I have gotten a couple of inquiries lately about drop shipping from China. Drop shipping, where the distributor or factory ships directly to a retail customer, is a of course a way to cut lead time and reduce costs substantially and at least here in the US it works. Drop shipping is a common feature of e-commerce nowadays with sites like EBAY and Amazon and even with many brick and mortar retail stores. But drop shipping out of China ? Hmmmm..I don’t think we are there yet.
One company that called me is an industry leader in a minor category of apparel and they wanted to ask me about finding a supplier in China who could drop ship to their customers in the US. They said they have a new CAD program which will allow customers to design a garment online and the factory in China will make the product from the online specifications as entered by the customer. I asked them what happens if what the customer orders is not what they get and they replied to me that would not happen because all the specs are there for the customer and vendor to see. The guy I talked with was insistent that there was no margin for error. This is a real company and theirs was a serious inquiry so I listened to them, politely. But all the while I am thinking to myself “these people do not understand China.” There are a few problems with this idea as follows:
- In overseas manufacturing something can always go wrong, no matter how simple the product seems. And, far from being simple, garment manufacturing is no walk in the park. I know because I used to work in Home Textiles. Drop shipping garments made in China to individual customers in the US seems like it would be fraught with problems. I can see massive returns based on incorrect sizing, color or quality. I mean, just because you show the vendor where the stitch goes does not mean they will put it there. As a vendor once said to me when I told him he should be able to find a solution for a simple problem we were facing “sometimes the easy things are the most difficult.”
- Few Chinese companies that I know of are going to be interested in doing orders like this. One reason is that it takes a lot of time to set up a production line and factories do not want to do it unless the order QTYs are large. Although the US Company said their solution would be to bundle the orders so that factories were given an order for, say, 1000 units a month, it just would not be a big enough order to get many Chinese companies interested. I should say here that a lot of small companies that come to me have ideas for products and they get very excited. They think that all they have to do is to find a factory in China to make their product and they have got it made. They expect the factories they approach in China to share their enthusiasm and they don’t understand when the factory does not. But factories want big orders. They don’t care what the product is. They just want volume, because that is where they make their money, and if you can’t offer that to them, they just are not interested.
- The cost to send one garment from China to the US via an international carrier such as FEDEX or EMS, is from $30.00-50.00. Needless to say that adds a lot of money to the product and I don’t think there are many customers who are going to be willing to absorb that kind of shipping cost on a $25.00 product. And then when there are returns the cost goes up even more. No one is going to want to absorb that cost, neither the customer nor the manufacturer.
As I said, these are serious companies and one company even offered to fly me out to Denver to discuss the project with them. But I knew I would just be going there to tell them that they did not have the right idea about China, and that an idea to drop ship from China to the US was just not a smart idea, and not one I wanted part of, so I politely declined.