Entrepreneurs are always asking how I created a consumer products business from the ground up. That’s why I’m starting a new series that walks you through every step of launching a product. Last month we covered product design, so start there if you’re new. Today it’s all about finding a manufacturer. My skincare line, StackedSkincare, includes both topical products and tools;  I’ll be referencing both processes so that you can choose the information that’s most relevant to your industry. 

Step 1: Finding a Manufacturer

We covered this in my last post, but when it comes to finding a manufacturer, I can’t stress enough the value of referrals. 

If you don’t have a professional network to leverage for referrals, try joining trade organizations or LinkedIn groups. Build a rapport with people in the industry, then ask them for their recommendations. You should also seek out industry trade shows, where you can meet manufacturers and labs, plus get a peek at what competitors are doing in your space. 

Step 2: Vetting Your Manufacturer

Once you’ve found a pool of manufacturers that you’re interested in working with, dive into their credentials and internal procedures. 

1. Ask for references and find out how the manufacturer has performed for other clients. Then, ask for product samples to test and be sure to test them thoroughly. 
2. Once you’re sold on your manufacturer’s reputation and samples, you need to ask about quality assurance. Your manufacturer should keep retains from every batch, and make sure that every new product that comes off the line matches the retains. This is a hugely important step in guaranteeing consistency.  
3. If your product falls under the FDA’s domain (in beauty, this includes medical skincare devices, SPF products, and some acne products), you need to make sure that your lab/factory has the appropriate certifications as well as your business. This will help protect your brand from issues with government agencies.   

Step 3: Negotiating Terms 

Once you’ve decided to go with your manufacturer, you need to negotiate terms. This includes assurance that your manufacturer will take responsibility for any problems in production. For example, if your product has defects and you have to recall or destroy inventory, your manufacturer should absorb the total cost. 

You will likely have to do several rounds of design iterations before getting it to the final product, so negotiate the cost of several versions.  

Your negotiations should also include a timeline for deliverables. Try to get as specific as possible and have your factory stick to it.

Preliminary Milestone Example

April 6: Tooling

May 11: Engineering Production (EP)

May 18: Release MA (Material Authorization)

June 1: Injection Mold Ready 

June 15: Print Cartons  

July 6: Material in house

July 20: Shipment

For manufacturing tools, you need to pay for the materials in advance, so expect there to be a large upfront cost, in addition to also having to first pay to tool the machines.  

Step 4: Pricing 

Once you’re ready to go into production, your factory will send you final pricing based on the cost of your raw materials. This cost can fluctuate as the price of your raw materials shifts, so you need to build in wiggle room when setting MSRP. If you’re concerned about fluctuations, ask your manufacturer what to expect. They can’t guarantee anything, but they might be able to forecast a range based on experience. If you need to increase your price after launch, most consumers will understand that prices can fluctuate.  However, there is a threshold that customers will accept before they look elsewhere, so make changes cautiously. 

You should negotiate tiered pricing based on volume with your manufacturer. Even if your orders are relatively small at first, you’ll want to know how your costs will diminish as you are able to place larger orders. I recommend purchasing in the smallest MOQ (minimum order quantity) to start.  You may take a hit on profit, but it’s than sitting on tons of inventory you can’t move.  Test the market and then scale your orders once you know you can sell the inventory.

Step 5: Filling & Shipping 

My tools factory partners with printers that create my boxes so that when it’s time to fill my orders, they already have my cartons. For my skincare products, we provide the components (bottles) and the boxes. Then the lab fills, assembles, and ships the finished goods to my warehouse. Depending on your product, you might have to work with a few different facilities to fill and ship, but look for a manufacturer who can manage it all. This will simplify operations, minimize the risk of mistakes and is less costly.

If you manufacture overseas, you’ll need to work with a freight forwarding company who can manage logistics with your factory and deal with customs. You might need to pay a bit more for a full-service operation, but you need to weigh paying more versus the time it will take to manage separate vendors. Time is money! 

Before you start shipping, you need an account with GS1 to make UPCs and barcodes. Have your factory package in inner case packs and outer cartons so you are set up for distribution.  The inner case packs contain single units, and those case packs are packed in an outer carton. For example, our Dermaplaning Tool is packed in inner case packs of 12, with 4 of those case packs to a carton, for a total of 48 units in an outer carton.  Each packaging tier has a UPC: the single product, the inner case pack and the outer carton.  Your warehouse will fill for retailers in either case packs or cartons.  For direct-to-consumer orders, they will pull from the inner case packs to fill (pick-and-pack). Setting up this system with your manufacturer makes fulfilling much simpler. 

Finding a manufacturer you trust is a monumental step that will continue to impact the success of your business for years to come. Not sure what to do next? Stay tuned; next month we’ll be covering packaging!