Thinking of sourcing product materials? Do you instantly think of China? Think again!
During this episode, Amy Weise, founder of Amazing at Home e-Commerce Consulting, shares her experience helping countless e-commerce brands figure out outsourcing and launching their products on Amazon, and on brick-and-mortar retail channels as well.
Know your components and play around with different materials. This can help you save money and have an easier supply chain.
We began our discussion with the elephant in the room, if China is the world’s manufacturing superpower, why would you think of sourcing your products somewhere else?
According to Amy, there is a great advantage in sourcing from smaller international manufacturing suppliers mainly because of their willingness to create stronger relations becoming a partner throughout the production process, something that Amy says Chinese suppliers are not so keen to establish.
When sourcing from countries outside of China, there seems to be more willingness from the supplier’s side to meet, even online, instead of texting like you would normally see with Chinese suppliers. They are more eager to establish a more communicative relationship and to build trust, and in case of any unexpected supply chain crisis scenario, an established relationship could give your business extra security.
Are you ready to start exploring new sourcing options for your business?
Here are the four fundamental factors you must consider before choosing a different sourcing company:
- Costs/Benefits: Know your numbers. You should negotiate costs with your supplier. Is the supplier within your budget range? Is your current supplier the right fit? Are there any other suppliers that could be a better fit?
- Quality: Are you making high-quality items? Which countries and suppliers offer the best quality of materials for your products? Do these suppliers provide the “Made in” quality stamps such as Made in Italy or Made in the USA?
- Logistics: Costs, costs & more costs. How much time and money does shipping take from your already empty wallet? What are the trade agreements, tariff codes, and taxes in the supplier’s location?
- Product: How well do you know your manufacturing process? Are some of its materials replaceable? Can you get these materials from a closer supplier and save money?
Know your components and play around with different materials. This can help you save money and have an easier supply chain.Amy Weise
In markets such as Latin America and India, as Amy describes through her personal experience, there is a massive opportunity to work together with suppliers on the product development phase; combining the company’s market demand expertise with the manufacturer’s know-how to co-create and achieve a better outcome.
Once the prototype has been co-created, it is tested, tweaked, and if the relationship has been built, we both align together on the costs for the long term supply chain management.Amy Weise
In order to get ready for the take-off, no matter where your supplier comes from, it is important to have clear agreements and contracts. You must know all the costs not only because you need to know if it is going to bring you some revenue, but also because prices may rise and you need to be prepared.
Shopping around to scout and compare is critical for choosing the right supplier. Ask for quotes, compare qualities, and even ask for samples, if possible! You are looking for long-term partnerships, so you do need to make sure you will be working with the right sourcing company.
If you want to learn more about how to source beyond the claws of the Chinese dragon, tune in and listen to the full episode above! Tons of other useful insights have been left out of this piece!
eComm Weekly – EP27
Today we are going to be talking about sourcing options other than China.
So now my guest Amy Weise. How are you? Please introduce yourself. I’m great. Thank you so much for having me Norm. Hello everyone. I’m Amy Weise. I’m the founder of Amazing at Home e-commerce consulting and we have helped thousands of brands, both source and launched their. On Amazon and many e-commerce channels and even into brick and mortar retail channels.
So I’m excited to be here today. I have hosted many sourcing trips to China and I also source my products in both the us and China. And [00:01:00] we’re also hosting an upcoming sourcing trip to Mexico. I also have clients. Source all from all over the world from, Germany throughout Europe, as well as India.
So there’s some really great places to source from outside of China. China, of course is still the leader in manufacturing. But there are alternatives out there. So it’s good to know what those options are and when you should consider them. So when we’re talking about China, I think that’s, everybody’s, go-to when they think of it, although.
There’s a ton of different categories out there, like beauty that I. Either stick to either north America or Korea for cosmetics, but for the go-tos it’s China. And there is right now a fairly big difference between dealing over in China and with the U S would you agree? Yeah, there’s a humongous difference.
