Don’t celebrate that first big order just yet.

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips” – a children’s apparel company in Utah

I came across a great article in Forbes recently about small companies getting on the map with orders from big retailers. I was very much interested in the article because I would say that about 50% of my clients over the past couple of years have been small companies that were fulfilling orders for global retailers. Most of them start out small selling on the retailer’s online site, but at some point as their products do well in online sales they are approached with an offer of store sales. And that is when the QTYs go up astronomically. Taking Home Depot as an example, well, HD has 1 website but they have about 2500 stores in the US. In other words, once your product is on the shelves at Home Depot, your exposure is going to go up very quickly. So you have to be ready, which was one of the main points of the article.

According to the article there are four things small businesses need to do when they get that first big order:

1.) Make the delivery date.
2.) Enlist the help of professionals to make sure the first order goes smoothly
3.) Be flexible to change your business model.
4.) Don’t assume that just because it is a big order, it is a good order for your company.

Let’s look at each point as it applies to fulfilling orders that are sourced in China.

1.) Hitting the delivery date. In order to do this give yourself and your vendor plenty of time. Do not consent to unrealistic lead-times dictated by your buyer. It is probably better not to take the order than to take it and deliver it late and subject to cancellation. As the Forbes article makes clear, if you mess up on your first order you may very well not get a second chance. The thing to keep in mind here at all times is that your China order is more likely going to ship late, than early or on-time. That is the nature of off-shore manufacturing. Anticipate delays and build them into your discussions with your buyer. If buyers want your product badly enough they will be flexible on the delivery dates. I would also venture to say that it is more important your supplier is comfortable with your delivery date than your buyer.

2.) Do not try to handle China by yourself for your first big order. It is too difficult. Hire a consultant to help you with vendor management and also make sure you are working with a logistics company or freight forwarder to handle customs and delivery. Make sure you cover all the bases and have smart people in place to handle all phases of the operation.

3.) Look at options for your product that will keep costs down and make it more likely that the order will go well. I have one client who has looked into getting his packaging done in the US because it does not cost significantly more than doing it in China. Needless to say, he will be in more control of his production if he does his packaging domestically. Smart move. But the main thing is that he is thinking of options.

4.) Just because you get a big order don’t assume you have it made. Big retailers will beat you down on price and in the end it may not even be worth all the trouble and cost to take the order. Big orders sometimes turn into complete fiascos. So be philosophical above all else. In short, don’t take the risk unless you have sat down looked at the order from all angles and you are sure it is worth it.

Here is the link to the article. Enjoy
http://www.forbes.com/sites/sap/2012/11/07/the-walmart-effect-4-best-practices-for-dealing-with-that-first-huge-order/

http://www.theeastasiaco.com

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