Many Amazon sellers like to look to China for suppliers. Yet most of the products on Chinese sourcing websites such as Alibaba or AliExpress are already available on Amazon. Coupled with the news about the U.S. government planning to add a tariff on Chinese imports, the future of sourcing from China doesn’t look bright.
Where, then, should eCommerce sellers look to for when sourcing their products to gain that competitive edge?
To this question, I will answer India! Yes, you are seeing this right – India is now one of the top manufacturing hubs alternatives to China globally. In fact, research has shown that India is fast becoming one of the top manufacturing places for the three industries most relevant for eCommerce sellers, namely: leather, electronics, and textiles. Let me elaborate below.
Leather industry:
The leather industry has transformed from a mere raw material supplier to a large value-added product exporter. Some of the products leather suppliers specialize in include footwear, garments, accessories, and furniture – and India is the second-largest producer of footwear and leather garments in the world.
Electronics industry:
India is home to the third-largest pool of scientists and technicians in the world. With their skilled manpower, strong design, and advanced R&D capabilities, it is no wonder India is one of the most cost-effective places to look when sourcing electronics.
Textile industry:
It may surprise you, but the textile industry in India has a long history and is now the biggest competitor to its neighbor, China. Products like stitched and un-stitched clothes, bed sheets, curtains, etc. can be purchased cheaply, thereby preserving a higher profit margin. Meanwhile, Indian textile suppliers are also earning a great reputation for themselves with their diversified and specialized product lines.
If you are still hesitating, let me show you six more reasons why you should source products from India.
Reason 1: Unique, differentiated products
India is a marvelous place where you can find all sorts of unique handcrafted products that are not found in other countries. This can provide you with lots of innovative product ideas, and thus help you gain an edge over your competitors on Amazon.
Meanwhile, handcrafted products are highly sought-after products across all eCommerce selling platforms. This is because handcrafted products can command higher prices, and therefore allow sellers to gain higher profits. The great news is, Indian suppliers, specialize in creating all sorts of handcrafted products – from pottery to cane to bamboo products, you name it, they have it.
Manufacturers from India focus on designing and developing new products on a regular basis, so you don’t need to worry that there will be a lack of new product ideas should you decide to strike up a partnership with them. Take note though, Indian suppliers are very protective about their designs. If you go to their trade shows, exhibitors often won’t let buyers take photos of products in their booths. This means that you will have to be very patient and prove yourself as a trustworthy business partner before they agree to work with you.
Nevertheless, working with Indian suppliers is a great way to go, simply because they can equip you with lots of interesting product ideas – and isn’t that exactly what is needed to sustain your Amazon business in the long run?
Reason 2: Place small orders
For a lot of start-ups, they are still trying to identify their niches and are quite unsure of what products they want to sell. Ideally, they will want to get smaller quantities of every different product to test which are the better selling ones. However, most suppliers will spell out clearly their Minimum Order Quantity (MOQ) – the lowest set amount of stock that he/she is willing to sell to you. If a seller is unable to purchase the MOQ of that product, then the deal is off.
The MOQ is essentially a tactic employed by manufacturers and suppliers to increase their profits and be more cost-efficient at the same time, as most factories will only start the manufacturing process of a specific product when they receive a certain number of the required products at one go. Below that number, they will be incurring losses, and naturally, they wouldn’t want that. However, the MOQ can be a big deterrent for newbie sellers – especially when the figures quoted are in the thousands. This situation is quite commonplace, especially on popular sourcing sites like Alibaba and Global Sources.
Enter India into your list of suppliers, and most sellers will be relieved to hear that Indian suppliers are usually willing to cater to small orders. This is because a lot of Indian products are handmade, and thus big orders may take a longer time to be manufactured. It is more cost-effective and realistic for them to sell off their products at smaller quantities than waiting to gather a big order (of course, this rule does not apply to those bigger Indian factories/manufacturers again).
Many Indian suppliers often set their MOQ within the typical range of 200-500 units. However, you can negotiate with suppliers and many are often willing to cater to orders as low as 20-50 pieces (except for apparel and textiles). Do take note though, they may charge a slightly higher price for smaller orders – but this is still a better choice for Amazon sellers, especially if you’re just starting out with a small budget, or if you just want to test a new product line.
Reason 3: IP protection
If you have been following the news, you will know that one of the main areas of contention in the trade war between the U.S. and China is intellectual property (IP) protection.
In an economy with a reputation for piracy and counterfeits imitating a long list of brands ranging from shoemaker New Balance to smart gadget designer Apple, China isn’t exactly in the U.S. good books when it comes to the issue of Intellectual Property Rights (IPR). The two countries speak different languages on this issue (literally and figuratively), with China insisting that the U.S. is ignoring China’s efforts on protecting IPR, while the U.S. accusing China of not meeting their demands on IPR. This issue is further complicated by Chinese administrative tools such as foreign ownership restrictions, business licensing and product approvals which supposedly only allow foreign films to enter the huge Chinese consumer markets if they transfer technology and IP to Chinese entities.
However, sellers can rest assured that most of the time they won’t meet the problems mentioned above when they source products from India. As mentioned under point #1 before, Indian suppliers are very protective of their designs. This translates to healthier respect for their buyers’ IP than typical Chinese suppliers. It doesn’t mean that your IP will never be compromised, but this situation will definitely occur less in India.
So when sellers source products from India and/or require Indian manufacturers to make products according to their unique designs, they will have fewer worries about their Indian partners copying their designs and selling them to other buyers. This is great for any seller whose selling points revolve around originality and being one-of-a-kind in the market.
