Follow the Data Episode 12: Sourcing: Manufacturing Lessons from a High-Level Seller
The manufacturer you choose to parnter with can have a huge impact on your Amazon business. A lot can go wrong: from late or damaged inventory shipments to having your supplier compete directly against you on Amazon. But there’s also huge potential for benefits like credit terms, discounts, and more time to focus on your business. Join co-host Cameron Yoder as he talks to a high-level seller about the experience of finding great manufacturing partners.
Follow the Data Show Notes
- Never sourced a product before? Check out this Forbes series that walks through the process of sourcing from China
- Want to learn more about negotiating terms with your supplier and getting yourself in to a more favorable financial situation? Check out Business Victoria’s quick overview of the systems you should be putting in place when it comes to your relationship with your supplier.
- Looking to source a new product to source but can’t find the right market? Check out our latest tool Product Discovery. It’s the fastest and most accurate way to find opportunity-rich products that meet your exact standards.
- Want to be featured on the show? Have a question about today’s episode? Reach out to our content team!
Podcast Transcript
CAMERON YODER:
What’s up everybody. Cameron here. Today we are going to get some insight into a topic that just about all sellers are involved in: that’s manufacturing. So I jumped on a call with a top-level seller that has been in the Amazon space for a good amount of time and has been in the ecommerce and manufacturing space for even longer. So we talk about everything from how is the manufacturing journey started to what he’s learned since then and is implementing now. There’s honestly a lot of great info here, so let’s get started.
CAMERON YODER:
Okay everybody so we have Adi here with us, and he is here today to talk about his manufacturing journey. Adi, how are you feeling?
ADI:
I’m doing great Cam, just gearing up for Q4 and launching a bunch of new products.
CAMERON YDOER:
That’s good man. New products are good. Especially in the craziness of Q4. So just to give everyone a little bit of perspective, can you just tell us a little bit about yourself, like how long you’ve been selling and what kind of the beginning of your journey has looked like, just with selling.
ADI:
Yeah, so I’ve been selling online for 4 or 5 years now. I started right after I graduated from university, and I actually got into the whole selling on Amazon thing only about a year and a half, 2 years ago. So most of my business actually happens outside of Amazon, and so I’ve got a different perspective on the whole selling on Amazon thing.
CAMERON YODER:
That’s interesting. So you said a majority of your selling is outside of Amazon.
ADI:
That’s true, yes. That’s right.
CAMERON YODER:
That’s good. That’s good. That gives … that’ll give … So you have kind of a really good picture of both then, and that definitely provides value. I would say you’re a master at both, and so you would be able to provide … I would consider you a master at both at least.
ADI:
Well I’m trying to do my best.
CAMERON YODER:
Yeah, that’s good. That’s good. So we’re talking about, we’re talking about manufacturing, specifically, and so again your unique background, your unique perspective is just really really valuable in these cases, especially for a lot of people listening. So touching on, let’s touch on Amazon specifically. How did you find or when, when and how did you find your first manufacturer? Do you remember that?
ADI:
Yes, for Amazon specifically it was a simple search on Alibaba, which lead me to finding, for the niche that I’m in, probably 20 or 30 suppliers, out of which I had to narrow them down to 6 or 7, and so it was just a simple search in Alibaba, started Skyping with them and you know, got samples and then took everything from there.
CAMERON YODER:
Okay, so how long in your ecommerce and your manufacturing experience journey was Amazon? Where along your selling line did Amazon come into play? You had already been selling a couple years before then?
ADI:
That’s right, so I had been selling for a couple years already and then I launched into Amazon just about 2 years ago. So I’d been doing this for a couple years before I got into Amazon.
CAMERON YODER:
So what then was your very first manufacturing experience like? Do you remember that far back?
ADI:
Yeah, I remember I … in the beginning I was primarily just concerned with the cost of the product, which I learned over time is not necessarily the best thing to do. So I tried just finding the cheapest supplier that I could because I thought that that would bring in the best return, and that was the first mistake that I made. So you know, really, the mistake I made was finding a supplier that was not the highest quality that was willing to cut corners. And over time I’ve just kind of learned what things to look for rather than just price.
CAMERON YODER:
Yeah, how did you feel going into all of this for the first time? So putting yourself back in your younger shoes when you were finding a manufacturer for the first time, what were you feeling?
