What we can learn from Miniso about Sourcing and Importing from China

What we can learn from Miniso about Sourcing and Importing from China

Miniso, known as a Chinese low-cost retailer and variety store chain that specializes in household and consumer goods including cosmetics, stationery, toys, and kitchenware, went public in US stock market on Oct 15, 2020 and grosses 9.3 billion US dollars on the day of this writing, Feb 5, 2021.

Anyone who has visited Miniso stores knows that their stores are usually opened in the best locations in shopping malls or commercial streets. Their store is bright and clean with a combined style of Uniqlo and MUJI, but Miniso products are sold at a surprisingly cheap price, such as eyebrow pencils and lunch boxes both at 10 Chinese dollars(1.4USD), however, Miniso products seem to maintain a sense of design and reasonable quality.

How does Miniso manage to create good products and make profits at such a low cost?

To sum up, it’s pretty simple, supply chain.

State-of-the-art supply chain management enables MINISO to shorten the lead time in fulfilling design, production, transportation, and sales while maintaining low costs and achieving rapid expansion across China and the world over.

I would like to disclose some of Miniso’s key building blocks streamlining their supply chain.

1. Factory-to-store model, no middleman.

Traditional type of retail businesses normally need to deal with many moving parts such as distributors, wholesalers, retailers, etc but Miniso works with no intermediaries and only orders directly with the manufacturers. The products are circulated among 18 key giga warehouses across the world before they are dispatched to regional stores in various locations.

2. State-of-the-art Manufacturers

Miniso observes quality, production capacity and industry reputation before using any possible manufacturer.

They currently work with over 600 suppliers, some of which are global household names of OEM suppliers, such as Intercos and Cosmex for cosmetics and skin care, Givaudan for spices, Jiacheng Group for cutlery and Sanxiao for toothbrushes.

Miniso regularly provides counseling to their suppliers regarding product quality, production efficiency and cost management and even dispatches product managers to the factories to offer on-site guidance.

Moreover, Miniso does not go fully dependent on some of their individual suppliers for 1 same product, they keep order quantities for each supplier under 10% of the whole production plan.

3. Fast payment on time

Why are high-quality suppliers willing to cooperate with MINISO?

The founder of Miniso summed up their strategies as Owner Talks, Talk with Money, Talk Big Orders and Give Cash. Occasionally he personally carries out the negotiation in order to gain absolute attention from the suppliers and impress them with large orders and timely payment.

Miniso owns over 4,000 stores and gives birth to myriads of best sellers. For example, a certain model of eyebrow pencil could easily generate 100 million units in sales. This type of mass purchase with deep customization earns Miniso absolute success in bargaining power.

The biggest headache to most manufacturers is given by some companies too long credit term that puts their cash flow at high risk. To solve this problem, Miniso generously gives the supplier an attractive payment term of only 15 days, while most other big buyers could request months.

4. Digitalized Supply Chain Management

Our Key Takeaways from Miniso

However, few of us can be in parallel with so big a company as Miniso, but what still can we smaller brands and e-commerce sellers can learn from Miniso in sourcing from China?

1. Try to work with factories, if not directly, at least indirectly.

Miniso is a 100% Chinese company headquartered in China, so of course, they can easily find manufacturers and use their big orders to work with them. For the foreign buyers to do the same is more challenging indeed because they are difficult to find for them and their orders are probably too small to get attention from the factories, but there are still quite a couple of ways to do the exploration and identification.

It’s not just that you will get the sourcing costs lower but also you find it easier to access the available inventory and track and adjust the status and details of your production.

In the meantime, if you find it difficult to find manufacturers or just feel it’s too much hassle to deal with the Chinese factories, you may feel in goods hands of a product sourcing agent who will help you to enjoy the same level of transparency and assurance of your supply chain.

2. Observe quality, not just price to confirm a good manufacturer.

It’s important to have a good idea of the manufacturing costs of a certain product, to do that, you simply need to get multiple quotes from various suppliers and manufacturers, you find out about the median number which should reflect the true amount of cost in bringing out the quality at the question. But it’s not advisable to choose the lowest price without giving consideration to your understanding of their pursuit in quality production and long-term cooperation. In most cases, it’s really recommended to voluntarily pay a slightly higher price to get better services and keep your suppliers motivated.

3. Pay for the order on time.

Paying on time or paying early doesn’t necessarily put you in the less advantaged ground after you establish confidence with a supplier, it can say a great deal about your capability in acquiring enough cash for your project and your resolves in making the project a success. The suppliers would prefer to work with such suppliers and provide better terms and services than a buyer that delays payment, which is a typical sign of not having enough cash flow.

If your suppliers offer you some kind of credit, cherish it and honor the due dates so your suppliers can continuously give you support. Not abiding by your own words makes you look equally bad as a bad supplier.

4. Train your suppliers to use task management apps like Trello, Gantt, Basecamp, etc to manage a complex project.

If your project with the suppliers involves multiple products coming with varying lead times, you may find task management apps really useful for yourself in the first place, so it reminds you to push the suppliers to deliver the work within a certain timeframe. Although most such international apps are not readily used by Chinese companies who use most other localized platforms, take the time in giving recommendations and training your suppliers, you may find your Chinese partners quick enough to learn to use your recommended tools and the joint journey would become a more seamless one.