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– Hello everyone and welcome to episode four of two Amazon Sellers and a Microphone. I’m Dustin Kane and with me as always is Kris Gramlich, Kris, how are you doing?
– Hi Kane, I’m doing good. Thanks Dustin, appreciate that.
– Yep, absolutely. I’m excited about today’s topic, ‘Product Sourcing’. This is, this is a great,
– Great topic and there is a lot to it. This, this particular topic could probably be about 40 podcasts if we broke it down each, each individual topic. But I think today it’d be great just to give sort of an overview of the steps to product sourcing. Some of the things that we’ve done in the past or wish we would have done different just and tips for what to be, how to be successful in product sourcing, because there’s a lot to it and you know, it can be a big, it can sort of make or break it right off the beginning if you pick a bad product or get bad terms with your supplier, it can, it can make things difficult when you’re launching a new product on Amazon. So, why don’t we just go ahead and, and dig right into product sourcing? Essentially, it’s basically three major steps where you’re picking a product, picking a supplier and then negotiating your first order. Obviously, each one of those steps has many individual steps within those, but those are the basic ones when talking about sourcing a product. So why don’t we start with picking the product? I mean, obviously, you have to have something in mind that you wanna sell. So what are some of the things that you do, Kris, when you’re deciding on what product to go after?
– For sure. And I kind of do like a little bit of reverse engineering here. I don’t know if that’s the right term or not, but…
– Kris, I think you’re kinda breaking up on my end.
– Technical difficulties, there you go.
– Yeah it’s all right.
– What I would normally do is look at the, like figure out the person that I want to sell to. So, you know, stay at home moms, teachers or office supply, like whoever your person is, like find that person who you want to sell to and then see what that person buys and then that’s when I was start sourcing that product to fit that person that I’m going after. So I guess before I start to source anything, I kinda come up with a customer avatar and figure out who my target audience is because that’s what I’m gonna launch to when my product is ready to be live on Amazon, I’m ready to start to use some scale scalability. So once I figured that out, the next thing I’ll do is do some searching on Alibaba and even further, there’s a site called 1688. 1688 is a good site. That’s kinda like the eBay over, over in China that’s kind of the eBay there, but you can go on there, a tip there it’s all gonna be in Chinese, so you gotta, you gotta translate it. But what you’re looking for is like price comparison. You’re looking for this, you’re looking to see if your price that you’re getting on Alibaba is similar to, or even better, or maybe you can use it as an initiation on 1688. So, kind of recap there. I figured out who my person is, I’ve figured out what they buy. I go find that product, see if there’s the main there on Amazon and then I start sourcing at Alibaba or 1688.
– Interesting. Yeah, I mean, I, for a lot of my first products, when I started, I was picking areas where I was interested in it. I was basically my own customer avatar because I was trying to pick what I was then, which helped me really nail down down the road, you know, how to market the product, you know, how to package it, what the end customer was really looking for because that end customer was me. When I was sourcing a lot of these products, so, I think that’s really a good approach to make sure you’re picking products, but knowing your future customer ahead of time, that that’ll really, really help out. You know, another thing for me picking a product is you gotta make sure that the market is there for it. And that it’s not oversaturated. I mean, I think that’s, you know, look, I love, I’m a tennis player. I love tennis. If I start sourcing kind of brackets right now, I’m gonna be, I’m gonna struggle. There are four major multi-million dollar brands that dominate the market. You know, I’m not gonna be able to enter into the tennis racket market, cost-effectively. Conversely, if it was, you know, something else that’s super competitive or low priced and there’s a lot of people selling it, those are the things to watch out for. I mean, I’m, I really like to do some research. There’s a lot of tools out there where you can research sort of the market for the product. You can research how many competitors you could be competing against. You can research what their listings look like, how many reviews they have. These are all things that could be barriers to entry, even if it’s a product that you love and you feel passionate about, especially on Amazon, those can be barriers to entry. So it’s really good to find that which but we’re, when you’re looking at that sweet spot for your products, Kris, what are some, some metrics you’re looking at where you feel confident that once you launch this product, you’ll be able to compete without spending a ton of money? Yeah, Kris, you’re cutting out again.
– Are you still there?
– Now I got you, now go on.
