Sellers can entrust product manufacturers to process and manufacture products. Product manufacturers can be domestic or foreign. Compared with foreign manufacturers, domestic manufacturers have lower costs. The suitable groups, advantages, disadvantages, profits and risks of processed and manufactured products are as follows:
(1) Suitable groups.
Processed and manufactured products are suitable for products with unique creativity or variants of existing products. Moreover, this method is suitable for sellers who have verified the market demand for products and are very confident in product sales.
Cross-border e-commerce product development
(2) Advantages.
● Low unit price: For products with low unit price, processing and manufacturing is undoubtedly the best method, which can obtain more product profits.
● Brand control: Processing and manufacturing means that merchants can establish their own brands without being restricted by the rules of other brands.
● Price control: Since they can establish their own brands, they can set their own prices for their products.
● Quality control: For processing and manufacturing, merchants can effectively control the final product quality and thus retain customers, which is different from consignment and wholesale products.
(3) Disadvantages.
● Minimum order quantity: Manufacturers generally have minimum order quantity requirements. If there is no good sales channel for the product in the early stage, the merchant has no confidence and assurance in the sales of their products. Mass production will lead to a large inventory backlog and may even cause the product to be unsalable.
● Safety risk: If the manufacturer’s operation is not fully understood in advance, it may lead to losses.
● Long time: From product prototype to sample, and then to refinement and production, it will be a long cycle. If it is a foreign manufacturer, there will be obstacles due to language, distance and culture, which may lead to failure to deliver on time.
(4) Profit.
Profit depends on the manufacturer. Generally speaking, the profit of a merchant’s own branded product is higher than that of wholesale and consignment products.
(5) Risk.
Manufacturers generally have minimum order quantity requirements. Once the product sales are not good, it will lead to inventory backlog and broken capital supply chain.
Generally speaking, when homemade/DIY products start to have good sales, they can be transferred to manufacturers for processing and manufacturing. In this way, sellers can save most of their time, reduce product costs, and thus gain more profits.