Episode 26: Sourcing Inventory From China and the US, Part ThreeMay 5, 2016 in Ecom-Crew-Podcast, Ecommerce, Importing, Product Sourcing
Today’s episode is the third and final installment of our series on domestic and international supplying. We have talked about shipping in both the United States and from overseas. We have also talked about the politics involved in overseas suppliers. Today we finish this series with how to find a supplier you can work with and make money.
There are tons of online suppliers that offer cheap products for newcomers. These sites are helpful, but the ideal situation is to explore the market and find your product through trial and error. On today’s episode we share our experience with finding our products and offer practical advice on how to be smart about it.
The main points from today’s show are:
- Why you should consider the long term when looking at a supplier
- Places to find product and the power of word of mouth
- How order amount is good indicator of a profitable product
- The reasons to consider domestic suppliers
- The math equation for smart product ordering
- What is bank management
We could try to explore what makes a great product and how to find the best seller, but there is no formula for what works and what doesn’t. This will conclude our series on this subject, but we hope we gave some useful information on how to approach building and managing your inventory.
Resources from Today’s Episode:
If you have any questions or anything you’d like us to discuss on the podcast please go to ecomcrew.com and fill out the contact form. Also we would really appreciate if you would leave us a review on iTunes. Thanks for listening!
Full Audio Transcription
Mike: Hi, this is Mike.
Grant: And this is Grant.
Mike: And welcome to this week’s edition of the EcomCrew podcast. This is going to be our third and final part of importing, mostly from China like we’ve been talking about but obviously this applies to anywhere else in the world. Parts one and two, we talked about things like shipping and inspections and things of that nature and it’s kind of a little bit backwards to talk in the third part here about selecting your manufacturer, which you might thing would be the first thing to talk about, but like we kind of talked about in the other podcasts why we saved this for last. And it really kind of gives you an idea of the full picture of what you need to be thinking about and also the all-in cost, all the shipping and everything but obviously we didn’t kind of cover selecting a manufacturer because without a manufacturer, there’s no products to import.
So we’re going to be talking a few different things here like MLQs and the actual manufacturer selection process and specs and terms and all that but we’ll get into all that here quickly. So I’m going to turn it over to Grant and he’s going to start talking just a little bit here about how he’s gone about finding manufacturers and how to select them.
Grant: Yeah. Thanks, Mike. So the obvious answers online are if you want to look overseas, there’s not a lot of places bigger than Alibaba. It’s got a great selection of people and they’ve got a fair interface. There’s probably a little bit to be desired and there’s also a lot of other websites out there too that you can use. Global Forces is a pretty big one. Made-in-China. And one thing that I actually do is a little bit of – I don’t know if I’d call it black hat necessarily. Maybe, Mike, you can give me the answer but I just call it like competitive intelligence. But you can use websites like Panjiva, and what it’ll do is that it’ll tell you who your competitors are using for sourcing and it does this by looking up a lot of the shipping, bill of ladings, and whatnot. And I’m not sure where they get their database from. I’m sure it’s some kind of structuralized shipping database. But them and ImportGenius, if you’ve got a competitor that’s got a great product that you like, you can find out how they’re importing or exporting and figure out what their suppliers are. So I don’t know. What do you think of that tactic, Mike? Is it good or bad?
Mike: I mean I think it is what it is. Those companies exist and lots of people subscribe to them. I haven’t heard of the first one you mentioned. I have heard of and used ImportGenius. It’s a free world out there, right? And if you don’t have a patent on your stuff, then there’s not much you can do to stop being from finding the manufacturer and making a very similar item and I think that as a side note here, it’s why you want to try to differentiate your product and put something in the product or do something with the product that makes it so that it is harder to copy. For instance, with our coloring books, all of our images are copyright. You can make another book that looks and feels like ours, but you can’t make the exact book, versus if you’re making a spatula or something, you can copy that exactly. So yeah, I don’t think that there’s really anything wrong with using that method to find manufacturers and obviously, Alibaba’s another. So yeah, I think that it is a little black hat but it is what it is.
