5 Common Mistakes Importers Make With Private Label Manufacturing
As entrepreneurs, you sometimes have an amazing product idea and you start looking for ways to bring that product to life. If your intention is to launch this product under your own label, then what you should do is Private Label Manufacturing also known as PLM. Private label manufacturing allows you to not only bring your ideas to life but also own a dependable market share especially if the product is unique, affordable and competitive.
The private label manufacturing model is a business model that has been around for a long time. China is a great place to manufacture private brands cheaply. Global brands around the world manufacture a part or all of their products from China. From food to electronics to other household products, Chinese manufacturers have been a supply chain partner to global brands for years.
Brands like Apple, Dell, Chevrolet, Prada, Michael Kors, etc manufacture a part of their products from China and the quality is top notch!
Truth be told, private labeling is not for everybody but it doesn’t mean that even those who are experts at it don’t make mistakes. The purpose of this article is to share insights about common mistakes a lot of importers make with private label manufacturing and how to avoid making such mistakes in order to save you time, money and energy
Common mistakes with private label manufacturing:
1. Not involving a trusted supply chain partner from the beginning
Many importers make this mistake. Considering that supply chain partners have the expertise and experience in dealing with Chinese manufacturers, it is important to carry them along from the beginning. The presence of a supply chain partner can save you a lot of money, time, energy and even resources.
For instance, the PLM process involves communicating with Chinese suppliers via emails, getting samples, negotiating with the manufacturers and other rudiments of the business transaction. If you are a newbie, these processes may be overwhelming for you and if you manage to even get it done, you may not get the best result in the end because Chinese suppliers tend to convince you to take the kind of quality they can supply instead of quality that you may want. Any part of the negotiation may end up being messed up.
This is why you need a reliable supply chain partner to handle business well for you from the communication stage to the bulk purchase stage. A trusted supply chain partner will not only monitor your transaction for you but also verify the manufacturer and ensure that they are licensed enough to produce your product.
2. Not requesting for samples before making payments
Many newbie importers just go ahead to make payments for bulk purchase without skinn asking for samples. If you are considering private label manufacturing, requesting a sample of the product you want to design in bulk is very important. Even if you have to pay for the sample, it is advisable to do that so you know the kind of product you are expecting. Plus, having a sample helps you achieve a lot of things before bulk purchase. For instance, it allows you to validate your product and market. With a sample, you can test if your product is needed in the market and if it will be acceptable. You can also use the sample to learn from your intended customers to know the market affordability. It also helps you to vet the quality of the product.
Sometimes, the sample quality will be of good quality while the bulk production will be of lesser quality. The best way to ensure that sample quality and bulk production quality are the same is to involve a supply chain partner from the beginning so that they can monitor and evaluate your product quality for you throughout the process of production. It is very easy to believe Chinese suppliers especially if they show you proof that they have been doing the business for a long time or that they have been producing for other importers. We implore that you don’t fall for this trick. Do your due diligence by paying for a sample before you go ahead to make payment for bulk purchase. You can read more about “How to get a sample product from Chinese suppliers and manufacturers”
3. Not involving legals
After finding a trusted supply chain partner, the next partner you need to work with is an experienced lawyer who has the knowledge of working with international trade. The importance of this cannot be under emphasized because it keeps each party in check and also protects your patent, design, template and even your money! Many importers do not involve a lawyer from the beginning and when things go wrong, in many cases, they don’t have any legal representative to fight the legal battle for them.
The Chinese manufacturer is also expected to present their legal aid so that the business transaction is built on trust and each party has a witness throughout the business period. The work of a lawyer is to draw up agreements and modalities of the business transaction. So paying for one is never a waste of time nor money.
4. Not having a signed contract
This is a follow-up mistake from the last one. Not having a signed contract is the biggest mistake an importer can make with private label manufacturing. The importance of this is that if lays down the rudiments of the business transaction and when or if something goes wrong, each party can always refer back to the agreement. Not to mention, an agreement covers all parts of the business transaction therefore, if an importer doesn’t have a signed contract with a Chinese manufacturer, it is very dangerous to do a business without it and this puts your business at high risk. A contract example will be available in our Private Labeling Manufacturing Guide that will be published soon.
5. Producing in bulk without letting a supply chain agent oversee the supply/delivery
This happens all the time. A situation where an importer manages to negotiate with a Chinese supplier and go ahead to make bulk purchases without having a supply chain partner to oversee the supply at each level. Sometimes, the quality of the bulk purchase is the same as the sample design, and sometimes, the quantity might be the issue. Having a supply chain partner to do a comprehensive quality and quantity assessment check is very important and cannot be underrated.
Above all, we understand that paying for these extra services of a supply chain partner and legal representative will come at a cost but it is better to pay for these services and protect your design, money and have peace of mind than losing sleep over a business transaction gone wrong.