Okay so you got your product idea, you’ve developed a prototype and judged consumer demand. Now you have to manufacturer it. What do you do?
For me, this was the hardest part of the equation and the area that I’ve made the most mistakes.
With the Clean Bottle, at first at least, I assumed that I had to make the product in China because, well, that is where everything is made. I asked a bunch of people what to do and they told me to try to find a sourcing group.
Basically, a sourcing group takes your design, shows it to a bunch of factories and helps you select the right one. They then work with the factory to get the product made. The sourcing group makes money because they upcharge you a certain percentage (probably 10-20%)per unit once you start shipping.
The upside of this arrangement is that you don’t have to pay anything up front (usually). And you have someone on the ground looking after things for you. The downside is that you don’t work directly with the factory. You work through a sourcing group. This means that you don’t own the relationship, and more importantly there is a greater chance for miscommunication because you are relaying your ideas and change requests through a sourcing group and onto the factory.
Getting Clean Bottle made in China was a painful experience. The first two factories my sourcer selected kept telling me “if you just made it so the bottom doesn’t come off it would be a lot easier to make”. They didn’t understand what I was trying to do. More than the language barrier, there was the consumer mindset barrier. I couldn’t translate to them, even with the sourcing group helping, what the American cycling consumer wanted.
Working with a factory is a very unique experience. As consumers we are used to being in control. If we don’t like a restaurant or a store, we have a million different options to choose from. Not with a factory. In China, there were only a handful that made water bottles. And they were used to making a standard design and making them hundreds of thousands at a time. Why would they shut down those factory lines, do a bunch of re-tooling and re-learning, to make my first 5,000 unit order?
So with a factory you are the vendor as much as the consumer. You have to be patient with the factory and sell them on the potential as much as they are selling you.
It is also VERY important to thoroughly vet the factory you are looking to partner with. This is the most important relationship you will have in business. You need to call all of their customers, examine all of their previous products and make absolutely sure they are the right people. This is another downside of using a sourcing group – you have to rely on them to do the vetting. This is why it is important to carefully vet your sourcing group, and also come up with a detailed list of questions the sourcing group should ask the factory. Don’t just blindly trust the sourcing group – no one knows your product and can anticipate the manufacturing challenges better than you.
People complain that things in China are poorly made and that you should always make stuff in America because of the higher quality and better ethics. This is not necessarily true. There are good and bad factories everywhere. Some of the best products in the world are made in China (Apple). For example, I eventually started making Clean Bottles in the US and the factory I first selected turned out to be horrible and unethical. When I tried to get my molds back they wouldn’t return them until I paid them a huge fee. It was a nightmare.
A note about China vs USA. By far, your preference should be to make the product in America, especially if it is something novel. This isn’t because the factories are necessarily better or more ethical, but because the communication is so much easier. You can explain to the American factory what you want out of a product much more easily than you ever could to a Chinese factory. It is easier to travel to the factory. You also don’t have to use a sourcing group as a middleman. Even if it is more expensive, the quality and time to market is worth it – and you can always move internationally as your volume grows. Plus you are keeping more jobs in the United States. If you can do it, do it – but just beware that just because a factory is in America doesn’t mean it is an amazing factory.
Sometimes you just can’t make a product in America. With our new metal bottle, the Square, we searched for 6 months to try and find a factory to make our bottle. Eventually we found a metal factory who would quote the project, but we had to totally re-design the bottle to make it work for them. And even then, the price they wanted would make the bottle close to $80 retail AND they wanted a guarantee of $1M in orders. As much as I tried – it just wasn’t viable in this situation.
With our Clean Bottle we were able to find an American factory at a reasonable price, and many of our bottles are now made there. So it just depends on the type of product. But when possible, always make the product in America, not just for patriotic reasons but for practical reasons.
So here is the summary:
- try to get it made in America if at all possible
- vet your factories like you would your future spouse. This is the most important business relationship you will ever have
- consider using a sourcing group to find factories abroad. But make sure to vet the sourcing group as well
- when you do find the right one SELL THEM on your vision and opportunity. The best factories will have plenty of business and are taking a risk on you by working with you.
- pre-define, in writing, the purchase price of your product and the conditions under which that buy price can change (increase in materials cost, labor, etc). If you don’t, then they can raise the price on you and they have all the leverage
Thanks it – thanks for reading and let me know if you have questions!