Domestic vs. Overseas Manufacturing: Which is Best for Your Business?
The product development stage of your business is sooo exciting!
You get to try out samples, test out materials, and finally see your creative vision come to life. But before you can make magic, you have to choose a manufacturer.
Deciding where to manufacture your products is just as important as choosing the actual manufacturer. There’s a lot to consider when thinking about going with an international or domestic manufacturer, like production cost, shipping speeds, and labor standards.
Not sure about the pros and cons of manufacturing locally or internationally? We’ve got you. Keep reading to learn about what to consider when choosing a manufacturer overseas or domestically – plus what we think about each based on our experience!
Domestic vs. Overseas Manufacturing
Lower Production Costs: You can seriously save if you go with a foreign manufacturer. Countries like India and China are known for offering lower prices to customers because they have lower overhead costs (i.e., lower wages for employees.) This means that you can save money in production and put those funds towards other parts of your business, like marketing or business development.
Larger Production Capabilities: Foreign manufacturers have enormous facilities that can produce several types of products. You can save time searching for multiple manufacturers by having all your products produced under one roof. Because overseas manufacturers have more production capacity, they will also allow you to order large quantities in a single order – usually for a lower cost.
Readily Available: Manufacturing is a large part of the economy for lots of foreign countries, so you’ll have plenty of options if you choose to go with an overseas company. Plus, some factories have implemented incentives for customers to choose them over other production companies, such as fewer regulations and lower taxes.
Longer Turnarounds: Be prepared for loooong shipping times if you make the decision to go with an international production company. Besides the time it takes to cover the distance, your products will also have to go through customs once they get here, which can take a while as well. You’re probably looking at a delivery that will take weeks or even months.
Higher Shipping Costs: Even though production is cheaper with foreign manufacturers, the shipping costs are not. You will have to pay more for shipping because your products are going through customs and traveling further to reach you.
Different Manufacturing Standards: Factories in countries like Thailand and China are not known for squeaky clean manufacturing operations. They can be dangerous work environments, and they almost always pay their employees very low wages. Also, some countries have different intellectual property protections than the U.S. This puts your products at risk of being copied by the manufacturer and sold at a lower price.
Smaller Orders are Expensive: It may sound crazy, but it will cost you more $$$ to order less units from overseas manufacturers. Foreign manufacturers are only actually cheaper if you’re ordering a ton of units of product, known as high MOQ's (minimum order requirement). If your orders are small, you may not be saving all that much.
Ouu I Love’s Take
Product development overseas takes a lot longer now than it did before the pandemic. Lots of factories and shipping companies are backed up because of supply chain issues, which means that it could take a lot longer for you to receive new products or product samples.
Here are Ouu I Love, we’ve been working with foreign manufacturers to create products of our own. We loved that we were able to cut costs by working with larger manufacturers, but we didn’t love the communication issues and the time it took to receive samples and orders.
Our takeaway: You may not be paying a lot in $$$, but you will pay in time. Give yourself plenty of lead time to get shipments in and go through rounds of samples!
Lower Shipping Costs: Keeping your production in the states means that your products have to travel a shorter distance to get to you. Skipping customs and overseas shipping means that you can have your products overnight or within a week.
Familiar Manufacturing Standards: Here in the U.S., we strive for ethical manufacturing standards. Our workers are entitled to a high-quality and safe working environment, limited working hours, and a minimum living wage. You can feel good knowing that a domestic manufacturer takes care of its workers – and the product itself.
Streamlined Fulfillment Process: Similar time zones, languages, and cultures mean that you will be able to collaborate more efficiently with your manufacturer. You can contact them during business hours to see how things are going and make a clear plan of action. Plus, it is much easier to visit a domestic factory than it is to go to an overseas site.
Limited Production Capacity: U.S. manufacturers are generally smaller than international ones. This means that their production capacity, so they may not be able to handle large orders or make a wide variety of products.
Difficult to Find: You won’t have as easy of a time finding a U.S. manufacturer as you would finding a foreign producer. You’ll probably have a harder time finding a company that has the experience, equipment, or capabilities to make your desired products.
Higher Production Costs: With better manufacturing standards comes a higher price tag. You will pay more for production with a higher-quality domestic manufacturer than you will for their overseas counterparts.
Ouu I Love’s Take
Working with a domestic manufacturer is life-changing when it comes to communication and coordination. If you have a low minimum order quantity (MOQ) and can afford to work with domestic factories, it is worth it to get your products quickly and communicate with the production team about precisely what you’re looking for.
Plus, it makes your products more unique when you collaborate with local vendors to get it done. For example, we get to work with our Creative Director’s grandmother to create some of our products! It doesn’t get more special than that.
Our takeaway: Communication is key. You may put in time and money to find the right fit, but it’s worth it to have a manufacturer that’s close by and easy to get in touch with.
The decision to manufacture domestically or internationally depends on your brand’s needs.
Deciding where to manufacture your products isn’t the sexiest detail compared to other things, like creating content for your social media or deciding on your color scheme. However, it is a vital detail that deserves your attention from the very beginning.
Keep in mind that you can always use domestic and overseas manufacturers for different products (that’s what we do!). Splitting your manufacturing can help you get the best of both worlds depending on the product.
Where you choose to manufacture your products is up to you and what your brand needs. Whether that’s lower production costs or quicker turnaround time, you get to determine your production priorities and choose a manufacturer accordingly.
Wanna know all that we have to say about product development and manufacturing? Hit us up at @ouuilove on Instagram!