Decade after decade, Asian countries like China have been the go-to for ecommerce brands looking to get stocked up on the latest goods at affordable prices.
And for good reason. The massive labor force, low production costs, and enviable worker skill sets have made trading the East a no-brainer for growing brand owners.
But these days, China isn’t the only player when it comes to viable ecommerce suppliers. Countries in Latin America have been leveling up their supplier game, tackling every supply chain stage from raw material sourcing to shipping. 📦
Take Puerto Rico, for example. In 2020, manufacturing made up a whopping 48% of the country’s gross domestic product (GDP).
And it’s not the only Latin American country to see massive supplier development. Mexico’s manufacturing production hit nearly 50% in April 2021, its highest level yet.
If you’ve been looking for ways to protect your business from global supply chain disruptions, help is on the way! Today, we’ll get into the many reasons why searching for your dream supplier in Latin America just makes sense.
Looking to expand your inventory manufacturing horizons? Find out how flexible funding can help boost your options.
The scoop on sourcing in Latin America
- Why partnering with suppliers in Latin America is a boss move
- 5 Latin American production hubs you need to know
- How to find the best suppliers in Latin America
- The right way to find suppliers in Latin America
Why partnering with suppliers in Latin America is a boss move 😎
By now, you’re probably comfortable trading in the East and may have even scoped out a few suppliers in the West. Because honestly, even if your supply chain isn’t working the way you need it to, better to stick with the devil you know, right?
Not necessarily. A growing body of evidence is pointing to the fact that suppliers in Latin America are well-equipped and waiting to help you reach your ecommerce goals.
But in case you need more convincing, let’s zoom in on why working with Latin America-based suppliers can be a boss move for your business.
Diversify your supplier base, reduce your risk exposure 💯
If there’s one thing we’ve all learned during the pandemic, it’s that diversification across your supply chain can save your business in hard times.
For example, say production and shipping issues arise in Asia, you can rest easy knowing you have a supplier on the other side of the globe that can step in and save the day.
Gain more negotiating power 🤝🏼
When you have business relationships in Latin America, you can use the rates and terms you get there as bargaining power with suppliers everywhere else. When approached correctly, you’ll be able to reduce your product costs and gain the best terms the world over.
Uncover new products and services
Every country has products unique to them. As you work with suppliers based in Latin America, you’ll be exposed to new items to sell. This diversity of product lines and offers can ignite your creative streak, inspiring you to improve existing products based on what you’ve seen in the Latin American market.
Save money on freight, taxes, and tariffs
It’s no secret shipping has become significantly more expensive in recent years. The closer to home you buy goods, the lower your overall product costs will be, and the healthier your margins.
For example, if your store is based in the US, your items can get to you faster from a Latin America-based supplier than a manufacturer in the UK or Japan.
Plus, if your brand resides in the US, you can benefit from the Free Trade agreements the US government has signed with Latin American countries like Mexico, the Dominican Republic, Chile, and Guatemala.
Take advantage of the Latin American tech revolution
Latin America is currently undergoing a massive tech transformation.
From innovative manufacturing machinery to cutting-edge materials, countries throughout Latin America are levelling up their production capabilities in order to compete in the global market.
These improvements are great news for your brand as they’ll help to speed up production, improve product quality, and reduce raw material wastage.
Communicate with your suppliers more easily
Language barriers are a real challenge when buying goods overseas. Requests can get lost in translation and large time zone differences can make it feel like you’re playing hide and seek with your suppliers.
You can work around many of these common communication challenges by partnering with suppliers in Latin America.
Not only are most Latin American countries Spanish and Portuguese speaking, but English is also widely spoken, making it easier to communicate no matter where you’re based.
5 Latin American production hubs you need to know
No longer famous solely for its world-class vacation spots, Mexico has worked its way to become a formidable force in manufacturing.
Boasting expertise in areas like automotive, medical devices, and electronics, Mexico is especially well-suited for brands with products that require engineering expertise.
Thanks to the lower cost of living in Mexico compared to countries like the US, labor costs, even for skilled workers, are significantly lower. But the most attractive benefit of manufacturing in Mexico is the Shelter program which allows US-based companies to operate in Mexico without legal risks.
#2. Costa Rica
If you’re looking for a country with a wide range of manufacturing specialties and supplier options, look no further than Costa Rica.
Costa Rica’s manufacturing specialties are just as diverse as its landscapes, broaching areas like medical devices, food, clothing, jewelry, and even aerospace. In fact, in 2020, Costa Rica exported over $3 million worth of medical devices.
