AS 64: How to Source from China Smarter with Sam Boyd
11 Oct 2016
Today, we had Sam Boyd, live from China come on the show! He is an American living in Asia. After working in product development, he founded his own sourcing company called Guided Imports in Shenzhen, China. He’s Focused on assisting importers of all sizes to navigate the often treacherous waters of Chinese manufacturing.
What you’ll learn:
- How Sam moved to China and start a business as an American
- How Sam built and expanding his sourcing company to 10+ employees
- What was his decision to go to China
- How pricing and quality match up when purchasing in China
- What QA/QC is important and how to do it
- The eco-system and insights of China
- How things are done in China
- How he’s changing the game
- Manufacturing in China, how to get goods from China
- How to source product from China
- How to get inventory from China
- How to do everything from product development, to storage, to fulfilment from China
- QC Inspection tips and secrets
- How to ensure a manufacturer is real
- How to market a product, source a product, manufacturer a product and all in between
And much more.
Get in touch with Sam
David Aladdin: Great to have you on this show Sam. Can you tell us a little more about yourself?
Sam Boyd: Hey thanks David for having me here, yeah great introduction, a little more about myself is I grew up in US, north east close to Philadelphia, and I ended up moving to china where I started my own company, sourcing company. Originally before I started my own company I was working with product development company out in Shenzhen and I just didn’t like having a boss and what happened was I left the company and I basically ask my assistant who was working with this product development company to come and join me where I was going to start my own company from my kitchen table.
My goal was to set out and have a sourcing company where we helped people get products manufactured in china and then ship it all over the world. And that was the company that grew from the kitchen table to a small office and then we continued to add on more employees. About a year ago, what we recognized was that there are a lot of people who are looking into products manufactured in China and it’s very easy to get attached to these big fish people who are doing stuff with retail, big box retailers and the wholesale.
There is not a lot of help for Amazon sellers. So what we found was if we offered a service that’s little bit more transparent than the traditional sourcing services that were out there that we would be attract Amazon sellers, we would be able to help them out and really allow them to grow their business by offering a full purchasing office in china. So that’s what we have been focusing on.
Our company is still a small company, almost all of us are based out of china and you know we just continue to grow and continue to figure out more and more ways to help a lot of eCommerce and Amazon sellers and that’s really the generally a gist of things.
David Aladdin: A lot of listeners are kind of wondering, how did you decide to end up in China, how did you decide to live there, you know how long do you plan to live there?
Sam Boyd: To answer your last question, how long do I plan to stay in China, my answer always is till I am sick of it and there’s always ways you can get tired of china but when you look at it, its where businesses is especially for e-Commerce this is the best place to be for. So probably until I can really set things up and I can completely get out of the country full time and have full team operating it or until another country becomes the next China.
The real reason how I started was I was dealing with China or importing from China since I was in high school but the idea of going to China didn’t start until I was studying at university and my university cancelled the Russian course that I was taking, I really wanted to learn Russian. So Chinese classes didn’t have class on Friday. So I thought I can have a three day weekend if I specialize or major in Chinese. So one thing led to another, I started studying over there and that’s how I wound up here so it might have been more of laziness, there’s always been I was always interested in china but that’s only how I technically wound up in China.
David Aladdin: SO, you are saying we could do this interview in Chinese. Do you know, do you speak Chinese?
Sam Boyd: Yeah it’s tough to say I am fluent, I have come across very few foreigners who are truly fluent, I can get by, I can do business, you know when I am meeting with people, it’s the language they are more comfortable with but I think English would probably be more enjoyable if your listeners.
David Aladdin: Yeah well there might be few Chinese speakers actually. You ended up in China like at some point in high school and it just evolved into this crazy business. I am just trying to get into the feel of it like what got you into the import aspect of guided import you know what made you want to create guided imports.
Sam Boyd: So when I was studying in China during university, it was obvious that there were factories all over the place in china like you cannot look left or right without running into a factory and I ran into a couple of bosses of a random product that they manufactured and they said do you have any contacts in US who are interested in buying our plastic sterilization packages that they put on different medical tools and without even skipping a beat I said Yeah of course, I was curious to see what that meant and I guess that led to a factory tour and then I realized ok this is awesome.
I started getting in the first way that I could which was product development company so after learning about product development, there were doing a manufacturing first, promotional electronics after learning about that and just truly understanding all the different caveats of international trade, I was like this, I have got to do this on my own and that’s when the thought came of, you know there is a lot of who are manufacturing in China who are interested in doing it if I just say hey I am American in China let me help you out, you know that small ideas sort of manifested into what we have today.
