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Archive for the ‘Sourcing and Trading’ Category

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Furniture Fairs in Asia (Spring 09)

In Sourcing and Trading on February 9, 2009 at 11:52 pm

A comprehensive list of Asian home furnishing fairs this spring, with insider details.
To view the article with links, please go to the Furniture Fair Guide

Asian Furniture Fairs

Asian Furniture Fairs

February

India Carpet Expo (Feb 12 – 15)
Almost 200 carpet manufacturers and exporters will attend this fair in New Delhi.

Ambiente Frankfurt (Feb 13-17)
The passage sections of Ambiente feature suppliers and manufacturers from around the world. A great show for home décor and housewares.

Indian handicrafts and Gifts Fair (Feb 25 – Mar 28 )
The biggest furniture and home accent fair in India. Fantastic products and great values for people looking to source in India with over 1000 suppliers.

March

India Houseware & Gift Fair (Mar 1 – 3)
-Smaller than IHGF, there are still more than 500 suppliers in handicrafts, housewares, and textiles.

MIFF Malaysia (Mar 3 – 7)
-More than 500 Malaysian furniture manufacturers and exporters.

Cebu International Furniture and Furnishings Exhibition (Mar 5 – 8 )
-A smaller show with all the top local Cebu manufacturers and designers.

Manila Now (Mar 5 – 8 )
-More than 100 furniture and home décor suppliers.

IFFS Singapore (Mar 9 – 12)
-One of the leading furniture fairs in Asia for good design.

IFFINA Indonesia (Mar 11 – 15)
-The largest furniture fair in Indonesia

VIFA Vietnam (Mar 11 – 14)
-A smaller furniture fair with around 100 suppliers. This fair has more furniture companies, and not as many accessory suppliers as the fall HCMC Expo.

TIFF Thailand (Mar 11 – 15)
-200 Thai home furnishings suppliers

Dongguan Famous Furniture Fair (Mar 16-20)
-A huge furniture fair near the heart of furniture city in Houjie. Also, there is a home accent and lighting section.

CIFF Guangzhou, China (Mar 18 – 21)
The biggest and best furniture fair in China in the Spring. Also running concurrently are sections for home accents and housewares.

SIFE Shenzhen (Mar 19 – 22)
Another huge furniture fair, not as large as the other two shows running at the same time, but still very big and lots of manufacturers at this show.

SFIFC Metal Furniture Fair – Bazhou City, Hebei, China (Mar 23 – 25)
-Primarily dealing with glass and metal furniture, it seems focused on office furniture and has over 1000 manufacturers at the exhibition.

Premier Vision China (Mar 30 – 31)
-One of the best fabric shows in China

April

Hong Kong International Lighting -Spring (Apr 13 – 16)
-The premier fall Asian lighting fair is now twice a year. Manufacturers and suppliers are from around the world, but a majority are Chinese and HK companies. It seems there are not nearly as many companies at the spring event and only occupies one tenth of the floor space.

Manila F.A.M.E (Apr 15 – 18 )
-The largest home furnishings fair in the Phillipines

The Canton Fair (Apr 15 -19, Apr 24 – 28, May 3 – 7)
-One of the oldest, and by far the biggest home furnishing fair in the world (if you include the surrounding fairs). Phase 2 (Apr 24 – 28 ) of the canton fair is when most of home furnishings suppliers show there. Phase 1 includes lighting, and Phase 3 has home textiles, carpets and rugs. Overall, there are over a million square meters of exhibition space and over 50,000 suppliers. Please note, that while there are more furniture manufacturers now attending the canton fair, it is still not as good as the CIFF for furniture, but it is much better for Home Accents. Four fairs are within walking distance. To read more about these fairs Click Here.

Hong Kong Housewares (Apr 20 – 23)
-One of the best houseware fairs in the world, there are thousands of manufacturers from China, India, Asia, and other parts of the world. Products are housewares, textiles, handicrafts, and a level of Pet Supplies.

China Sourcing Fair: Home Products + India Sourcing Fair: Home Products (Apr 20 – 23)
-Both fairs are at one location in Hong Kong (the Expo Center, near the airport). This is an unassociated extension of the Hong Kong Houseware fair. Expect to find thousands more suppliers. But, since the HK Housewares is the premium event, suppliers at this event typically are waiting to get a space at the HK Convention Center. Shuttles and the train make it easy to travel back and forth between events.

