Bridging the gap between Asia and Europe, Turkey is situated on the edge of one of the largest trading blocs in the world – with its broad and established manufacturing base, it serves as a viable, strategic import option for UK businesses. In addition, Turkey would be considered ‘near sourcing’ for UK companies, with the majority of shipments arriving within 7 days – saving significant amounts of time compared with most cases out of Asia.
Moreover, Turkey and the UK are also in the initial stages of discussing a trade deal on similar terms with the EU trade deal post the 31st December Brexit negotiation deadline.
In order to best take advantage of this land of opportunity, a solid sourcing strategy will be indispensable. Our tailored sourcing checklist will help you make the step up from amateur importer to an experienced one – as well as saving you precious time and money in the long term.
Every importer has their own unique product to source, and thus will have a slightly different approach to their business, but we’ve done our best to highlight the basic, fundamental steps every business should follow on their journey to international shipping success.
1. Research the market and identify the product
The first (and probably the most important) step of your sourcing journey is to research the market. If you enter a crowded niche, you will certainly struggle to maintain profit margins necessary to stay afloat.
Most people find researching the market and identifying potential products frustrating and overwhelming (with good reason). If you don’t know what you ’re doing, it’s easy to get lost in the abyss of products research – over thinking and indecision is common when choosing a product. Don’t get caught in this trap: just pick a good product that you can improve slightly and go with it. If it’s your first venture, consider it a learning experience.
Along with deciding which product you’d like to have manufactured, it is vital to be clear early on with your specifics and expectations. This brings us to Step 2…
2. Produce a product specification sheet
Probably the costliest mistake you can make as a businessman sourcing from Turkey is failing to define your requirements and product specifications.
Failing to set out expectations from the get-go will only make communicating more difficult and lead to potential losses in the future. You can avoid this mistake by clarifying the product specifications as precisely and accurately as possible.
The language barrier is a big reality when sourcing from Turkey – it comes with the territory when sourcing from anywhere overseas. Ensure you’re aware of this and plan accordingly in your sourcing strategy – solve this problem by preparing a very detailed list of product requirements put together prior to identifying suppliers, ideally in fluently translated Turkish and English.
Helpfully, most product development companies have a standard product specification sheet they fill out with all of the details for your product – ensuring there is no ambiguity when submitting a quote/request. The more detailed and exhaustive you make your product spec. sheet, the higher chance of your production running smoothly.
Another common occurrence that delays completion of production is indecisiveness – a lot of importers make changes to their product details after manufacture has begun, but even a small change in a product requires that the process starts over. Attempt to be absolutely sure of your product specs before you submit them, because any changes made are guaranteed to impede your progress.
3. Don’t overestimate your product margins
Imagine this: you are very excited about sourcing your first product and you are in communication with Turkish suppliers asking for prices and are already dreaming about the big profits you’ll be making. When you receive initial quotes, you realise that product costs are higher than the quoted amount – many importers are oblivious to the idea of total landed costs and fail to factor in ‘dominant’ items such as quality control, insurance and marketing fees.
Putting together a manufacturing cost analysis and validating your product early on will save you valuable time and money; TM Sourcing can also help you better understand the costs and viability of a potential product. Lastly, during the validation phase, be sure to research any compliance and/or certification requirements for your product. Factories are not responsible for knowing these specifics, since they may differ in different countries they ship to.
Sourcing Cost Analysis Checklist
‘Obvious’ items
- Quality inspection
- Vat and other import taxes
- Banking fees
- Insurance
- Logistics fees (from the seller to the buyer’s door including both parties’ inland transportation)
- Warehouse/storage costs
- Domestic courier expenses
- Marketing costs
- E-Commerce marketplace fees (if applicable)
‘Hidden’ items
- Random customs examination
- The cost of anticipated returns
- Defective products
- The costs of professional product photography
4. Identify 10 - 30 potential suppliers – including trading/sourcing companies
Spend time looking for the right supplier. This step, like every step in your sourcing strategy, is vital – whether you are searching online or utilising online Turkish sourcing platforms/directories, you should spend enough time to find at least 30 potential suppliers. Include anyone you think has the slightest potential of producing your products; the greater your sample size, the greater your chances of finding the perfect supplier. We’ve put together a 30+ page guide with downloadable guides and resources that will aid you in this process – below is an excerpt explaining the roles of manufacturers, trading companies and sourcing companies:
Manufacturers
Most factories make a specific type of product or focus on a specific type of manufacturing process to keep costs and overheads low. However, they will likely have a high minimum order quantity – if you’re looking to manufacture a small quantity, big manufacturers may not be the best option. Either way, you should contact them all – if their response is unsatisfactory (or if they ignore you completely) you can quickly eliminate them.