I think the imports was just a pivot, our major focus for doing tons of containers was on an average month where we helped all different types of retailers and seeing how fast eCommerce is growing it’s such a lower order quantity, it’s not attractive for a lot of people because if you have tens and thousands or even hundreds of thousands, or if you are lucky million dollar purchase orders and then some guy comes to you and says hi I am looking for private label product that I want to have, my starting order would be you know worth $3000 and you are working out of a commission then that’s not going to be attractive.
So what we figured out was let’s not do this anti open business where we sort of hide all of our contacts, let’s keep it all open, let’s offer a service where you hire us to act as your employees, we are your team on the ground. And what we are going to do is we are going to identify suppliers, we are going to work with you and we are going to show you these suppliers which ones are good, which ones or we are probably going to skip and we will handle all of the negotiating putting the purchase orders together and all of that.
So it was really just a pivot and it turned about to be a lucky one because you know now a lot of our clients are Amazon sellers and the benefit for that and hopefully the benefit for your listeners is I understand Amazon and importing got Amazon in and out, I mean that’s what we do. We don’t personally sell on Amazon, I think that would be kind of disservice to our customers, it’s like we don’t want you to feel as though we are supplying you products and we are also your competition but truly understanding the manufacturing and helping these eCommerce businesses get products manufactured and shipped to them, this is really what we focus on.
David Aladdin: Alright, I think you really made a smart decision to start your own product mainly because I actually try to avoid advertising other companies within the podcast. Just it would conflict with the podcast like our believes but I like how you mention that you made a pivot within your business, you know when you found that the business wasn’t moving the way you wanted to, it wasn’t driving enough income or it wasn’t doing as good as you though it would. And I think all of us need to pivot, we need to see that slight decline or not reaching our expectation. So I thought that was really cool.
Sam Boyd: Yeah, I mean if I had started out, I would have no idea where I was now. I am very happy that I kept my avenues open, so you are absolutely right.
David Aladdin: What do you see as a ecosystem in China like what’s going on over there?
Sam Boyd: That’s a big question.
David Aladdin: Take it wherever you want to go.
Sam Boyd: Okay cool so I don’t love saying this publicly but China sucks. It’s difficult, I guess that’s a better word, it’s difficult. What I mean by this is that my job wouldn’t exist if China wasn’t disorganized, it wasn’t difficult to get products manufactured to deal with factories. So I think we may look at the eco system, what’s going on in China. To understand why they can’t do it, it’s an emerging market, it’s the wild west. It wasn’t too long ago when China doors were closed and no one was even considering products manufactured from China and China as a country went from they were completely shut off to the rest of the world to within a couple of decades they opened themselves up to this to sense where every single one of their highways are five lines across each side and all of their roads are specifically built, their infrastructure is specifically built to transport goods from factory to port and then from port to other countries.
So at such a fast growth, they adapted very quickly but they haven’t been able to adapt to the strong cultural understandings and the strong cultural business practices that most of the west are familiar with. So if we take a couple of things for example the idea of china is all about face, its about all types of negotiations, they should first start with a true dinner and then you want to drink together, then you want to truly be friends and then you start doing business. And the reason for doing that is a lot of people, they have conditioned themselves now, they do it now but traditionally they condition themselves, ok we don’t need contracts and that’s a big thing, people say that China doesn’t have contracts, you don’t sign contracts. Now you do sign contracts but the clarity of them isn’t there and another one is friends with bribery, the perfect example of a sourcing company which I am so happy we pivoted away from is that you hide everything.
So at one point we are acting as a middleman and we were sort of that shield to prevent our buyers from truly seeing where the other factories were, they never knew how we truly were getting profiting, were we usually do some type of commission, even if we setup our commission X they wouldn’t really know its Y so all of that is necessary. I was on the phone with someone who does sourcing in Vietnam and I was talking to her today and they were comparing our battle scars and the idea of not being transparent which is what China in a way is all about was so foreign to her even though it’s a country a way.
So China is different and I think a lot of your listeners have dealt with China, they have definitely purchased from China or looked into purchasing from China and they see that and it’s really all about understanding and then properly navigating it through it.