Costa Rica’s high literacy rates, advantageous geographical positioning, and willingness to trade with different countries make it an easy pick for ecommerce sellers. But what really sets Costa Rica apart is its extensive manufacturing experience spanning more than 30 years.
With footwear being one of Nicaragua’s key specialties if you’re in the business of dressing feet, Nicaragua could be your missing glass slipper. 🥿
But Nicaragua’s production skills don’t just stop at shoes, its light production skills also shine.
Just like its neighbor Costa Rica, Nicaragua has a favorable geographical location and equally impressive skilled labor force you can tap into. And with some of the lowest labor costs in Latin America and enticing tax breaks under Nicaragua’s free trade zone initiative, manufacturing here will allow you to pass on savings to your customers and boost your bottom line.
No stranger to the manufacturing realm, Colombia has built up a robust raw material supply chain, supported by experienced professionals at lower costs.
Colombia’s manufacturing repertoire is expansive, covering products like coffee, spices, cocoa, processed foods, plastic, movie theatre furniture, and much more.
In fact, Colombia’s coffee, teas, and spices accounted for 5.6% of the country’s total exports in 2018.
So whether you’re on a mission to give your customers the best brews or help them spruce up their homes, Colombia’s growing supplier base has got your back.
Uruguay may be one of the newer countries on the supplier block, but its year-on-year manufacturing growth and growing production workforce show promising signs.
To give you an idea, Uruguay’s manufacturing production rose by 21% in November 2021, after a 6.9% uplift in October of the same year. Talk about a rapid uptick!
If your store covers multiple niches, Uruguay may be where you should set your sights. Its expertise in manufacturing goods like processed foods, petroleum-based items, textiles, electrical machinery, and beverages makes Uruguay a one-stop shop for multi-niche sellers.
How to find the best suppliers in Latin America
Ask around in your network
Networking is huge in Latin America.
Ask your network if they know any suppliers that have experience in manufacturing your product type.
Don’t know anyone in the region? Go ahead and join manufacturing-related groups on social media for the countries and product types you want to produce.
And don’t be surprised if a referral comes from a friend or a friend of a friend. It’s how some of the best business partnerships are formed.
Attend trade shows
We know. Trade fairs are so 2019, right? 😅
But when it comes to finding suppliers abroad, trade shows can dramatically speed up the process.
Since there’s often a big price tag to secure a booth, typically only the best-established manufacturers will have the means to attend. Once you’re at the show, take time to ask potential suppliers questions about their expertise, trading practices, and pricing to gauge your compatibility.
One other quick tip — online manufacturer directories and trade show participant lists can be a goldmine for stellar supplier candidates if you have the time to sift through the hefty lists. 😉
💡Pro tip: Don’t be afraid to ask to take photos and videos of booths, products, name badges, and business cards, and annotate the images as you go along. You’ll meet a lot of people during the trade show and it’s easy to go home and realize you can’t remember who you were most interested in speaking to!
Test the waters with multiple suppliers before you jump in
Once you’ve found a few suppliers who have successfully produced samples for your brand, it’s important to trial them over a few months.
You don’t have to drop your current suppliers cold turkey. In fact, it’s better to keep your current supplier contracts in place until the new suppliers have mastered the rhythm of working with you and your items.
Think of this time as a probation period where you can examine whether you:
- Like working with the manufacturer
- Are happy with the product quality and delivery times
- Can work together to iron out any kinks
Secure flexible funding to kickstart supplier relationships
Sending samples back and forth, trips to visit potential manufacturers overseas, and placing initial orders while covering existing ones — these are just some of the expenses you can incur when you begin your search for a Latin America-based partner.
Of course, once a successful supplier relationship is established, the cost-saving benefits can more than offset these expenses. But like all good things, it will take time until you get there.
To make sure your Latin American manufacturing journey is a success, you may want to secure flexible ecommerce funding to help you get started. At SellersFunding, we offer a variety of fast, flexible solutions designed specifically for ecommerce. You can learn all about it with a quick and visual demo.
The right way to find suppliers in Latin America
The rise of Latin America’s manufacturing industries has created some well-needed options for growing ecommerce brands to find better production deals, explore new products, and boost their overall ROI.
But finding suppliers in Latin America can feel like a daunting task when you first get started.
Our advice? Take the process slowly.
First, make sure you understand what you want to achieve by sourcing from Latin America, then look for suppliers that fit the bill. Look beyond experience and product quality, asking whether the supplier is reliable and if you can see yourself working with them long term.
Soon you’ll have new supplier relationships you can count on to scale your business and your profits. As you prepare to take on Latin America, don’t get blocked by tight cash flow. Find out how the right working capital can help.
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