If you have been listening to the online marketing community you would think that it is absolutely impossible to run an eCommerce store by buying from a local supplier. It is too expensive compared with Chinese products and you will be beaten on price, right?
This couldn’t be more wrong. I have sold hundreds of thousands of products made by a local carpenter and his wife by focusing on one thing – quality!
If there is one thing the modern customers likes more than low price, it is bespoke craftsman level quality. Something the urban professional can show off to their colleagues and friends to highlight their status and means.
In this blog post I have put together a list of the advantages of working with local suppliers that a Chinese factory simply can’t compete with.
Table of Contents
Craftsman Level Control
When you are looking for suppliers you don’t have to find huge factories, you can select local craftsman. One of my most popular products is made by a local carpenter that I bundle with factory made components into a premium kit.
If you look for a craftsman in your local area then the options for products are wide open. It also gives you a level of quality that cannot be matched by competitors who source their products from China.
There are plenty of customers who prefer quality over price and you can develop a Unique Selling Proposition of premium products and sell at a premium price.
Whether it is a carpenter, leather worker, potter, a tailor, printer, digital artist, writer, or graphic designer, the list of occupations you can integrate into your business is endless.
If you work with Chinese manufacturers then you will have to employ a quality controller. This is a 3rd party agent to inspect your product before they get loaded onto a ship.
This is not necessary with local suppliers – or at least it is significantly less necessary.
The quality offered by a tradesman is high and with this comes pride in workmanship that cannot compare with a factory designed to pump out as many units as possible.
You can also just pop over to the manufacturing space with a local supplier, as long as you are on good terms, and check out the quality yourself.
More Control Over Your Product
Control is a word that does not suit working with global suppliers. You may need to hire quality control agents, shipping agents, translators, and any other number of people to grease the wheels of commerce.
Compare this with a local manufacturer when you can phone up the tradesman directly or drive down and inspect your product personally.
You can feel your prototypes, see the color without worrying about lighting, and give clear directions on any alterations or customization.
There is a big advantage to picking up the phone and saying “Hi Bob, can I get an extra pocket added to my backpack.” And they can do it!
This cannot be done with most international manufacturers.
If you have a good working relationship with your supplier then you can even offer one-on-one customization. This could be engraving or embroidery that you offer at an extra cost to increase your average order value.
You could also offer custom, bespoke designs on behalf of your supplier and take a commission on the order.
Easy to Make Adjustments and Upgrades
Very similar to the customization advantage above, you can also more easily make adjustments and upgrades to your products. This could be to make your original product better or to create a high end alternate product range.
This is much easier when you are using a local supplier because you can inspect the product options yourself, you can order lower MOQ, and don’t need to outlay as much cash.
If you intend to create a multitude of original products then having someone down the street is particularly useful. If you have read from marketing gurus who source from China you will often hear it takes 6 months to create a new product because it takes so many iterations and each one can take multiple weeks of shipping – not a problem when you can drive to the factory the day they have finished.
There is a big advantage to being able to state ‘Made in USA’ on your product range. This is something that most of your competitors will not be able to claim and gives you a unique value proposition your customers will recognize.
You can also show how much of your revenue or expenses goes back into your local community. You will often hear giant multi-national organizations bragging about how much money they pump back into the local community or through taxes. You can do this too from an intellectually honest position.
A smaller company will often have a smaller Minimum Order Quantity or MOQ. This is a huge advantage for beginning eCommerce companies as you don’t need to outlay as much money to get off the ground. This represents a big risk reduction when you are in your most risky position – the start.
If you ring your local craftsman they might even make you one off orders – an MOQ of 1. Although the price usually goes down significantly with scale.
The down side is when you want to scale too much. As your business grows it might take a long time for your local supplier to fill your orders. At this point you will have to consider splitting your order across multiple companies or outsourcing to larger organizations.
Let’s first consider international suppliers – There is a lot of steps for an international factory to produce the product, load it onto containers, truck it to the port, load it onto a ship, 3 weeks for the ship at sea, unload the container ship, load it onto a truck, and truck it to your warehouse.
While a local supplier only needs to produce the product, load it onto a truck, and deliver it to your warehouse.
This can reduce the delivery time by up to a month!
If you are running low on inventory and need a boost in a hurry, then working with a local supplier cannot be beaten.
Less Cash Locked up as Working Capital
The fact that you don’t need to order as much product and it takes less time to deliver means that you can substantially reduce the amount of cash you have locked up in inventory.
This is a significant boost to your cash positions.
It also means that you can grow faster as you can invest your profits into other activities than just buying more inventory.
2019 and 2020 were the year of tariffs. And if you weren’t expecting it you could have seen your cost of goods increase by 5-20% depending on what you are selling.
Another advantage of a local supplier is that there are no tariffs. This is a direct reduction in your cost of goods that can either be taken off your price or added to your profits.
Of course, you may end up paying more in your cost of goods overall simply due to the differences in labor costs compared with buying internationally. This is a cost-benefit analysis that needs to be weighted up for your particular circumstances.
Support Your Local Community
Finally, giving work to your local tradesman supports your local community and puts money back into your local economy. This money will transfer through from your supplier to the lumber yard to the grocery store to the local sports team.
Every contribution matters and this is a valid way that you can contribute.
While it may not seem like a lot of money now, as your business grows it can become a sizeable expense every month.
If you are worried about sending your money overseas, then using a local supplier is a great option.
The brings me to the end of this post, hopefully, it has given you some insights into the benefits of working with local suppliers. One topic I haven’t gone into is how to find those suppliers – there are some directories and guides available online.
There are certainly advantages with to working with international factories, particularly as you scale and need to order larger quantities. Just keep an open mind and consider all of the aspects before making a decision.
Some of the best suppliers I have ever worked with live close by and I still have a strong relationship with. If you have any comments or questions about working with local suppliers then please leave a comment below.