Hong Kong Gifts and Premiums (Apr 27 – 30)
-A huge event, not nearly as much for home furnishings buyers as these are less expensive products, but some similar categories, include promotional picture frames, ceramic gifts, and clocks. Also running at the same time, is the China Sourcing Fair: Gifts & Premiums (Apr 28 – May 1), at the Asia World Expo in Hong Kong.

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Top home furnishings retail stores: Where can you really make a Profit?

In Sourcing and Trading on February 2, 2009 at 11:51 pm

Every year, suppliers around the world love to look who is the biggest.  Sometimes dreaming of landing the big customer, who will buy thousands of a single item, at a decent margin.  Lets just start out, and say, this is NOT that list.  Those lists are easy to find, and to keep people from reading through a highly opinionated article, the links to the top lists are here.

Home Furnishing News does a top 100 Home Furnishings Report.  The top stores include the mass merchants, such as Walmart, Sears, and Target because HFN covers all home furnishings categories, including Housewares, Bedding, Lighting, and Appliances.

HFNmag.com:  Top 100 Home Furnishings Retailers
http://hfnmag.com/fileadmin/template/main/images/resources/2008Top100retailers.pdf

The Furniture Today Top 100 U.S. Furniture Stores is a bit different.  All stores on this list are 100% dedicated to selling furniture and home accents, and starts out with Ashley Furniture, Ikea, and Rooms To Go. This list is available to non-subscribers at a fee of $60.00. Most of the top 40 companies in the Furniture Today report are in the HFN, but after the top 40, Furniture Today has a lot of good information on larger furniture stores.  (attached link is a report which contains the top 100 furniture retail, and more reports)

Furniture Today: The List
http://furnituretodaystore.stores.yahoo.net/furlis.html

Now to the real point of this article: which accounts allow a supplier to make some money?  This has always been a core issue for anyone in trading or manufacturing.  Working on such tight margins, that a single chargeback causes a complete loss of profit is not smart or safe.  Thus, businesses should encourage retailers and suppliers to be realistic and understand the value of the product offered and the risk of working to close.

Walmart:  Over the last 5 years, Wal-Mart has shifted from being the lowest price retail store.  A few years back, they realized that there is no point in reducing a $9.99 product to $6.99.  They did not sell any more of that specific item, so the end result was a loss in profit for the store, the supplier, and the factory.  Walmart studies their price points very hard, and like to offer great value, but these days, the dollar stores are where a consumer will find the lowest prices, and factories will find their lowest bidders.  A typical Walmart item should have at least 25% total profit margins or higher depending on how many are involved in the supply chain.  For entrenched Walmart suppliers, their margins are pretty high, but this is offset by the cost of needing to stock, predict sales, and ship the goods.

Rooms to Go: The third largest US furniture store also seems to be going more direct.  Over the years, middlemen have been supplying them from China, and over the years, they have been growing.  Moving full containers direct to their warehouse is pretty much the only way they do business.  Now, it seems they are finding the good factories themselves.  The products they sell are larger size furniture store goods and the volume from Rooms to Go is very large, so if you can get business with this retail store, you should have a nice stable account.

Ikea, Lowes, and Target:  All three of these retail stores have Asian purchasing departments.  The teams will source projects or products for the retail buyers, who may then start doing large amounts of businesses depending on how things go.

Hobby Lobby:  Primarily a home accents retail store and a hobby store, they are known for their Asian purchasing trips.  Expect to see them at sourcing fairs, and visiting factories a few times a year.  Margins should be 25% and higher for direct business.  The only issue with Hobby Lobby, is that they will order an item one time.  Most of the other stores mentioned will reorder multiple times.

Sams Club and Costco:  The impression consumers have of these stores is they buy really cheap products, but this is off base.  Both stores work on a really low retail markup, of around 15%, that enables them to sell better goods at much lower costs.  (Avg retail markup is 40-50%).  They also, order huge quanties, so if your lucky enough to get the buyers interested in your products, you may expect to sell a huge amount of higher value goods!  Again, this is often a one time order, so plan for a steep sales drop, after the shipment is gone.

