Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Android | Google Podcasts | Stitcher | TuneIn | Spotify |
Curious about Amazon product sourcing and specifically about sourcing products in China? In this Serious Sellers Podcast, Steve Simonson, an early pioneer of China sourced private label products speaks with Helium 10’s Director of Training and Customer Success, Bradley Sutton about how to negotiate with factories and other sourcing strategies for Amazon. With 20 years of experience sourcing from China, Steve is definitely a master of this important topic.
In episode 38 of the Serious Sellers Podcast, Bradley and Steve discuss:
- 00:30 – An Introduction to Steve
- 01:40 – The Early Days of Sourcing in China
- 03:10 – War Stories and Forgettable Dining
- 05:00 – What is the Canton Fair?
- 06:22 – Advantages of Attending These Events in Person
- 09:08 – The Pricing Benefits of Strong Personal Relationships
- 09:55 – Key Differences – Factories, Trading Companies
- 13:25 – The Buying Power of Trading Companies
- 15:30 – Language Barriers and Cultural Differences
- 19:20 – Native Speaking Translator – Double-Edged Sword
- 21:00 – Additional Cultural Differences to be Aware Of
- 23:30 – Do I Need to Be Prepared to Haggle?
- 24:15 – The Big Takeaway – Know the Market Price
- 25:30 – How to Protect Yourself During Negotiations
- 28:00 – Doing the Math – What Percentage Allocated to Product?
- 31:15 – Here’s how to get in touch with Steve
Enjoy this episode? If you found this episode helpful, be sure to check out our previous episodes for more insights to become a successful Amazon FBA Seller! Don’t forget to “Like” our Facebook page and subscribe to the podcast on iTunes or on Google Play Music!
Want to absolutely start crushing it on Amazon and make more money? Follow these steps and access these other helpful resources to get started:
- Get the Ultimate Resource Guide from Manny Coats for tools and services that help successful Amazon sellers dominate on Amazon!
- New to Selling on Amazon? Freedom Ticket offers the best tips, tricks, and strategies for beginners just starting out! Sign up for Freedom Ticket.
- Trying to Find a New Product? Get the most powerful Amazon product research tool in Black Box, available only at Helium 10! Start researching with Black Box.
- Want to Verify Your Product Idea? Use Xray in our Chrome extension to validate how lucrative your next product idea can be with over a dozen metrics of data! Download the Helium 10 Chrome Extension.
- The Ultimate Software Tool Suite for Amazon Sellers! Get more affordable Helium 10 tools that can help you to optimize your listings and increase your sales! Sign up today!
- Protect Your Amazon Brand with a Trademark! Protecting your brand from hijackers is vital. SellerTradmarks.com provides a streamlined process for obtaining a trademark for your business and shielding your products from fraud!
- Does Amazon Owe YOU Money? Find Out for FREE! If you have been selling on Amazon for a while, you may be owed money for lost or damaged inventory and not even know it. Get a FREE refund report to see how much you’re owed!
Sutton: Today, you’re going to find out everything you
wanted to know about sourcing products in China. How do you negotiate with the
factories? What kind of things should you be aware of? You’re going to find out
about this and more on today’s episode of The Serious Sellers Podcast.
Sutton: How’s it going, everybody. Welcome to another
episode of the SSP, The Serious Sellers Podcast, and we have a great guest
today Steve Simonson here. He is—I don’t want to say Jack of all trades, master
of none. He’s actually master of all trades, Jack of none, if that makes sense.
Steve, I don’t know what to talk about because you’ve got so many levels of
expertise and different levels, and so we finally decided—about three minutes
ago—that we’re going to talk about one that I need some help in because I don’t
have too much experience and that is sourcing, about how to do that from China
and different pitfalls that people do. So, Steve, does that sound good? Can you
talk to us a little bit about that today?
Steve Simonson: No doubt. Although I would definitely say that I’m not necessarily a master of anything, I definitely have many years—nearly 20 years of experience sourcing from China. I’ve lived some painful lessons, and I’m happy to share those lessons with everybody out there.
Sutton: That’s awesome. And actually, I didn’t know
that it was that extensive. Even those of us who have been around for like
three, four years know how much the game has changed as far as just the Chinese
market, the economy, regulations, and things. So I can only imagine the
difference in the last 20 years.
