Amazon Sourcing From China with Francois Jaffres

Amazon FBA Sourcing in 2021

Welcome back to another episode! Find your detailed script on how to negotiate the most attractive deals for your business when sourcing from China in the new episode of Dr.Amazon Podcast.

Francois Jaffres from Noviland explains how to be sharp and bargain the best conditions with Chinese colleagues. And also shares the useful guide “Preparing Your Business for Chinese Holiday Closure” for our listeners.

 

Timestamps

 

01:20 Amazon Sourcing from China: Preparedness is a Key Factor

04:00 Financial Aspect of the Amazon FBA Sourcing

05:35 Create a Need and a Wishlist

06:58 Developing The Relationship With The Factories

09:14 How To Choose The Right Factory

13:25 Get the Price Down on the Sample

15:14 How Does Noviland Help Amazon Sellers?

21:00 Three Main Amazon Sourcing Recommendations for 2021

22:40 How to Contact Francois Jaffres?

 

How to Constact Francois Jaffres?

 

Noviland Website: https://noviland.com/

Noviland Facebook: https://www.facebook.com/Novilandinc/

Noviland Instagram: https://www.instagram.com/novilandinc/

Noviland LinkedIn: https://www.linkedin.com/company/noviland/

Noviland YouTube: https://www.youtube.com/channel/UCeVbGi4Mhg2Kq2O8sDk75Qg

Francois Jaffres LinkedIn: https://www.linkedin.com/in/francois-jaffres/

Preparing Your Business for Chinese Holiday Closures AND a Request for Quote (RFQ) Guideline https://noviland.com/#live

 

 

Amazon Sourcing from China: Preparedness is a Key Factor

Timestamp 👉 01:20

Yeah, so the main thing I think every seller should really take away is preparedness. Right? 

And it’s hard to be prepared for product development if you’re not an engineer, or if you’ve never had any product development experience in the past or have been a buyer or merchandiser for a different company.

 

It’s very hard for a lot of Amazon sellers to start that way and taking it from an engineering approach. And so when I say preparedness, you have a product that you really would like to launch, you’ve done all the proper research, you understand the Amazon PPC, a bit more, you understand the competition out there, the keywords, everything that needs to go into your listing.

 

It’s understanding your product through all the materials, all the dimensions, and the certifications you may need. So let’s take a plastic product. It has to be BPA free because it’s going to, I don’t know be used as a utensil for any reason.

 

It’s understanding also the packaging, just one step further, it’s one more move that not enough sellers really emphasize early on. But it is important to think about for the main reason being, you want to try to catch all of this in one swoop, instead of developing your product little by little. And then three months later, you’re like 

 

“Oh, crap, I forgot about the packaging. Now I have to take these volumes into account. You know, I’m sourcing this nice mug, how am I going to package this into a set? Is it going to have expanded, you know, expanded polystyrene, which is just styrofoam? Is it going to be bubble-wrapped? Am I going to have a design on it?”

 

These are important aspects of think of upfront because that can play into your margins, it could play into your shipping costs, it can, you know, determine if that’s an oversized item or an odd-shaped item for Amazon. Right. So preparedness is number one. And those are just the product and packaging. 

 

Financial Aspect of the Amazon FBA Sourcing

Timestamp 👉 04:00

Lastly, I really want to talk about is target pricing and budgets. I think those are two very important things too, to sort of realizing when you start your sourcing journey. So it’s getting a better feel for, you know, I have no more than $5,000 US dollars that I can spend on this product to start sourcing, and that includes shipping. Now, you might really have a budget of $6,000-7,000. But you don’t want to go over $5,000 unless you get a great factory under your belt.

 

But when you know your budget, you’re a lot more comfortable with negotiations, with factories. And when you understand your target pricing, you know what’s realistic and what’s not. So hey, I need to buy this product for $2. And the packaging has to be sort of this type and style. And I can’t spend more than $5,000. 

