In 2020, e-commerce growth accelerated, and online sales grew by 32.4%. Although the pandemic had the upper hand, the flexibility of e-shopping is worth considering. People love to order products from the comfort of their homes. Therefore, the desire to serve the customers with the best is escalating.
For instance, running a petroleum-based company will want you to get premium-quality products. When seeking suppliers for your company, you’re left with two options. Either connect with petrochemical products manufacturers or fuel oil trading companies in Singapore.
Let’s stick to the main difference between manufacturers and trading companies below.
What is The Difference between Manufacturers and Trading Companies?
Manufacturers are industrial sites where the production of goods takes place by converting raw materials into finished products. On the other hand, a trading company doesn’t hold a manufacturing unit.
Instead, they’re directly connected to multiple factories to make their products. A trading company makes a profit through a markup on the commodity. It may be worth choosing a trading company over direct manufacturers.
It depends on the situation and which supplier adds value to your business. Here’s a rundown of the key points to help you decide between these two.
- Have a Clear Communication Network
Communication says it all in a supplier-client relationship. It helps keep things on track and ensures smooth product delivery. When dealing with a supplier, having clear lines of communication is pivotal to conveying the right message.
At the same time, the supplier must understand your requirements and serve you accordingly. In such a case, trading companies are fairly easy-to-communicate.
It’s because they’ve got well-trained staff with better English fluency. Therefore, if delivering your message to factories seems exhausting, you better find a trading company.
- Prioritize Customer Service
Running a service business is only possible if you can satisfy customers. In this regard, trading companies tend to be more consumer-focused as they don’t attend to the manufacturing part. Eventually, they’ll put more effort into servicing your customers with the best.
On the flip side, manufacturers may get you the desired goods, but they rarely meet your customer demands. Simply put, customization is only possible if they have a large queue of clients to serve.
- Experience With importing
If you’re new to importing, collaborating with a trading company makes it easier. However, connecting to international importers alone is hard, especially when starting.
Luckily, you can save your efforts by using the connections of a trading company. In some cases, you can even save on cash since they get you a budget-friendly deal.
- The Product Costing
Of course, everyone wishes to get the lowest price with supreme quality goods. Whether you work in a trading company or a factory, this requirement is universal.
Yet, you may assume that trading companies may charge you more since they work on a markup basis. Well, that’s not true. If they’ve built a long-term relationship with a factory over the years, they’ll get you better pricing.
They’re likely to buy high volume across different clients and get premium goods with reasonable quotations. You may not order high volumes if you’re new to the business.
- Determine Your Budget
One of the buyers’ most common mishaps is paying attention to their budgets when choosing between trading companies and manufacturers.
While a trading company often features fixed prices, there must be more space for negotiations. It’s because they’ve already settled the quotations with the factories.
However, manufacturers may get you the products as per the affordability. Since they’re the production unit, they stay open to negotiations. It’s particularly handier for newbies starting a business venture.
- The Order Size
Another thing you need to confirm is the order quantity which is vital for both the trading company and manufacturers. Most of the manufacturers feature a MOQ (Minimum order quantity). Therefore, they will only serve you if your order meets the standard amount.
The trading company makes a better choice for businessmen ordering in lower volumes. It’s because they’ve linked to various factories and may be able to offer you a lower MOQ. In addition, you may also request a variety of products by placing a mixed order.
You can determine the best option by looking into your situation and requirements.
If a supplier tells you they trade, you have nothing to worry about. Yet, you must dig deeper by visiting the production facility if they’re a production unit. Determining a suitable supplier for your company boils down to your requirements and preferences. So, choose wisely.