Steve Simonson: Oh my gosh. I can tell you that back in 2002, 2003, we would have to travel in a car over the worst roads on the planet for like nine hours to get to a factory. And people, when you tell them, “hey, I’m going to China and I’m doing this sourcing trip or whatever,” even back then they’d say, “oh you’re living the dream.” And it was a total nightmare at the time. Now, today, they’ve got the best bullet trains, the best freeways. The internal transportation inside of China is world class. But that’s not how it always was. So I definitely have seen China expand in such an extraordinary way over the past nearly two decades that I’m thrilled that everybody gets a much easier time and experiences China in a much better way today.
Sutton: All right, so how about before we get to the
serious stuff, because this is The Serious Sellers Podcast—that just got me
thinking—I bet you have some fun stories. For me, the thing that I didn’t like—there’s definite differences in cuisine from different
areas of China. I was in Beijing and Shanghai and had some like hot pot over
there; it was great. But then whenever I was going to Canton area or Guangzhou,
and people invited me out to eat, I was like, there’s a bird’s head with beak
here, there’s a monkey heart or something. I was . . ., “are you serious?” This
is what you guys are going to serve me? I’m not a picky person, but to me, this
is next level. So, this is fear factor level stuff they’re trying to get me to
eat. Well what are some fun stories like that you could share going back to the
last 20 years?
Steve Simonson: Well, first of all, let me tell you that you’re totally right. The different cuisine types across China are extraordinarily varied. And some of the people in the north have never eaten some of the things that the people in the South eat or the East or the West or even little sub-areas eat. I can tell you that one of the most—I don’t know—shocking moments at a dinner, and I will preface this by saying I’ve had my best meals in the world, repeatedly in China. So it’s out there. The good stuff is out there. And when I go to China, we eat like kings. It’s extraordinary. But, one of the most shocking times is we’re at a restaurant, this is probably in Guangzhou province, so kind of the center of China, and they show up with this plate, and on the front of the plate, this guy’s hand is kind of still there with a towel and on the end it’s kind of like this deep fried fish and you can see the tail there, but it’s all kind of flayed open and deep fried. Basically, you just take the chopsticks and you grab one of nice little white pieces of meat. And I didn’t quite understand the presentation because the guy’s hands were on there with a towel. Well, he takes this towel away and the fish’s head is still there, and he’s gasping for air. That fish is still alive, and it was shocking.
Sutton: Oh my goodness. Yeah, that’s no Bueno.
Steve Simonson: It was just something else. And they made a big deal out of it. Our hosts wanted to talk about how expensive that was and how unique and blah blah, blah. And I’m like, “you know, just put the fish out of its misery.” I do have to say it was delicious, but yeah, it was shocking.
Sutton: Okay. All right. That’s why you’re going to
have to let me know what that place was so I can avoid that in my journeys over
there. All right. Now to the serious stuff. Let’s talk first about what
everybody knows about. Everybody’s probably heard of different things. There’s Yiwu;
there’s Global Sources Fair. The Canton fair is one of the biggest ones. And what
is the Canton Fair for those actually who don’t know?
Steve Simonson: Yeah. So the Canton Fair has been held, I don’t know, at least for the last 60 plus years, and they hold it twice a year. This is probably in the 120-130 range of the Canton fair in terms of the number of fairs. And it’ll be coming up in April 2019 and then October 2019 and that same sequence, 2020, 2021 for forever as far as I could tell. And it is massive. The numbers of vendors and the numbers of booths and the number of square kilometers covered by exhibitions just blow the mind and it really is a very, very good place to go source for really almost anything in the consumer space. If you’re outsourcing industrial aircraft parts or some sort of crazy industrial stuff, maybe not the best place for you, but anything in the consumer space between phase one, phase two and phase three of the Canton fair, you are likely to find a number of sources to consider and then compare against each other all in a very concentrated time period, and certainly a concentrated space in Guangzhou at the Canton Fair grounds.
Bradley Sutton: Cool. What’s one of the advantages of actually attending one of these as opposed to those who say—the Newbie—the general idea is, “Oh, I’m just going to go to Alibaba or AliExpress or one of these websites and try and source.” Why would you suggest to somebody to pay the $500, $700 round trip ticket to actually attend in person?