 

Now when you’re talking to a factory, you don’t have to tell them exactly how much you’re looking to get this product for. But if they say oh I could do this for $3. Now you can go back and say okay, well maybe I can negotiate volumes a little higher, stay within my budget and let’s try to get that down to maybe $2,50, and that way you have the right margin. 

 

So I think preparedness and these three factors. So the financial aspect, the product specification aspect, and the packaging specification aspect, I think those are three major components when it comes to sourcing from China.

 

Create a Need and a Wishlist 

Timestamp 👉 05:35

Yeah, I think it’s a great way, and I’ve seen a lot of successful sellers doing this. And it’s something I don’t see very often, it’s something I’ve tried to push on more sellers. But that’s going back to all those specifications. 

 

And those customizations and the budget and the target pricing, it’s what exactly you need in this product, okay, I need this to have a certain class or a certain finishing, I don’t necessarily need it to have, you know, a handle that’s 10 centimeters, or has this exact design, it could have, you know, anywhere between 5 and 10. And it could be in different designs or styles. But I wish that it has certain aspects.  

 

Developing The Relationship With The Factories

Timestamp 👉 06:58

So that’s something that you can look forward to in the future. After you validated that this is a great product. Another thing for understanding is the target pricing again, I need this product to be no more than $3, otherwise, just doesn’t cut it, I’m not going to have the right margins. I wish it gets to $2. Right. So I wish that this product could be $2 and how am I going to achieve that you can only really achieve it by developing a relationship with the factories. And in that relationship, you have a lot more transparency into that long term pricing. 

 

So okay, I’m starting with 500 to 1000 units now, perfectly fine, a lot of sellers want to test the market, makes sense. But if this product goes well, I want to place an order of let’s say 2000 or 3000, the factory might say “hey, that’s not enough”. You know, try to find a new way to really get that pricing down, maybe removing some features to it, maybe shrinking down the packaging, maybe not doing a full custom print on the packaging, and just doing a sticker on it. But working with your factory, that’s how you’ll get to the wants to the wishes, right.

 

So start off with $3 perfectly fine, just want to test the market, I’m just going to break-even I understand my margins aren’t too high, but I wish it will be to $2

 

“Hey, you know, factory XYZ, how can we get this to happen? How many do I have to order? What features do I have to remove? Can I order a complimentary product to it, and you could bring down this pricing?”

 

So now you have a margin between two different products. There are so many ways, but that has to be done through the development of the relationships.

 

How To Choose The Right Factory?

Timestamp 👉 09:14

Yeah, and that’s a great question. That’s a million-dollar question I think every company really has, and there’s no cookie-cutter answer to it. That’s the first thing that I can say here. It’s something where it is going to require time, there are going to be costly learning curves if you’re doing it all yourself.

 

You know, especially if you’re using a marketplace that just lists all the manufacturers, clear examples, Alibaba, the one that everyone tends to go to. It’s thoroughly vetting them. It’s not just relying on accolades. So for example, relying on okay, this is a gold supplier, I should trust them with all my money. 

 

Can I see some references? 

It’s how much information are they actually receiving and able to regurgitate back to me?

Are they saying yes to everything, and then they’re increasing the price down the road?

Or are they saying yes, and immediately telling you “yes, we can do this, but it’ll cost 10 cents more”.

Or are they dragging you out?

Are they just saying “maybe we could do this maybe we can’t”

 

An experienced factor should truly talk to a manufacturer, they’ll tell you very clearly “Yes, we can do that. No, we can’t do that”. The last thing that you want is someone to keep dragging you on. Maybe we could do that, we’ll try this out, try that out more than likely a trade agent. And those aspects and they need to check back with the factories.

 

Find your detailed script on how to negotiate the most attractive deals for your business when sourcing from China in new episode of Dr.Amazon Podcast. 

 

Francois Jaffres from Noviland explains how to be sharp and bargain the best conditions with Chinese colleagues. And also shares useful guide “Preparing Your Business for Chinese Holiday Closure” for our listeners. Follow the link to grab your copy. 