Grant: Yup. Yeah, and if you’ve got like a domestic supplier that you know is grabbing from overseas or if you’ve got somebody else, maybe an actual competitor, that you just really like their product, that’s pretty much an easy way of going around and doing it. One of the things that I’m a pretty big proponent of (and Mike is too) is that Alibaba is really – I wouldn’t call it the beginner’s market by any chance but it’s accessible enough to everybody that I see a lot of products on Amazon that I can almost immediately tell are from Alibaba. When you just go there and you just do a little bit of browsing, everything on Alibaba eventually ends up on Amazon. That’s the way I feel about it.
So it’s a lot more important to go with somebody that you know is going to give you long-term protection. And if you sell on your own website that’s great but if you’re doing it on Amazon, then you obviously know that it’s only a matter of time before somebody’s really entering your space and I think Mike can attest to that too. I mean I think every last one of his categories are all competitive.
Mike: Yeah. And I agree with your assessment of Alibaba being a beginner’s marketplace and also kind of almost like a schlocky kind of marketplace. I think that the highest quality stuff is off Alibaba and the highest quality manufacturers are off Alibaba, but I think that if you’re just getting into import for the first time, it by far and away is the best place to start. It’s where we got our start. It’s typically where minimum order quantities are going to be a little bit lower. It’s accessible. As Grant said, you can search quickly through that marketplace, you can communicate quickly through that marketplace and find a bunch of manufacturers quickly and at least get your feet under you and get through the first process of doing all the things we’ve been talking about from inspections to shipping to actually seeing the stuff show up and getting your hands on it and getting it off to Amazon. I think it’s a great place to start.
Long-term here, because we did get our start on Alibaba, very quickly I’ve noticed that the best manufacturers, like I said, are not on Alibaba. And I thought that the Canton Fair was the Holy Grail of manufacturing or of finding manufacturers and also the Hong Kong Fair and some of these other fairs around the world. What I’ve realized now, some of these manufacturers that we’ve been talking to as of late, you know, really the last month or so, and because we’re getting ready to go to China, I’m like, “Well, we’ll meet you at the Canton Fair or we’ll meet you at your booth,” and they’re just like, “Well, we’re not going to exhibit there this year,” or, “We’ve stopped exhibiting at the Canton Fair.” I think that what it comes down to is that there’s also the same type of environment there. I think the Canton Fair’s the mid-level. It’s like the graduating step from Alibaba. You don’t see a lot of people that sell on Alibaba at the Canton Fair, you don’t see the best manufacturers at the Canton Fair, and then it becomes hard to find those and it’s a lot of word of mouth and references that have helped find some of these manufacturers for us now. So it’s kind of interesting how we’ve evolved.
Grant: Yeah. And I will say that’s prat of that process of what we’re doing, really when your order volumes get to a certain point, it’s kind of like you are advancing to the next level and you’ve got that experience going for you. And we do realize that a lot of people aren’t going to be at full container load transports in that kind of situation, and for a lot of people, if you’re just starting off, going to Canton Fair, I mean that’s about a $3,000 investment just to get there and back and do everything you need to do. And if you’re just looking to do a $3,000 order, that doesn’t make any kind of sense. So Alibaba is more geared – I would say if you’re doing under $5,000, Alibaba is going to be the best place to go. If you’re going to be doing anywhere from full containers, then that’s when you start meeting your manufacturers either in person or traveling. And if you’re talking about multi-containers per year, that’s when you start really, really getting to know your factory and going to these other type of events.
To bring it back just stateside though, one website that is actually pretty useful is ThomasNet and a lot of the manufacturers stateside will use ThomasNet as a place where they advertise. And if you can’t find a manufacturer on Google, let’s say you’re doing clothing in the U.S. and you just want to do something locally, you can easily use ThomasNet to try to find somebody and otherwise, when you try to find a clothing manufacturer, you’re almost always going to find somebody on Alibaba instead just because they’re a lot more marketing-oriented. But you can go a lot of places by just finding manufacturers in the U.S. that just aren’t readily listed.
Mike: Yeah, makes a lot of sense. I have used ThomasNet and we were not really looking for domestic manufacturers to make particular products that we’re doing right now. The book manufacturer that we did find, we found it through word of mouth. So yeah, I think if we were struggling to find a manufacturer to find something particular to make in the U.S., that would be a great place to look.
