It may seem that the most noticeable concern for all eCommerce shop owners are product sales. There is, however, another critical element that you, as a shop owner, always need to be on top of – the availability of your supplies. Products on eCommerce stores just don’t come out of nowhere, and the key to sustainable store operations is having reliable suppliers. It may not look like it on the surface, but any business’ backbone is its key suppliers.
Local or Overseas?
This is probably the question you will ask yourself once you begin to source for suppliers. There are two options, each with its own pros and cons. First off, you have your local suppliers. These are the businesses located within the vicinity (or country) of your operations. These might be the more expensive option, but they’re more convenient.
The second option is that of overseas suppliers. The term ‘overseas’ can refer to any country abroad; but nonetheless, most of these suppliers are based in three countries – India, Taiwan, and China. The biggest draw in engaging with these partners is that the cost of production is generally much lower as compared to that of the locals.
Local Suppliers- Why and Why not?
Getting local suppliers is quite advantageous to startup eCommorce shops. Not only is it more convenient because of proximity, but this accessibility also makes communication easier due to the absence of a language barrier - unlike with overseas suppliers.
Another advantage is that there is higher quality when it comes to manufacturing and labor standards. These local suppliers, in order to operate, need to adhere to the set standards in your region; which makes calibration with the supplier easier because you’re both familiar with the same benchmarks.
It’s also easier to ensure that these quality standards are consistently maintained. Close proximity makes the supplier easier to coordinate with, assess, manage, and audit. Moreover, it’s also easier to verify operations, legalities, and the reputation of these local suppliers.
Two of the biggest drawbacks against local suppliers is that production can be more expensive due to the relatively high costs of labor and acquisition of raw materials in the region. Another big challenge with going local is that you can be limited to selections that are only available in the state or country that you are in.
Overseas Suppliers – Why and Why Not?
The biggest benefit overseas suppliers bring is that they can significantly lower your production costs. They do this by establishing their businesses in regions that have lower costs of operations, cheap labor, and easier acquisition of raw materials. You also have a multitude of manufacturers to choose from. So, there is definitely no shortage of overseas suppliers who want partner with your eCommerce business.
While production costs can be lowered and your margins raised, getting overseas suppliers exposes you to more risks as compared to dealing with local producers. One fine example is that outsourced manufacturers have a reputation of producing lower quality goods. The generic and unbranded products from China are good examples of these – and you certainly don’t want your products associated with those.
Lower quality in terms of labor and work standards are also issues when it comes to dealing with overseas suppliers. What makes it even more challenging is that the geographical distance alone makes it difficult to manage, assess, audit, and visit these manufacturers. So you might have some issues maintaining the quality of your products.
And since we’ve touched on the geographical challenges, these obstacles also come with business, cultural, and language differences. The business processes that you’re quite used to in your home country might not be the same standard practices that are being employed at the supplier’s region.
It All Depends on your Values as an eCommerce Business
Having been presented the two options and the advantages and disadvantages of each, you might have a tough time deciding on which type of supplier to partner with for your eCommerce shop. The surest way to know which option is best for you is to re-evaluate your values as an eCommerce business.
If your business’ unique selling point is to provide your customers with the lowest possible price, better savings and more discounts, then it does make sense to choose the most inexpensive option. But let’s say if your value-add is something along the lines of helping the local community (or your state/country) by providing jobs and supporting local products, then by all means, go local.