David Aladdin: I think one of the biggest pinpoints when dealing with manufacturers in China is actually am I getting the right price when I am asking for let’s say a 1000 units or 3000 units and when I ask for like a discount, they do give me the discount but is it the best discount that I can get. How do you deal with that and how are prices that you purchase from different from prices that we purchase from on Alibaba, I guess that’s the better question?
Sam Boyd: Yeah that’s a good question, I am happy you brought that up because it’s a big misconception with China. In theory, I can get anyone, any product that’s produced in China or could be produced in China in any price possible. I am confident in that, now what I am also confident in is the saying that you get what you pay for. So as a whole if you are looking to get a product and you really want to, let’s take an example of instance let’s say, lets all imagine that we have gone onto jungle scouter AMZ tracker, one of these services tell us what is the best product to choose.
What we do is we find okay this is a product that the mark-up is great, the mark-up is the perfect product, if only I can get it for X amount of dollars. So let’s say its selling for $45 and your thoughts are if I can get it for $10 then I stand to make $35 profit, let’s take away shipping Amazon fees so now we are looking around $20, I stand to make a $20 profit for instance. So now your mentality is let’s go and find a factory that can produce this product at the $20 mark and it’s a really dangerous way to get products manufactured because you are looking at price first.
So you can definitely handle pricing and as someone that is on around, having a full team on ground in china, we definitely have some advantage over pricing or also over the full term of negotiating but before even looking at those numbers you want to get an idea what does this product really cost to manufacturer how much is it because if you talk to one factory, maybe they are going to say yeah we can only do it for $5 but then when you are going to talk to another factory they are going to say $55.
So now there’s a huge discrepancies, there’s $50 discrepancy over arbitrary product and the biggest point of all of this is before even trying to guess or what I can assume what you can potentially get a product produced for, do the homework and go to maybe speak to a five or ten factories with the exact specifications of your product, see what is that they quote you and once you have a blanket of numbers you can sort of take the average and say here is the average, here is the high and low, you are definitely going to see outliers.
Once you have that you can definitely go back to your original question was, Is how you can get it cheaper and that’s when you want to consider, ok do we want to get cheaper, do we want to ensure quality, do we want to make sure there is a phenomenal relationship with the supplier through the life of the product. And when you identify that question that is when you can identify what your end game is going to be for negotiating.
If you want to have a phenomenal relationship with the supplier and by having a phenomenal relationship that’s where you can negotiate payments in the long run. So if you are originally starting at a 30-70 payment plan, you might be able to change that like a net 30 where you are paying 100 percent of the products after 30 days of receiving it, things like this. That’s a good strategy for building relationship. If you just care about getting the price down; you can get the price down but you might sacrifice something, you might sacrifice quality.
So if you take a wrist watch you can have a wrist watch the outer shell is going to look the same but the differences of components on the inside are what are really going to change.
David Aladdin: I totally agree. Right now I have an issue with one of my products where the quality, turns out there is actually a defect in maybe in 5 percent of the units, 10 percent of the units and it is causing a higher refund rate. I mean I have been working around the clock to decrease that refund rate which is related to the quality and so if I have the option I would chose quality over price first obviously and so I like that you brought that point out because it’s when you actually get the products it’s too late to ask to pay for more better stuff.
Sam Boyd: Unfortunately yeah and there are no returns in China. I was saying that you cannot go to the customer services desk and say I bought these 1000 unit and could you please give them back or return them you know I get my money back. So in order to prevent these issues such as the one you explained is that you need to understand that anyone that you work with in China, whether it’s a factory or it’s a sourcing company or whoever it is for the most part, if they are of this Chinese mentality, this Chinese manufacturing mentality you need to take the additional steps, you need to think they are producing them, they are saying that these products are good, I’m sure your factory promised you that yeah the quality’s going to be great but you need to take the extra steps and you are going to have to say with the third party inspection company coming in to check the goods or we are going to do that and have our local freight forwarder check them as well, do random checks on them just to make sure the quality is good because as much as you want to take every ones word for it by having a game plan for every potential mistake that could happen that’s how you are going to save money, it’s how you are not going to negotiate money after the factory.
David Aladdin: Very true, I mean I have been buying like such a large quantities that having a quality issue when the products are here, actually you know I have got to potentially pay 50 cents for every unit to pay to come to me and dispose if it’s bad. All the issues that come with having a bad quality product or there is an assembly issue in it so getting it right done right at the sources is key.
