Categories of Supplier

1. Manufacturers and Vendors

When you work with manufacturers and vendors, you’re working with the source of the supply chain. They research, develop, and produce the product you purchase. Effectively, sourcing your materials from the manufacturer means you’re not paying any additional businesses for the handling and storing of the product.

Many manufacturers create the materials after they’ve been ordered. This can create a longer wait time than what you’ll receive with wholesalers and distributors. But, if what you need isn’t something readily available or mass-produced, manufacturers can create large volume orders to the exact specifications you need. Manufacturers are ideal when efficiency and intricacy are top priorities.

2. Wholesalers and Distributors

Wholesalers and distributors are known for purchasing supplies in bulk, storing them, and selling off in smaller quantities to businesses and retailers. They specialize in carrying standard sizes in high volumes.

Since the product is already created, you may have limited options, but the order turn times will be shorter.

3. Independent and Trade Show Reps

Independent craftspeople who create their own pieces often sell their work independently or partner with representatives who help sell their final product. Independent craftspeople are known for one-of-a-kind intricacy, along with handmade detailing.

Sourced materials from an independent craftsperson are typically ideal for projects involving low-volume purchasing where turn times are a lower priority.

4. Importers

When you hear talks of overseas manufacturing, the suppliers who import and export those manufactured goods are known as importers. Importers purchase their materials from one country, and then they sell those same materials in a different country.

When you source materials through importers, high-volume orders in standard sizes are where you’ll find the most benefit. The high-volume helps to offset the costs incurred through shipping and transporting the materials. It’s not uncommon to buy from a wholesaler or distributor who sources from importers as well.

Trading Companies

Trading companies, or traders, are similar to wholesalers. The main way that traders differ is that they typically don’t take ownership of the goods. Importers typically want to go directly to the manufacturer, but this isn’t always practical.

Advantages

• Traders will have much better English language skills for communicating with you.
• They do the direct dealings with factories, and usually, have good working relationships with several of them.
• You can source across multiple product categories, as they often deal with disparate factory types.
• Trading companies usually accept lower minimum order quantities than manufacturers.

Disadvantages

• You don’t know who the actual factory producing your product is.
• Traders don’t accept liability for defective products.
• They have a higher (but still unlikely) chance of “disappearing” or evading communication.
• You are paying their markup, which is usually 5% or higher. They may not be more expensive, however, because they get discounts for buying in bulk.

Wholesalers

This type of supplier differs from a trading company in that they buy the products and often also import products themselves.

Advantages

• Wholesalers often have western representation, making communication much easier than with most Chinese factories.
• If they have a warehouse in America, your lead time and shipping costs could be reduced.

Disadvantages

• You are often paying a 20-50% higher price when buying through a wholesaler than through a trading company or factory.
• Wholesalers generally only deal with standardized products and usually can’t arrange customization.

Manufacturers

A manufacturer is the actual owner of the factory or factories.

Advantages

• When you’re looking to manufacture a product, you should always try to go directly to a factory. You will get more control over production than with other types of suppliers, and get a better profit margin.
• Dealing directly with the manufacturer gives you the best price and the most choice for customizing your products.
• You have more control over quality standards.

Disadvantages

• It can be difficult determining how reliable they are.
• Their sales reps often have only rudimentary English language skills.