American Signature:  This company manufacturers sofas in the USA, but they also do outsource sofas and most of the other products they sell.  The stores are full set furniture stores, so accent tables, decorative accents, and all types of furniture are available to consumers.   They are the 6th largest furniture store, and less established overseas than Ashely furniture.
These are so many retail stores, that to make a whole list would take days.  The key to finding your best match, is to review the stores purchasing pattern.  Do they purchase mostly overseas via direct containers, or do they require a stocking partner?  Also, establishing their order pattern.  Is this just a one-time order, or will they reorder the item.

GoodFactories is working on our own list of the top 100 retails, which will be available to our star members.  We will include an overall rank, purchasing amounts, which types of products, and an overview of the countries they buy from.

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Sourcing Guide for Sofa’s

In Sourcing and Trading on January 23, 2009 at 12:21 am

Over the years, furniture manufacturers moved from North Carolina, Italy, and various areas where labor was considered “affordable”.  Now furniture has found its home in China, Vietnam, and Indonesia.  GoodFactories has gone ahead and is starting to examine what this means to buyers, by publishing free pricing guides.  Our goal is to get a current glimpse of pricing for popular types of products.

This month we focused on Sofas.  Our team has been visiting some factories and also contacted some suppliers outside of China, getting an overview on the current pricing smaller retailers can expect to pay.

Some key points:

A variety of sofas and recliners were chosen.  Prices will vary greatly by factory.  Leathers quoted are noted in the quotes, but large price swings will be encountered due to the many varieties and quality levels of leather.  A quality manager mentioned that they had to learn over 50 different types of leather, not to mention that these all come in a variety of colors.

Prices are dramatically affected by small variations in the product design.  Some popular variations are removable seat cushions vs. fixed seats, type of foam in the cushions, and leather vs. leather match.

Prices mentioned below are based on a full 40-foot mixed container, with up to 5 skus in the container.

All prices are FOB local port nearest the factory.  That means that on top of the price you see, you will need to pay for shipping.  We will deal with estimated shipping costs and duty rates later.

Quality Level:  Prices for this report are “value oriented”.  This means that these are NOT high-end manufacturers.  The pricing we got is from manufacturers who ship major furniture stores and wholesale companies, and their products do look great and are acceptable for most retail stores.  If you own a high-end retail shop, you can contact GoodFactories via online chat or email, and we will let you know some suppliers that match your needs better.

Some key terms:

Top Grain Leather is a standard term for high quality leather that should last a long time.  Price does matter, but there are many different quality levels of top grain leather.  The higher the quality of the leather, the fewer the imperfections.  Standard top grain leathers can be found at most “value furniture stores” such as Ashley Furniture, Rooms to Go, and American Furniture Warehouse.   Top grain leather literally refers to the fact that hides need to be split for use in upholstery.  The top grain is the outside, and the inside is called split leather.

Full Top Grain means that the sofa is 100% natural top grain leather.

Leather Match combines Top Grain Leather with PU (vinyl faux leather).  The color and pattern are extremely close, so that it is very difficult to tell the difference.  PU is significantly cheaper than top grain leather but does not last as long as top grain leather, so most retail and wholesale companies who use PU do prefer to use top grain for the seating, cushions, and arm rests.   This helps ensure a better feeling and longer- lasting sofa.

Split Leather is a lower-grade leather that is used on non-active parts of the sofa to lower cost, but it still qualifies as a 100% leather sofa.

Since fabrics vary so much, such as micro fibers and exotic patterns, we decided to use a lower cost average material of around $2.50 per meter.

We are not specific with the cushion type, due to factories’ preferences and price swings.  Normally, polyfoam is the cushion of choice, but some suppliers we visited added springs to the bottom cushion, and back fill materials tended to be synthetic.