In fact, my lead times in the U S are 12 [00:02:00] weeks. So if we think our lead times in China are bad it’s not necessarily better or worse in different countries. It’s just a matter of what you’re sourcing and what’s gonna work for your business. And you have to think about economics as well, because.
Even sourcing in the U S some people like to have their products made in the USA because they get that made in the USA stamp and people like to buy American made. However, people don’t always choose American made for every product, especially if the price has to be so much higher and it’s just not economically.
It doesn’t make economic. To to sell that product at that price and make it in America. So that’s just some considerations there. It always depends on the type of product and the economics of your business. And one of the other things that when you’re looking at China, China is a machine they know, and they [00:03:00] have been working with sellers, especially e-comm sellers for a long time.
And when you place an order, what to expect, they know how to get the plan into action from a to Z when you are dealing with the U S. Unless you’re into the beauty category supplements some other products, but they’re not used to ESL e-com sellers. So we probably we have to approach things differently because they’re thinking, oh, you’re not giving us 20 or 50,000 units.
You’re giving us 500 units. How do you get around that? Yeah, I think you brought up such an important point Norm it’s. It’s so in order for me, I have a large plastic product that’s made in the us. And it was so hard for me to find a supplier because I literally had to basically give them my whole business plan.
They don’t you manufacturers in the UK. Are normally compete companies [00:04:00] themselves, right? Like brands will set up their own manufacturing facilities. So a lot of manufacturers that you find in databases in the U S databases, such as like ThomasNet and those kinds of databases maker’s row, that kind of thing.
They’re actually manufacturing for their brands. So they’re not usually open to you just coming in and saying, Hey, can you make this right? It’s not like China where you can show them a picture and they can figure it out. In China it’s more like you’re shopping. But anywhere else you’re sourcing, whether it’s, Mexico or the us or any other country you’re going to benefit from knowing your manufacturing process.
And knowing your business and being able to have a more in-depth conversation and not expect your supplier to be cradle to grave, right? Because your supplier in another country is not necessarily going to be able to provide packaging for you and everything, for your. You may have to source [00:05:00] only one component at that supplier and you might have to get your own packaging and you might have to get your own three PL or third-party logistics provider in order to prep and ship out your goods.
I think my biggest tip for people that are wanting to source outside of China is to know their manufacturing process and know their business because you need to have more of a conversation. And if you are only testing a product, you’re wanting to just order 300 units of something, It is, you need to have more of a plan because most manufacturers outside of China are not set up for that.
You need to have more of a plan, a long-term plan of really knowing your market, really having an understanding of where you’re going with this product, because you may have to come alongside of a manufacturer especially. Outside of the U S for example, like if you’re in Latin America or you’re dealing with a smaller supplier in [00:06:00] India, for example you might have to come alongside of that supplier and work together on developing that product.
And then, have an understanding of, okay, we’re going to test the market with this first iteration of this product, but we’ve already validated market demand. And our plan going forward is, then we’re going to make these tweaks and we’re going to look together. On the costs work together on the longterm supply chain management.
So we’re going to go down some pros and cons of countries in a second, but one of the things I wanted to talk about, so this is the old guy, talking here, like back in, I think it was late nineties was the first visit over to Taiwan. That’s when I started doing some sourcing and it was very.
People manufacturers wanted to do work with you, but they wanted to know your family first. So they wanted to know you. And this is so crazy. I think I’ve told you this before, but you go into a manufacturer and sometimes the first day you wouldn’t even talk [00:07:00] business, they would just talk to you. They wanted to know a bit about you next day.
He’d come back with the translator and you’d be, talking business and, seeing what you could do now. I’m not saying that in the us or in India or wherever, but is. Is it still something that you would consider if you get down to a short list and you want to do plastic shoe stretchers and there’s three manufacturers in the us, would you go and visit the factory?
So you can, first of all, see who they are, where they are and negotiate terms.