Grant: And one of the reasons why you would want to go local is we’ve gone over – the reason why we went over shipping first is that when you really start putting in all of the cost involved, if you’re shipping under a container and you’re just doing a single pallet, what you’re really trying to do is labor arbitrage because the cost of goods is generally going to be the same depending on what type of industry you’re in. And what you’re really saving is on, let’s face it, cheap Chinese labor or cheap overseas labor versus American labor. But American labor is generally quite a bit more automated, more sophisticated, and you don’t have to worry about a lot of the things that you would worry about in China. So even though you end up paying a little bit more, or sometimes a lot more, in America, when you add in all the shipping, all the QA involved, and the potential headaches, it does make a lot of sense to source domestic. I still source from domestic suppliers in a number of cases.
For example: maple, walnut, cherry. These are all woods that are only truly grown in America. I mean they are grown elsewhere in different kind of varietals of the species but I don’t have a Chinese manufacturer coming to make maple for me because I’d be shipping maple from America out over there and then they’d cut it down, kill it, glue it up, and then send it back over here. I probably would save a little bit but maybe part of me is still patriotic. I don’t know. But I still like to keep stuff in America when I can I do think there is some selling point. It really depends on your audience. If you’ve got a very price-sensitive object, obviously it doesn’t really matter, but for me, in my particular niche, it does matter at times. I don’t know about coloring books, Mike. I can’t imagine anyone’s ever asked you like, “Are these made in the U.S. or anything?”
Mike: We actually do get asked that believe it or not, and we do make them in the U.S.A., at least as of now and we do promote that fact on our website, “All of our books made in the U.S.” We can’t just say everything’s made in the U.S. because all of our pencils and cases and gels pens and markers, all the other things that we’re working on are going to be done overseas in various Asian countries. But we do make the books in the United States, and the reason we’ve been doing that is first off, they’re incredibly heavy so weight’s obviously a factor and space. They take up like a lot of dead weight, so shipping them is expensive. So we can get them physically made in China cheaper, but our landed cost is significantly more expensive and we’ve found that the quality is just better here. For whatever reason, China’s just not a paper-making country so the paper quality seems to be lower and they’re using a different printing process that doesn’t make the black look as vivid as our books that we like.
So between all those different things and the fact that it’s really just a little bit cheaper here like all-in, or about the same, and if you ever factor in the cash flow needs to order 120 days’ worth of books in advance versus us ordering 30 days’ worth of books in advance, all those things all told, we’d just rather go with somebody in the United States.
Grant: Mm-hmm. And what was your minimum order that you needed for stateside versus like China?
Mike: So in the United States, it’s 1,000 books and in China, it was a container. [I didn’t get the right pricing? 12:22] and I forgot exactly how many books it was that fit in there. [Crosstalk 12:27]
Grant: Like 40,000?
Mike: It’s close to it. It’s like more between 30,000 and 40,000. I forgot the exact number. That was for our 20-foot container. How many pallets positioned is it again, Grant, for it? Is it 16?
Grant: I think it’s 26 cubic meters for a 20-foot container. But I think realistically, if you get 20 pallets in there, you’re pretty good. Or 22.
Mike: So I think it was about 26,000 books than because I think one cubic meter’s 1,000 books. Something like that. So I mean it’s obviously a much bigger number and also they wanted us to do that per title, so it wasn’t just like, “Oh yeah, just combine 26 different titles, 1,000 apiece. We’ll do that for you.” It was, “We want you to order a minimum of that per title to get the pricing down.” So it was just like, “Okay, we’ll we’re not quite at that stage yet,” and you don’t really know what titles are going to take off and there’s obviously ebbs and flows in the titles that are selling. It’s been kind of interesting and I’d rather have less inventory and just be a little bit more nimble, even if we’re paying a little bit extra but versatility is worth it for us.
Grant: So in a lot of ways, your sourcing decision, and this is kind of a little bit of an advanced topic, but it can almost be made into a mathematical formula of cash flow versus ROI because at some point, let’s say you are a bookseller and you can go from domestic or international. And let’s say you sell a book for $10 and domestic, you can get it for $5 and international, you can get it for let’s say $3 landed. But the problem is if you’ve got to go domestic, let’s say you’ve got to get 1,000, and like Mike said, if you’ve got to go international, let’s say you’ve got to get 30,000. And depending on your turnover rate, at some point you just have so much money locked up and 30,000 books. If you’re only going through 1,000 a month, I mean you’ve got a three-year supply. Yeah, maybe you’ve got an extra $1.50 per sale in terms of your net, but you are sitting on a huge amount of inventory that’s simply not moving.
