Most Common Supplier Mistakes - Part 1

A guide to help you better understand and avoid mistakes when communicating with suppliers
Seth Kniep
May 5, 2018
Build your Amazon product
When working with suppliers, you can’t expect them to think the same way you do. Western thinking and Eastern thinking are very different, and you can’t force Western thinking onto your suppliers.

It’s easy to get frustrated by miscommunication. To help you be prepared, here’s a list of the top 13 mistakes sellers make when working with suppliers.

Mistake #1: Thinking that a factory, trading company, sourcing agent, manufacturer, and supplier are all the same thing.

There are a lot of terms to keep track of in this industry, and a lot of them have some overlap, but knowing what’s what will save you a lot of frustration.

A factory is the location where your product is built, whether by people or machines.

A trading company is a middleman. They find the supplier for you and they ship you the product, but before they ship it, they raise the price a bit to make their own profit.

A sourcing agent is similar to a trading company, but not the same. They’re more like a liaison. Sourcing agents might put you in direct contact with different factories, or vet multiple suppliers to find you the best price. They also usually provide factory and product inspections, and shipping and logistics opportunities.

The terms manufacturer and supplier are used very loosely. They could overlap with any of the previous three terms.

Then we have what they call manufacturers and suppliers. These are used very loosely. As a general rule of thumb, they could be any of the previous three. Often a manufacturer is synonymous with the factory, while the supplier is even more broad. 

Mistake #2: Trying to negotiate on shipping.

There’s a big difference between comparing shipping prices and trying to negotiate on shipping. There’s only so much suppliers will be willing to negotiate with you on shipping, because they have to charge a minimum price. Sometimes, they’ll charge you exactly what shipping costs them, and sometimes they’ll charge you a little extra, because they have to make money, too.

Trying to negotiate on shipping might make a supplier think you don’t know what you’re talking about, and then they’ll be less likely to want to continue working with you. So, don’t negotiate on shipping; just compare shipping prices between a few different suppliers to find the best deal.

Mistake #3: Thinking that a factory is a giant building with a smokestack rolling out millions of products a day.

Most factories in China aren’t big and fancy. You have to put the Western image of a factory out of your mind. In China, you’ll most likely walk into a dingy room with a few lights (because they want to save on electricity) and see one sophisticated piece of state-of-the-art, space-age machinery with the entire family working on it. The factory might not look amazing, but it doesn’t have to for the product to be incredible.

Mistake #4: Thinking a factory or supplier isn’t legitimate because you can’t find them on Alibaba.

Some people think Alibaba is full of scam artists, while other think, “If it’s not on Alibaba, I can’t trust it.” But here’s the thing – plenty of suppliers just don’t care about wasting time on Alibaba. They don’t want to have to hire a staff that speaks English and navigate a Western website. They just want to focus on making and shipping out as many products as possible.

Mistake #5: Thinking that most suppliers on Alibaba are factories.

A lot of suppliers on Alibaba will tell you they’re factories, even if they’re not, and that’s normal. For them, it’s just good business. But the majority of them are probably just trading companies who have bought their products directly from factories and raised the price a bit to make a profit when reselling them.

Mistake #6: Assuming all legitimate factories have a website and an online catalog.

Again, factories don’t want to waste their time with websites and catalogs. They sell to middlemen, like trading companies, and those are the people you see online. Factories just focus on making their products.

But how do you contact a factory that doesn’t have a website? Probably through a platform like WeChat or QQ. With QQ, everything you type will be translated to Mandarin, and everything they type will be translated to English, making communication easier. But that brings us to our next mistake…

Mistake #7: Trying to use the QQ ID as an email address.

If you drop a QQ ID (something like 2094W3872@qq.com) into Gmail, your email is going to bounce back, unsent. These IDs are unique to QQ’s platform; they don’t work as standalone email addresses. QQ is designed specifically to facilitate translation between two different languages and make communication with suppliers easier.

These are just some of the most common mistakes sellers make when working with suppliers. In part two, you can read about more mistakes to avoid, so your communications with suppliers can be stress-free

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Seth Kniep

Married a pearl. Fathered 4 miracles. Fired his boss. Turned a single dime into $104,857. Today, a self-made millionaire, Seth and his team of 8 badass coaches teach entrepreneurs how to build passive income on Amazon.

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