Steve Simonson: Well, it will tell you a lot of things that you never even considered, and your learning will be accelerated so much faster than the, back and forth on Skype or Ali Baba or whatever those communication methods are. It’s the consolidation of the time and your ability literally to walk from booth to booth and compare precise details between the two suppliers. And, just think about it. If anybody has ever ordered samples out there and it took them awhile to get samples, imagine being able to compare ten different factory samples, within an hour’s time period, literally just by walking up one row of an exhibition center. You really get a much faster idea and understanding about the product—who they are. And then of course the intangible part that nobody can really put into precise dollars and cents. You know, seeing somebody face to face, reading their body language, is an extraordinary advantage to figure out, “Really, who can you trust?” That’s a big deal to me.
Bradley Sutton: Okay. What’s the extensiveness of this? We were just together at the Prosper Show, there’s 150 booths there, but I bet it’s a little bit more than 150 booths at the Canton fair.
Steve Simonson: Yeah, I don’t know the hard count of the booths, but it would be tens of thousands if you included all three fairs. And I can just tell you that on a typical day, if I stay the entire day at the show, which at this point would be a real pain to me, but I’ve done it, then I would walk somewhere around 12 to 15 miles in a day just up and down all of these booths. It is an extraordinary scale and something that people until they see it, they don’t fully understand it. Massive, massive, massive. And the other little fringe benefit is you may have in your mind, “hey, I’m going to the source, pet products or baby products or automotive accessories or whatever it is.” And then you walk by this one other booth that may be adjacent and you have a new idea and you’re like, “you know, that’s interesting, I haven’t seen that.”
Steve Simonson: But you start to feel how the puzzle goes together on Amazon. You’re like, “Hey, I could make something out of this” and you may walk away from the show with a totally unique and innovative idea that you never would have had going in had you not had the opportunity to physically see it, touch it, feel it, and so on.
Sutton: That’s great. Now how about pricing in general?
Are you usually able to negotiate better prices when you’re in person like that
as opposed to negotiating over the Internet?
Steve Simonson: Well, in general, I prefer to have that personal contact if you really want to get to the heart of the price. I would say it just depends on who you’re talking to, either at the show or online. There are lots of trading companies that pretend to be factories. There are lots of even retailers that pretend to be factories. Who you get the best price from is where you have the best relationship and the best set of services that you expect. I’m not against trading companies, just to be clear. There are plenty of reasons why going through a trading company can make sense.
Sutton: Can you explain? That’s something that even I, now
have been around for a little bit, know, but I believe there’s a lot of people
out there who don’t understand that term. What’s the difference between like,
you know, trading company factory or whatever other terms that we might come
Steve Simonson: Sure. Let’s just start at the basics. There are some people who are literally, they’re just like retailers and they go find factories, they buy wholesale and they try to sell it to us. And they always tell you they own the factory, or they have an investment in the factory. Those are basically just people who are doing wholesale arbitrage—they find a factory; they try to sell it to somebody somewhere around the world. That’s where you’re going to find the least capable. In terms of scale, in terms of the highest price that is the worst of the formula. I would try to stay away from those. The next level up is a trading company that specializes typically in a segment of products. So they won’t just sell one single item. They’ll usually sell a number of different items, but they are almost always in the same types of verticals. If somebody’s selling the home and kitchen products, that’s when you’re going to find a trading company. Instead of having, you know, 5 or 10 SKUs that a factory might produce—not that factories can’t produce more than that, but a narrow selection. A trading company might have hundreds of products. I could tell you that there are very capable trading agencies or trading entities that are able to do a lot better sourcing and a lot better pricing than most buyers. And I’ll give you one example. A trading company can be either a large or very small and their capabilities are really what you need to judge them by, not just the idea that they’re called a trading company.