ADI:
That’s true. Okay, I guess at that time I … it was really new. I mean, I’m gonna talk when the first time I actually looked for suppliers. This was before my Amazon days. At that time I didn’t really know where I would be getting the supplier so you know, I asked around friends, and I was told, you know, look on Alibabab because China is where the, most of the stuff is made. So went on Alibaba not knowing anything about what to expect. So set up my account and just started talking to these people from across the globe. And it was actually my first time talking to somebody from China. And there was some communication barriers, and it was a steep learning curve. But in the beginning I was a bit apprehensive just because I didn’t know what to expect. I just thought it would be better to manufacture stuff locally because I can trust the person. But you know, I quickly found out that you can actually source in China, and there are some very good factories there. Sure there’s gonna be scammers in pretty much every country that you work with, but if you really dig deep, you can find a really solid supplier. Ever since then I haven’t looked back, and I’ve just been sourcing from China.
CAMERON YODER:
Where you, would you say you were, when you first started, where you pretty confident in yourself or do you think you were more just apprehensive or scared or?
ADI:
I was pretty confident that I was gonna be able to run or like start a business and then grow it. I definitely was apprehensive about working with the Chinese suppliers just because I never heard of anybody or knew anybody who had worked with one. So that definitely took some time for me to get used to and get comfortable with, but I kind of just took it one day at a time and acclimiatized myself to working with the Chinese suppliers. Once I received their products and tested it compared to what a US supplier was providing, it was essentially the same product, and in a lot of the cases, the US supplier that I was working with, they were importing it from China and just being a middle man. So you know, I just realized quickly it’s best to work with the Chinese suppliers.
CAMERON YODER:
Yeah, okay. Now, so you touched on this a little bit, but talking about your … again we’re still kind of talking about your beginning phases of when you started out, but what were your criteria for finding your early manufacturing partners or did you have any criteria at that time. So you talked about what the first wanting to get products that were a little bit cheaper, right? To save on margins or just because that’s what you thought would bring you, bring in a lot of sales, so what were your early, what was your early criteria for finding these people?
ADI:
I mean, it was pretty simple. I just wanted something really cheap, and I didn’t want anybody to screw me. So that that was it. You know. So at that time that was basically it. I did not care about the quality of the product, which in hinds sight was just an absolute mistake. At that time it was just you know get the product over quickly, start selling it, and start making sales, which did happen, I did make money, but you know if I had to use the criteria that I have now for picking a supplier I would have done a lot better.
CAMERON YODER:
Okay, and we’ll touch on that soon, on your criteria now and what you’ve learned since then. But one last question on kind of the start of your journey: did you ever have a moment where you thought, “Okay, this is going to work.” You mentioned before that you, yes you did make money, but when was the moment when you knew, okay this is big, this is going to be big, I know this is going to work, and I’m going to keep on doing this. When was that?
ADI:
Well, you never really know if it’s going to work or not until you put it out into the market, right? So it could be the best product, in your opinion, in the world, but until you put it out in front of the customer, and the customer decides to take our their credit card and purchase, you haven’t really done squat. So the moment for me was when I actually did put up the product on Amazon and you know, I made my first sale. And it didn’t really even take a lot of effort. I worked on optimizing it and got the first bunch of reviews. I made my first sale within 6 or 7 days of going live. That’s when I knew I had something going, and just double down and invest into a bunch of other products.
CAMERON YODER:
So you kind of, just after that initial point in time, you kind of realized oky I’m gonna go all in
ADI:
Yeah
CAMERON:
Because I recognize that what I’m getting from this and that it works. Right?
ADI:
Yeah, and you know just compared to my previous experice selling in ecommerce, it’s a lot easier to sell on Amazon just because the traffic is already there and you’re just tapping into Amazon’s power and putting your product in front of the customer, so speed of execution to me is probabl the #1 thing that I would emphasis. I mean if you see something that you even have and inkling that it’s working, double down on it, I mean, do no wait around because if you’re gonna wait around, someone else will double down, and you’re just going to be left behind. And you know, as soon as I started seeing some sort of traction, I just doubled down. I air shipped a whole bunch of other products. I did not care about that immediate margin that I was losing out on by air shipping, but I wanted to get in front of the customers get my rankings up and so yeah that’s what I would say about that.
CAMERON YODER:
Did you test the market a ton while you were … so you said follow the inkling, right? And so did you just see a market and because of your experience with selling before say “Okay, I know this is worth the risk, like maybe it’s not going to work,”
ADI:
Right.
CAMERON YODER:
“But I see these metrics and I know that the market’s going to work.” Did you test that market out physically, like did you order a small amount of products at all, or did you just jump straight in, ordering a decent amount of inventory in the market full force?