 

O the So taking the time to actually research for your supplier is going to be the number one way and then building that relationship. So not focusing on the transaction not focusing on “Okay, this is going to be $2”. And if they tell you $2, okay, maybe I can get it for $1.95 now, or maybe I could get it for $1.80. And it’ll be better margins for me. 

 

It’s not focusing on that transaction and realizing that this is not a b2c model. This is all b2b. 

 

Right? So in a b2c model, the customer’s always right, that is the same, right? That’s Amazon’s mantra, I guess, someone returns something, okay, here’s your refund. But when you’re doing that, with factories, the biggest turnoff for them, is for you to say, I want to refund for this, or you did this wrong, so you’re going to be penalized. 

 

Because they’re not going to be able to do that in the opposite way “oh, you haven’t paid me on time, so we’re going to penalize you by doing this”. They’re not going to want to do that, because that’s not building the relationship. Right? That’s damaging it in every way.

 

Also, if you approach them with a questionnaire of 1000 questions of “Hey, you know, do you have this? Do you have that? Do you have this?” A true factory is not going to take the time to answer that unless you’re an established business. They know, that Amazon has really brought to light in China. There are a million successful businesses that say I want the best product at the best price. And I promise I’m going to double or triple my order next time they hear it every time, right. 

 

So you have to be able to differentiate yourself, you differentiate yourself by being prepared by being professional, developing that relationship. And not just taking taking taking, you have to give sometimes, and you have to work through problems that just point the finger and blame.

 

Get the Price Down on the Sample

Timestamp 👉 13:25

So for beginners, again, breaking out of that b2c model, and trying to relate to them trying to understand the perspectives, and I think one of the best solutions truly is to find small problems and find ways to work through them with that factory. So again, not pointing the blame, not saying “Oh, you didn’t make the sample right. Now you have to ship me a free sample”. It’s  “hey, you know, I understand this happens, what can we do to correct it”, the factories will look at that as “okay, this guy is serious, that they’re actually going to place the second order, they’re going to stay with us. They understand that we made a mistake, but we’re working to fix it”.

 

The last thing that they want to hear is you did something wrong, now you fix it. It’s how can we fix it? And that’s how they look at the second orders. So being honest with them is just as important. It’s telling them 

 

“Hey, look, you know, I’m really going to place just 500 units this time. I accept that you’re giving me a higher price because you have to cover your margins. I just understand that. But in the second one, what can we do to get that price down? Again, not what I wish for, but what I need. I need this to be $2, but you’re giving me 2.50 right now, how many more do I have to order?”

 

And they look at that as Okay, again, this guy is serious. They’re talking long term, we’re talking about pricing, we’re talking about quantities, it’s moving the conversation forward. Instead of just taking taking taking, I need this to be $2. Otherwise, I’m not going to accept it. It’s just no way to start a relationship. 

 

How Does Noviland Help Amazon Sellers? 

Timestamp 👉 15:14

So it’s an intense experience, you know, we try to do cover everything from the factory to the door. So whether that’s to an Amazon warehouse, where we also handle fulfillment, so it could be direct to consumer.

 

But it is cutting out a lot of this, this learning curve that every company, every person sort of has to overcome with each factory. And we do that by having an experienced team every step of the way. So we have your US-based account manager, of course, they can provide you with the amazing service that we’re so used to here in the US, right, everyone’s looking for that, you know, friendly conversation, the yeses, the nos, the thorough explanations. 

 

So we have a US-based account manager we have overseas, we have two offices, one in Shenzhen, one in Hong Chou, and they handle primarily the product development. So we have a product specialist, and they double as a factory specialist. They know what factories like to hear, they know how to make them excited about projects, they understand the details of your product itself, they understand whom that’s being sold to, and then in turn, they’re able to really engage with the factories and communicate with them.

 

First, they understand the language, so they’re most comfortable with it. Secondly, through the mediums that they’re most comfortable with. So it could be WeChat could be a phone call, could be going in person and talking to the factory owners.