Reason 4: Smoother communication
For Amazon sellers who are only comfortable with communicating in English, you will be glad to hear this: English is the second official language in India, and most people you deal with when sourcing for your products will be using this language to converse with you. Some will be more fluent in this language than others, but generally, clear communication shouldn’t be much of a problem. (Of course, if you know how to communicate with them in their native languages, please go ahead – that’s even better!)
Experienced sellers will tell you that being able to discuss business matters with someone who is fluent in your preferred language of communication is very advantageous. This is especially so when you are developing or modifying a product to sell for your private label business. There will be fewer back-and-forth communication, saving precio me time and it can really make your collaboration process much smoother.
Reason 5: Domestic availability of various raw materials
A wide range of raw materials is readily available within India including cotton, silk, jute, marble, metal, wood, bamboo, and others. This meant that the costs of manufacturing products that require the use of these raw materials will be much lower in India than in other countries. For example, countries such as Vietnam need to import such raw materials from China, and you will find that the manufacturing costs in Vietnam are much higher when compared to if you choose to work with Indian suppliers.
Just for your information, India is the world’s largest producer of cotton and accounts for 26 percent of global production. The quicker-thinking among you all will catch on that this meant India is a popular place for sellers to source for textile products – and yes, you are right! From my research, it seems like most Amazon sellers are comfortable with manufacturing textile products with Indian suppliers, as they already have the expertise in this area. So if you are a seller targeting the textile/clothes niches, you may want to consider India as one of your future suppliers.
Last but not least, this is the sixth reason why you should consider sourcing products from India.
Reason 6: Help uplift disadvantaged communities
Regardless of where you live in the world, we are all a part of society. As members of society, we all have a responsibility to help others and improve the state of the community to create a better world to live in. The good news is, there is a marvelous way which allows you to contribute your part to society as an eCommerce seller, just by going about your everyday business – source for products from India. For your information, there are many non-profit organizations in India that employ disadvantaged communities (for example, single women who don’t have the skills to earn a living) to manufacture products for export. When Amazon sellers source products from such organizations in India, they can thus help to uplift these communities. On a more commercial note, some Amazon sellers find that they are able to command higher prices for products manufactured by such communities, simply because of the stories behind them. This is the best exemplification of what I meant by good karma – while buying your products from disadvantaged communities, you are indirectly creating job opportunities for these needy people, a resource that they are badly deprived of. At the same time, you are also creating a name for yourself and your brand as a social enterprise. Isn’t this the best of both worlds?
And if you are ready to start exploring India as your next sourcing country, here are three tips to help you source more effectively from India.
Tip 1: Build relationships with your suppliers
This may seem common sense, but it surprises me how many Amazon sellers are still treating relationships with suppliers in a strictly ‘let’s get down to business and then bye!’ mode. This is never the way to go if you want to, in the long run, sustain a good partnership with Indian suppliers. Just like working with Chinese suppliers, Indian suppliers will feel at ease working with people in a more personal tone. After you’ve placed a few orders (and make your payments on time), they will come to trust you. Some may even offer to take you out for meals or arrange trips to visit tourist locations such as the Taj Mahal if you are in India. Do not be in a hurry to reject them – understand where they are coming from, and after all, they just want to know their clients (you) better so that they will know how they can better serve you.
In time to come, there are many benefits if you are in a good relationship with your suppliers. Once a relationship has been established, you will be favored more. You may get better prices, better payment terms with lower or no advance payments, longer credit times, or are not charged for samples by these suppliers. These are just some examples of what I received from my best suppliers, and it really makes doing business all the more meaningful and engaging.
Tip 2: Hierarchy is important
As the adage goes, ‘When in Rome, do as the Romans do.’ The same applies to doing business or working with people across different countries. You need to be sensitive to the various countries’ business cultures nuances to be able to bring across your ideas to them better. In the Indian business culture, decisions are usually made at the highest level/personnel with the highest authority. You will thus notice that at smaller Indian companies, decisions are typically made by the owner of the company. If it’s a larger company, decisions will be made by top managers who have been given the authority. Hierarchy is very important in Indian business culture. When meeting someone face to face in India, introductions will occur according to the personnel’s business rank, typically from the highest to the lowest. As a seller trying to get their cooperation, it is thus important for you to identify the highest-ranking person within your desired supplier’s company, and engage them first. This will show that you respect their authority, and at the same time have a healthy understanding of what to expect when cooperating with them.
As a general rule of thumb, seniority within Indian companies is normally determined by the person’s age, i.e. the older a person is, the higher the position he or she will be in within the company. In any case, it is always good to be polite to the elder people within a group, so mind your manners when greeting your Indian suppliers!
Tip 3: Ask specific, scenario-based questions
This is something that I cannot emphasize enough. When working with suppliers, the important thing is about asking specific questions, so that you and the suppliers will know whether both of you are suitable for your businesses.
Meanwhile, when working with Indian suppliers, you may want to be more mindful of the way you word your questions. my advice is to ask them specific questions that don’t require a direct yes or no. This is because Indians don’t like saying “no” to a question. They want to keep all options open so that they can then make careful decisions based on specific situations and circumstances.
Let me give you a scenario. For example, when negotiating over price, your usual way may be to quote a price and ask if the supplier can agree with it. With Indian suppliers, you may want to be more tactful and reveal more details about your pricing rationale. You can mention that you’re planning to increase your order volume, and thus ask if they will be open to offering you more competitive prices if you decide to work with them? They will then be able to assess the situation more accurately and hence reveal to you how much they can reduce their prices by. Meanwhile, you can decide to negotiate further depending on your profitability.
With this, I hope you are confident enough to start your sourcing venture from India. Stay tuned as I offer you more tips about doing business on Amazon!
