The real issue is we're forcing Western thinking
onto Eastern thinking, and we expect him to think like we do.
And that results in all this frustration,
people thinking that suppliers are screwing them over
when they're not doing that at all.
And as a result, you don't make any money. You get frustrated, you give up
and you don't have success in your Amazon business.
We have to change this.
Amazon Warriors, online e-commerce,
Shopify sellers, all you guys out there, I'm so excited to share with you
the top 70 mistakes sellers make when working with suppliers.
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50 handpicked super high potential products for free.
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I'm going to drop it there for you, and I'm going to do it soon.
Follow me on Instagram and expect that very soon.
Mistake number one.
Thinking that a factory and a manufacturer and a supplier
and a trading company and a sourcing agent are all the same thing.
It's unbelievable how many terms are in this industry,
but I'm gonna explain each one to you to tell you
they're not all the same thing, although some of them overlap a whole lot.
First, let's begin with the most simple, a factory.
A factory is the location
where the machines are and the people are that build your product.
That's all it is. It could look like a warehouse.
It could have a huge smokestack. It could be something in between.
It could be a family owned garage where they're making it
like a lot of businesses start. But that's what a factory is.
A trading company is a middleman.
What they do, and you'll find these all over Alibaba, some contests
that over 70% of the companies on Alibaba are trading companies.
What they do is they find a supplier for you and they ship you the product.
But before they ship it, they raise the price.
They like to deal in simple, fast, low hanging fruit type shipments.
They're unlikely to do custom orders
unless you do a massive minimum order quantity to make it worth their time.
They will never tell you the real contact information of the factories.
Often they will claim to be the factories. They're not illegitimate.
You can go with them. They can save you a lot of time.
And sometimes the relationship with
the factory is so good they can get you a really good price.
Then you have a sourcing agent.
Sourcing agent is very different than a trading company, but very similar.
A sourcing age is more like a liaison.
Sometimes they will give you the contact information of the factories.
They also will look at multiple suppliers and try to get you the best price.
But they walk through the whole process with you.
They're really good at customization.
They also usually provide factory inspections, product inspections,
shipping and logistics opportunities.
They are a complete customs service to make it as easy as possible.
So if you're building out a brand or something like that,
they're really good option to use.
Then you have what are called manufacturers and suppliers.
These are used very loosely.
As a general rule of thumb, they could be any of the previous three.
Often a manufacturer is synonymous with the factory, and a supplier is very broad.
The supplier could be someone who knows
someone who's getting it for you, or it could be actually the factory itself.
The reason it matters
that, you know the differences is because a lot of Chinese suppliers,
I'm using generically, will tell you they are the factory.
Let me give you an example.
Just today, someone on our coaching team, where we teach all of this
super in-depth to help you
de-risk yourself as much as possible, she shared on her private group.
She said: “Guys, my supplier is also doing the retail packaging for me.”
And so I explained, actually, they're probably not.
99% chance is that's not true.
What they're really doing is they're working with another factory.
They are upping the price a bit, so they make a little cut off the top,
a little cream off the top.
They have another factory built out the retail packaging.
Then they have that shipped to their factory where they're building the actual units.
Whatever it is you're having being produced,
they put them together and send it to you and say: “See, we did it all ourselves.”
They didn't do it all themselves, but that's how it works.
You can actually get a better price when you go directly to the factory
very often. But also the response time is often going to be a lot slower
because it's an actual factory and you have to build up trust before
they're willing to work with you on a fast level and on a discounted level.
Mistake number two.
Trying to negotiate on shipping.
Listen, warriors, there's a big difference
between negotiating on shipping and comparing shipping prices.
If you go to the black market at some subway station in Shanghai,
yeah, you can find people selling Doctor Beats
headphones for $300 and talk them down to 30, 25 bucks.
But shipping is different. It's not so negotiable.
There's only so much they're willing to negotiate with you
because they have to charge a minimum price and oftentimes they will charge
you exactly what it costs them.
In other times, they'll market up just a little bit to make some cream off the top.
So instead of negotiating: “Oh yeah, you know, that's $2 apiece.
I would want $1.25 apiece or I'm not going with you.”
You know what they usually say? Our Chinese liaison told us this
when we flew to China, she explained the whole thing.
