So, what's the next step?
You've conceptualized and designed a novel adult toy product, something that fills a gap in the market and that you're excited to introduce. Your plans are finalized, and you're all set for action.
But there's one essential piece missing: the manufacturer for your adult toys.
Engaging a manufacturer for the first time can feel daunting. That's where this article comes in—it's here to guide you through the process and arm you with the knowledge necessary to secure the right manufacturer for your adult toys.
AMERICAN OR CHINESE?
Is it better to keep production domestic or should you consider outsourcing overseas?
The answer is not straightforward and varies depending on individual circumstances. Both options present unique logistical hurdles. When it comes to American manufacturers, the fact that a significant part of the manufacturing industry has shifted overseas can pose a challenge. It's possible you may not find a local adult toy factory capable of producing your product. Also, not all product categories may be serviced by domestic factories. Plus, American manufacturers might prove more costly than their Chinese counterparts.
So why would one opt for a local manufacturer instead of an overseas one? Here are several reasons:
- Branding. Certain consumer demographics might respond more favorably to a product made in America, allowing you to leverage this aspect in your branding for greater appeal.
- Minimum order size. Depending on your product and anticipated demand, order size can be crucial. American factories typically allow for smaller product quantities, which can be important if you wish to minimize inventory.
- Easier verification. Determining the reliability of a factory can be more challenging when dealing with overseas manufacturers.
- Faster shipping time. Domestically produced goods usually arrive faster, eliminating lengthy international shipping times.
Why then might someone choose Chinese or other overseas factories?
- Cost effectiveness. Chinese and other overseas manufacturers often offer lower prices than their American equivalents due to differences in labor and material costs.
- More variety. For certain products, overseas manufacturing may be the only option since the requisite factories no longer exist in the U.S.
- Volume. Overseas factories often accommodate larger product volumes, which can streamline the production process and assist in bulk production.
Nonetheless, choosing to manufacture overseas can come with its own set of complications, particularly with China, a popular destination for outsourced manufacturing.
- Banned materials. It's crucial to be aware of prohibited materials, especially during the prototyping stage. Several companies have encountered difficulties due to discrepancies in regulations between the U.S. and China. An example is Lumber Liquidators, whose laminate flooring, manufactured in China, failed to meet health and safety standards because it contained excessive levels of formaldehyde, a known carcinogen.
- Tariffs. The U.S. has recently imposed a 25% tariff on steel and a 10% tariff on aluminum from overseas (with some exemptions). These tariffs could affect the cost-effectiveness of overseas production. If you're unsure, the Harmonized Tariff Schedule can help you estimate potential costs.
Your ultimate decision will be influenced by a mix of factors. After settling on your preferred direction, you can delve into the task of identifying the right factory. Much of the forthcoming discussion will focus on locating a reputable adult toy factory in China.
REASONS TO OPT FOR CHINESE SOURCES
If you're planning to OEM/ODM sex toys from China, you typically have a pair of options:
- Branded products;
- Purchasing non-branded items (white label)
Choosing the first option means adhering to certain contractual obligations towards the Brand, possibly imposing restrictions on pricing, quantities, and corporate identity. Conversely, opting for the second allows you to engage with suppliers of non-branded goods, freeing you from such obligations. But how do you locate these products?
Given that China manufactures the majority of the world's sex toys, sourcing wholesale from a non-Chinese supplier often means paying an inflated price due to multiple intermediate steps from the factory to the wholesaler. Consequently, sourcing directly from the manufacturer in China offers a notable economic advantage.
An additional benefit of purchasing from Chinese manufacturers is the potential for product customization. If you have an established store and a loyal customer base, creating a unique product brand could enhance your margins and customer loyalty. For product or packaging customization, engaging directly with the manufacturer proves more fruitful than dealing with a wholesaler.
COMMENCING THE SEARCH: WHERE TO BEGIN?
Locating a manufacturer nowadays is considerably more straightforward than in the past.
When launching my eCommerce venture, I lived in China and sourced my products from local markets. Products were obtained directly from factory floors, simplifying the process for me compared to those operating from overseas.
Open marketplaces such as Alibaba and Global Sources offer a vast array of manufacturers, trading companies, and wholesalers. With a platform as large as Alibaba, it becomes challenging to differentiate between these types of suppliers. Similarly, Global Sources, a marketplace akin to Alibaba, presents a plethora of product categories, which may be overwhelming when trying to narrow down choices.
Assuring you're dealing with a factory and not an intermediary involves taking a few steps. You can request their business license, which should provide necessary information for verification. Alternatively, their business name and location can be used to find their listing on China's State Administration for Market Regulation website.
Also, consider whether a company has an email address registered to its own domain instead of a free webmail provider. It's easier to identify who you're interacting with if they own a website. While setting up a free email address takes only a few minutes, the repercussions of dealing with a company that doesn't actually manufacture anything could be much more time-consuming.
KEY CONSIDERATIONS BEFORE SELECTING A MANUFACTURER
Selecting a manufacturer implies choosing a business collaborator. Key qualities to look for in a collaborator are adaptability, dependability, and trustworthiness. You likely have your own preferences, which serve as an excellent starting point.