ADI:
Yeah, the product that I picked cost only about a dollar a unit, so I was able to order 1,000 units so it was a small thousand-dollar order. And so in terms of the risk, I hadn’t really taken a huge amount of risk. Yeah, and the product was light also so I didn’t really need to wait for sea shipping. I just air shipped it over for a couple hundred bucks. You know, essentially from the moment I had placed the order to the time when I was live on Amazon was, I would say, 30 to 35 days.
CAMERON YODER:
Wow.
ADI:
Yeah, and because this product takes 15 to 20 days to manufacture and then after that the air ship did it after which it went to Amazon, so like I said it was just speed of implementation and had I sea shipped it, who knows how much further that would have delayed everything.
CAMERON YODER:
Do you think that’s still possible for sellers now? Like do you think that ability to just go head-on, straight-on into a market is still alive today?
ADI:
It’s alive, yes. I mean, it really just depends on … it comes down to you as a person. If you are willing to just execute quickly and not wait around, you might stumble along the way but you’re gonna be that much further ahead than somebody that waits 6 months and then finally gets a product out. It just comes down to your risk tolerance. If you are willing to take a bit of risk and know that the reward is gonna be waiting for you the sooner you get there … Like if I told you that the next 10 products that you launch on Amazon, there’s gonna be one that generates $100,000 a month for you. How fast would you want to get to that? Right?
CAMERON YODER:
Yeah
ADI:
That’s the thinking that I had is, you know, I could wait 3 years or I could wait 4 months. And I just decided to take the approach that I’m just gonna go all in because sooner or later I’m gonna hit my homerun. And in my case the first product wasn’t the homerun. The second one was, and that product didn’t end up getting to 80 to 90 thousand dollars a month in revenues. And how I just waited around, that wouldn’t have happened.
CAMERON YODER:
I think that’s interesting because we do, I feel like a lot of sellers hear about successful sellers who made a homerun with their first product and then because of that first product, they were able to carry through and keep going. But you, you kind of kept your head up and you kind of kept going until you opened that 10th door or that 20th door that had that good product to sell.
ADI:
Yeah, I mean you just have to believe that it’s gonna work out for you, and if you’re being smart about it, if you’re following the data, as Cam says, you know, you’re eventually going to run into a product that’s going to make you a good amount of money. And now it’s just your choice whether you want to get there sooner or later. And in my case I am willing to double down on what I’m doing and try to open all those doors as fast as I can. So that’s what I would encourage everyone to do as well. See what your risk tolerance is, make an educated decision, and then just dive in.
CAMERON YODER:
That’s good. I love it. So kind of moving back a bit to manufacturing. So since you’ve started your journey, what are some of the biggest road blocks that you’ve run into, considering everything to do with manufacturing.
ADI:
Yeah, so since I’ve started the biggest roadblock that I’ve run into for my business has been related to running out of stock. The absolute worst thing you can do as a seller is run out of stock because, you know, it takes a lot to get a product into Amazon and get all the rankings and reviews and optimize the product. And if you run out of stock for any reason that is just not acceptable. And for me that happened for a bunch of reasons. It was just mis-planning. I had the funds available. I just had so many skus that I was dealing with that I lost track of which products were in stock and which products weren’t. And so that lead me to hiring somebody who their only job is to make sure that we are fully in stock all the time. I would say the biggest roadblock in my case has been that. I’ve had some other roadblocks. I’ve dealt with some suppliers that tried to screw me that were just scammers. I’ve even had a supplier who tried selling my product on my listing on Amazon because they had the artwork, and so I’ve dealt with a bunch of issues. The way I look at them is they are just temporary setbacks. You just kind of have to work one of them at a time.
CAMERON YODER:
That’s interesting. So talking about the amount of skus that you handled. When, was there a specific amount that everything started to get super overwhelming that you couldn’t necessarily handle it yourself?
ADI:
Yeah, I would say as soon as I was at a dozen products at that time, it just becomes a lot for you to juggle everything just in your head. The room for error is just a lot smaller at that point. It also depends on how many units you’re dealing with. If you’re selling a higher priced item—if your item retails for $60, to make the same amount of revenue, you don’t need to sell the same amount of units in which case you’re not going to need to watch your inventory as closely, but in my case I’m moving a lot of units because the price points are lower, and so for each product, at any time my initial orders with suppliers are anywhere from 4,000 to 6,000 units. That adds to the lead time; that adds to inspection of the goods and everything. So it really also depends on which niche you’re in and what your product portfolio looks like in terms of retail pricing.
CAMERON YODER:
So as you continued to grow, as you added skus to your list, and again kind of expanded on capitalizing, or bringing someone on to your team to handle all of that inventory and timing, but on top of that, as you started to grow your sku count, I’m guessing that you started to increase the number of manufacturers that you were also in touch with. Is that right?