– It’s like a, I got this, this formula that I have it’s all like, there’s this product that meets this standard and this standard, and this standard but some of that is the search volume. Like I need the keywords that I’m going after for that product. They have to have enough search volume and by enough I mean, if you have brain analytics, they have to have at least a hundred thousand ranking in those five keywords because I’ve done it before and I think you’ve done it too where the product you’re going after may not have enough keywords to target and you’re kind of stuck with a, kind of a low demand product. So, I like to have products that have high demand, especially on search terms, highly searched terms. So those, when I launch it, I can target a whole bunch of keywords and not just one and so forth.
– Right. And I think on the flip side, you wanna make sure that there’s not, you know, a thousand sellers selling a really similar product, especially sellers that have thousands of reviews each potentially. So there, there is a, there’s a middle ground that you really want to look for when you’re when you’re sourcing when you’re picking your product to go after.
– Well, I think to add to that, it’s like if I’m sourcing a product and there’s something I wanna look at on Amazon before I start to source it, if there are more than two or three listings on that page with a thousand reviews, I’ll just go somewhere else.
– Cause there’s, there’s too many there. So that’s like a quick test. Like if I have a product I’m thinking about doing, I’ll go to Amazon, look on page one, if there’s more than two or three listings and it’s getting harder, but there’s more than two or three listings that have more than a thousand reviews, I may go somewhere else first before I started going, yeah.
– Yeah, I agree. I agree 100%. Another really good tip on that note is if there are competitors that you see them, and maybe there’s not a ton of reviews, you know, 100, 200 reviews on the top couple of products, but a lot of them are negative reviews, that’s a way you can come in. You can read through the reviews and find out why customers are not super happy with those products and then make that adjustment on your product. That can be a big differentiator if there’s a lot of negatives and you can fix that problem and come in with a, with a product that attacks, attacks that issue, you can really be successful right off the bat. So there’s a lot of, a lot of things to look for when you’re actually picking that product, then moving on once you’ve gone…
– But to give it to, to kind of tackle onto that, not only look at the negative reviews, but see, see what other are buying in that frequently bought together area and you could possibly create a bundle if it makes sense. So you could differentiate yourself from other people’s products. You could, you could sell a higher-priced item and have that people have that piece that people are buying already. And that could kind of differentiate you. So, you’re right, definitely get the reviews, but there’s other things you can do on the listing to kind of give you an idea on what else you should probably source.
– That’s, that’s absolutely a great idea to bundling can basically create a new product. Products in one, and you’re right Amazon gives you that data right there. It says frequently bought with. And if it’s there, that means it’s bought a lot with that product and you could combine those two and potentially sell those two at a price point that’s lower than those two products combined currently on Amazon. Great, great tip that. I think bundling is becoming a really a good strategy right now, especially in saturated markets where people are able to differentiate. So now you’ve got your product picked. The next step is trying to find a supplier. And this, this can be, I feel like a challenging step for a lot of people. I mean, you’re, you’re definitely stepping potentially outside of your comfort zone. You’re calling factories, particularly in China or India, or if you can find a U.S. market or U.S. manufacturer you’re calling around and then having to deal with them. So, I’ve used Alibaba basically for every supplier I’ve found Alibaba is a great resource. You can go there, you’ll, you’ll be able to search for the products. You’ll, they’ll load up just all the suppliers that are selling those products and you’ll be able to get a gauge too, cause it’ll show sort of a minimum order quantities and it’ll show like a price range based on the units you’ll order. You can basically ignore that. I mean, it gives you an idea, but there are, you can absolutely negotiate different terms with each supplier. So at that point, what, the way I would go is I look on Alibaba. I will try to find, you know, five or six suppliers for that product that at least their listings look good they look like a good supplier potential. And then I will get a sample sent to me. I’ll request a sample for each of those products. You’ll get a good idea once you get the products, you know, you can test them out and then go to the next step of, of negotiating. But what, what are some things that you do when you’re picking a supplier? I know you mentioned 1688 that you used as well as Alibaba. Great way to that’s great way down the road to get data, to help negotiate the price point. But what other things are you doing when you’re looking for a supplier?
