Product Sourcing From India: 10 Things Western e-Coms Need To Know About India’s Business Culture
- March 22, 2020
- Posted by: admin
- Category: Blog
With the ongoing China-US trade war and uncertainty surrounding it, many Amazon and eCommerce private labels are looking at India to source products. While sourcing from India is a great opportunity, there are 10 things sellers must be aware of.
Small and midsize factories dominate
While China manufactures at scale, in India most factories are small and midsize. The government also favours SMEs and the country’s regulations are designed to protect them.
There are many large enterprises as well, and these are mostly in industries such as apparel, textiles, chemicals, pharmaceuticals, machinery, electronic components and auto parts.
For most products relevant for private label manufacturers are smaller factories. Many factories are family-run businesses so don’t be surprised to see two generations attend a meeting with you if you visit their factory.
Small orders are accepted
Since they are smaller companies, and a lot of the products are hand-made, suppliers are usually willing to cater to small orders, sometimes as low as 20 pieces. They may charge a slightly higher price for smaller orders.
This is definitely a huge advantage sellers, especially if just starting out with a small budget or a seller wanting to test a new product line.
There are specific product categories that are ideal to source from India.
India manufacturers put in significant effort into design development, and offer unique and innovative product designs.
Many products are handcrafted, and are not as price-sensitive as mass-produced products.
Here are a few key categories E-com sellers can source from India:
Home décor and home products (metal, wood, ceramic, cotton, jute)
- Houseware, tableware, kitchenware
- Lawn and garden ornaments & accessories
- Lamps and lighting
- Home furnishings and made-ups
- Carpets, rugs & floorings
- Jewellery and accessories
- Precious gemstones
Textiles & apparel:
- Garments (cotton products – knitted and woven)
- Cushion covers
Gifts & stationery:
- Christmas and festive décor
- Candles, incense sticks, potpourri and aromatics
- Decorative gifts (including corporate gifts)
- Stationery and paper including handmade paper
- Cane, bamboo fibre, natural and eco-friendly products
The more adventurous can also consider food items such as tea and spices.
Your IP is safe(er)
One of the main areas of contention in the trade war between the US and China is IP protection. When sourcing from India, you won’t have to worry about your supplier copying your designs and selling them to other buyers.
In general, Indian suppliers have more respect for their buyers’ IP than typical Chinese suppliers. That doesn’t mean your IP will never ever be compromised, but it’s much less likely to happen in India than in China.
In the unlikely situation that your supplier does infringe your IP, and if you do have a strong contract in place, it is easier to take the supplier to court as legal proceedings in India are in English and the legal system is similar to other common law countries such as the US.
Nothing is lost in translation
English is the official language in India, and most people you will deal with at your supplier will speak English, some of course more fluent than others.
As there are 22 languages in India, each with its unique script, English is the language that unites the country. Generally, most Indians speak two languages – their own state’s language and English.
This is extremely advantageous when it comes to communicating with your supplier, especially when you are developing or modifying a product to private label.
In addition, you don’t need translators when visiting a trade show in India or talking to suppliers online.
Suppliers don’t have updated websites
Most Indian suppliers don’t maintain updated online catalogues of their products and many don’t even have their own websites because they are afraid their designs will be copied by other suppliers.
They prefer sending their newest designs to buyers directly by email or exhibiting them at trade shows. In fact, suppliers are very protective of their designs and discourage videography and photography at trade shows.
Expect longer delivery lead times
As a lot of the products are handcrafted, production times can linger longer than expected. Plus, monsoon season complicates things as well as the multitude of Indian festivals.
In addition, India lacks developed Infrastructure like China’s. Roads are not as well developed and maintained as they are in China, customs and shipping are not as efficient and streamlined, and red tape can slow things down.
As an importer, you need to monitor your delivery times more closely. Unforeseen delays can happen so it’s always better to build in some buffer in delivery times.
Production hubs specialize in specific materials
Similar to China, there are production centres for specific products in India. But while Chinese cities tend to specialize in certain product categories, Indian cities specialize in materials and offer products across different categories in those materials.
Moradabad is a city that focuses on the manufacture of all types of metal products — from home and garden décor, to hardware to cutlery.
Similarly, Saharanpur has wooden products suppliers that make anything from gift boxes to furniture.
Khurja is a city that focus on ceramic products, and Kanpur suppliers offer genuine leather products.
When sourcing from India, take the time to develop a relationship with your supplier. Similar to China, it is common for suppliers in India to take their clients out for meals or arrange trips to visit tourist locations such as Taj Mahal.
The Indian way of life is a bit slower and relaxed. As family and professional lives are not rigidly separated, you may get questions about your family, and may ask similar questions in return.
Building relationships with suppliers is advantageous as it allows buyers to get better pricing and payment terms in the long run for repeat orders.
Hierarchy is important
Decisions are usually made at the highest level and hierarchy is important in Indian business culture. At smaller companies, decisions are typically made by the owner of the company or if it’s a larger company, by top managers, if they have been given the authority.
Day-to-day communications might become slower if your contact person needs to get authorization for various actions.
When meeting someone face to face, introductions occur according to rank. Talk to the senior most person first, and seniority is determined by the person’s position within the company or their age.