So you mean, can you like rephrase that question? You’re saying if it is a very it’s, you’re not doing that much product development and you’re really just doing kind of a stock price. Are you still going to go visit? Is that your question? So let’s say that we get to a short list and you’ve come down and you’ve got a couple of different suppliers in the U S let’s say it’s in the U S let’s [00:08:00] make it simple.
And you want. Get them going. Are you going to like to get in establish a better relationship? The reason why I’m selling, saying this is because they’re used to a different structure. They’re used to the larger distributors coming in and buying 20,000 units. So what I’m saying. Go to the manufacturer and talk to them and show them what you’re trying to do, show them, how you’re selling on Amazon or on your e-commerce platform to see first of all, to have them build trust in you.
Yeah. So I wouldn’t necessarily say that you have to go visit every time. We do live in a very modern world and it is possible to get on zoom. It is possible to get on video calls. Even with my supplier in the U S I did not visit them in person until after they already had my molds. Like my molds were made in China, and then [00:09:00] we moved them to the us and they set up the tool and everything, and we talked on a regular basis.
And I didn’t actually see my product in production in person until a year later. So it’s really, I think I can’t understate the importance of in-person connection, if you can make one. That’s really great. But if you’re limited there’s plenty of ways to have communication.
Even in China, I see people will source from China and they will never get on a video call with their manufacturer. They are just doing everything via chat. And in that case, I don’t think that’s smart. I think you should work on the relationship, whether it’s in-person or it’s on a video. You should be vetting all of your suppliers.
You should be looking at, their expertise and making sure they are who they say they are, whether they’re in the U S China, wherever it is. You want to follow the laws of that country and [00:10:00] make sure that you’re understanding what you’re getting into and that they have the ability to be a good partner for you.
And you have the ability to be a good partner for. I think that’s so important that relationship it’s not like going to McDonald’s yeah, let’s go over to the advantages of other countries. So some of the countries that come to mind Vietnam is becoming stronger. India’s becoming stronger, taking Korea for cosmetics is a great option.
And then the Latin American community, and then a us and Canada. And there’s probably lots of others there, but do you want to go through sort of each one of those countries quickly and, top one or two pros and cons?
Sure. Yeah. I, for me, it’s more about I don’t really I guess it’s more about, like I said, the economics of it, like finding the right fit. That is what falls to the top of the list for me. Not necessarily what, because you can find just about any [00:11:00] product in any region, if you look hard enough.
But it doesn’t necessarily mean that it’s a good fit economically for you, or it’s a good partner for you or even logistically. You want to take all of those things into consideration of for example, Mexico is great because you can get the lead times are really awesome. You can get your your products into the us in only two days, versus putting it on a boat from China and waiting for 30 days.
And then, port congestion on top of it. So that’s great, but you may not be able to make the same, But depending on your product, you might not be able to find a manufacturer that can do everything for you. You might still have to source some raw materials from China and then move them over to Mexico and bring them together and import them from there.
So I think just obviously China has. The top in terms of sourcing, because they’re just, they can do so [00:12:00] much a to Z for you. And they’re so well versed. So if you’re a newbie, China’s really good. India is really great for like more handcrafted goods. They make a lot of custom, really beautiful things.
But there is legit, there are logistics challenges. In India and the manufacturers do not necessarily have the same certifications and and qualifications. For that a bigger brand that’s selling and retail might be looking for. Those are just things that you have to think about.
You have to know what your requirements are, and then you have to match that up with your suppliers. You have to realize that not every supplier is going to. From every country is going to be able to meet your needs. Vietnam is really great. Taiwan is really great for certain goods. Even like Jordan Israel, you can source apparel there very well.
There’s a lot of cutting and clothing type of products you can get from those countries. And the tariffs are very low. There’s [00:13:00] really great trade agreements where you can get. Almost nothing for for importing from those countries. So I think it’s just about, as I mentioned, knowing your fundamentals and then the U S I’ll add that back in the U S is really great.