Pricing Guide:

73
73” Wide Full Leather Sofa
Material:  Leather (3 prices below)
Dimensions: 73”w X 35”d X 29”h
Seating: 60”w X 23”d
Seat Height: 21”
Arm Height: 25”
Feet: Wood
Cubic Feet: 49.8
Price (Leather Match):  $235
Price (Full Top Grain):  $365
Price (Full Semi-aniline):  $406  (as shown, semi-aniline has a slightly shiny/waxy finish, different pattern, and is more expensive)
***(Add a sleeper bed): $100 to the existing price
86
86” Wide 3 Seat Fabric Sofa
Material:  Fabric
Dimensions: 86”w X 34”d X 27”h
Seating: 80”w X 20”d
Seat Height: 19”
Arm Height: 27”
Feet: Metal with Chrome Finish
Cubic Feet: 53.1
Price: $159
sectional
Three Piece Corner Sectional
Material:  Fabric
Dimensions: 113”w X 113”d X 32”h  (depth for each section = 43”)
Seat Height: 21”
Arm Height: 25”
Feet: Wood
Cubic Feet: 164.7
Price: $372
theater
Leather Theater Seating (3 reclining seats)
Material:  Leather
Dimensions: 112”w X 36.5”d X 39”h
Seat Height: 20”
Arm Height: 25”
Feet: Wood
Cubic Feet: 104.1
Price (Leather Match): $465
Price (Top Grain + Split Leather): $499
3seat
Three Seat Reclining Sofa
Material:  Leather
Dimensions: 85”w X 42”d X 40”h
Seating : 69”w X 19”d X 20”h
Seat Height: 20”
Arm Height: 25”
Feet: Wood
Cubic Feet: 93
Price (Leather Match): $270
Price (Top Grain + Split Leather): $340

The Final Price

Above are some basic costs that seem great, but one of the problems with sofas is the size of the cartons.  To help find out if it is really worth “going direct”, all factors need to be taken into account.

Shipping: $1.60 per cubic foot to Los Angeles area.  This cost includes all shipping fees, port fees, and local trucking fees in the states.  Costs can change quite a bit depending on the freight company used and the logistics agent, but $1.60 is a decent ballpark figure.
Duty:  Duty can vary by country, but at this point shipping from China to the USA has no duty.

Local office: GoodFactories suggests that a local agent or employee be used to ensure your quality standards.  But in this report, it is not being considered a direct cost.  Once you feel confident in a supplier, you may choose not to have a local representative.  GoodFactories offers an inspection service, based on a low set fee, which allows a supplier to buy directly from the factory.

Actual cubic feet: If you are buying directly to your warehouse, a sofa can be packaged to save cubic feet.  For the prices below, it is estimated that a 15% space savings can be achieved (real space savings can exceed 10%, depending on the design).  If shipping to a warehouse to redistribute, then increase the cubic feet, so that the packaging supplied by the manufacturer can be reused.  Also, a good idea to enquire about is a “knock-down option” which requires a small amount of assembly at the retail store.

New Prices including freight:
73” Wide Full Sleeper Sofa = $301
86” Wide 3 Seat Fabric Sofa = $232
Three Piece Corner Sectional = $595
Leather Theater Seating (3 reclining seats) (Leather Match) = $607
Three Seat Reclining Sofa = $396

One may be surprised to know that if your process is efficient, sofas can still be manufactured in the States at competitive prices.  Ashley and American Signature both still manufacture in the US.

Warranty Information:  Many manufacturers will offer a 1-year warranty on the cushions, and possibly longer on the frame and reclining mechanism.  Some better ones will offer longer warrantees up to 5 years.

Special thanks for helping quote and research this project goes to: Haining Oyi May, Haining New Hongyang, Mihao Furniture, Zuoyou Furniture, Baotian Furniture, and Shanghai Chouqin Furniture Co.

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Quality Control is Easy: 5 Basic Steps to Follow

In Sourcing and Trading on January 18, 2009 at 6:31 pm

Ok, so quality control is never easy.  But, there are some basic guidelines that, if you follow them like the law, will make your life a lot easier.  Most large companies have systems in place, and I’ve found them all to be remarkably similar.  These concepts go beyond home furnishings, as I’ve seen them applied in the shoe, garment, and electronic industries.  Below is a basic summary of the key elements.

Create Master Standards

Written Orders and Spec Sheets:  The written order is the bible.  Make sure you have a very detailed spec sheet for every product.  Take the time to create a form for your company that is submitted with every order, so the supplier knows exactly the specs you wish.  Don’t leave details out.  The lack of details in an order means that you are essentially giving the option of “Factory Choice”.  If there is any question, you can even write in “all other specs are per the approved sample”.  Don’t give the factory the choice, unless you really trust them.