Steve Simonson: That’s a really big mistake people make. But I know a trading company in Yiwu for example, and I believe they’re clearing somewhere around $60 million a year. And I went into their showroom and they have thousands of products by the way. I went to their showroom, and I tried to guess what the cost should be. I’m a pretty good buyer, the sophisticated buyer. And I went in and I am usually always willing to pay too much. They already had given us the price list and my assistant had the price list and I would say, well, I think that should be a dollar. And they’re like, no, it’s 80 cents. And I think that should be, you know, $2 and they’re like, it’s a buck 72. And so even, you know, my own sophisticated buying, it doesn’t prepare me to know as much or have as much reached as a giant trading company. Trading companies are kind of the middle tier. And then, of course, the final tier would be buying from the factory directly. And everybody has this immediate idea that buying from the factory direct is always going to be the best price— the best service. And there are cases where that’s true, but not in every case. And I just don’t want people to think trading companies have no value because that trading company I just mentioned, by the way, Bradley, I last had a meeting with them and before me, Walmart had a meeting with them. The guys from Walmart left, and then I came in and then after me, it was somebody from some other big company down in South America. I didn’t know their name, but anybody who’s sophisticated in understanding global supply chains knows that trading companies have value, but it’s not the only answer either. So I hope that helps.
Sutton: No, no, that does actually. Like I said, I’m a
novice at this stuff too and you just taught me something because the guys were
some of my older partners when I was in the game. They just had the— maybe stereotype—I
guess you could say, “Hey, let’s avoid the trading companies because those guys
aren’t really the factory and it’s going to be more expensive and stuff.” But
you brought up an excellent point. I had
no idea that there are actually trading companies that are doing tens of
millions of dollars and at that level they’re actually able to negotiate, even
though that they’re taking a cut because of their buying power, they’re able to
probably negotiate better deals and they have better market penetration with
the factories to help you out. So that’s some great knowledge to share because
I think I’ve told people before to watch out for the trading companies, so I’ve
been doing it wrong.
Steve Simonson: Well not necessarily. You make a very good point by the way that a large trading company with scale—this particular company I was just mentioning, they have hundreds of employees. They have a massive warehouse, showroom; they really are a sophisticated company and they’re buying in bulk or have deep relationships with these factories. So they get a better deal than we can get. Certainly as a new buyer buying a thousand units or 10,000 units or whatever our initial order is. And that’s kind of what the leverage is: how much volume. That’s what China understands, volume. And if you go to a factory and you’re like, “Hey, I’m ready to place an order for 500 units or even 5,000 units.” They are like, “cool, you know, wire us the money and we’ll talk later.” But a trading company has a deep relationship. I’m not saying to only use trading companies. And I would say indeed that may be less than 15% of our business go through trading companies. And if it scales to let’s say more than 2 or 3 million a year in purchases, we will probably eliminate trading companies by that time. But for all those out there who think, “No, you know trading companies are the worst.” There is a part that they need to be considered.
Sutton: Okay, that’s excellent. Talking about just in
general now, regardless of what kind of company or individual or entity you’re
dealing with in China, one thing that a lot of people have trepidation . . . Where
in the world did I get that word? I
don’t have a very sophisticated vocabulary, but every now and then I surprise
myself. But anyways, something that gives people pause is the language barrier
and the culture difference. Let’s talk for a few minutes about what are some
things that we need to be aware of. And one funny thing that you had mentioned –
There was actually a very famous Spanish political slogan back in the day was a
“Si’ se puede,” and then actually in America, I believe under, if I’m not
mistaken, under President Obama as it was, “yes, we can,” which is the same
thing now. “Yes, we can,” “Si’ se puede,” for a Chinese company if they say
that, what does that mean?
Steve Simonson: Oh my gosh. Yeah. It’s funny that you mentioned that. So, back when Obama was first running, they had the, “yes we can.” I’m agnostic on politics, couldn’t care less. They don’t make a difference in my life day to day. So I don’t care. But I was in China at massive trade shows and they would have a big picture of Obama there with the “yes we can” slogan and that really is what the message from Chinese factories is to you. Yes, we can. And in Chinese it’s pronounced kaaiiiii . . .. so when you ask them, you know, you know, can you do this for me? Can you make this for me? All the bosses, they’ll say “kaaiiiii.” And what “kaaiiiii” means in China can range anywhere from “sure, no problem, we got that,” all the way to “hell no, that is not happening.” And “we are insulted that you even ask us that.” That’s the range of what “yes we can” means in China.
Sutton: Ah, interesting. How do you differentiate then
and how do you know? How do you know which end of the spectrum you’re on?