– There’s other things I’ve been using and there’s some sites that I’ve learned to use over these last few years. Etsy, like that, surprisingly is a good site, Etsy, so if you, if your search sources something that could probably be made here locally, try it out, get on Etsy first, get like 20 of them and then test that those 20 out before you commit to you know, 2000 overseas. So if your product is something that is like handmade or came made, I always check Etsy now because I’ll, I can get smaller quantity that I can then make a test listing to see if that’s really a product that…
– That is interesting. That’s actually not an approach I’ve taken yet. You’ve kind of frozen up on me again.
– Yeah. I’m just gonna keep talking and if it doesn’t work out, then we’ll figure it out later.
– So Etsy is a good one. Smaller order quantities. You could test the listing and see how it goes from there. www.thomas.net, www.thomas.net is more of like a U.S. manufacturer. We can find people like made in the USA products and you can kinda search around in there and there’s, there’s different suppliers. Now you will pay a premium, but you’re gonna be able to get shorter lead times and you’re gonna be able to replenish your inventory faster because you had somebody local. I mentioned 1688. That’s a good one. Flea market, not Flea markets. Farmers’ Markets, Farmers’ Markets. I’ve done that before where people are like selling custom coasters or they’re making their own little soaps or their, whatever it is. You can kind of either ask them if you could sell their product first on Amazon. And you kind of make a little bit of a side hustle there first and then if it works, maybe have them private label your own brand with that same product. So Farmers’ Markets are there. Gosh, there’s all kinds of stuff. Your own house like you could say, these are product ideas I guess, but you can source products, 1688, Alibaba, www.thomas.net, Etsy, Farmers’ Markets. Those would be ones.
– So you really, you’re really testing out the product concept before you almost commit to even a full-time supplier.
– Pretty much and if it, but if, but if, that’s if I’m kind of on the fence if it’s gonna work. If it’s something that I’ve I’ve seen or I’ve, I’ve researched quite a bit and I’m pretty confident it’s gonna be, it’s gonna fit my metrics that I’m going after and I’m not gonna find it on Etsy or Farmers’ Market I’ll just go dive in right into it. And then that’s where you negotiate with your supplier, either on Alibaba or whoever you use. I usually try to find like 30 suppliers. If I can’t find 30, at least find 20. I’ll send them the same type of form. And we can talk about negotiation on different podcasts cause there’s some cool tips there, but I’ll try to, I’ll try to find some suppliers and then I’ll just get samples and compare and continue to continue to roll. It’s a process, it’s not like you launch products in a month, it takes a while.
– No. And if the products ends up being successful, you wanna have a really good relationship with your supplier
– That’s gonna be critical. I mean you don’t wanna have a bad relationship where you have to start over again and try to find a new supplier for that product.
– Well, and to add to that, like you don’t wanna burn any bridges with the people that you’re not gonna use because you wanna keep them kind of like in your back pocket in case this one supplier doesn’t work out, you can always pivot and go to the other supplier that you, you know, maybe get second place, third place.
– I’ve had one of my main suppliers from China, got a great development, great relationship with him. He’s actually flown out two or three times from China. We’re in Kansas City he’s flown out here, stayed with, with us, with my family for weekends and it’s been great. I mean, we’re, we’re family friends now. I mean, I, he sends pictures of his kids, and then when they’re on vacation, you can develop really good relationships with suppliers and that goes a long way. Especially in some of the other cultures, like the Chinese culture, they really value friendships.
– They, they kind of get a hard knock for being tough on business and negotiating. If you’re really friends with them, I mean, the deals open up.
– Yeah. And I’ve heard like people that go over there and visit their supplier, they don’t even talk about price or they don’t even talk about, you know, minimum order quantities. They just go over there, they take them out to dinner, have couple cocktails, and just kinda get to know them, and then if it comes up, it comes up. It’s kind of like that like, so yeah, I’ve never been, I’d probably love to go someday, but it would be an interesting journey for sure.