ADI:
Well you would think that, and initially it did happen. But what I’ve learned over time is to cut down the number of suppliers that I work with. For example, last year I was working with 8 suppliers. This year I’m working with 3 suppliers with actually double the amount of skus.
CAMERON YODER:
Oh wow.
ADI:
And you know there’s really a handful of reasons for that. One is it just saves a lot of time. You know, you’re not communicating with 8 or 10 different suppliers at any time on What’s App and Skype and email. So it reduces a lot of the communication, which the communication can delay a lot of the stuff as well. The other thing is they can consolidate everything for you. So when you’re shipping, rather than shipping from 8 different locations, now I’m having only to ship from 3, which also saves on customs and duties and handling and everything. And for me the biggest benefit has really been—because I’m ordering such volume—I can go back to these suppliers, the 3 I’m working with and say “Hey, I’m getting a lot more business. What can I get in return. And you know, it just comes at a price at that point. So I’ve been able to cut down on price by as much as 30% per unit just by consolidating my volume with these 3 suppliers. Because at that point you become a bigger client for them.
CAMERON YODER:
So do you think that a seller’s goal should be to establish themselves in … let’s say they’re selling skus across multiple different niches, right? If he or she has a supplier or manufacturer that only focuses on kind of one specific niche, then should he or she try to focus on finding a manufacturer that is pretty wide spread and will be able to manufacture an array of items if that’s what they’re interested in?
ADI:
It would be hard to find that kind of a supplier. For example if you are in, for example Beauty category, and you are working with a supplier, it’s going to be really tough to get that same supplier to make electronics products for you. What I would do in a case like that is I would find an agent, which I’ve also done. If you find an agent, you will … the obvious biggest reason of finding an agent is you will save a ton in terms of communications. That one person will be the contact for you and all these suppliers, especially if you have different categories you’re selling in. So in terms of communication, it’s gonna cut down a lot of time for you. Second is, you’re never going to be able to negotiate as well as a local Chinese person will be able to. Because that person will get on the phone and they will just hammer it out and they will bring down the pricing by as much as 20 or 30 percent. Generally agents will charge you 5% of the order fee, so if you’re order is $100,000 they’ll charge you a $5,000 fee, which might seem like a lot, but if you compare it to what they are saving you, it’s actually not a lot. So if a person is in that situation where they’re not tied to any particular niche, I would prefer to go just with an agent because they will save you a whole lot of headache.
CAMERON YODER:
Was there … would you recommend … is there any specific time that you think would be best to bring an agent on in terms of the level of sales that they’re at or just in general at any time if that’s what they’re interested in, which would be kind of diversifying in many different niches.
ADI:
I would say today is the best time. Because you know the great thing about a lot of these agents is they only charge you based on the order. So if they do a whole bunch of work for you and you don’t actually go through with it, you don’t have to pay them anything or at least that’s the case with the agents that I’ve found. So I’m only paying them if they’re able to save me money, and you know, in that case you’re not losing anything out of your pocket, even if you’re starting with a small order of $2,000. 5% of $2,000 is like, what, $100? Right, so you’re saving yourself a whole lot of time and money. So I don’t think there’s any wrong or right time in terms of bringing an agent on. It just depends on your own preferences. Personally I find that with an agent, if you find them and you trust them they’re going to have your back; they’re going to save you time; they’re going to save you money. And overall, there’s just no reason to not have an agent.
CAMERON YODER:
That’s good. That’s good. Changing gears a little bit, there are sellers that do swear by traveling to meet their manufacturers in person, and so my next question to you is a.) have you traveld to meet your manufacturers and if you have what was your experience like? Was it a positive one? Was it a negative one? What benefits did you both receive from that experience?
ADI:
I have gone to China, although I don’t think you need to make a trip down to China to source a product. You don’t need to do that at all. I went there because just this year I was placing a significant order of a product, it was like 400,000 units, and I just wanted to go there in person, make sure everything was going fine, and you know, in terms of going there, you don’t need to be there. But the reason I would go there would be, once you have a sizable amount of orders coming through, let’s say you’ve been working with a supplier for some time, and you’re placing a decent amount of volume with them, going there has a couple of benefits. First for me, I just wanted to go there, check out the factory, and just see the working environment is, how the workers are treated and things of that nature. Second, meeting in person as far as the business is concerned … you’re going to have a much harder time trying to get credit terms with these suppliers just over Skype or What’s App than if you were to go there, not only meet the suppliers, the agent they are working with there, but … You know, when I went to see these factories, in pretty much all the cases I ended up going and meeting the President of the company, and when the president of the company has met with you and they tell the sales person, “Hey, let’s give this guy some credit terms.” That’s a lot more effective than you asking for credit terms just as a blind face over the internet.