Sam Boyd: One hundred percent and my advice for you and your listeners as well who are producing in China is if it is eCommerce related do not let any shipment leave china without having atleast one QC inspection handle. The reason why is because it’s been done, do everything that you can do in China and the second you say okay I am going to try to save the $200 that is going to cost for QC inspection and I am just going to hope everything is okay, it’s $200.
I can understand in a way how that can be a lot for some but that’s safety on your investment, it’s such a strong safety net, just to say okay you are going to have inspectors going to the factory and check these goods but not only that what happens is that there is a quality shift. So let’s take a factory for example who’s been producing your products for a long time, you are on your sixth, seventh, twelfth order for instance, they are going to get lazy. The shift in quality is going to happen, they are say ok we got this guy, we got these orders in the bag, what we are going to do is maybe scale it down a bit and we are going to see to try to sneak it in some cheaper components so we can earn a little extra money on this or we are not going to use the same skilled worker, whatever it might be.
They are going to look for more ways where they are going to make more money and what happens you have a product that in the beginning it was going strong, because your suppliers could have been motivated, they are like okay we want to keep this guy rolling, we are want to keep these orders coming in. Then they get used to, they get used to you, they get used to seeing your money so then they start looking for other ways to make money because they are used to seeing it and quality shift happens.
So if you keep a supplier on their toes and they know that every single time a third party quality inspection company is going to come in and they are going to check the goods, they are going to check a random sampling of the goods, they can’t afford that quality shift, they can’t afford to say okay we are going to try to sneak in some lesser quality products because they know they will get denied, they will know that you will find out about that at the time of when money is due and they will lose you as a customer.
So, it’s a very important thing to think that without a doubt anytime you are looking at manufacturing in China whether its using a third party service or it is doing it yourself, factoring 2- 300 dollars for every single order and I promise you it will save you a ton of headache.
David Aladdin: Actually, I need to do that, I feel like I have been. . . there’s so many fees in running an Amazon business insane amounts. I think I am at over 3000 a month, maybe 4000 a month, in just recurring costs; they are a just passive cost, that doesn’t include any of the products that I am purchasing, any of the shipping costs.
Sam Boyd: That mindset you have is the same mindset of a factory, it’s like there are so many fees involved with it. If we can just bring it down a little bit then we would be able to make some more in that 3000 mark-up, that’s not going to be big. That’s the mindset of the factory as well.
David Aladdin: 300 dollars that’s like actually very small, I mean it’s cheaper than the phone I just bought.
Sam Boyd: Yeah if you take into account all of the products, the money that you have lost in potential revenue with reviews, what you are paying for refunds and getting them shipped back to you, all of these things, doesn’t the 200 dollars more that pay for.
David Aladdin: Do you guys do that. What companies would you recommend?
Sam Boyd: Yeah so, it’s definitely something we offer with our services.
David Aladdin: So it would be part of a suite like?
Sam Boyd: Well right yeah, probably we are going to be offering our own quality control service very shortly that’s going to be hopefully the most competitive and the most intensive quality control service that’s out there but not spending the entire time to plug my company, I would rather just give you guys a small content is, there are some good companies out there, there is Asia Quality Focus that’s a good one and there’s Asian Inspection. What I can do if you guys have shows, I can email you the list and I give you prices and maybe give their pros and cons people can look at.
You should pay between 200 and 400 dollars for inspection and the reason is there are inspectors who will do it for 68 dollars, I think I found one doing it for, we have to think about this. Now going back to the culture of China and being there briberies are very common thing. If you are an inspector and you are getting paid not 68 dollars, you are getting paid whatever the inspection company who has hired you to then travel to the city to spend an entire day at a factory.
If you are being paid, whatever that is which is a fraction of the 68 dollars how motivated are you going to be to know this order, this client’s order is relying on the graces of you being able to properly determine whether or not this is a passing or failing inspection degree. So, it’s very simple and if I am an inspector and I am under paid, I can go to the boss of the factory boss and say there is a couple of issues here, there is a problem going on with this order, I can overlook at it but I am not getting paid too much for this, you know you get where I am getting at. It’s so easy and so when you think of. . . no I am not saying that’s not going to happen if you pay 600 dollars for inspection. But when you work with a credit company the one that’s reviewed and people seem to like it and you can’t find anything bad about them online.
When you work with a company like this and you know that their employees are paid properly that motivation and also those controls to audit their inspectors are going to be a little bit stringent and you are not going to see that much. That’s why I say stick within 200 and 400 dollars range, you may get it at an average of about 300. So for 2 to 300 dollars you are getting a certified engineer to go and travel to your factory to spend the entire day at your factory inspecting your goods, he is a third party, that’s worth it in my opinion.