So at the end of the day, it really comes down to a combination of, “How much does it add to your cash flow to have this kind of extra margin?” And I’ve made a few wrong decisions even before where I said, “Well, I’d rather have an extra 20% margin,” and this is actually a domestic shipment, so I negotiated a very large order, like a $50,000 order, and I just said, “I’m going to take a 20% discount,” which is a decent amount. So that saved me a good amount of money but then I ended up holding that inventory for about seven to eight months and I realized that’s a lot longer than I wanted to. Most of the time, most people consider a standard turnover at three months. Is that about right, Mike? Three months, you’d say, for –
Mike: We try to stick with something like six weeks to eight weeks if we’re ordering domestic and if it’s overseas, we try not to get any more than six months like absolute max and we try to only get four months but it’s difficult because it depends on how long it takes the supplier. So I mean if you’re ordering on 90-day lead times, you need to have really a minimum or four months’ worth of inventory in stock and then that doesn’t account for any growth, which has been our problem. It’s hard to forecast unknown growth, right? So it’s pretty interesting. So yeah, we’re typically targeting like having no more than six months of inventory when we order from China.
Grant: Mm-hmm. It’s hard. It really is one of those. You can either get stuck with too much or not enough and going international exacerbates that problem, and we’ve both been stuck in a situation where we’re out of stock and we’re having to order international and that’s just like a huge headache, just like you’re in right now with your pencils.
Mike: Yup. It’s an awful feeling and because it feels so awful, we keep on ordering more and more stuff and we haven’t been in the other situation yet where we’ve been stuck with inventory. We’ve been pretty lucky. We use forecasting software. It’s been helping us quite a bit, but at some point because I’m just frustrated running out of stock on things like our pencils that we are right now, you compensate the other way; then you order just too much and it locks up a lot of money in inventory and if you’re sitting on something for 9, 12, 15, 18 months or something, that could be a bigger disaster than being out of stock. So it’s something I’m very cognizant of and trying not to let happen, but it’s a tough game to play. I feel like I’m back in the casino playing craps or roulette or something and there’s definitely a luck aspect to it again, because you can’t forecast unknown growth. You don’t know which products are going to be the ones that take off like wildfire.
I mean on the pencils, we planned the best that we could and they just did really well. It’s a high-quality product. We have the brand now to help push it and we actually ended up selling more on ColorIt.com than we did on Amazon.com. I mean all these were things that we just weren’t planning for and now, with our reorder, we had to take into account the holiday season because obviously, even though it’s only April, by the time they come in, it’s going to be around June and we can’t just place our reorder at that point and hope to get stuff for the holiday season so we had to order basically our holiday order at this time as well. So it was a pretty tough decision and it was a quarter-million-outlay, which is not insignificant for anyone.
Grant: Yeah. Not at all. And so I think we can kind of summarize like some of the points we’re making here, which is that it’s not all about the price at the end of the day. A lot of it’s about your cash flow, lead time, and quality. And those are probably far more important to your business than just simply your margin, and obviously your margin’s going to dictate a lot of factors, but in order for your business to succeed, you need to be like hitting on all of these different aspects instead of just trying to get the lowest price point. I think a lot of people get that wrong when they approach Alibaba. They think of it as like walking into some Chinese night market and just haggling for the lowest possible price but the reality is that you’ve got to be thinking about what makes sense to you in terms of your cash flow.
So, that said, we’re going to talk about minimum order quantities and when you try to negotiate with a supplier, the idea (at least for me, and we’ll get Mike’s opinion after this), I’m not trying to make that much money on the very first order. And the reason is I just get stuff just to test it out to see if it works. And I always believe in getting the data and I’m big on that for PPC and big on that on Facebook ads, I’m big on that for email and I’m big on that on sourcing too. You just get the products in, you put it on a place that you can market it, whether it be eBay, Amazon, your own website, and just see how it does. And for that reason, I’m not looking to order like 1,000 of a product. I just want to get maybe 100 or 200. And a supplier never likes hearing that and they’re like, “Well, I’m not even going to make money off this. Like this is just a pain. It barely puts up in a pallet,” and I’m just like, “Yeah, fine. Whatever.” I’ll even like air ship some of them if I don’t even want that many, again, because I’m not that interested in making money on that particular order. What I am trying to do is figure out if I’m going to make money on a bigger order down the road.