– Oh yeah. Yep. Absolutely. So, I mean, there’s, there’s lots to that with, with picking the supplier, but just keep in mind that it could become a long-term relationship that’s very, very mutually beneficial for both of you. So, you know, once you have that, once you’ve got your, your samples in what, you know, if with the way you’re approaching it, I guess you’ve, you’ve already sort of proven concept with some, some, some products I mean you can sell the samples too, you can list the samples on Amazon or go to AliExpress and just order 10 or 15 units on AliExpress of a product. Doesn’t have to have branding. If you want, you could slap a logo on there before you ship it into Amazon, but it doesn’t have to be fancy, but you can certainly prove the concept of it a bunch of different ways. But once you have that, once you’ve proved concept, once you’ve narrowed it down to a particular supplier that you’re going to use, then you have to start negotiating that first order. And you know, that you’re negotiating everything from, you know, the order, quantity, the per-unit price. If they’re handling the shipping, you’re gonna have to negotiate what that shipping’s gonna cost, what the terms are, are they gonna do sea or air, et cetera. I mean, there’s, there’s a lot to, to negotiate in there and you wanna make sure that you’re, you’re getting a good deal for both you and the supplier. Anything that you typically do in that, in that negotiating step that is a good tip?
– Yeah. I always kind of makeup there is a board of directors or somebody higher than me that I need to blame sometimes. So, and I’ll negotiate, I’ll say, okay, like, I’ll, I’ll send it as I’m like the senior buyer or the senior product manager for the, for the company. I’ll set up my website and everything so they kinda see that we are legit. And then as we negotiate, I’ll tell them that I need a price quote for 5,000 units or 10,000 units. Though, that immediately gives them like, oh, this guy means business. And they’re gonna give you a pretty competitive price right off the bay, right off the bat. When that price quote comes back, then compare it to all the other 20, some odd seller or suppliers that I’ve contacted. And then I’ll go back to them and say, great, your price, you know, it a little bit higher than normal. The board of directors has declined it based off other posts we have gotten from other suppliers. Go, please go back to your manager and renegotiate with them. So then the next day they come back, they give you a little bit lower price. It probably only went down like 5 cents, 2 cents, whatever it is. But once you come up with the price you want, and once you’re ready to place that order, the last thing I do is flip it from 5,000 units and say, awesome, we’re ready to go, but we wanna do a test order of 500 units. And so now they’re like, I got, I got 5,000 unit pricing, but I’m only gonna do 500 units to start with. That’s easier to do than rather than going, hey, I need 500 units to start with. You’re not gonna get any type of negotiation going on there. You kind of just put yourself behind the wall there. But if you come in and say, I’m looking to do five, 10,000 units, go back and forth and then you’re, you kind of explain that you’re, you know, you’re willing to do 500 units as a test order first because your board of directors wants to test out 500 units first before they commit to the 5,000 unit order, they’ll probably come back and the price may be like 5 cents higher than what it was, but you’re still getting a good price, but you’re just gonna have to do a smaller quantity. So that’s, that’s one of the negotiation tactics that I use. Also, there’s things that you can put in like a, like a contract, like if this fails inspection, you know, you, the supplier’s got to cover the re-inspection. You can negotiate terms. There’s, there’s all types of little things that you can really get into, but that’s my main bread and butter is that board of directors and then tell them, I want 5,000 units and then bring it down to 500 before we place the order.
– Yeah. Great tips there. I have a much of a very, very similar approach. You definitely wanna come in asking for a quote on a reasonable order size. I mean, they’re not, they don’t want to waste time with small orders, but if you set the precedent that you’re gonna potentially be at that high order, or you’re looking at that, you just have to, now you’re going into the test modes, you need a sample, you look more credible, you got the right pricing. You have an understanding, cause you probably will be ordering 5,000 units down the road. And so you’re able to understand that pricing and that’s a really good approach. The one thing you gotta be careful with sometimes on them is if you if you negotiate too hard with them, it’s gotta be a win-win. So, I mean, when you come in, like you said, with that high price, they’re giving you a good quote that works for them at the 5,000. So you know that they’re willing to work with you to get there but if you really haggle with them hard, they will say yes, and keep saying yes to lower prices and they are going to lower the quality of the product. They, they will do if you’ve got metal screws in the product all of a sudden they’re gonna send you product with plastic screws or all kinds of just, they keep lower the quality to try to get you that price. They wanna make the sales. So you’ve got to make sure that you’re, you know, it’s gotta be a win-win you’re, like I said, you’re looking for the long-term benefits. So just trying to haggle someone just down to nothing can backfire sometimes as well.