David Aladdin: No I agree, I actually after the show because I don’t have a full suite with you, I might have another company.
Sam Boyd: I will give you some companies and we will test it out too. We will beta test what we are working on with you and see how you are like it, you can give us some feedback to grow but again look at the other companies as well. This thought about bribery, it’s actually huge to talk about.
David Aladdin: So if you get one of these inspection companies, I am sure they have been offered bribes all the time, you have got an offer bribes too, are you allowed to say how much you have been offered like bribery what’s the highest amount ever.
Sam Boyd: Ok let’s not give a number, let’s put it this way that so what we still do and also what we did a lot in the past in the company is that we worked with big box retailers as well, people you know who are importing products to be sold you know in Walmart, Target and above and beyond Tesco. So if you think about those order sizes, there are hundreds and thousands of dollar order sizes and for a factory to say that we want that contract, they are willing to do a lot, they are willing to wine and dine you which is to some you know that can be looked down as a bribery.
You know they are looking to do what they necessarily would have to do to get that contract right. So you have to be very careful at all times especially when you are in China, you are not going to see as much I don’t think. I am not going to see it much as a purchasing office for eCommerce sellers because the order quantities are not huge but it’s still there. And it is monetarily and it can be also be bribing you with vacations, with going to visit their families in their different areas, whether it’s small islands around China or whatever it may be. These are the things you definitely have to be worried off.
Now I would say for the most part a Chinese national is going to receive more attempted bribes than a non-Chinese person because it’s their culture, they are used to it, they know how to sort of dance that dance and they know that it will often be reciprocated nicely. So that’s one of those things that us as a company like I have Chinese employees, I have sourcing agents who are Chinese, how do I prevent that as a company from factories telling our employees who are paid in good salary but you know everyone wants more money from saying we will give you more money if you are make our factory look good.
The way that would normally come in traditionally, the way that will come in, you know I can glorify it by say you know you would be wine and dine in and things like this but in theory the way you are going to see that is the factory will say to whatever purchasing agency there is ok, if you award us the contract then what we will do is we will give you whoever that low level sourcing agency is or whoever that negotiator is, we will give you an extra 25 cents per each unit and that will go into which ever account you will like to go into.
So if you are placing an order of ten thousand units, 25 cents too. Yeah, it’s a huge motivator and that’s one of the things when we were small sourcing companies, helping big companies, there were ways of preventing that but as we have grown and we have a decent size of sourcing agents, question how do we prevent that and how do we prevent it personally is we have audits, I have factories who I am very close with and most of these factories don’t know my entire team so what we will do on monthly basis.
David Aladdin: How big is your team by the way?
Sam Boyd: We are ten people, so it’s a strong size and I hope we don’t get too big like you are saying there’s too big cost setup. So, what will happen is I’ll talk with one of my friend factories and say one of our sourcing agents is going to approach you and I want you to push them along, sort of see what they are willing to do to grant you the contract or favour you. And this is what I want you to say so, we will make it look as though that they are entirely a not qualified factory. One that our agents are trained not to source or not to include in our reports. But we will also have them say okay now if you can make us look qualify because we understand we might not look qualified then we would give you X and that’s how we are with our own employees.
So if they report it to us immediately that’s the best things, they know all about this, they know this is going to happen so they are on their toes all the time. So it’s kind of, it does happen they will never know if it’s really us or if it’s actually a factory. So if they reported it to us immediately, that’s the basically the best thing they can get and we have bonuses aside for that. If they don’t report it and say no, you know that usually happens, we have certain conversation, if they accept it immediately, the whole company of our is going to know what happened and they are going to have to log out and leave.
David Aladdin: The struggle is real, I feel like you have a lot of checks and balances in place and I can tell it’s very important to maintain that high quality almost non-biased towards any manufacture.
Sam Boyd: You it is, it’s difficult and at sometimes I can imagine for how some businesses are able to do this without being in China or without having some type of presence, now let’s talk after that, let’s talk other ways of not using a sourcing company, other ways of benefitting from people outside of China. So I don’t want to say I am entirely like all I am saying is to use a sourcing company.
David Aladdin: Yes, how about Alibaba, what are your thoughts on Alibaba, sourcing from Alibaba, I want to say go into the prices but I hear that a lot of the listings on Alibaba aren’t the manufacturers themselves. Is there ways that we can distinguish quickly which ones are real manufacturers and which ones aren’t?