As for manufacturer-specific requirements, here are a few essential points to consider from the outset:
Clear Communication. Not everyone at international factories is proficient in English. Some may use tools akin to Google Translate to decipher your emails. Use straightforward language to avoid confusion, and keep initial correspondence succinct and clear. Utilize Lists. Lists streamline your queries, ensuring each question is acknowledged and addressed, regardless of language barriers. Use Varied Communication Platforms. Do not restrict yourself to a single communication medium with a manufacturer. Having multiple contact methods—email, phone, Skype, WeChat, or other means—can be beneficial. Maintain Multiple Contacts. What happens if your primary contact is absent or leaves the organization? Is there someone else you can reach? Building connections with multiple individuals can be advantageous. While you should have a primary contact, knowing an alternate point of contact could save time and money. Ensure the Company Has an Export License. It's generally not an issue, but it's something to be aware of. Factories without export licenses can present various problems:
- They tend to be smaller operations.
- They may lack English-speaking staff.
- Working through Chinese export bureaucracy could fall to you instead of being managed for you.
Most manufacturers should possess an export license. Absence of one could signal future complications.
- Request references and a signed non-disclosure agreement (NDA). This step helps establish a benchmark and ensures you're dealing with a credible entity. While an NDA doesn't necessarily prevent imitation, it does offer some legal protection.
- Understand local holidays and festivals. If collaborating with overseas manufacturers, knowing when national holidays and festivals occur is critical. Knowing when the factory is closed or contacts may be unreachable can prevent unforeseen disruptions.
Addressing these points upfront can prevent potential issues down the line.
ESSENTIAL DOCUMENTATION
When procuring products from outside the European Union, ensure these goods can be imported and marketed within the Union's territory.
In essence, the products purchased must possess necessary certifications for customs clearance.
Failure to provide such documents can lead to severe consequences. The European Union holds the buyer responsible for the goods. Non-compliant products can be detained or confiscated. In this case, not only would you lose the product investment, but you could also face fines and additional charges related to warehouse fees imposed by customs.
Below are the fundamental documents your supplier must provide:
- Certificate of Origin: A document issued by the Chinese Chamber of Commerce.
- Packing List: A delivery note containing the manufacturer's details, importer's details, and all information related to the cargo.
- Commercial Invoice: The invoice issued by the supplier, containing all order-related information.
- Bill of Lading: A document transferring possession of goods from one company to another.
Depending on the type and use of the product, customs may require additional documents . For instance, electronic products, liquids, or batteries may be subject to additional inspections.
OBTAINING A MANUFACTURING QUOTE: THE PROCESS
At this point, it's likely that you've established contact with several manufacturers and are prepared to provide them with your product plans or sample.
The ensuing steps are crucial: you need to ensure that you provide comprehensive, beneficial information to the manufacturers, aiming to receive an equitable quote in response.
As you navigate through your plans or samples, keep in mind potential American regulations that might apply to your product. An online search for each material you plan to utilize can often alert you to any significant regulatory issues. For instance, California typically imposes the most stringent material and environmental restrictions, so it's a good idea to start your regulatory compliance review there.
The California Department of Toxic Substance Control has assembled a roster of regulations your products should comply with to ensure consumer safety.
It's also essential to provide your manufacturer with detailed information. Though providing a sample is ideal, the more specifics you can supply, the better. From measurements to material recommendations, the more work you do upfront, the less you'll need to undertake during the prototyping stage.
Consider the following five questions when requesting a quote:
- What is your minimum order quantity (MOQ)? Ensure that the MOQ is feasible for you, not only in terms of initial cost but also in light of storage space, potential inventory taxes, and other costs associated with carrying inventory.
- What is your sample pricing? Samples may entail upfront costs. Depending on the manufacturer, these can range from a slight adjustment of the final product pricing to being completely free.
- How much will my order cost? Consider asking for quotes for different quantities, as order volume can influence the price.
- How long will it take to fulfill my order? Understanding the lead time is critical. This information is not only important for the initial order but for future orders as well. Accurate lead times prevent stock shortages due to longer-than-expected manufacturing periods.
- What are my payment terms? If you're a newcomer, you'll likely have to pay upfront. However, you can also inquire about future payment terms—these might evolve as the factory grows more accustomed to doing business with you. Are there any setup charges for each order? Sort everything out at the beginning.
Keep your request concise and courteous, ensuring you provide all necessary information.
When you receive a quote, consider the following:
- Ensure you're comparing similar aspects. Examine materials, processes, and more—if they're different, you may risk misconstruing pricing and quality. Review everything thoroughly.
- Understand your FOB (Free On Board) pricing when dealing with an overseas factory. FOB refers to the point of ownership transfer from the seller to the buyer—the seller assumes all costs before this point, and the buyer covers all costs afterward. FOB is typically calculated to a specific port, which can significantly impact what you need to handle yourself. Handling shipping independently can be challenging, as you have to worry about every intermediate step in the transport chain.