For products that must be made to specific technical requirements, only a manufacturer will do. For example, if the product you will sell is made using a manufacturing process like metal stamping or plastic injection moulding, you will need to verify the supplier’s capabilities early on.
Trading Companies
Trading companies do not make, store or own goods – they act as intermediaries between manufacturers and importers who want to buy their products.
The easiest way to tell a trading company from a manufacturer is to look at their product catalogue. If it includes everything from electrical goods to rugs and ladies’ fashions, then they are a trading company. If there are only a few items that could have all been made on a similar production line, then they are more than likely a manufacturer.
Trading companies respond quickly to enquiries, are professional in their dealings and usually speak your language, but charge heavy commissions: this is what you’re paying for.
If, however, you want the best factory price without the hassle of trying to deal directly with the factory, there is another option available to you. This is to use a sourcing agent based directly in Turkey…
Sourcing Companies
A sourcing company is ideal when you need products manufactured to exact technical specifications. Agents based in Turkey visit factories to inspect quality controls closely. After you’ve greenlighted mass production, the agent will visit the factory again to inspect raw materials and even check the first few batches for quality.
When you partner with an agent, you will receive comprehensive support throughout the sourcing process. If you want to get it right the first time and build a long-term relationship with your supplier, engaging a sourcing agent is the right way to go.
5. Narrow yourself down to 5 suppliers (and verify them)
For obvious reasons, it is now time to narrow down the suppliers to (ideally) five and verify them. The right way to build an initial shortlist will depend on the criteria that every importer is looking for manufacturers to match – however, here are some simple steps to follow:
- Check their website
- Email them to see whether they speak English if you feel this is a requirement
- Glance over their social media profiles
- Evaluate the credibility of any information through certifications and factory photos
- Check online reviews (Google My Business)
Screen out the ones that fall outside selection criteria or whose credibility is not strong enough.
Remember not to settle for whatever is left: if you’re unhappy with your selection, add an additional 30 potential suppliers to your list and start the sourcing process over again. There are more than enough qualified suppliers in Turkey – you just need to find them.
Once you verify the potential suppliers in Turkey, send them the product specifications to check if they can produce the products according to your needs.
6. Place sample orders and start to consider prices
With your verified shortlist, it is now time to compare their quality output. Ideally you should order samples from all five, have them shipped to you and begin comparing the key differences. However, it will soon become costly to order samples from 5 different suppliers. In addition to courier cost, they may also charge for sample development. Therefore, it is better to choose three suppliers and use the others as back-up options. This is also the point in your sourcing strategy where you can begin to consider and think about price as well.
It’s important, if at all possible, to order more than just one sample from each factory. This helps ensure they don’t send you the best sample they have sitting around. You can recover the sample costs in 2 ways: firstly, make sure in your purchase agreement you specify that the sample costs are deducted from your final order cost. Secondly, you can sell your samples on eBay or Amazon – which is also a good way to test the market as well as to obtain useful, early customer feedback.
7. Negotiate the price and delivery times
If you are happy with the samples, you can move on to the next stage in your sourcing strategy – if not, you should contact your backup suppliers and ask them to send samples. Assuming you’re satisfied, it’s time to negotiate with your chosen supplier.
First, determine what factors (price, delivery times, quality, packaging etc.) are important to you, and then communicate with your supplier in order to work towards those goals. Remember, if low price is the most important factor, your product quality will almost always suffer.
Instead of focusing on price with your order, you should focus on payment terms, additional units to cover defects, special labelling, packaging and delivery times. If you pressure suppliers to lower the price too much, although they won’t say no to you, they will try find a way to recoup that lost profit by cutting corners such as using lower quality raw materials and your delivered products will end up being of a lower quality than the sample you approved.