Approved samples:  Take the time to sign off on your exact product.  If the product you want to buy, already exists, then when you are at your supplier, you should take a permanent marker to sign and date the sample.  Even better, is to create a sticker that you can sign and date.  This lets the factory know that this is what you ordered.  When quality inspections are done, this and the written order are what need to be used.

Other steps can be taken, including establishing finish standards, if you are using the same finish on multiple items.  Also, you can even create item files for every sku you order, with images and notes on important details.  These can be used as a record for Quality Inspections, and should include the date of an inspection, the results, and any issues encountered.  These should be used by your company and can also be used by the factory.

Pre Production Samples (PPS)

If you have inspectors (internal or hired) in the country you are purchasing from, it is highly recommended that you take the next step, and review a “production” sample.  This should be a duplicate of your signed sample, or if there were any modifications needed, this may become your master standard.  Not only is it good to look at the sample, but you should make it clear to your supplier, that the PPS they supply should include packaging.  This way, you can ensure the packaging meets your standards.  Your team should sign off on the carton, and take images for future reference.  Please note, that carton marks and hang tags may not be finished in time for the PPS sample inspection.  You should not let this be a hang up, but should make sure that your written order has very good detailed images of the carton marks, and you should approve your hangtags, if you are not supplying them yourself.

Final Inspection

If you have completed the steps above, your final inspection should be a breeze.  The most common complaint I’ve received from lighting manufacturers, is that we did not supply enough information, and that is why they made the error.  There are quite a few ways to do a final inspection, but below are 2 ways I’ve seen used.

100% inspections, pre packaging: Make sure the factory knows the date you plan to view your goods.  Have them lay out the order in an open warehouse, along with your master standards, in an area with good lighting. Take out some random specimens and compare your master standards, item by item, and line by line.  If these are up to spec, go though the rest, and look at the key areas you expect a problem.  I suggest having a label created for your inspector.  This way, if a shipment comes in, and there is a problem, you know who to contact.  Also, the inspector will be more accountable.  If they are not willing to put their approval on a product, are you willing to ship it to your customer?  Also, make sure to have a few of the products in the packaging, so you can confirm packaging is to spec, carton marks are correct, and all labels and hang tags are in the correct locations.

Random inspections: This is the most common way for companies to do inspections before shipments.  The factory will have all the goods for the order already packaged and in the warehouse.  Your inspectors will go there, and select at random a select number of boxes.  There are guidelines and rules as to which level of random inspection is called for, depending on the size of the order.  If you have a good factory, and have gone through the above processes, than this is a more time effective way to do an inspection.  But, I would suggest the 100% inspections with new suppliers, until you feel you have confidence to move to random inspections.

Training

Last and certainly not least is the most important part of quality control in any situation.  Training your quality inspectors well is as important as all of the above steps.  You need to work with them, so they understand exactly how your quality control system works, and most important, when to ask questions.  They will run into cases where something is not 100% perfect, and they will need to make a decision.  Clearly defining what decisions they should make, vs. when to bring in a manager is essential.  Build a library of examples and images for them to review.  Spend time with them, and let them offer their opinion and make the decisions while you are there.  Once you feel confident that they can do this on their own, let them do it.  Managers can stop by unannounced on an inspection already underway, and help and offer advice, to keep the training going and to get feedback from them on the supplier.  You will be surprised how hard and diligent inspectors are, if you spend the time to train them.

Good Factories

The final note I’ll make, is that none of this really matters if the supplier you are working with is no good.  If you find a factory, which seems to not want to follow through with the steps above, or makes excuses why he cannot achieve what you have outlined, walk away.  The will power to move away from suppliers who are not meeting your quality inspections is probably vital to your future business.  There are lots of factories out there hungry for business and ship great quality.  We’re looking for them, and helping bring them to you.  If you have any recommend suppliers, we would be delighted to get to know them.  If you have had bad experiences, let the community know about it.  And, tell the supplier that you have written him up on www.goodfactories.com.  Good factories is a new concept to sourcing; where we promote improved quality and help factories understand the importance of quality though open critique, ratings, and reviews.

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