So I just simply order the product and if I negotiate, I tell them, “Okay, listen. Here’s the amount that I want right now, which is going to be 100 units or 200, whatever.” And they’ll usually say the MOQ’s going to be 1,000 or 2,000. And I go, “That’s fine. I understand your MOQ’s 1,000. I’m not ready for that yet. I want to see if this can sell. So give me a price for am MOQ of 100.” And usually they’ll give me a number that’s about two or even three times higher than like your 1,000 MOQ. And I’ll be like, “Okay, fine. Let’s negotiate what 1,000 MOQ would be then for that order.” And that kind of makes people think because you’re not trying to like ding them on a small order, but you’re trying to negotiate a big order. Most people take a little bit of the wrong approach. They say, “Hey, I’m not a big guy now but I will be. Like this is just a sample order. I’m going to be a huge guy. I’m the guy. I get all these sales. You should really work with me.” I don’t even try bothering with that. I just say, “Listen, let’s just negotiate on a number in the future. I’m not promising that now but if we get there, that’s what I want so I’m not going to have to re-negotiate the next time I come back to you.” And I’ve found that that generally has worked pretty well for me and it makes it easier if I find an item that just doesn’t do well and I can just liquidate it if I really have to and then move on to the next thing. What are your thoughts, Mike?
Mike: For me, it really depends on the angle that we’re taking. I mean we’ve been really narrow focused on the products that we’ve been bringing in and I know you’ve been a little bit more scatter-shot just trying to find things here and there that are working so I think if you’re in that mode, which is obviously perfectly fine, you can have a wide catalog of products you’re looking for, I wholeheartedly agree that you want to have as low minimum order quantity as possible for the first time around. For us, we’re always doing things right now that are related around the ColorIt brand, so we know that we have another outlet to sell that stuff with and have some confidence under our feet on these orders so we haven’t even been coming close to ordering minimum quantity levels from manufacturer. We’ve been at two, three, four times their minimum quantity even on our first orders now.
So it’s been just a little bit different situation, but yeah, if you’re selling a widget, let’s say you’re just getting started on Amazon and doing importing, I think you want to be negotiating below the MOQ, just like Grant was saying, to where you’re getting just that minimum buyable product, enough product in to just see if it’s working and make sure that you have, like I was just saying, a viable product, making sure it’s something that’s going to actually work. And with the ColorIt stuff, I mean maybe we’re a little bit crazy and getting jaded from our success but it’s just been, “Okay, we’re going to develop markers now and we’re going to order what we think is enough for us to stay in stock based on our projections of other things that we’ve sold and their minimum order quantity might be 1,000 but we’re going to order 4,000 or 6,000 or whatever it might be because we’ve learned our lesson from other things.”
So I think it just depends on what it is that you’re doing and we’re releasing items there a lot more strategic and slowly versus maybe a better example would be with IceWraps where we have been kind of scatter-shot over there. we’re been trying a wrist wrap or a knee wrap or a brace or whatever and we just got six pallets of stuff in actually for those SKUs and there’s I think 15 or 16 different things on that pallet and they’re all basically minimum order quantity type levels. So I think it really just depends on what it is that you’re trying to do at the time that you’re trying to do it.
Grant: Yeah. And I think the most important thing really at the end of the day (I think we would both agree on this) is having a product that you can vouch for to put a reorder in as opposed to like just a cheap low-quality item. I mean both of us are always looking for high quality at the end of the day and even though I might be looking for a better price later and you’re looking for a better price upfront, I think both of us are very much in the camp of, “This has to work in terms of like a partnership with the vendor,” yeah?
Mike: Yeah. And I forgot to mention one thing that I think is really important, Grant, that you brought up. People worry about making money off their first order and you said you don’t, and I definitely don’t. Like I don’t even care if I lose money actually on the first order. If you’re ordering that MOQ type thing, you have an idea of something you want to try – we’re actually doing this right now with a couple other products and I was actually just talking to a partner about this – it doesn’t matter. Like you’re trying to prove the concept and there’re a couple product lines that we’ve developed that have become ultra-successful and we probably tried, let’s see, 30 to 40 different SKUs, different sizes and permutations of that product and maybe 15 to 20 of them become successful and the other ones just never really sold well. We actually are cleaning up our warehouse right now. We have two pallets of these widgets that we’re going to throw up on eBay and try to sell in volume and if they don’t sell we’re just going to like literally throw them in the dumpster.