8. Identify your key supplier and reflect on the strategy
Now is the time in your sourcing strategy to look over all your suppliers and determine which one appears the most capable and suitable to your operation. Once you’ve done so, go back to your product specification sheet you made earlier and make sure they can meet your product requirements. If they can’t, it’s usually best to move on. But if you find that there are one or two items on your spec. sheet that are causing all your potential suppliers to reject it, you may want to alter or re-evaluate that specific detail.
Now is also a very good time to take a step back and determine if this is legitimately the right product and the right supplier. It is always a good idea to reflect on your sourcing strategy – if you are not completely happy with the price or with the suppliers, it’s always better to cut your losses and start again with a different product.
We see a lot of people get so tired of sourcing by the time they get to this phase, they get disinterested and end up choosing a potentially unsuitable supplier out of laziness: if in doubt, take a rest, reflect and, if necessary, start the whole process from scratch.
9. Iron out purchase agreements and contracts
- Before moving on to make payment, it is now time to compose a watertight, written contract and agree on product specifications, requirements, delivery times etc. This is where you can reinforce required standards and expectations on a written document that both parties sign – ensuring everybody involved is content and understands their undertaking fully.
Well-written contracts typically include the following provisions:
- Clarity on parties involved
- Terms on samples, price, quality management, logistics
- Definition of product quality, quality satisfaction, timely delivery
- Payment terms
- Liability for breaching contract
- Choice of law
- Dispute resolution
- Arbitration clause
- Solicitors’ fees
Contracts and purchasing documents should always be written in both Turkish and English and signed by both parties after everything is clearly explained and agreed upon. This is also a great time to consult an International business lawyer with experience in Turkish contract law (a simple Google search will help you to find one). If you’re planning to spend a significant amount of capital, the additional security of an experienced law firm is a great way to mitigate risk.
10. Make multi-level security checks on suppliers’ bank account details
After your supplier sends you their bank account details, make sure they match the exact name on your contract and on their website. If your supplier sent this information via email, ask them to confirm it via an encrypted messaging service such as Skype or WhatsApp. Emails are hackable and you need to make sure that your payment will make it into the supplier’s bank account.
11. Iron out upfront payment arrangements
The payment terms are agreed on the contract stage, so don’t forget to negotiate upfront payment during this period.
The upfront payment is negotiable so don’t be shy to discuss it. Usually, the manufacturer will ask for 100% upfront payment, but we don’t recommend agreeing to this – instead, to this offer to pay 50% upfront and negotiate from there if necessary. Once you are confident that you’ve cleared everything up, go ahead and make payment.
12. Request weekly production updates
You should make sure that weekly production updates are agreed upon by the supplier on the contract. Ask for consistent information from supplier regarding any issues (etc.), to please inform you as soon as possible so you can calculate delays and resolve any problems this might cause.
13. Arrange detailed quality control inspections
While having a good manufacturing agreement which includes all the product specifications and requirements is a good way to start your relationship with the supplier, regular quality control inspections are essential to minimise the risk of wasting your time and money – research has shown that problems caught later in the production process will always cost more than those caught earlier.
Remember: always, always, always have your goods inspected regularly. There are a variety of different types of inspections – request that which will suit your order’s priorities the best.
14. Organise freight forwarder collection
You can negotiate the shipment to be included in your price – TM Sourcing will be willing to arrange the shipment with local shipping companies for you. Alternatively, you can do your own research and find a local shipping company yourself. Once you find one, send your shipment details to your freight forwarder (as well as your supplier information) so they can arrange collection once the production is complete.
15. Request the shipment
Be sure your goods make it into the hands of your forwarder and all documentation prepared for them to make it to you. This includes all customs information, invoices, etc.
Conclusion
These items listed above are vital when formulating a sourcing strategy to find suppliers from Turkey on your own. It can never hurt to customise and add additional steps to the above checklist – these are merely what we at TM Sourcing consider will be a useful framework of steps to shipping success.
To give you an idea of the magnitude of our internal sourcing plans, our purchasing agents add an additional 10 – 20 steps to the above list in order to ensure our clients achieve the safest possible outcome when importing from Turkey.
Sourcing goods from Turkey can be time consuming and will require the maintenance of a lot of moving pieces – however, at an incredibly competitive rate, the TM Sourcing team will handle all aspects of your operations in Turkey: saving you valuable time, money and giving you the freedom to exponentially grow your company and its operations into the international powerhouse it could eventually become.
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