For example, if you have a large plastic product or you’re doing anything that goes in your body or on your body, or you’re doing food you can always find a co-packer. Or private labeler in the us, Mexico and Canada, those are three really great options for any of those categories. And then if you’re selling outside of those categories in metals or wooden products or cutting, so type products, that’s when you really want to open up all of your potential opportunities and then start checking off the boxes.
So know your manufacturing process. And start checking off the boxes of of finding a supplier that matches those. Yeah. One other thing I would add to that you can [00:14:00] also check the different types of materials because let’s, I’m going to go back to my plastic shoe stretcher. Okay. So I want to blast it.
I don’t know why I want a plastic shoe stretcher, but let’s say I want this plastic shoe stretcher. I can’t do it. Let’s say in the U S for some reason you can always look at different materials. You could look at maybe a wood, plastic shoe stretcher, or a resin, perhaps plastic shoe stretcher, or a little aluminum one, but there’s always options available.
So a lot of the times, like when you’re going over to Alibaba it’s, there’s all your options. You can be innovative, you can, if it just looks like there’s plastic available, or if it’s plastic and it’s only red, maybe you can do a different type of color or a better quality plastic, or a different type of of steel.
I don’t know why I’m going on plastic shoe stretchers, and I’m trying to think of the components involved with it. But anyways, we have done. And we’ve taken a, and this was a very costly item. This was something that [00:15:00] was over a hundred dollars change. The material made it a better, stronger material.
And instead of the cost of it, the cost of goods was I think, $79. We got it down to 30, something dollars in the U S. And so not only do we stop the lead time, the crazy lead time coming from China and the shipping costs, we’re able to do it in the U S changed the type of material and people love it.
So that’s just another, yeah. I love that idea too. And I think even if you’re sourcing from China, for example, like if you’re looking at duties, extra duties, like wood, for example, at what in steel have extra duties to import them from China because they’re readily available in the United States.
You’re paying extra duties on most products that are made of wood or steel by. Getting them from China, but you can also get bamboo products made [00:16:00] that look just like wood and are very high quality and very eco-friendly. And so that you can get those made in China or India in so many different countries.
And yeah, Norm I think that’s a great idea. Always consider different materials and and think about what that saves you. And then I think a lot of times people add on a lot of additional things that they might not necessarily need, like a, for example, reflective material or a glow in the dark material.
And those kinds of things can add a lot extra to your costs. So it’s really important to know how important those things are to your market. I was sourcing a I was sourcing a product. I made myself at hobby without a materials from hobby lobby, and I was able to make it myself for a dollar.
It was a, like a phone a phone holder for your car visor. And so I made some of these up and I put them on Amazon and I sold through them and people liked them. So [00:17:00] even my ugly version of it. So I was like, okay, I’m going to go. I’m going to source this in China. And I found this manufacturer who made a, like a phone arm band that was like very similar material and everything.
And, he kept giving me quotes of like $4 or more per unit. And I was like, wow, that’s, I can make it myself for a dollar. Like I have to be able to mass manufacture it for lower. I was like, let’s start breaking down these. And we started looking at it and it turned out the reflective little reflective band that went around it, which I didn’t need for the car.
Was $2. So it’s important to know your components and play around with different materials. Like you’re saying Norm, because you could really save a lot of money and it might actually be easier for the supplier to, but what you have to realize. Cultures in other countries of course in the U S we are, we’re naturally used to changing things out and being innovative.
But in other countries especially China, they’re used to giving you exactly what you asked for. So they’re not [00:18:00] going to suggest another material automatically. You have to make those suggestions and then the work with you on it. And a lot of people don’t realize that. So they go my supplier.
You mentioned that was a possibility. So it’s on us to be innovative and think of those things and say, okay, let’s break this down and okay what other materials do we have options to use? And do we really need this? Or can we, for example, instead of sewing this, can we heat seal it, is there another.
Is there another method that we can use to save on this and that’s really important skills to have. And it’s really important to realize that when you’re working with a supplier overseas, they may not automatically think to give you that option.