But it doesn’t bother me in the least bit because by doing this whole process, we not have a line of products that are making us mid-five figures a month and we’re going to throw about $5,000 worth of stuff in the trash and to me, it’s a part of doing business and developing that line and now that we’re in the position, it’s just chugging along quite smoothly. So I mean it just really depends on your philosophy but for me, it’s, “Just throw things at the wall and see what sticks,” and it doesn’t really matter what you’re making on those initial orders. If you can break even, I think you’re doing quite well.
Grant: Mm-hmm. Yup. This is really that testing mentality that we keep trying to drill in. If there’s anything you can take away from this podcast, it’s really that you’ve got to like take the emotion out of product sourcing, and just to deviate a little bit from our talk and just to the mentality of sourcing, I’m on various places like the Amazon forums, BigCommerce, Shopify, Reddit, and I don’t know if it’s just the fact that a lot of the people that make posts are just getting into it or kind of newbies or whatever but you hear a lot of people saying, “Hey, I’m going to spend a big chunk of my –” I don’t know about savings, but, “A big chunk and go on to some random guy from Alibaba for $3,000 and if this doesn’t go well, that’s a huge hit on me and I don’t think I could afford to lose it. What product should I get?” I don’t really answer this kind of stuff, I just kind of read because I’m always trying to hope to get some other answers from more mid-level guys, but if I were to answer, my answer would be that you shouldn’t be in this business is $3,000 is going to like take you out of the game.”
Mike and I, our old business in the gaming industry, I mean there’s a term called bankroll management and that’s like going into a blackjack table where they’re playing $5, $10 hands and you put down like a $100 bill or even like a $20. Like what are you trying to do here? The odds are not in your favor. You might be the best player in the world, but just a little bit of luck not going your way would just be complete devastation. And crap happens all the time. Like you should always play at a level that you’re okay where you can take a loss. So you should never put all your chips in one boat. All your hopes and dreams should not be able to be killed in one blow. That’s definitely the wrong way of doing it and if you don’t have enough cash for that, then you should consider having a normal day job that can supplement your income so that it’s not such a devastating blow or you should at least have some kind of backup plan. Even if you have to go to some like Craigslist garage sale to buy stuff so you can do retail pricing arbitrage from eBay to Amazon or vice versa or whatever, then that’s going to be a far safer option than trying to grab some cheap stuff from China and then schlepping it on and crossing your fingers that you don’t get destroyed when some guy does it for like twice as cheap. Anyhow, that’s kind of my little rant about bankroll management here.
Mike: I think it’s incredibly important and we’ve never spent more than maybe 3% or 5% of our total budget on any one item, with the except of now this pencil order. That was a pretty big chunk but it’s a proven product; it’s a reorder. So yeah, when we’re developing a new product, if we have a $10,000 bankroll as you would call it or whatever, I wouldn’t spend more than $500 to $1,000 on developing your first product. You’re just crazy if you go above. Maybe $3,000 because $10,000 is not a whole lot of money when you’re doing importing, but I would at least have $10,000 available for getting started with this and not spend more than $3,000 on any one product so at least you have a second and third bullet in the chamber to fire if the first one fails.
And even if 1 out of 3 does fail with any product development, you’re still going to do really well because you should be doubling your money every time you invest in a product. Maybe not the first order, but once you have a successful product and you’re reordering and you’re making at least 100% markup, if you’re successful two-thirds of the time, you’re still going to have an incredibly successful business even if you’re throwing one-third of your product out continuously. It doesn’t take long when you multiply your winnings by 100% markup. So I think that bankroll management is definitely really important. I wouldn’t take your last $3,000, put it all in one product and if that blows up, then just give up on ecommerce. That’s silly.
