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The further along you get in the invention process, the more you realize how expensive all of this can be. But what if you sink $50,000 into your idea and it only ends up selling for 2 years? You may not even make your investment back. But you can extend the profits on your product if you learn the techniques listed in our featured article, How to Make Money on Your Product for Years, Not Months!
We also have another taste of Sourcing Smarts on how to ask questions of potential manufacturers.
Enjoy! |
How to Make Money on Your Product for Years, Not Months
Inventor Story: Betty Morris 
New products are being replaced by newer products at an increasing
pace. This means that each new product sells for a shorter time that
products previously sold. This greatly impacts how much money
inventors are making. How do you know if your product will stand the
test of time? Will your product sell long enough to make back your
investment or will it keep on selling so you can actually make money?
How much does your product's longevity depend on your marketing and how
much depends on your product? Of course, some products only can
succeed for a short amount of time, but with a well thought-out
marketing plan, you can extend the life of almost any product. Read on... |
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A Taste of
Sourcing Smarts
Taken from Chapter 4 of "Sourcing
Smarts: Keeping it Simple with China Sourcing and Manufacturing"
by Edie Tolchin, Don Debelak and Eric Debelak,
this
installment discusses questions to ask your prospective China
manufacturers.
Narrowing Down Your Choices and Negotiating with the 'Winning' Factory
After you have sent your five prototype samples
and information to different factories, you should start receiving quotes in
2-4 weeks. The quotes may be similar or
quite varied, but you don't want to choose a factory solely on price. There are issues of quality, promptness and
reliability that can make or break your product and these issues simply cannot
be overlooked. Below are some important
questions to ask your potential manufacturers.
1) Can you provide recommendations of proposed alternate
materials? For
example, your prototype is made of leather, but you are seeking a less
expensive, but attractive alternative.
Will they offer you samples of other fabrics (canvas, nylon, polyester)? This will help determine their eagerness to
please and their problem-solving skills, which are very important with a
foreign supplier.
2) Can you please give me a list of holidays when your
factory will be closed for the current year? This is
very important, because China factories have many holidays where they are
closed and therefore your production (and other product development stages)
comes to a halt for as many as two to three weeks, especially during Chinese
New Year, typically at the end of January / early February. This way, you can adjust your schedules
accordingly.
3) What is your delivery lead time? In other
words, from the time we approve both the pre-production and mass-production
samples, how much longer will your factory require before my order is placed on
a vessel (or air cargo)?
4) What policies do you have in place for replacement
of defective merchandise? I normally write a stipulation in all my
purchase orders that clearly spells out how the supplier will replace any
defective items, beyond the typical industry standard, indicating that they
(the seller) will be responsible for not only replacing the defective product,
but also for arranging for the collection, and return shipment of those items
as well.
5) Do you work with a China freight forwarder who could
arrange our shipment? For many
small initial orders, it can be easier and more economical for the supplier to
arrange for the ocean freight and marine insurance to be prepaid, and
coordinated by their appointed freight forwarder at the port in China. Also, sometimes the factories get cheaper
freight rates than if arranged in the USA. Your unit cost will increase by a few cents,
but it will be worth not having to deal with steamship companies for quotes,
making the arrangements with not-so-reliable trucking firms in China, inferior roads and transportation systems
within China,
and so on.
6) What are your MOQs (minimum order quantities)? This one is
a biggie! If you are only in the
position, as most start-ups are, to purchase a small number of pieces to begin
with, you must state this up-front. Many
Asian firms - especially the larger ones - will assume you are interested in
purchasing their "typical" MOQs from the start.
These "typical" MOQs can be upwards of 50,000 - 100,000 units! So, if you only want to buy 1,000 to "test
the (market) waters," that should be the very first subject you discuss. You don't want to get too far along with
prototypes, counter-samples, and so on, only to lead the source on, thinking
you will buy these huge quantities, and then he/she will quote you a price
break, for 50,000 - 100,000 - 250,000 units!
You can certainly volunteer that you will only be buying a small
quantity to begin with, but if your product sells well, you will be back to
them in the future for a quote for larger quantities.
7) Are you willing to cooperate with the Asian
affiliate of our appointed independent safety / testing lab? The answer
for this one should be obvious: if they
say no, or are non-committal, run for the hills. If your invention is an item with possible
safety issues (for product liability insurance purposes), you will NEED to have
production testing done. Your mission is
to make sure your new product never appears on the Consumer Product Safety
Commission's (www.cpsc.gov) Recall
List. You can literally lose you shirt
if this happens. And, with the CPSC's
new requirement for the General Conformity Certificates, the answer to this
question is a no-brainer!
8) Do you work with a translator? You
can almost always expect a small communication problem, which is why I
recommend working with an international trade consultant or another inventor
who has imported from China
before, because "Chinese-English" terms are frequently very different from
"American-English" terms. Your
supplier's command of the English language should be a very strong factor in
your ease of building a business relationship.
But if you find you are having too much difficulty, you can ask your
prospective supplier to find a translator - or better yet, have the documents
and/or specifications translated into Chinese BEFORE you send them. It may cost a couple hundred dollars, but it
will save time and money in the long run.
Stay tuned for more of a taste of "Sourcing Smarts" in our next newsletter. To purchase
"Sourcing Smarts: Keeping it Simple with China Sourcing and Manufacturing"
by Edie Tolchin, Don Debelak and Eric Debelak, go to www.egtglobaltrading.com, www.sourcingsmarts.com, or www.amazon.com. |
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Are you ready to get
your product or idea on national and international
television?
I'm happy to
announce a unique opportunity for a very select few individuals with innovative
inventions and products. Nick Romer, award winning inventor and best
selling author of "Make Millions Selling on QVC" is sponsoring a two day event
designed to accelerate you and your product's path to
success.
Attendees will
discover the insider secrets to getting their products on the top home shopping
channels and will have a chance to connect with top industry experts looking for
great products, and product developers interested in long-term success.
If you think you
have what it takes and you've got a fantastic product or idea, then you'll want
to visit the following page for more information:
http://www.millionsonq.com
Edie Tolchin, co-author of "Sourcing Smarts: Keeping It Simple With China Sourcing and Manufacturing" will be presenting a workshop at Nick Romer's "Millions on Q" bootcamp the weekend of 1/31-2/1/09 in New Jersey. Contact Edie Tolchin, EGT Global
Trading at EGT@warwick.net or via phone at 845-321-2362 for further information.
The dates of the
event are January 31 - Feb 1, 2009 |
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