If you find 30 potential suppliers that all seem capable of making the product you want, how to pick the best one?
With B2B platforms like Alibaba and Global Sources, many buyers ask themselves that question. And an easy answer is “I will ask for free samples and see who says yes and makes good-looking samples”.
This comes with three benefits:
- Work with more cooperative suppliers (or so you think… more about that below)
- Get to communicate with them and “feel” them
- Move your project forward — once you approve a sample and a supplier, you have made great progress
When we ask an importer why they picked a particular supplier (often because they ended up running into serious issues), the importer often says “because prepared nice samples for free, and that was a very good sign”.
This comes back to benefit 1 — the buyer assumes a manufacturer that gives freebies will value their business more and will go to great lengths to keep them happy.
Are free samples an indicator of a great supplier?
I actually think there is no correlation — and maybe there is an inverse correlation — between “free samples” and “great relationship over time”.
It reminds me of a scene in the book Poorly Made in China where the sourcing agent visits a factory in Shantou. That factory is so hungry for business, they borrow 50 people from another company and get them to fill some bottles during the visit (which is kept short). The agent relates this situation to his client, who think this is really the sign that they are very motivated to get his business. In the end, that factory proves to be very, very bad.
Why is that?
There are two reasons for that, in my mind.
- First, good factories are sought after. They are truly a rarity in many product categories in China and Vietnam. They get to pick their customers, and they don’t need to give anything for free. At the other extreme, who is more likely to find every way to attract buyers? Suppliers that are desperate for business. And they tend to have the worst business practices all around.
- Second, it sets all the wrong incentives, as suppliers can’t spend a lot of engineering and sourcing resources on a potential customer that hasn’t even paid anything (and that may also be working with 10 other factories on the same product development). They are fixated on making a good-looking sample in order to get a purchase order. They are not building a good BOM, doing risk analyses, and so on.
A better approach
In my mind, and based on my experiences, good companies are usually happy to pay a fair price for samples. Often, it is not just for making a sample. On the manufacturer’s side, it involves:
- Planning on how to do in the best way.
- Sourcing components, and sometimes pushing a sub-supplier to do a custom job (e.g. printing).
- Putting things together, noticing issues, going two steps back again.
- Getting confirmation from purchasing and production that, if a customer buys this product, it can be made at the right cost, up to the right quality standard, and without delays.
- Documenting it so that it can be made the same way later.
As you can guess, if this is unpaid, not all 5 steps will be done. And this has consequences (poor quality, delays…).
By the way, paying for it doesn’t mean a higher cost in the end. The “sampling fee” and some other non-recurring engineering costs can be deducted from the first PO amount if the supplier accepts that. It is common for OEMs to do that.
I’d add that, if your product is unique, you probably want to qualify 1 or 2 suppliers first, before sharing your intellectual property with them. Paying 5 companies to prepare the same sample makes no sense, naturally. Do more work upfront and ensure you are in contact with good-fit companies first.
Why don’t many manufacturers charge for sampling and other services?
It is a fact, most Chinese manufacturers don’t know how to invoice for services. And they are not interested in learning.
First, it is not their business model. They want to keep things simple and focus on a few big orders, not manage the complexity that comes with many divergent requests.
Another reason is, the typical salesperson gets a commission of a few % of each order, so they are only interested in selling a batch of product. They are single-mindedly focused on getting a PO. They put pressure on their colleagues to give freebies to customers, and to make samples as beautiful as possible… to get the PO.
Oh, and what if production doesn’t look exactly like those pre-production samples? That’s another topic for later, they think. Once the customer has sent us a deposit, disagreements and arguments are not really a problem. Deposits are not meant to be returned…
Sorry if I am rather negative here. We have seen too many cases where sampling was not done right and the buyer was unhappy about production.
Do you have any tips to share, to avoid these situations?
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