3. Can we pay using Paypal?
4. Can we change the color ?
5. Can we brand with our logo?
6. What is the cost per unit including shipping by DHL Air Express to United States Zip Code 89076?
7. How long for manufacturing once we place an order?
8. Do you accept Escrow payments?
Our first order of 500 will be a small test order and in the future will be ordering between 1,000 to 5,000 units.
Can we order 500 units for the first order?
We are looking forward to hearing from you soon.
-Kitchen Express – Purchasing Agent
After you’ve gotten an initial impression of several different suppliers and you are happy with the products that they offer it's time to move on to ordering your samples.
Ordering Your Samples:
After you've spent a little time communicating with each of the suppliers you reach out to, it's time to pick a few of your favorites and to order samples.
We usually suggest that you order a minimum of three to five different samples from different suppliers.
This process is fairly straightforward and will only really involve you reaching back out to your chosen suppliers and letting them know that you would like to order samples and arranging payment, most commonly via something like PayPal.
A quick trick to help you get the most out of each of these experiences is to ask for two different things from your supplier.
The first thing is to ask if they are willing to send you more than one unit, because typically they're willing to give samples for free ( with the exception of expensive products manufacturer) and our only charging you for shipping, they may charge you an extra few dollars but are generally willing to include more than one unit for you to take a look at.
The reason you want to do this if you want to be able to compare two different things that were manufactured in the same facility and potentially give on to a friend or family member to conduct testing on.
The second thing that you may want to ask for when you're ordering your samples is a few different samples of packaging that they have shipped along with the products. Again, because generally you're helping them just cover the cost of shipping most manufacturers will be willing to include this along with the product, if they have some on hand.
This can be extremely useful because while most manufacturers make the products, they often work with external Partners to create the packaging.
This can give you a better insight into the different types and quality of packaging that they will be able to help you obtain.
You can typically expect to obtain the samples within a week or two of completing the payment and most good manufacturers will follow up with you once they have shipped and include a tracking number.
Once you have received them it's extremely important to make sure to thoroughly use and test them, the same way you did with the products you purchase from your competitors. Do not skip this step, as it helps you to ensure that you have the highest quality product possible.
Choosing a Supplier
Once you've had the opportunity to get your hands on and test the samples ( and maybe have a few friends or trusted family members play with them as well), it's time to actually choose a supplier to help you make the product.
I typically like to choose suppliers based on the four criteria that we will lay out below, but if you'd like to add a few of your own in addition…. feel free.
I like to assignment a numerical value to each of these, typically using something like a 1-5 or a 1 to 10 scale, with the highest-scoring manufacturer being the person that we choose to work with.
Obviously, one of the biggest considerations when you are looking at potential suppliers is price, although it may not be as obvious as it sounds.
When most people hear price, they automatically think that lower is better meaning the lowest price supplier is likely going to be our best option for the winner of this category.
While that may be the case, we really have to determine the overall value that each manufacturer provides in exchange for the price they are charging per unit.
For example, while one manufacturer may be a few cents per unit cheaper, maybe they don't have the package design that you like or they have a higher minimum order quantity. in this case, it's highly likely that you may not choose them, because you'd like to save money on the initial order.
Side-by-side with price, we need to keep in mind the overall quality ( both look and feel) of the product that this particular partner can deliver.
Obviously, this is why the sampling process is so important. We need to be able to compare the quality (and durability) of products from different sources and if we only get 1 or 2 samples (or NO samples), it makes this step virtually impossible.
The second piece of criteria (and usually one of the most overlooked) that I would suggest you consider when selecting your manufacturer, is how they communicate.
You should be able to discover this fairly quickly, especially if you use the template for contacting suppliers that we provided above, but what you're looking for here is a partner.
If you find that they are unwilling or unable to answer your questions (or give you the information you need, like tracking information, in a timely manner)during the sourcing process, chances are this won't change if you become a customer.
You need to think of this sort of like a long term “romantic” relationship. If you and your significant other have trouble communicating at the start of your relationship, no amount of time or money involved in that relationship can resolve the underlying issue….and it will virtually ALWAYS result in big problems down the road
The final criteria you should consider is really a combination of the other three.
Based on everything you know about the manufacturer, the price they offer, the quality they offer, and the way they communicate, how comfortable would you be sending them a few thousand dollars?
I know it sounds a little silly, but there is nothing wrong with the addition of a “gut check” here. While everything may seem ok on paper, if you get “that feeling” when you’re working your way through this process, it’s best to keep it in mind.
Your gut is usually right, when it comes to things like this.
Placing Your First Order:
This is it, the finish line! You've gone from having a small idea about what kind of product you want to source, to identifying a partner that you want to work with to actually make it for you.
This is actually one of the easiest parts of the process.
As long as you've gone through the evaluation in the previous sections, all you have to do now is let your supplier know that you are ready and tell them how many units you want them to manufacture.
While the particular ins and outs of this process will vary depending on the manufacturer and the platform that you use to find them, we're going to cover a few details below such as how to pay for your order and how to have your manufacturer ship it.
How To Pay Your Manufacturer for Your First Order:
Depending on the platform you're using, you have different options available, but you’re always going to look for one main thing….a way to protect the transaction.
Platforms like Alibaba make this process is extremely simple, because you can pay using wide variety of methods (from credit cards to wire transfers) and still be protected by the “trade assurance program,” which helps to make sure you get exactly what you ordered and will help you to resolve any issues that may arise during the manufacturing process.
If you are not going to be using an all-inclusive platform, like Alibaba, you would want to use either an escrow service or potentially a service like Paypal.
In either case, I would suggest setting milestones for the manufacturer to get different amounts of the payment.
E.g. 70% upfront and 30% on completion of a product inspection or upon delivery.
Most reputable manufacturers won’t have a problem with this and it gives you an extra level of protection.
How To Ship:
While most people can figure out how to pay their suppliers, many people get tripped up when it comes to having the finished products shipped to them, once they’re done.
There are a ton of options to consider, but especially for your first order, time is usually the biggest priority.
We will almost always have our first orders shipped by DDP Air (which means all of the duties and taxes are included in the cost of shipping and it will be shipped by plane). This is often one of the more expensive ways to ship your product, but we like it for two simple reasons.
The first, is that we get the product into our hands up to a month faster (vs it being sent on a literal slow boat from china), meaning we are able to start selling the product and recouping our investment faster.
Second, being able to make a profit while shipping the most expensive way possible is an extremely positive signal.
It tells it that even in a worst case scenario in the future, when we need new inventory as fast as possible (like around christmas time, when we are selling like crazy), we will still be able to make a profit…and at the end of the day, profit is what we are after.
At this point, you’ve learned everything you need to in order to source a physical product for your business.
It can seem like a completely overwhelming process, mostly because of all of the terminology that gets thrown at you throughout each step, but once you’ve done it once, it becomes much simpler.
If you’re feeling overwhelmed by the process you’re not alone, I’ve sourced dozens of products and each one presents its own unique set of challenges along the way, just take it one step at a time and you’ll do just fine!