Grant: Mm-hmm. Yeah, and a lot of that stems from the other fear that most people have, which is, “What if I get a product that doesn’t sell?” And that’s why it’s so important to be able to counter that because I think the reality is – and Mike might disagree with me here – anybody that thinks they know a top seller just by looking at it, I think if you do it here and there and you can pick out a top seller, that’s good for you. But if we took the wide variety of buyers out there and we put them on a map and actually decided their performance of picking an actual seller versus not, I actually think it’s almost like stock market pickers, which is that nobody beats the market. You know, I think it’s a lot of BS science out there.
I mean I do believe there probably are buyers that are very, very good at what they do but those people are very few and far between. I think most of the people that are buyers are probably just jumping onto the bandwagon. They’re like trend buyers and they just see what else is hot and they buy some of that too under it’s not hot and then at some point, they’re like, “Well, I did make this amount of profit for the company so they’re pretty happy with me,” but the reality is the market tells you what’s going to be hot and what’s not going to be hot. So if you go into it thinking, “Hey, I’m going to be this hotshot buyer and I’m going to buy something everyone’s going to like,” I would say that’s the wrong way of looking at it. You should act like you’re a complete idiot and hopefully luck is on your side and you need to put enough cards out there and hopefully luck tells you which ones are good and then you put your money on that afterward, as opposed to thinking that you’re a genius. Your opinion, Mike?
Mike: Yeah, I definitely agree with that. I think the things that you can do to make that tide turn more in your favor is to get into products that you know something about. If you’re just ordering random products just because you want to start selling stuff online, let’s say (I keep on using a spatula as an example but) you just want to get a spatula or a grill brush or a bottle opener, just something random that you don’t have any interest or tie-in to versus having something that you have a direct knowledge in and have a passion about – I mean I’ll give you an example. This guy who’s in my mastermind group is trying to develop a swim cap right now and that makes a lot of sense to him because he’s an avid swimmer and he’s constantly hearing complaints, especially from women, that their hair gets wet and these things don’t work and he’s trying to improve upon an existing product and develop something he has a passion and interest in but it’s still basically an off-the-shelf product that just needs a couple tweaks. He developed those types of products and I think you can stack the odds in your favor a little bit more.
Grant: Mm-hmm. Yeah, and for me, cutting boards are almost a little bit of a boring subject to most people, like, “Well, how many possible designs could you possibly come out with for a cutting board?” but I know the industry pretty in and out. I mean with CuttingBoard.com, we rank very, very well for a bunch of very big terms and I get market data that nobody else has access to. And that puts me in a wonderful position of knowing what’s selling, what’s hot, what’s not, and what I should be going after. And Mike has the same thing with IceWraps and as opposed to walking into some trade show blind, I’m like, “This is what my customers want. Not this color, that color, and this size, and that’s the price I need it at.”
And I’m using all scientific metrics to help me out. And, like Mike said, if you’re just trying to go into some kind of category where you’re like, “Oh, this is a hot product. I’m just going to buy some and try to like make some profit,” that’ll work for a while until the next guy sees the same thing. Where you really make the true money is knowing where you can set your differentiation by getting the product that nobody knows is in demand yet, or if it’s in demand, knowing how to make it so that it’s a unique product that your customers want that nobody else has.
Mike: Yup, makes a lot of sense. So what do you think? I think we’re kind of a little bit over our time limit for this. Is there any other pertinent information you want to throw in this episode or do you think we’ve kind of covered the whole importing stuff significantly at this point?
Grant: Yeah. I think so. I mean I think if we did kind of a final recap: we talked about shipping, we talked about customs and duties, and we talked about kind of order specifications, how to kind of figure out the quantities that make sense to you, and lastly, a little bit about just product selection. And I think it’d be very difficult to do episode four because that’d probably just be how to pick your winning product and I think that’d be like selling a book on how to find a lotto ticket that works. So that one’s really up to you, but yeah, hopefully we’ve covered every topic in regards to the A to Z product sourcing, but if anyone has questions, definitely hit us up by email or leave a comment in the podcast and we’ll be glad to try to at least answer any questions that we can.
Mike: Definitely. And just a reminder with our contest that we’re running right now, this is going to be the last episode. So if you leave a comment on the podcast and if you want an hour of consulting, we’re going to be giving away a free hour of consulting. So just leave a comment. Anybody that’s signed up on our newsletter and leaves a comment is going to be automatically entered into that drawing. So definitely leave a comment and until next week, everybody. Thanks for listening and we’ll talk to you then.
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