Just trying to find my mute button. Yeah. That’s some very good points. Another thing that you need to consider. A lot of the times when you’re going over, especially over overseas [00:19:00] specifically China, like Amy was saying. And you go to a factory there’s so used to just giving you, they already know you want the best price.
So they’re trying to match that price. And there, you’ve got to let them know that you want something better. Or if you like one of the things that we did. We go and check out our products or our competition is we buy them and we see what they’re like. And for example, that plastic shoe stretcher I’m serious.
I had somebody, I was checking out plastic shoes, stretches for. The problem was, they were really crappy. You turn them and they break. So I knew right off the bat, I could go and ask for something that’s better. And here are the specs on it that I want. And they were able to do that. Client never went with it, but anyways, that’s a whole other thing.
But what I’m saying. The Chinese manufacturer. And if you go to Vietnam, [00:20:00] probably India, they’re used to we’re nickel and diming. We want, nickel and dime nickel and dime. If they know that you’re looking for something better, more of a premium product, you can still get a good price, but they’ve got to make sure.
Or all you’re going to see is the pro product quality slide at the beginning, or slowly slide later on, on your fourth or fifth order, because they’ve got to start making some money over here. If you’re over in the us, you’ve probably already got one leg up because you used, they’re used to higher quality standards, but you still want to bring that across.
Second point I want to make is a lot of people don’t realize this when you’re going over to let’s say a Korea or Vietnam or an India, those Trump tariffs are re are gone. So you have what’s called HTS codes and those HTS. You want to check? You want to check this out with your broker to make sure that when you’re, when you are [00:21:00] importing that you’re getting the proper tariff code, because it could range anywhere from nothing to 20, 30%.
And I’ve had this happen where I bring in soap. I’m a soap person. And so person I’m a soap distributor and I brought in soap at 17% and I realized. But when I found like my partner, he said, I’m lucky we could ship this in as Casteel. So he can’t lie, but it was zero. I saved 17% just because I changed the tariff code.
And there was no Trump, Tara Trump taxes. The 25%. So I saved overall, almost Fort just over 40%. So these are things to consider as well. And especially when you’re working over here with Latin America, Mexico, Amy, you specialize in us and. Yeah. Mexico there’s all sorts of things that make things [00:22:00] so much easier, especially supply chain or logistic nightmares right now.
Do you want to touch on that?
Yeah. It’s In terms of supply chain and logistics nightmare. I think, it’s something that I never really I never factor hard coded into my costs because it’s very fluid. You always have to, I think the big things that you need to prepare for. Supply chain and logistics is making sure that you number one, that you shop around.
I see a lot of people they’ll pick one freight forwarder and they go with that one freight forwarder every single time. And that to me is the biggest mistake you can make. I always have about five that I love and I get quotes from all sides. Every time I shipped something because it’s, they all have different spaces on in, in different places.
And so it’s important to note that your costs are gonna vary based on your providers. So it’s really important to shop [00:23:00] around. And then also margin is very important. Norm I love what you said about the lowest price is not always the best because. You do, you have to be a good partner to your supplier and they have to make money too.
It’s a partnership. It’s they make money, you make money and our customers are happy and we’re both able to grow and scale. So it’s very important. I’m always reminding my suppliers like, okay I’m not trying to give away the factory here. Let’s work together. Let’s see what we can do to to meet our.
And our materials, but also, and that’s another thing. If you have a good relationship with your supplier, they may have space on during the pandemic when and of course I know it’s still during the pandemic, but during the heavy piece, when there was a lot of logistics problems and we were paying, $30,000 for a container we were able to actually work with our suppliers who had previously bought space.
In on containers. So we just went with their their shippers and sometimes it worked out for us other times it was a nightmare. But but ultimately we didn’t end up paying more [00:24:00] than we usually pay for shipping. And if we did it, wasn’t much more where some people were paying, like I said, $30,000 for a container and that’s.
How can you justify paying more for shipping than you’re paying per unit? And then I think the third thing is just really being ready to increase your prices. Right now, what we’re going on $6 for a gallon of gas, like it’s going to cost you more to shift things. And so you cannot be afraid to you’re not running a charity, you’re running a business and you can not be afraid to increase your prices accordingly.