Steve Simonson: Let me know if you figure it out. The reality is you can only continue to ask qualifying questions. It’s not a simple yes or no question. So as an example, if you’re looking at a product and you see it and you say, “gosh, this thing would really be cool if I made this tweak or that tweak.” And you ask them, “Hey, can you make these adjustments or modifications?” Often, you’ll hear, “yes we can.” And then you have to go further and go, “well, have you ever done anything like that before? Or can you show me some samples or give me some examples of something like that?” and really start to ask him questions and really push them to qualify their comment. And at some point, you’ll either get them to go, “you know what, this is more complicated than we thought.” Or you’ll actually get them to show that they can demonstrate their understanding of it. And I think that’s the collision of culture and language that you really have to push through to and don’t make any assumptions that they are understanding what you’re getting at. And if you speak with any colloquialisms, regardless of what your native language is, if you go up and you’re like, “Hey, I just want to really do this really great and you throw in a bunch of nonsense words that don’t really mean anything” Then you are not going to get very far with them; they’ll smile, they’ll be polite. They even may break out a chuckle or two along the way. But the comprehension may be below 20% of what you’re talking about. So you really have to speak slow. Ask them to repeat things back to you to make sure they understand it. Ideally, you have somebody that you can trust in China who speaks their language, who can really be your filter to make sure that you know what’s going from you to them is actually the right questions and answers.
Bradley Sutton: And that’s usually the best case I believe. I’m sure probably now it’s exponentially different, the number of people or the number of employees at different factories who can speak English as opposed to when you first started 20 years ago. But even with that, how important is it – let’s say that they are going to Canton fair – to have a native speaker along with you translating or even just in the negotiation part? Is there any point where it’s not better to have a native speaker try and handle the negotiations for you?
Steve Simonson: So that’s one of the areas that you kind of has to be careful of. Number one, if you just go to Canton fair, you probably don’t need a translator per se because most of the booths will have English representation. That’s not necessary at Yiwu or some of the other more outside types of trade shows. You won’t have to have it there. And if you do hire somebody there, you have to be careful because many of the translation services are just like sourcing/trading companies in disguise. And this is the kind of trading company you’re sourcing company that I don’t like—they basically set of vampire hook into you. They provide this translation. But you don’t know that they negotiated one to 5% in there for them on the backside. You thought they were just explaining you know what you wanted. So you have to really be careful of that kind of sneaky approach. If you do have someone or if you’re able to find somebody who is on your own team or your trusted service, then have that native Mandarin speaker help guide you through the process. Or even Cantonese in the south is okay. Having them to be your go-to as somebody you can trust. That’s a really big thing and it takes time to understand how to position that person and how to find that person.
Bradley Sutton: Okay, that’s great. Any other – switching away from just language – cultural things to be aware of? Like things that would offend you. Every different culture has different ones. In some, “hey don’t shake your hand of this because that’s the hand you wipe your butt with” or “take off your shoes when you enter the house in Japan.” I mean every country has different things that – might not come naturally to Westerners. So what are some of the main ones that would help for people doing business with a Chinese company?
Steve Simonson: Well, for me, I have to say that China is a very successful trading culture and so you’re very unlikely to offend a Chinese supplier unless you insult their price or their quality. I’ve watched a colleague and he thought he was just being a tough negotiator, but he’s sitting there insulting the quality of their product, trying to beat them down on price and that’s not the way to do it. If they have poor quality, then don’t buy it from them. If you want to negotiate, you need to find better ways of negotiating. You don’t insult them in terms of their quality. It’s okay to hold them accountable for quality. Being fair, but the firm is fine, but don’t insult them. I think that’s just a global rule. It doesn’t matter if it’s in China or anywhere else.
Sutton: Okay, that’s good. That’s good to know. What
Steve Simonson: Yeah, on a trading culture side though, be aware that they’re very forgiving. They want to do business. But I would say that if it’s your first time or first few times to China if you go out to dinner with them or go out to lunch, you’ll see they put on a big spread and they really want to impress you. It’s a face culture. So that’s why they don’t want to be embarrassed or insulted. But you’ll be surprised that maybe that at the dinner table, not only will they smoke, but the way they chew their food with their open mouth and they’re spitting on the plate – it’s a real crazy different culture. I love China. I love the people, but you just have to prepare yourself. When in Rome do as the Romans do; you don’t have to spit and do all the other things that they’re doing. But just know that’s part of their culture and try not to take it personally. I think that’s where I’ve seen more people have the culture shock; understanding how the Chinese operate inside of China.