- If the quote specifies "FOB Seattle", for instance, your responsibility starts from the port—however, ensure all customs fees and duties are paid at the port. If the quote states "FOB China", you'll need to handle all the extra fees yourself.
- In the latter case, a customs agent and a freight forwarder based in China will be necessary. Finding a reliable one can be challenging. Familiarize yourself with basic shipping charges—though there can be a multitude of potential charges, available guides can help you navigate them.
- Upon receiving your goods, note that you can't simply go to the port and claim your goods. You need to be aware of your local regulations and potential hazardous freight rules relevant to your product.
- Negotiate! Determine what pricing you need to ensure a profit. Don't hesitate to engage in discussion with the factory—they expect it. Multiple factors can influence this, including payment terms. Do you have to pay upfront? Can you make payments at various milestones? What is the minimum order?
You should also acquaint yourself with the Basic Importing and Exporting section of the U.S. Customs website if you're working with an overseas factory. This resource can help you understand importing regulations, trade agreements, and duty rates on the products you import.
By the end of the quote process, you should have a clearer idea of which manufacturer to select. The next step, then, is prototyping.
TRANSFORMING PRODUCT IDEAS INTO PROTOTYPES
Upon receiving the product samples from your manufacturer, it is essential to thoroughly evaluate their quality and adherence to your original specifications. Two crucial steps in this process are as follows:
- Consistently document your findings.
This stage is crucial for refining your product and ensuring its quality. It requires rigorous testing and the capturing of detailed notes and photographs to relay any necessary changes back to the manufacturer. Adequate lead time should be factored into your production schedule, as correcting errors and enhancing the product can take several months or even up to a year if significant modifications are required. Keep in mind that adjustments are less costly and simpler to execute during this phase, rather than once production has commenced.
- Finalize the financial logistics.
Understanding and agreeing on the financial implications of potential production errors are vital. These include the costs of reworking faulty parts and the shipping expenses related to the return and replacement of these parts. Clarifying these details in advance can strengthen your relationship with the manufacturer and possibly result in financial savings.
Once you have confirmed your product's readiness, the production phase can begin.
TRANSITIONING FROM PROTOTYPE TO PRODUCTION
After successfully developing a prototype that meets your standards, the initiation of a full production run can occur. It is advisable to start with a smaller order to assess the factory's ability to deliver products that match your criteria.
- Settle on a manufacturing partner.
When deciding which manufacturer to entrust with your production, evaluate the quality of communication, support, and assistance provided during the prototyping stage. Although a factory may have produced an exceptional prototype, it does not necessarily guarantee a smooth production process. It is advisable to partner with a manufacturer that truly comprehends your business needs.
- Obtain a purchase order.
A purchase order is a binding document that enumerates the specifics of the production run, such as the types and quantities of products and the agreed price. When creating your purchase order, ensure all necessary details are included. If you omit critical information, you might not have legal recourse should your products not meet your expectations.
- Take into account local holidays.
During certain periods, such as the Chinese New Year, factories in China often shut down for two weeks or more. Additionally, production quality can suffer following these holidays due to the return of workers or the integration of new personnel. For time-sensitive orders, early planning is crucial to avoid production delays.
- Initiate your initial payment.
Factories commonly request an upfront payment equivalent to 30% of the production price. Upon completion of production, the remaining 70% is required to finalize your order. If your production run is relatively small, the factory might demand full payment before starting production. However, you should always attempt to negotiate a smaller upfront payment to lessen your risk, especially in the early stages of your relationship with the manufacturer.
RECEIVING THE FINISHED PRODUCT
Following the commencement of your production run, it might take several months for your products to reach you—typically between 70 and 90 days. Regardless of your product's size, appropriate storage space is necessary. Additionally, transportation from the port to your warehouse needs to be arranged.
When the freight arrives at the port, it requires overland transportation to its final destination. Whether intermodal or over-the-road transport is more suitable and cost-effective depends on your warehouse's distance from the port of arrival.
Intermodal Transport
Intermodal transport involves the use of multiple transport methods to deliver the product without unloading the freight from its container. This often involves the freight being transported by train to an inland hub, from where it is shipped to its destination by truck. Depending on the quantity and distance, this can be the most cost-effective option.
Over-The-Road Transport
Alternatively, over-the-road truck transport might be more suitable, particularly for smaller quantities referred to as Less than Truckload (LTL). The size of your order will dictate which option is most beneficial.
Consideration should also be given to warehousing. If your product is small, such as watches or tools, and you are in the early stages of your business, you may manage with a garage, shed, or shop. However, most businesses will require the leasing of warehouse space, so it's essential to factor this cost into your planning.
FROM START TO FINISH: A PRODUCT JOURNEY
You have explored domestic and overseas manufacturing options, conducted exhaustive research to find the right manufacturer, mastered the art of effective communication, navigated the quote process, and understood how to transform a product idea into a prototype, a prototype into a production run, and a production run into a tangible product.
Equipped with this knowledge, you are prepared to traverse the complex landscape of product manufacturing. While the journey might be challenging, the gratification of seeing your product in the hands of customers makes it all worthwhile.