CAMERON YODER:
Yeah. Yeah.
ADI:
So in my case, I didn’t really go there expecting this, but this was just one of the benefits that came out of it was … generally when you’re placing an order with a Chinese factory, they are going to want you to pay everything up front before your goods ship out. The next level to that, which you should always try to do, is have them extend credit terms until the goods arrive at your port, so if you are shipping out the goods today, and the goods are going to arrive at LAX in less than 20 days, let them know, “Hey, can you ship out the goods and I’ll pay you in 15 days.” So that’s like the second version, but at this point the credit terms that I have with my supplier, simply because I was able to go to China, are: I pay them 15 days after the delivery in the US, which just again saves so much capital for me. I’m able to invest that into growing the business. Overall it’s just … why wouldn’t you get credit terms if you can?
CAMERON YODER:
Right. Are there any other credit terms that you think would really benefit sellers?
ADI:
In terms of suppliers?
CAMERON YODER:
Yeah, in terms of suppliers.
ADI:
I mean, in reducing that whole initial down payment, some suppliers if you’ve been working with them for some time they will bring that down. I think originally when I started out they were asking for 40% up front. This time I only give 20% up front. And that’s an extra 20%, and let’s say my order is $100,000 that saves me an extra $20,000 that I can put into launch a couple of new products. And so I would say there’s a couple of things, you can ask for a lower deposit, the second thing you can do is try to see if they will let you pay before the goods arrive at port, so you’re not paying everything up front. Most of the Chinese suppliers will not do that, just because that’s just their rule and things like that, but if you’ve been working with them for some time, which is another reason to just stick with a supplier if you can, rather than just switching around, is because you build that solid relationship with them. And in, especially in China, relationships are everything. If they have no need for … even a year, that might not be enough. But even working with them for a couple of years, that’s when they really start to warm up to you. And you know, if you get the chance to go down there, definitely try to negotiate terms. Tell them, “Hey, I’m willing to sign and negotiate a contract that you might want that I will pay you on time.” But I would say, just in terms of the delivery dates, try to see as far as you can extend the credit terms.
CAMERON YODER:
Yeah, that’s good. I think that information is really beneficial, actually for … just across the board. For people starting or people in the middle or high level. It’s good for people to know because often times I feel like many people don’t necessarily think about it. Or they don’t even necessarily think to ask when really all they have to do is maybe ask in a strategic way. But also, just kind of put it out there.
ADI:
Yeah, like I mean think about it, my whole trip to China probably cost 2 or 3 grand. And in terms of going there, not only did I get further discounts because I straight up asked the president of the company, I was like, “Hey, look: I started with you, my first order ever was $20,000, this year I’m placing order in excess of $200,000, don’t you think me increasing your volume by 10 times should allow me to get some sort of discount?” And right away, she was like, “Hey, give this guy 10% off.” So on that sizable order, you know, I paid my trip off 6 or 7 times over, just by being there.
And that would not have happened had I not stuck with the supplier for awhile, with this supplier, I’m probably manufacturing 20, 25 different products. And had I dispersed all of that amongst 3 or 4 different suppliers I wouldn’t have that buying power to negotiate a deal with her. And that’s why, if you find a supplier that you can trust, that you’ve been working with for some time, that you know is going to be around for awhile, try to consolidate as many of your orders with them because it’s … at the end of the day it’s going to be a win-win relationship for both of you.
CAMERON YODER:
Right. No, that’s good. So kind of moving on a little bit, let’s move on to a different question, let’s keep on going. How is—just broad overview—how is your sourcing process, your manufacturing process, different now than from when you first began.
ADI:
Yeah, so in terms of when I started versus today, my criteria has changed significantly. When I start talking to suppliers now I have a very strict criteria. First is they have to be very honest and transparent with everything they’re doing. So the first thing that I ask them is—before even pricing and anything like that—is are they willing to have inspection done? Are they open to factory visits? Are they open to signing agreements with me, confirming delivery dates? Because if they’re not willing to do that, then they don’t trust their ability to deliver or they might just be a trading company, which I’ve actually run into that issue too where it was just a paid factory, and they were just talking as though they are the actual manufacturer.
CAMERON YODER:
So before you even talk about money or prices or anything like that you ask those questions?