– And that’s where like on your, on your terms or your contracts or whatever it is that before you commit that order, you wanna make sure that the product you’re getting is gonna be the same quality as the sample you got.
– That has to, that has to be in there because you don’t wanna get something with a cheaper plastic or cheaper, you know like you mentioned screws. So just kind of, cause they will, I don’t think they, it may not be something they know. I mean they know they’ll do it, but it’s…
– Yeah. It’s not malicious. They’re trying to, they’re trying to get to your price point.
– So I agree. Yeah, but those, I mean, at that point now, hopefully, everything works with your order and then you’ll be focused on doing a reorder, but those are the the basic, I mean, we’ve covered a lot here. Obviously, we can talk about each one of those just in so much depth, which we’re going to do on future episodes. I mean, just the picking the product, I mean, and picking a supplier. Those, we can talk for days on those topics.
– I think we gave a good overview here of those main steps. I mean, you’re picking a product, picking a supplier, and getting your first order are, are the major steps. And hopefully, some of these tips and I learned something from you, Kris, that was great. I’ve, I’ve now just developed a board of directors for my company.
– It’s kind of nice. You can now take the pressure off you, you’re like, ah, it’s not my decision.
– Yeah, those board of directors are rough.
– Rough man. They, they, they constantly are on down my throat, telling me they need lower pricing.
– My company just got a lot bigger. I’ve got a lot more people working with me than I had thought. That was, that was a great tip. So it kinda makes sense. It makes this stuff fun, I mean, that’s what I love about this business that we’re in is you get to have a lot of fun like that. You know, talking about your imaginary board of directors. That’s, that’s hilarious, but yeah great tips there. That was fun. Anything you wanna add in the last few minutes here?
– Quick, quick, quick, quick thing, check, check IP. Make sure you’re checking patents and intellectual property. Make sure there’s no patents on some of these items. You don’t wanna get stuck with something that you didn’t have to, you know, get rid of on the cheap or Amazon has to get rid of. So, if you find something double, double, double-check like I can’t mention that more than enough.
– Yeah. That’s a great point, absolutely. We’ve made that, I’ve made that mistake. I’ve sold stuff with patents on it and quickly figured out that was not good. So yeah, that’s an absolutely great point. Well, before we run, just like we talk about in every episode, you know, Kris and I are both experienced sellers. I say that we’re, we’re not gurus. We just are experienced sellers. We’ve been doing it for a long time. And so if you’d like to talk with us about your business, we’d love to, you can, you can go to www.Sellozo.com or somewhere, maybe around this, in the show notes on the podcast or if you’re watching this live, it could be somewhere around the video. You can book a call with us, we’ll talk anything Amazon. And then if it’s a good fit, we’ll also walk you through Sellozo and how we help sellers automate and optimize their ads on Amazon. We can talk anything with you. We’d love to talk with you we talk to sellers all day long and Kris and I would be excited to talk about your business. So please, please take us up on that offer if it’s something that you’d like to do. And if you’re in the beginning stages of your Amazon business right now, I highly encourage you to today take your first step towards sourcing a product. Do something, get a spreadsheet going, look for suppliers, do something that gets the ball moving, you won’t be sorry, it’s a great business. Look how much fun Kris and I are having. We want you to have as much fun too. And if you’re, I forgot to mention about the going back to Sellozo, if Sellozo is something you’d like to get started with right now to help advertise, automate your advertising, we have a discount for you. It’s podcast 20, it’ll get you 20% off your first month with Sellozo as well as a free trial, 14-day free trial, as well as a call with Kris or I, that’s worth it right there. So use that podcast 20, go to www.Sellozo.com you can sign up using that. Get 20% off your first month. Kris, as always, it’s been a blast.
– For sure.
– We will see, I don’t for sure when we’ll be back here talking again. Well, tomorrow’s the weekend. We’ll take tomorrow off.
– We’ll take a few days off and we’ll come back and get back at it next week.
– Yeah, Monday, we’ll get our next episode rocking on Monday again, fun times Kris. Everybody have a great day out there and take action some way to get, get going.
– See you, man.