As many of you are aware the number 1 challenge for most Amazon FBA sellers is sourcing good products to sell. It is easy to find products and categories online that look like they are good Markets to enter but going through the tedious process of researching, then looking for manufacturers via alibaba.com or other online sales portals, getting samples sent, and then negotiating sales was for me not effiecient enough.
In my own business we hit a plateau in what we could source and launch without having a costly staff I would have to train to find products all day, launch products, negotiate on my behalf etc. That was a nightmare I did not want. I have several friends who have Amazon businesses in the millions of dollars a month and being in mastermind groups with them I learned that to source properly and launch efficiently is the winning strategy. So I was fortunate enough to go on a sourcing trip with one of those experts who has been sourcing for his own Amazon business for 10 years in China now.
Here is the list of lessons I learned in that trip.
1.) Direct sourcing is 30 to 40% less expensive.
2.) Do your product research before you go with good ideas of what categories and types of products you want not necessarily the exact product.
4.) Have a trusted sourcing agent
So let’s review this list.
If you’re purchasing off a sourcing web site there is additional costs, since many people will take up a lot of valuable time with online sourcing and there is a cost to be on those web sites the Chinese suppliers have to increase the prices. Also so many people ask for free samples as well who never follow through with orders this drives the cost of actual purchases up substantially. Nothing is really free and someone has to cover the costs or business go under, also if you’re willing to fly all the way to China to purchase they know you are serious about business and less likely to not pay for orders.
So when I talk about product research I am talking about using Amazon or other sources to find product ideas and categories you want to launch products in. In my case I knew I wanted to expand and diversify my products from mostly food, to kitchen, pets, and sporting goods. So I knew the categories and just did very fast Amazon product searches to find which products in those categories looked the most promising for a good launch, and then printed out product ideas directly from the Amazon web site and put them into a small binder. Why? Because although my translator was fairly proficient in English there still was some gaps in communication. So a picture is worth 1000 words in any language and we could find those items faster. This was invaluable also as web services is NOT available easily everywhere and you CANNOT go to any web site you want. Everything Google was pretty much a no go zone and wifi or 4g may not be available everywhere.
When you deal direct you may put zero down to 1%, unless your product is customized in which case you may put 50% down. But in my trip I spent 25k on products and put 3k down. So you do not need as much cash on hand to source directly. You will have to wire the remaining funds to the suppliers, or in working with GDW you just transfer the funds to us (US Firm) and we pay for the goods after they are inspected and ready to be put in one of our containers to ship to FBA or GDW. So when you purchase online you normally put 30% or more down and pay the rest when it ships. Or maybe when it is done?
When you are dealing online with no face to face interaction, no way of knowing if these places or stores are real you may only test purchase 50 items or less as some online experts suggest. Today this is nowhere near enough product to actually launch a product and have it ranked and selling organically. I would suggest 300 to 1000 units so you can seed your reviews and feedback and get the products moving. Then you are able to launch, have a little inventory to sell, and be ready to reorder. This is a lot easier when you are saving money on test orders, express shipping, and actual product prices. Example items sells on Alibaba for $2.50, direct sourcing in China under 1.00. How many more items can you afford to get to launch if you save that much? We will be going over how we launched 50+ products in 60 days after our China sourcing trip in future webinars and articles so be in the lookout.
Trusted Sourcing Agent:
We were lucky and were able to get a translator that knew what we wanted the first time, expect to pay for these negotiators as this is a common business in China, and will cost you about 3 to 5% of your purchase as a fee. But we wanted more services that were not offered as easily in China. So we subleased an office (as we could not own property directly not being citizens) and warehouse, purchased printers and supplies, and hired some locals to start our own sourcing, inspection, and shipping office in China. Why?? GDW Inc is a 3PL inspection and FBA prep company in the US. We work with thousands of customers importing into the US, and packaging and preparing PL products for Amazon FBA and other sales channels via FBM. The weak link for us and most customers is on the Chinese side and the inefficiencies of having to deal with potentially 5 different companies to get a product to market. Here are just a few companies we all deal with daily in our eCommerce businesses.
2.) Inspection companies
3.) Shipping companies
4.) FBA Prep services
5.) FBM or 3PL companies
6.) Amazon FBA and more
So we decided we could bridge the gap and offer a complete end to end service for people like us who wanted to deal with 1 company for all of their supply chain needs. GDWinc.com now has the ability to help you source efficently, inspect the goods before they leave China, Bag, Box, and label goods before it leaves China, aggregate shipments into express, ocean, or air freight shipments, recieve the goods in the US on our EIN, our Bond, and inspect them for damage and insure they meet Amazon’s new FBA guidelines, then ship into Amazon for you. We are quickly becoming a one stop shop, with full time sourcing to follow on our list of services later this year.
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