ADI:
I ask those questions, and those questions are more important to me because I have friends who lost 50, 60 grand just on an order that was a faulty product because they forgot to get the inspection done. And if … you know I may not get inspection done, but I’m going to ask the question in a way where it sounds like for sure I’m getting inspection done. I give them a date, I say “Hey look, if I place an order with you by the end of this week, 35 or 40 days from now, my agent, which is this and this company, is going to be coming to your factory to inspect. So I may not actually send the agent, in most cases I don’t, it’s almost like a bluff. I’m calling their bluff to see if they’re gonna be okay with that. And you’ll find that the good ones they’ll say “Hey no problem. You can send anybody in.”
And the other thing like I said before, running out of stock is probably the worst thing you can do when running your business, so you want to have things in writing with these suppliers. Where … I basically at this point tell them, “Hey look, you tell me when you’re going to be ready to ship by because based on that I’m going to send you by down payment.” If you tell me it’s going to take 30 days, I expect to [inaudible] in 30 days. If you don’t think it’s going to be 30, if you think its’ going to be 45, just tell me. And as soon as they confirm that, I put it into a written agreement, send it to them, and they agreement outlines that if you’re late by a day, every day that you delay by, you have to reduce the cost of the product by 2%. And you know, that really gets them going in terms of get prioritize my shipment or somebody else’s who doesn’t have an agreement like that in place.
CAMERON YODER:
Has anyone ever, any manufacturer, ever refused to sign a document like that?
ADI:
Yeah, yeah they have.
CAMERON YODER:
In that case, would that be another factor, another filtering factor for a manufacturer? Like okay, if you’re not going to sign this then, I don’t want to work together.
ADI:
For sure. I’m not telling you to sign something you … like you’re telling me the days that you’re going to take, like if you think it’s going to be 60 days, tell me 60 days, but stick with that. All I’m asking for is transparency.
CAMERON YODER:
Right.
ADI:
And I’m not saying you have to manufacture in 30 days, I’m asking you what it’s going to take. And if they’re not willing to sign that, I mean, that’s just a red flag for me. Like if for example, I have Q4 coming up and this guy can’t really promise me that he can deliver in time, I’d rather order from somebody else who will. And the legitimate suppliers who know that they’ve got enough man-power in their factory to be able to produce the order in time, they will say yes to that question.
So you want to ask them up front, “Hey, are you … I’m going to be sending an inspector, is that okay? I’m going to be coming in for a factory visit, and are you willing to sign the agreement for delivery date?” So those are the initial questions. The couple of other things that I look for is the product portfolio. It is so much easier to work for a supplier who can supply you with a whole range of products, for example if you’re selling supplements and you’re selling Vitamin C, if this supplier can make Vitamin C and also Vitamin D and Vitamin B, that’s so much easier than trying to go through that whole process of negotiation and seeing how good they are. So just seeing what their catalogue is … one of the first things I ask them is just show me your entire catalogue. I might not be ordering all of them, I might be ordering 2 or 3 products, but I just want to see what you have so for down the road, it’s going to make my life easier. I’ve often times gone with suppliers who had a bigger and better catalogue than the suppliers who were giving me better pricing because a lot of people don’t factor the cost of time into all this, and it can just take up too much time to work with multiple suppliers.
CAMERON YODER:
That’s a long-term strategy. I do feel like it is, it’s hard for people to think longer term. And finding a manufacturer with a large portfolio like that is definitely a long-term move, which I think is very important if you’re very serious about the Amazon selling game, then that would be a move to think long-term instead of short-term.
ADI:
Yeah, I mean if you’re not thinking 2 or 3 or 5 steps ahead, you’re not planning for success. If you just want to be a 1-product seller, that’s completely different than actually wanting to build a brand that is long-term. So you don’t just have to think about this product, you have to think about okay what is the company that I’m building? What is the portfolio going to look like? You have to walk backwards from that, and if your partner, which in this case would be the supplier is able to supply your entire portfolio, guess what, you just saved yourself a whole lot of time because when it comes time to re-order the second product, you’re not gonna have to go on Alibaba again and do all of that again. You can basically just message your supplier on V-Chat or Skype and say, I also want to order this product: here is the artwork for it. So you definitely want to think at least a couple of steps ahead because that again will save you a whole bunch of time and really that’s a real way to build a company is not to look at product by product, but to look at what you’re building and plan backwards from there.
CAMERON YODER:
That’s good. That’s good.