Bradley Sutton: That’s good to know. When people think of negotiating, like in Chinatown – everybody who has been to San Francisco, Chinatown, LA, New York and they’re used to haggling with prices now because there’s a standard like, “hey, if they start at this price you can go like this percentage down.” But actually, in China itself, is it similar where there’s this whole kind of built-in haggling that has to be done or, or how does that work? Either looking at Alibaba or in person negotiating with the factory. That first price that you see, how much should we consider having to haggle?
Steve Simonson: Well, you know, I would say at the China fake markets where they have all the Louis Vuitton stuff, then yes, it’s just like you described in New York or LA or any of the other haggle areas. For factories, it’s hard to say if there’s a set number because some factories quote you a reasonable price upfront. And other factors, particularly those “retail people” I talked about earlier, they’ll quote you, the sky’s the limit kind of price. And so to me, the only way you know price is – for anybody keeping the score at home. This is the one that you want to remember. Make sure that you know the market price. It doesn’t matter what the factory says the price is, it matters what the market says. So never expect one factory to set the price of a product for you. Go get three quotes or five quotes or whatever. Push them to go based on this quantity, and by the way, you can kind of push them towards a container quantity. Then backtrack and go, well I just need a sample starter-set of 1000 or 2000 units. I don’t need the full container, but I’ll take that price. Push him on at this quantity and with this quality level. What’s my price? And then compare apples to apples. That’s the only way to really know the market price. I’ve had factories give me very aggressive pricing out of the gates, particularly if I’ve known them for a while. And I’ve had factories where we’ve been able to improve by 40 to 50% the price over the course of time by shopping around and buying from other places, including getting terms in China by the way. So all of those are negotiable points.
Sutton: Speaking of terms. I would say one of the questions
I see most in Facebook groups are things like, “hey man, how much can I…” – even the ones that don’t go in person, “I’m
doing this negotiation on Alibaba, do I need to use their guarantee or do I do
the PayPal guarantee?” For many it’s the first-time sending money overseas. You
know, maybe they’ve heard some horror stories, but tell us about, how safe are
making transactions on these websites or what can sellers do to protect
Steve Simonson: Well, certainly if you’re using the Alibaba kind of escrow type service or things like that, that’s going to be pretty secure. I think in general, China’s fairly secure. If you send them money, they’re probably going to send you something. I’m a big believer in knowing what you get before it ships. If you’re not paying for an inspection process or at least a pre-inspection before the ships process, then I think you’re missing a massive part of your supply chain. That is such a mistake and people always tell me, “well, you know, gosh, I don’t want to pay a couple of hundred dollars or whatever it is.” And it’s like, the order is worth 20,000 and if it’s all garbage, what are you going to do? You’re out that money. And that has happened. So I don’t think that China steals money. Although I’ve heard some horror stories and tales. In general, you’ll just get a crappy product if you’re not vigilant about it. So, be cautious with who you’re doing business with. Be Prudent if your Spidey sense starts tingling, then take extra steps like using the escrows or whatever. But in general, you’re going to get something. I think more people miss the idea of the inspection process and making sure that they develop good specifications for their products. So they know what they’re getting ahead of time. That’s where the mistakes are really made.
Sutton: Okay. That’s a good thing to know about. I
think that is something that a lot of people skip and it’s very important that
they know that it’s not an escapable thing. Don’t try and cheapskate your way because
you’ll get bit later on. With that in mind, let’s say somebody has $5,000 to
invest, or they’re going to launch on Amazon. So how much of that, regardless
if it’s $1000, $5000, $10,000, $100,000 on one product, what would you allocate
to the actual – keeping in mind, hey, they’re going to have to do PPC. They
might have to, you know, whatever they’re going to do for launch. There are
transportation costs, but how much would you say in percentage should they
allocate to the actual investment of the product itself?
Steve Simonson: That’s interesting. I get to do a virtual profit loss statement here. I would say just in general, 50% going to your landed cost of your product. So landed cost. Sometimes people refer to this as DDP pricing, deliver and duty paid to price. That’s the price basically to get your product produced to your specs, including shipping, including inspections, all of that landed to its final destination. Like an Amazon FBA (Fulfillment by Amazon) warehouse. That’s your landed costs. That should be around half of your opening gambit. And then the other half should be on marketing and launch functions in my opinion.