I think that’s it like working out your margins, making sure that you have enough margin so that if something happens that it doesn’t take your entire business shopping around having good relationships with your suppliers, looking at all the options. Those fundamentals will carry you through no matter where you source from.
Yeah. That’s that’s some great advice now, Amy, we’re winding up here. Do you want to talk about the event that’s coming up in Mexican? [00:25:00] Yeah, sure. We are doing a sourcing trip to Mexico. Mexico is very interesting for people because what ended up happening during the pandemic is pre honestly smaller manufacturers.
And let me just start by seeing that larger companies are already sourcing from Mexico, right? There’s major automotive companies and stuff like that, making them. In Mexico. And us micro brands were like wait, I’m not Toyota. Like I don’t have the ability to open up my own factory in Mexico and all of that.
But there are a lot of smaller manufacturers in Mexico and in Latin America that previously would only really make. Locally, so they weren’t exporting, they were just, making products for local retailers and things like that. But what happened during the pandemic is a lot of those a lot of those suppliers or buyers for them dried up because it [00:26:00] really impacted businesses.
And so manufacturers started looking okay where else can we where else can we find. New buyers outside of our own borders. So this was the first time that because of the pandemic, a lot of manufacturers started really thinking about moving beyond their own borders. And and so it was really a prime time to start making those connections.
And so this trip that we’re doing in June, And Mexico is all about learning. First of all, learning educating people on the I’m doing business in Mexico because you can’t just, you, you can’t just go show a Mexican manufacturer, a picture of something and be like, can you make this is not China.
Right? There’s definitely. Things that we have to do differently. We’re really focused on education first. And then we’re also hosting a trade show there in Mexico in Mexico city we’re hosting a trade show where we’re bringing together some of these micro manufacturers and our goal is two fold.
Our [00:27:00] goal is to not only teach. Those micro manufacturers, how to work with micro brands like us, because they did not have experience with that previously, but also to teach us how to work with smaller manufacturers. And what’s, you’re going to learn by coming to Mexico with us is you’re going to learn.
How to source from many small countries, right? For many of sorry. Smaller manufacturers in these types of countries that, you know, the, that these fundamentals cross over into any smaller manufacturer that you’re wanting to work with that might not have experience like. The manufacturers have in China.
So that’s what we’re aiming to do. And we’re doing it’s like two events. Our first event is in Mexico city and that’s going to be five days where we are spending four full days doing conferences and learning all about doing business in Mexico. And then we are attending the trade show on one day.
We’re doing some fun tourism stuff too. We’re [00:28:00] doing some dollar dinners and just lots of networking, lots of fun. It’s a great, it’s a great business write-off and experience all in one. And then the second half, we’re actually doing a mastermind in Ken Kuhn. And that’s where we’re going to do some advanced e-commerce topics.
And we’re going to have some of the best speakers in the industry they’re in Ken can with us and the goal of course. Fun and and just learning those advanced technique techniques there as well. That’s all the information on the Mexico trip and you can actually go to the Mexico trip.com to learn more and and yeah, and sign up.
Yeah, I think it’s going to be a great opportunity. In fact, Alibaba is actually sponsoring is the primary sponsor for it. There’s going to be a great opportunity if you’re interested in learning more about Mexico or sourcing in Mexico how it all operates, how to get just. It’s covered. And I believe that right now there’s about 16 [00:29:00] different speakers, maybe even more, but they’re all top in the industry, plus from from the Latin American market too.
So anyways, I just want to thank you for coming on. We are going to be, we’re going to miss next week. Amy and I are going to the prosper show in Vegas. If any, or you are Amazon sellers. If you see us come up, say hi, and I think that’s it for today, Rachel. Thanks for coming on and monitoring everything.
And thank you for thank you startup club for allowing me to have this slot every week. We will see you later. Bye. Thank you for having me. Thanks everyone.