Sam Boyd: Yeah, there are a couple of ways, a lot of them are pretty simple ways were search the factories name, search the name that are listing on Alibaba and see what you can find on Google. So Google is not great, especially Google maps in China is terrible, Bing maps is much better. I never thought I would be plugging Bing ever.
David Aladdin: They are on the rise I am telling you, they are coming back.
Sam Boyd: But check their address and see what does it look like, does it look like an office or does it look like an actual manufacturing and also you can look at company records, What I believe, I haven’t tested this but in the process of testing this out, but what someone can do if you really curious about whether or not they are a factory or a legitimate factory is to get their name, get their information and call your local embassy or Chinese consulate and ask to speak with the trade department whoever is in charge of trade or international trade and imports into your country and ask them to verify if this is a legitimate manufacturer.
They can then go and check the business records, these business records are available to anyone, however the database is in Chinese. So to be able to hop on the phone and to get free advice from someone in your own country, it might not take. . . it might take longer than a day but it’s pretty sure far away of actually knowing. Now that’s really in a sense of are you . . .you are getting ready to use this factory, they have set their factory just you want to approve that it’s a factory.
So the other things you can do, is really utilize Google, really utilize the factory name and look through the pages and see what is there. Do they have other websites and do the websites the address and the names, do they all match up or is it all different names like this could be a trading company , they are saying that we are operating under a couple of different names, now the same time I am not entirely against trading companies, I am against suppliers identifying themselves that’s something they are not, that’s something I am very much against but the idea with trading company is once you get past the idea that yeah it’s just another middle man and once you sort of understand that this is in theory, someone who understands the products, they understand the market they are selling in and they understand that in order for them to maintain in their customers, they need to ensure that their suppliers can uphold a certain level of quality then the idea of a trading company could be one be the one factory in and to their list of suppliers, potential suppliers.
David Aladdin: Yeah, I think it would be in their best interest, it’s almost like having a QC agent for you technically.
Sam Boyd: Yeah you know some of these trading companies; they exist because the factory has no means for international or for export. So they utilize the trading company to act as their export agent, you need certain certifications and licenses to export your products so one can manufacture, one can also export, bigger manufacturers can do both but if you are a smaller manufacturer, you may want to utilize this agent who can hire the English speakers, who can hire the sales team and all you say is that you give them your catalogue and they handle everything.
Now there’s this fantasy that because you are going to china you want to go directly to the source. Now that’s great but you have to understand that when you are going directly to the source you are going to have to deal with, however that source decides to operate, you know the businesses practices they have and all of the these things and now they have been playing efficiency, you know one that doesn’t look good, you can always go to the other, and then the other, the other and the other. But I am sort saying this in a sense not to take people immediately away from it. If you see that they are a trading company don’t get out.
David Aladdin: I see what you are saying. Let’s say there are tons of listings on Alibaba but then there are also a lot of manufacturers that aren’t even listed there. You see it firsthand like what is it like out there, is it so many manufacturers that don’t have the chance or time to get on Alibaba and like you being on the ground I feel like bit more access to the same types of products being manufactured but just not available on the web for us to see.
Sam Boyd: Yes and no, Alibaba is a great resource but at the same time Alibaba cost $20,000 a year to be listed as a gold supplier.
David Aladdin: That is crazy.
Sam Boyd: Yeah it sounds like a lot right but if you think that you are a factory, 100 percent of your marketing budget could be each year only $20,000 and all you have to do is just employ the English speakers. So depending on your size that’s a drop in the bucket or that’s how do we do that. So then as for those other factories out there I think it’s easier to say that they will fall into two categories, there’s one factory who’s fine with their current clients, they have got a series of trading companies, maybe some close contacts or sourcing companies and they don’t need anyone else, they don’t need to advertise because they are already getting enough orders as it is and they are maximising their manufacturing output. So if that’s the case then you are not going to be able to find them, you will have to sort of know someone who knows them or you will have to find them in a different way. That’s one way you can see that there are factories out there that are not listed.
David Aladdin: There’s secret manufacturing places that we all need to know about.
Sam Boyd: Yeah so I fantasize about them and then I will sort of make sure that we are not only fantasizing about them. And then the other option is maybe these factories they happen to produce great goods, they are essentially artists in their craft but they don’t have this ability to do international record to do export.