Sutton: Okay, that’s good to know. Let’s see, what else
can we talk about? Switching back to things that people I see are scared about.
Things like, “hey, how do I make sure that the factory is not just going to
backdoor my product, try and sell it themselves or sell it to somebody else
who’s going to end hijacking my listing?”
Steve Simonson: Well, once again, let me know when you figure that one out. Listen, we do have contracts with some factories for exclusive distribution. In some products, there will be patents or other intellectual property protections, but we have to be honest with ourselves and, and I find this so often that, we go and rip off somebody product and then we are beside ourselves when somebody has the audacity to do the same thing to us. And so the idea is don’t rip off somebody products. Find something that’s cool, maybe two somethings, mash them up or iterate, do something different with the product and then get the sales trajectory going. You can be candid with your factory and say, “Hey, I want you to sign a non-compete or an exclusive distribution or whatever it is.” The chance of them actually enforcing that is fairly low unless you have a big scale. We do have some suppliers that we have pretty ironclad deals with and we know how to structure those even in China to make them enforceable. But out of the gates, I wouldn’t worry too much. I would just tell the factory, first of all, I want to an exclusive distribution on this item for whatever your marketplace is, and most factories will agree to it. Make sure you put it in writing and technically it should be in both Chinese and English. That’s one way to at least keep the factory on the sidelines. If you tell them also they can’t sell into your market area because of that exclusive distribution. Again, that should keep them away, but there are a thousand other factories who may make the same thing. It’s not going to keep hijackers away entirely. It’s an incremental process that you put each of this little blocking and tackling pieces in place and then over time, you have a nice defense around you.
Sutton: All right, that sounds good. Steve, like I said, you’re the man as far as
sourcing goes and we could have another hour conversation just on some of
these. And we’re definitely going to want to have you back here. I’m sure this
has answered a lot of questions that many have had, but I’m sure there are
other questions though that have arisen that people would like to ask you. So
how can people get ahold of you? How can they possibly get your help with the
sourcing process? And I believe you also . . . one of our most popular episodes
we’ve had so far is from your brother from another mother, Kevin King, who had
come on in one of our earlier episodes. You’ve got something exciting coming up
with him that maybe you can talk a little bit about as well.
Steve Simonson: Yeah, no doubt. So, the folks out there wanting to keep track of what Kevin King and I are up to, they can go to kevinandsteve.com and we’re hatching up I would say quite an interesting and unique idea. It’s not a course, it’s not a software, it’s not a membership. It’s not anything that anybody’s ever seen. It’s something totally cool and unique and, and we’re excited about it. It’s infinitely not scalable. Very, very difficult for us. And that’s why there’s a little bit of a, a time a build up here because it’s extraordinarily difficult. So that’s one way to keep in touch. The other way is I dedicate most of my free time for entrepreneurs to the Empowery eCommerce Cooperative. If you go to empowery.com/contact or just to empowery.com you’ll be able to get messages into me. Often, I will post replies to those on message boards or whatever. I don’t do one to one stuff because I am busy, but I love entrepreneurs and anyway I could find to help entrepreneurs via the e-commerce co-op or online methods podcast, whatever. Yeah, I love entrepreneurs. That’s what I try to dedicate some of my time to.
Sutton: All right, well thank you very much again
Steve, and we’re going to have to have you out here. Once we open our new
office – we got a tequila tasting room and we’re going to have you maybe take a
shot every 10 minutes and just see how the conversation progresses under those
Steve Simonson: Well, if you did, that will be quite a record because I don’t drink alcohol, but that would be quite a show. Thanks, Bradley. Appreciate it.
Sutton: All right. Thanks a lot Steve. Talk to you
The Helium 10 Software Suite will allow you to gain an unfair advantage over your competitors as it was designed and battle-tested by Amazon's top sellers. So if you want more sales, more time, lower PPC costs, and if you want to discover hidden keywords your competitors don’t use then start using Helium 10 -- the same tools top Amazon sellers use on a daily basis.
Latest posts by Helium 10 (see all)