Overseas vs. Domestic

Option 1: Produce products domestically

Producing your product in the United States can come with some nice benefits, but also increased costs. First, having your product made here means shorter shipping times, and less need to have a bunch of stock on hand. You may even be able to get away with producing items as orders come in, so you don’t have to sit on hardly any stock. Domestic production also comes with the marketing benefit of being able to say “Made in the USA”, which can be a real conversion booster depending on who your target audience is. Depending on the product, you may also be able to have a higher standard of quality control (since you can personally visit the production line frequently) and thus produce a higher quality product. 

The downside of producing things in the US is that it’s expensive. Sometimes 5x or 10x as expensive as China. Which is a serious downside, and frankly breaks a lot of business models. Costs can soar particularly high  for unique products which have bespoke production processes compared to more common workflows (for example, a high-tech product that doesn’t exist or custom machined parts compared to custom tee shirts). 

Option 2: Produce overseas (mostly China)

Producing your product in China can easily be 5-10x cheaper than doing it in the US, which is why so many companies choose to do so. There’s also so much manufacturing going on over there, that it’s often quite easy to find an existing production line that can manufacture what you need for little extra cost. One of the best ways to do this is to go on Ali Express or Alibaba, find products that are similar to what you want to sell, and reach out to the factory. You can tell them the specifications for any changes or customizations that you want for your product and they’ll likely hit you back with a quote and minimum order quantity. 

There are a handful of downsides to producing in China though, especially with the recent increase in tariffs. If your product is affected by tariffs, there’s a chance that producing in China might not actually be that much cheaper than doing it in the US, so it’s important to look into the cost impact of tariffs on the front end. Another downside is shipping time. It takes a while (at least a few weeks) to ship things from China to the US. For this reason, you generally need a domestic warehouse to handle all of your order fulfillment so your customers don’t have 30+ day shipping times. This also means that you need to hold stock for all SKU’s of your products, which can be a substantial upfront cost if you have a lot of variants (like hoodies in size S, M, L, XL, multiple colors, etc.). A lot of Chinese manufacturers will also have minimum order quantities, meaning you have to commit to a higher upfront cost on that front too. And if something in the order is wrong or they didn’t meet your specifications, you have to wait another couple weeks for them to send you the revised product. 

Choosing whether to produce at-scale domestically or overseas is really up to you at the end of the day, and will likely highly depend on your product and business model. The important thing is to make sure you take all the pros & cons into account.

Depending on your product, you may be able to partner with a brand-development company that will handle the production and potentially even design elements for your product in exchange for a percentage of your revenue. This is a relatively bespoke business model, and won’t be available for every niche. Clothing however is an example where something like this would likely be possible - you just have to look around to find a provider to help you out. 

The basic idea is that if you can get a production company to buy into the idea of your business, they might be able to help cover some of the upfront cost of production in exchange for a revenue or profit share down the line. Although while this option is worth mentioning since it is possible, it’s pretty rare to come up with an arrangement like this, so don’t count on it.