David Aladdin: I hear aeroplanes in the background, Is that my cargo flying above?
Sam Boyd: We are not too far from the airport. Actually, it’s literally right next to us.
David Aladdin: Is it the cargo that comes out of there.
Sam Boyd: No it’s passenger and cargo, this is what interesting if you are shipping on air express, most of the air express if you have ever been on a transit landing flight or just any international flight, a lot of the goods are in the belly of the aircraft are express shipments because UPS for instance they lease out space in international aircraft of Delta, Pacific, big airlines that leased that out and they have that space. So they just put it in these airlines and it makes perfect sense, it’s phenomenal.
David Aladdin: Who will start the next freight business?
Sam Boyd: I think Amazon is trying to. That’s what we are seeing. I don’t know they have made it very clear that they are going to offer logistics. They have put the pieces in place, the question is are they offering logistics for FBA sellers or are they offering logistics as this is their first step to cancel out the FBA seller and go directly to the source which is Chinese manufacturers.
My theory is just that they are trying to take over the, there’s a lot in some cases they have taken over the UPS in places in US where they are doing their own shipping. UPS has lost a ton of business from this. I think that’s probably what’s going to happen when you look at exporting from China as well, they are going to act as a freight forwarder because as much as they love, as much as Amazon would love to craft factories and be able to get factories to be the ones that are producing the product and its going directly to the customer. So it’s like have to see factory to customer. They need to solve the problem that every single sourcing company in China for the last 40 years have been trying to solve which is how do you make China better at what they are doing? How do you make our industry or our business obsolete?
So I have more faith in Amazon been able to just act as a forwarding company which is great, maybe we will get cheaper rates, maybe I will get cheaper rates.
David Aladdin: I feel like there is a ton of variables going on right now I mean you have robotics on one side that could just replace all of China and you could literally turn manufacturing back in the US but I think Amazon in terms of like freight, trying to do the logistics, I think they are just going to see where the money is at. I don’t think they are either targeting the seller or manufacturer, I think they see Alibaba as a threat right now, the dominance they have played I think, I think Alibaba and Aliexpress are actually bigger than Amazon entire corporation, So I saw some stats about that. They Aliexpress sourcing to from the manufacturers and that’s kind of how they want their own fee to so.
Sam Boyd: It makes sense for them to put their boots down, I mean they have an office in Shanghai, Amazon does so mainly for the fact that there is www.Amazon.cn, but it would make sense for them to have boots on the ground but you are right it so many moving pieces that we can only imagine what’s going to happen and the story we have to see but the size of Amazon it’s so big in sense that they want to take over everything and they are just trying. It probably means not too much to them if they were to invest hundreds of millions of dollars into something to see if it will work.
So it’s probably what we are looking at now, and hopefully it works to an extent where existing Amazon sellers can keep doing what they are doing but I promise you just from what I am seeing, I am sure you are seeing it a lot to David is that Amazon is not what it used to be. Sellers are the ones who are very successful with it, they are sort of thinking outside the box, they are sort of looking at ways that are not what every guru or whatever Amazon is of course teaching you.
David Aladdin: Well, of course they are all flipped upside down right now, I don’t even know how they are going to explain their subscribers paying them 2 grand to take a course, I don’t know how they are going to tell people how they grow their product when now they are up against this listing of like 300 to 500 reviews. You know they are going to have zero marketing base to reach out into and they are going to have product pretty much like, no email lists, nothing.
Sam Boyd: I am interested in to see how this is going to play but at the same time I have seen last couple of months people getting their products on to Amazon and not doing black out reviews and things like this been able to be successful in certain ways. Now I am not a marketer, I don’t go into what I have heard or seen but it’s definitely, I think that the idea all you have to do is pick a highly competitive product that’s doing well, get it manufactured, just put your logo on it and that’s 100 percent done and the game for that is over.
What sort of is no their maybe not 100 percent getting very close to that, if you want to truly make this as your business and what we are sort of getting more into is an not the idea of someone spending, you know making this their part time income but being able to either truly put the resources that are needed to be put together to make this your company or make this your full time job and actually make it so you are not spending only two hours a day on your Amazon company, you are spending all day and this is your start up.
David Aladdin: You have got to be like Sam Boyd who goes straight to China and literally just gets into the whole fray like I feel you cannot do these types of things part time like you can’t just go to China part time and start a business part time , you just jump right into it like you can’t do Amazon part time if you really want to be successful, the two hour thing is I don’t think Amazon wants you working on your listing for two hours a week, they want someone who is dedicated to their customer service, you know it’s building a better product all the time.
