5 key questions every startup should ask their factory before placing an order

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The light bulb went off and you designed an awesome “why didn’t I think of that?” product.  The samples, made locally, are perfect and maybe you even have pre-orders from buyers.  The hard part is done right?  It’s time to make a million? Well, translating that product into a full production run, is surprisingly challenging and it can make or break your business.  Before you place an order with any factory be sure to ask these question

  1. What is the Landed Price?  The price the factory quoted is typically FOB (freight on board) from the factory.  On top of that cost, you may have to pay transportation fees to the port, shipping fees to the US as well as duties, customs and trucking to your warehouse. Be sure you are aware where the FOB location is for this shipments.  All of this should be factored into your final “landed price” before you mark it up to the stores.  Otherwise, you will be cutting into your profit margin before it’s even hit the shelves.
  2. What’s the MOQ?  Always inquire about the minimum order quantity.  If the minimum you can order is 1,000 units per style/color/size that is very different than ordering 1,000 units total. Once you know the MOQ, you can determine what colors and sizes to show buyers.  You don’t want to offer blue if you can’t gather enough orders together to meet the MOQ.  The minimum for each style may be different.  For example, black is more readily available, so the MOQ may be lower than specific pink that requires a custom dye lot.
  1. Is this Negotiable?  Negotiate everything until it works for you and the factory.  Our first factory wanted an even split between sizes, but when we gave our store buyers the choice, most of them went heavy on mediums.  We ended up ordering 25% small, 50% medium, 25% large, but we stopped allowing our stores choose sizes and bundled the product in a matching breakdown 1 small, 3 medium, 2 larges. It worked for us and for the factory.

  1. What is the timeline for samples?  When you send your local samples to the factory for a counter-sample, make sure to send over specs too.  Engineering drawings and tech packs will save you a ton of time.  It could take several revisions before the supplier gets it right and each of those revisions are weeks to produce and money to ship. If you are as clear as possible from the start, it will help to expedite the process.  Remember, whatever the factory says is their sample timeline, pad that and then pad it again.  

  1. Can you produce a Factory Sample?  Your counter-sample may look great, but don’t forget that has typically been made by hand in a sample room.  Once the factory goes out to source the actual material there may be slight differences in the color, dye lot or materials available. To avoid getting backed into a corner and accepting lower quality standards or increased cost try to work with materials that are readily available. Also, know your deal breakers.  We would include the exact type of foam for our shoes, the thickness etc in our specs.  Without the right foam our product would not work.  If that could not be matched on the open market for a production run, we would not accept substitutions.  

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