Why are trading companies better than manufacturers?
“Why would I want to buy products from a trading company when I can just get it directly from the manufacturers?” “I think the factories will sell at better rates to me.” These are common statements by people who want to import goods from China. Well, about the better prices, I can tell you for sure that it is not so accurate at all times. Sometimes, you can get lower prices from the trading companies than the factories. Also, buying directly from factories can be a bit too challenging for you. I will get to that.
However, here is a brief description for those who don’t know the difference between trading companies and manufacturers.
TRADING COMPANIES VS MANUFACTURERS
Trading companies, sometimes referred to as wholesalers, are companies or businesses who place orders of products directly from the manufacturers and resell them in smaller units to importers. They will sell to you at lesser MOQs than a manufacturer will be willing to sell to you. Although they may market to you at a slightly higher price, other advantages can make you disregard that aspect.
Meanwhile, the manufacturers run the factories where goods are produced. They will manufacture your goods on demand, and this means they produce custom made products. This also means that they will have high MOQs of which you might not be able to meet up with without negotiation.
These two companies are the types of businesses you will come across as you source for suppliers on eCommerce platforms or offline. Okay?
So, let’s move on to why you should consider the trading companies over the factories. Take a good look!
7 REASONS WHY I SHOULD BUY THROUGH TRADING COMPANIES?
Here, let me introduce to you why you should give trading companies a chance over the factories.
1. Trading companies have lesser MOQs.
MOQ! MOQ! MOQ! Meeting up with MOQs as an importer can be frustrating, I know. That is why you can get over factories and go to trading companies.
With trading companies, MOQs are usually smaller than those of the manufacturers. The manufacturers have high MOQs so that they don’t make losses after every production run.
However, trading companies will save better for smaller businesses who want small quantities. The MOQs of trading companies are also easily negotiable than that of the factors.
2. Communicating with trading companies is much more comfortable.
Trading companies usually have better customer services and an understanding of customer needs than manufacturers. They will communicate fluently and patiently with the customer.
The trading companies’ focus is entirely on the customer and how to deliver good deals while the factories focus mainly on production. This makes trading companies provide more accessible communication opportunities.
3. Trading companies offer a more comprehensive range of products to choose from
When you desire products of different styles and qualities, you can trust the trading companies with this. The trading companies will offer products based on the customer’s requests.
Factories will only specialize in one product type, while trading companies deal with more than one. This is a limitation on the part of the factories.
4. Trading companies are suitable for small businesses.
Small businesses with little capital should start with trading companies. Trading companies will offer a more significant relationship with the manufacturers and home, have stocks at hand.
As a small business who cannot afford to wait for goods to be custom produced, you can order pre-produced goods from trading companies in lower quantities suitable for your business scale.
5. Trading companies are better at cooperation.
If you happen to have issues with the products you ordered from a trading company, it would be easier to file complaints as they are always willing to help you.
But, the reverse is the case of the factories. It might even be hard to get in contact with them (especially if you don’t buy in supermassive quantities)
Also, getting a refund (partly) is more straightforward with trading companies. I don’t think factories offer this type of service to its customers.
6. Trading companies make business relationships easier.
Trading companies bridge the gap between you and the manufacturer. They build relationships with the factories so that you don’t have to do so anymore.
This way, you can rest assured that you can maximize the best value of the business transactions without being too involved with factories.
7. Trading companies save you time and help you avoid stress.
Rather than spending much time finding the best factory for your business amongst the many you will see, wouldn’t you go for a direct link to them through the trading companies?
It is no news anymore that a trading company will work directly with a reliable factory to work on your order. So, you can rely on them for the quality of your goods. This would save you the stress of sourcing for reliable factories and the time spent on more important matters.
These reasons are so obvious that you wouldn’t need to be in too deep to experience them on your own. Now, if you’re in the business of importation and don’t know how to source for the right trading companies, here a few tips to help you.
Tips for choosing the best trading companies
Just as you have to find the best factories before engaging in any business transaction with them, you will also have to find the best trading companies amongst the many there are out there.
I will brief you on some tips you should employ while searching for the right trading companies. The few are:
a) Source rightly
Sourcing is the essential step in choosing the right business partner, either the factory or the trading companies. When sourcing, you will come across many companies that you might find it hard to choose. This is when sourcing rightly and differentiating the feed from the shaft comes in.
So, while sourcing, here are the guidelines.
ü Where do I source from?
There are many places (online and offline) where you can find trading companies. Some include B2B platforms (Alibaba, Aliexpress, DH gate, etc.), Google, Social Networking Services (SNS), trade fairs, etc.
You will find so many selling the goods you require, so you need to sort them out carefully.
ü How do I know the best?
Well, to know the best, you will have to go into research. You can most easily differentiate the good from the lousy trading companies on the B2B platforms through the feedback sections. But in a situation where you find suppliers from Google or SNS and can’t find the feedback sections, here are tips on how you can check the company’s authenticity.
- Search on Google for more details about the company. You can find the websites, origin, location, references, and a lot more if the company is a genuine one.
- Please get in contact with them and ask them direct and relevant questions.
- Surf the web for cases of scam by the company. You would be able to find traces of scams if past customers have experienced any.
- Check the product samples and compare them amongst the ones you are considering.
- Compare customer service loyalty and reliability. This is essential.
- Ask the companies about their shipping method and the procedures involved.
- Ask around from competitors if they have ever come across the company.
These guidelines will surely be helpful if you take the time to work them over.
b) Get a reasonable budget.
You wouldn’t need to be told that sometimes quality and price are in a direct variation. Although cost does not always qualify the quality, it does at a handful of times.
So, if you plan on getting a good trading company, you should prepare a reasonable budget. Reliable companies will not sell their quality goods to you at filial prices, so be prepared.
c) Don’t be carried away by cheap products.
Fake trading companies will put up too low prices of products to attract you. Before you know it, you’re in, and then boom! Your money is gone. Yes! Scams like this happen, primarily online. So, it would help if you were on alert.
When you come across products that seem too cheap compared to those by other trading companies supplying the same products, you should doubt the authenticity of the product or the company itself.
However, if you still don’t want to buy from trading companies, here are some tips for those who prefer buying from factories.
- It would help if you were experienced in sourcing for the right factory. You will need to have experience as sourcing for factories is a lot more challenging than sourcing for trading companies.
- You want to specialize in just a product type. Factories sell mainly one product type, so you should also deal with the same product if you’re going to deal with them.
- You are prepared for the shipping process. Shipping with factories is not as easy as with trading companies. Factories will only sell bulky products, so you need to be ready to ship the bulky cargo.
Frequently Asked Questions (FAQs) about trading companies.
To answer those questions spinning in your head now, here is a brief FAQ section for you.
i. What is the difference between a wholesaler and a trading company?
Sometimes, these two terms are used interchangeably. Well, there is a slight difference. Wholesalers can have stocks of products at hand while the trading companies may not. Trading companies are mainly middlemen who help you interact with factories and place your orders.
Also, trading companies will take some time to ship your products as they will need to prepare it with the factories. Wholesalers won’t need much time as inventories are with them.
ii. Is Alibaba for trading companies only?
No! Although this was right a few years ago, it is not it anymore. You can find wholesalers, trading companies, and manufacturers on Alibaba.
Trading companies are worth it. Definitely! New importers will have to start with them. This would be best for them.
So, dear reader, I hope this article did an excellent job of convincing you to give these companies a try. Who knows, you might find out that there is no going back with them.
Thank you for reading!