ADI:
And then in terms of … that’s the criteria that I look for now, but another thing that I’ve noticed recently in terms of what’s going on with the manufacturers, I’m seeing a lot of factories are coming directly to consumers on Amazon. And I touched on this earlier, but I had one of my suppliers who I am no longer working with obviously now; they took my products and shipped the to Amazon under my account. They started competing with me. So that’s another question you want to ask them right away in the beginning is “Do you guys happen to sell on Amazon?” And you want to ask it in a way where you’re not being suspicious, you know, because you dono’t want them to lie to you. And if they say “Yes, we’re selling on Amazon,” you know, you want to be careful with that. You want to make sure they’re not going to come and sell on your listing or I even had my friend who was also selling in the same niche as me, I offered to tell them who my supplier is. She contacted the supplier asking what the dye line for the product would look like so they could make their own packaging, and this guy sends my artwork over to my friend.
He had no idea that I’m related to this person, so he’s sending my artwork out to my competitors. So I messaged him right away, I was like, “Hey, what the hell is this?” So you don’t want somebody like that. You want somebody you can trust. If somebody is willing to do that behind your back, it’s just one strike and you’re out. So ask them if they are selling on Amazon already because that is what I’m seeing a lot happen lately too. They’re just going directly to customers, and essentially what you’ll be doing is—they’re already selling on Amazon—is you’re sourcing from your competitor. And you know, that competitor may not have your best interests in mind. So if they say they sell on Amazon, I’d try to find another supplier.
CAMERON YODER:
So I feel like. So the market has kind of changed. As Amazon has increased in popularity, I would say that the door just for ecommerce in general has opened up to a lot more people than probably maybe 3 years ago even. It’s a very short period of time, but a lot more people are in the game now, and so as a result I do believe that maybe as a result or part of a result of that is manufacturers selling products that they produce on Amazon. But in the manufacturing market as a whole, from what you’ve seen—because you’ve been in the game for a long time—how has everything changed? Like how has manufacturing and the process of someone from here selling online, being in touch with a manufacturer, how has that whole game and the market changed over time.
ADI:
Like here in the states, you mean?
CAMERON YODER:
Yeah, speaking from the perspective of people here in the states, how has the game changed?
ADI:
Yeah, I mean 100% you’ll find that if you reach out to a supplier they will have clients who sell on Amazon, and this was not the case 2 or 3 years ago. The whole business of selling on Amazon has kind of just exploded, as you mentioned, and pretty much every category that you can think of, sellers have gotten in and so you know, that’s been a big change for better or for worse. But that’s also lead overseas suppliers to come in as well because they can see the opportunity, and they say “Why shouldn’t we go directly to consumer?” But I mean, the competitive landscape has definitely changed. And it will continue to change. Every year that somebody waits to get into the selling on Amazon game, they’re only shooting themselves in the foot because, guess what, next year it’s gonna be harder than today. It’s a great opportunity today, like it might be more competitive than it was last year, but I’m seeing guys get in today, starting to make a killing 2 or 3 months after they get in. So even though it might be more competitive, there’s a bunch of different niches where you can get in, and obviously Viral Launch has all the tools for that. It’s never too late to get in I would say.
CAMERON YODER:
I would agree with that. It might be more difficult, it’s probably going to be more difficult down the line, but it’s not going to be impossible.
ADI:
Think about it just like this. A simple way to think about competitive landscape is, if you take for example Vitamin C, right? Two year ago, the average review rate, or the review count for the top 6 people when you search Vitamin C, may have been 1,000 reviews or 800 reviews or 600 reviews. Today that’s … that average has gone up to 3,000 reviews or 4,000 reviews. Guess what. In 2 years from now that might be 10,000 reviews. And to be able to get in as a new seller, it’s just going to be that much harder. So what you want to do is you want to find those niches where the average review counts are not as crazy high. And you can establish yourself as a top dog in a couple of years from now. And there’s still a lot of products and niches that you can get into where the top dogs don’t have a whole lot of reviews, so that’s just like 1 tidbit I would say, when sourcing products, try to avoid products where you’re seeing a whole lot of sellers already that have been established for some time.
CAMERON YODER:
Of course. That’s good. So talking broad overview again, what—because we’re kind of narrowing down here, we’re kind of ending, getting close to the end of our time but—what would you say are 3 key practices that sellers can start implementing right now to help their manufacturing and just selling process in general right now?