 

Next is also talking to those factories’ management rather than just a trade agent that represents the factory, which is very common. A lot of times you’ll talk to your trade agent, you’ll say, Are you, manufacturer, they’ll say Oh, yes, you know, I’m a representative of the manufacturer or, or in a manufacturing cooperative, something of that nature. It’s very common to hear on Alibaba. But when they’re working with management, you also get that next level of service, because they’re able to say “Yes, we could do that immediately”, because they understand the manufacturing process behind them. And they understand the pricing and the margins that they have to get.

 

We also work with them to get better pricing, because we have the buying power. So let’s say you’re, you know, you’re trying to source this mug, that’s just what you’re trying to get, you’re trying to get it from a factory for 500 units, well, that factory is going to see that as one client doing one order. Whereas we’re developing a relationship with the factory to where we can have 10 companies that are looking for similar mugs, bring them 10 times the business. 

 

And we develop that relationship with our customers to make sure that we understand the products, we understand the project as a whole. 

 

And we can effectively translate that to the factory, sort of cutting out a lot of the BS or the drama in between it, right. So we handle all these different aspects for the sourcing side. But then it also comes down to, you know, keeping up with production, it’s keeping up with the samples. And every time that someone orders a sample with us, we’ll inspect it, will provide them with a report will let them know, hey, these are honest thoughts on it, and then we’ll ship it out. Of course, if we catch any discrepancies, we can catch them while it’s still in China. 

 

Rather than, it is shipped out spending $80 to $100 on shipping right now at least. And then finding out you don’t like it. And then it’s working at the factory to further develop it to find

what improvements need to be made on that product, or what sort of quantities needs to be purchased, to actually get the right pricing. 

 

And aside from the samples, production management, another thing that we definitely oversee, so we provide all of our users with constant updates of what’s going on in their production. One thing to realize is that when a factory quotes your elite time of let’s say, you know, 50 or 60 days, it’s not because it takes 60 days to make this mug, it’s because there’re 20 companies in front of you that have larger orders, and really just takes five, six days to make it. So it’s constantly engaging with them, and sort of continuing to build that relationship. That’s one part that we really are able to provide. And we’re able to provide it on both sides on the factory side to have them have a better experience and on our customer side to make sure that their projects are streamlined. 

 

Three Main Amazon Sourcing Recommendations for 2021

Timestamp 👉 21:00

So going back to the beginning of our conversation, preparedness is number one. I think that is, and I can share an RFQ Guideline with you as well actually, that could help all of your listeners and followers structure their requests for quotes, and that way they can shoot those out to manufacturers. 

 

So preparedness is number one and setting the right expectations. That’s part of the preparedness. So realizing that there are tooling costs, things like that is important to understand. 

 

The second is to become better educated in the supply chain. Because it’s not as simple as just purchasing a product from a factory overseas, you have to understand, again, going back to preparedness, you also have to understand the export the import process of it, the stores, the warehousing, fulfillment, things of that nature. So that’s number two. And the third, I think it’s something that COVID-19 has really brought back to life for us. And that is realizing that developing the relationship is very, very, very important and more important than just completing a transaction or successfully negotiating something. 

 

So building the relationship, being prepared, setting the right expectations. Those are just a few key tips or key takeaways to go into 2021. And do it successfully. 

 

22:40 How to Constact Francois Jaffres?

Noviland Website: https://noviland.com/

Noviland Facebook: https://www.facebook.com/Novilandinc/

Noviland Instagram: https://www.instagram.com/novilandinc/

Noviland LinkedIn: https://www.linkedin.com/company/noviland/

Noviland YouTube: https://www.youtube.com/channel/UCeVbGi4Mhg2Kq2O8sDk75Qg

Francois Jaffres LinkedIn: https://www.linkedin.com/in/francois-jaffres/

Preparing Your Business for Chinese Holiday Closures AND a Request for Quote (RFQ) Guideline https://noviland.com/#live

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