Sam Boyd: Yeah, I think all of this is possible and there are a lot of people who will, I have met a lot people who have fantasized with idea I am going to just come to China and some of them have been successful in doing that after fantasizing and actually buying that ticket. At the same time there are so many pieces with Amazon for a successful business to perform there needs to be a delegation and if you look at, there are two sides to Amazon, there is marketing side and then there’s the production side or the sourcing side and if you figure out what you specialize in, so if you are marketer, focus on marketing and figure out how do you completely outsource the sourcing side. What kinds of things can you do in order to completely outsource it?
You know there are sourcing companies, sourcing services, guided imports that can do that but the other stuff is, does it make sense for you to only on focus on China, you has to be the one up in the middle of night, working with your factories, building the relationships, doing all of these things, hoping you can trust whatever boots that are on the ground that will promise you that they are not taking bribes, you are doing all of these things and outsource the marketing or would it make more sense to go to China. When you are looking at the marketing you have you know there’s a lot to that as well and also hopefully those and those that are getting started and also those who are looking to actually grow because we are working with a lot of people who have just sold their businesses, there Amazon businesses or are getting ready to sell them and if you are a perspective seller of your Amazon business what you really want to have is a fully packaged service.
So be able to have all of those avenues very easily laid out where it’s saying if you are buying my company, all you have to do is focus on working with these factories, here are the factories. We have got this entire area which is marketing, we have got that mapped out with outsourcers and the people that we have found, the freelancers that we found or vice versa. Being able to do that; that is how you can continue to grow and that’s how you can innovate and that’s how you can say, ok let’s step away from only Amazon and let’s look at what other markets are there, is there importing into China, is there lazzado, Lazzado is like the Amazon of South East Asia, they do fulfilment.
How many people are talking about lazzado, even though they are handling tons of countries as it is? Let’s talk about retail, wholesale, there are tons of these avenues that you can look at when you are not only relying on Amazon and you are not entirely doing everything by yourself. You are truly making this idea that you sort of working out of your second bedroom and you have turned this sort of into a company, you may not feel like it’s a company because it’s not tangible and all of your workers are all over the world but I think a lot of people can now relate to that.
David Aladdin: I think we should close out with that. We have got five minutes left, I was going to say give a closing statement but that was pretty good.
Sam Boyd: I hope it didn’t scare too many people off. I am just trying to give like some of my experience in what I’m seeing as this an industry and we are really in an interesting spot and everything is changing so it’s cool to be able to seeing all of that happening.
David Aladdin: I find you are in a very interesting spot right now because China is evolving like crazy and Amazon keeps changing, I mean the whole eco-system of Amazon is completely different now. You know whoever is the best marketer and whoever can find the best marketing team, whoever can find the best sourcing team is going to be on top, that’s how people build epic businesses, it’s whoever the best at doing all the little components very well and you pretty much hit that right on the spot.
Sam Boyd: Yeah well hopefully we will see, maybe I am a hundred percent wrong and Amazon is going to completely change again tomorrow. So all of us just have to you know be able to be flexible and pivot as everything pivots with it. So I guess we will see.
David Aladdin: Awesome. Thanks for coming on the show Sam. David Aladdin, Sam Boyd Out!
Popular: The masterlist of resources we use and recommend.
We are the fastest growing Amazon FBA Podcast with over 150,000 Amazon sellers tuning in. See why this is the best Amazon Podcast.
Amazon Seller Tools for ourselves, and for you, which we use to supercharge our Amazon listings and build epic kindoms. Comes with a 7 day trial.
Sell Your Amazon Business?
If you own an E-commerce business with annual sales of at least $1M+ and you're open to a serious conversation about selling please read on. I have clients with funds between $2M - $20M who are ready to buy low maintenance Ecom businesses doing at least $1M+ in annual sales (with no upper limit) with a profit margin of 20% or higher. The business can utilize Amazon FBA and or Shopify and must own its own website and customer database.
This business will have a basic team of VA's in place or someone who can do most of the grunt work and it will also have sufficient evidence of scope of scale, without the new owner being handcuffed to their desk! If you or someone you know has a healthy Ecom business that meets these basic criteria and you are serious selling your Amazon business and moving on to something new, then please send me a PM with some basic details about your business or please share this post with someone you think might be a great fit.