ADI:
Okay, there’s a bunch … I would say first: know who you are working with, and try to find somebody who is going to be a long-term partner. Try to figure out, is this going to be somebody I can see myself working with for the next 2 to 3 years? And you know, ask the right questions to determine that. Then negotiate, negotiate, negotiate. Try to negotiate as hard as you can on the price because that extra 30 or 40% savings that you see, and you know you would be surprised, you can get 30 to 40% off on top of what they quote you in the beginning. Because that’s just their listing price. And there’s a few ways to do that. I’ve even gone as far as creating V-Chat groups with a couple of different suppliers and just let them butt heads. And I’ll see who comes out on top and go with that. The best way that I’ve found though, if you happen to have a friend who speaks Mandarin, get them on a Skype call with a supplier because they’ll do a lot better in terms of like negotiating. Another way to do that is just to find an agent in China. That again is a little bit harder if you’re just starting out, but you maybe will find one when you go there and you visit them in person. In my case what I’ve done is I’ve actually hired an ex-supplier to become my agent. So I had somebody who was working for the company that I used to source from, and you know, she was moving to a different province and whatnot, and she was going through a bit of a different period, so I asked her, “Hey why don’t you just come work for me?” And eventually she just started doing everything in terms of creating my FBA shipments from China, ensuring all the carton labels are put on properly …
CAMERON YODER:
Smart. That’s smart.
ADI:
She actually, because I mean, you know one thing I’ll tell you is these guys work way harder you’ll be able to find here in the US. Second is they are so used to getting paid on commission, so they’re base salary generally start from like $400 to $700 a month, and they make only on top of that what they’re able to help you in terms of like profits or orders. So you’re actually saving a lot, and you’re finding somebody who’s just a gem, who knows the Chinese market inside out, who knows the whole selling on Amazon situation, and they can be trained on it. Like creating a new shipment and putting carton lables on and things like that, you know if you can find somebody who’s already there, who knows it, that was one of the things that’s really helped me as well. And then you know beyond that I would say make sure to have some written agreement with the supplier, especially when you get into bigger orders, you could really … I mean at this point I get insured for every shipment that I get from overseas because I’ve had a couple of shipments where the goods got damaged in transit, and you know, I just lost 8 or 10 thousand dollars because of that. So I get insured for that. You may not need that right at the beginning. But definitely have an agreement in writing for when they’re going to be shipping the goods out because the last thing you want is delays on your end because that affects your business, not theirs. And you know, another best practice, I guess this would be for more the medium term, ask for credit terms, and all you have to do is ask for it. Even if that means they extend 15-day credit terms, which means you pay them before the goods arrive at the port, that can really go a long way.
CAMERON YODER:
That’s good. Final question here. This is touching on you. Final question, and then we’ll take off. What are you specifically looking to do next when it comes to manufacturing and what are your next steps as a whole in the selling process in general?
ADI:
I’ve gotten to the point where I’ve put a good system in place, so I don’t have to go around looking for suppliers and do the whole find-a-supplier thing. I have suppliers at this point who can make any product that I tell them, you know, I basically have to tell them, “Hey, these are the ingredients that I want in the product,” and they can formulate it because the 3 factories that I work with now, they’re really large, and they can, you know, they have the capability to do that. That’s one system in place. The other system in place is I have somebody on the ground working in China who helps me do basically everything I need. They schedule the shipments, they will coordinate everything with … through the suppliers. And you know, the whole sourcing from China thing for me at this point is just … it takes maybe an hour a week because I deal with this person that I have there. She does all the work. I just have my employee. I let her know what needs to be ordered and how many units, and she handles the rest in terms of like placing the orders, creating the shipments, packaging and cartons and everything. So I think it’s a sweet spot that I’m in, and it can definitely be achieved by anybody.
CAMERON YODER:
That definitely takes a lot of trust. It takes a lot of trust. I’m sure you’ve built that trust and that experience with that person, but I’m sure it’s a hard spot to get to but again since you are in such a sweet spot, I’m not going to say that you haven’t worked hard to get there. Like you’ve gone through a lot to get to this sweet spot and where you’re at right now.
ADI:
That’s true. You know, I’ve actually made 3 trips down to China. This person is actually my friend now, so I mean we talk about stuff other than business too. So you know, and just it does take time, so you’re not just overnight just going to find this person that’s going to be able to do everything for you on the ground there. But just start with small steps. Try to find a good manufacturer, and if they can meet all the criteria that I just mentioned, I think that’ll hopefully save you guys time and some money too.
CAMERON YODER:
Well Adi, thank you—seriously—thank you so much for being here. Thank you so much for talking about your experiences, what you’ve learned. You’ve obviously been in the game a long time, and you’ve learned a lot. So thank you so much for sharing everything with us.
ADI:
Hey thanks Cam, it’s been an honor, and I mean a lot of stuff that I’ve learned is directly from you guys at Viral Launch, so I … it’s my honor, and hopefully I was able to help out.
CAMERON YODER:
Hey everybody thanks again so much for joining us here on Follow the Data.