She goes, If you do that, they go, Man, this person
doesn't know what they're talking about, and this is what they'll say.
“Oh, no problem. Yeah, let's find a better price for you.”
And then they decide never to talk to you again.
So instead of negotiating on shipping, just compare it
with a few other factories and see what their shipping prices are.
Makes it a lot easier.
If you get an insanely good shipping price, be careful it could be
that they gave you a lower price because they know you're just interested
in the landed costs.
That means the total cost you're going to pay
when lands on your doorstep or in Amazon's warehouse ready to sell.
The units, the shipping, everything combined.
So what they'll do is
if the shipping really costs $200, they'll drop it a little bit
and then raise the price of the unit, and they use this to get you in the door.
So keep that in mind as a strategy some of them use
just because they want to get the sale.
Keep in mind also, if they send you a ridiculously low shipping price,
they might be using what's called a standby route with an airline.
That means where only certain planes can take the box.
So if you are shipping
15 boxes, it might end up going out in ten different planes
and you have to wait a while for it to show up.
And oftentimes it won't even show up in the same shipment
because it's going out on different planes.
So if you're OK with that, yeah, you might get a better price.
But oftentimes, if it's really low, is it too good to be true,
is it a second rate service, that often can be the case.
Mistake number three.
Thinking that a factory is this giant sophisticated,
huge building with a smokestack that's rolling out millions of products a day.
Most factories in China are nothing like that.
You're going to walk into this dingy room, dirty floor,
a few low hanging lights because they don't want to spend money on the electricity.
And one sophisticated state of the art space
age machine with the family working on it. And that's it.
And this the factory looks terrible, but the product is incredible.
That's very common.
And that's why when you say: “Hey, I like to get a factory inspection.”
A lot of times these factories get nervous.
They don't want you seeing what the factory looks like
because they know if you're in the West
or other parts of the world, you're going to go: “Hmm, I don't see the smokestack.
Hmm, I don't see the smocks or the foot covers or those,
you know, things they do as nurses where they put that
the hair covers like cooks do over their head.
They don't look like an official
laboratory pharmacy in white suits, superficial, clean and squeaky.
So, you know, I can't go with that.”
You realize, though, most factories, a lot of the things that you're wearing
come from factories that are the most unsophisticated places
in the world, but the product is absolutely badass.
So this is another area where you have to change your thinking
when you compare Eastern to Western culture
and how that works when it comes to suppliers.
Mistake number four.
Discounting a factory or supplier's legitimacy
if you cannot find it on Alibaba. This is a really funny one.
Some people are terrified of Alibaba.
They think it's full of scam artists and other people feel like:
“Man, if it's not on Alibaba, then I can't trust it.”
Listen, there are so many factories in
China that have never been on Alibaba, and they don't care, you'd be mind blown.
And why don't they care?
Because they're just focused on producing an amazing product.
They're too busy to worry about getting a website up
or getting on Alibaba or marketing to Western culture.
They're just focused on the product,
and they're already shipping the product out to 30 different countries.
They don't have time to hire a staff that speaks English
and to bring in all these people and make sure their SEO is optimize.
They're just building the product, doing what they do best.
In fact, some of them would never even want to touch working
with someone from the West.
Not anything against people in the West, but they don't want the hassle.
So what they do is they only sell their product to trading companies,
and those trading companies show up in Alibaba.
And when you go to Alibaba and you go:
“Hey, I need a factory who will build this lighter for me?”
Here, let me get a bigger flame. Little, a little too much.
There we go.
“I need a factory who can build an amazing lighter for me.”
And they say: “No problem. We are the factory.
We will produce it for you.”
No, no. A lot of times that's a trading company.
They're going to work with the factory that doesn't want to talk to you.
They speak Mandarin. They don't speak English.
And so that's the way it works.
Now there are also many legitimate suppliers on Alibaba, and these trading
companies are not all bad.
Just because they're raising the price doesn’t it make them bad.
That's why you were able to get the product so quickly,
because this is what they're good at. You need this. No problem.
Minimum order quantity, 350. Ship it out. Boom, there you go. And it's done.
That's what they like to do. That's what they do best.
In the U.S., in other countries, we have this close minded view thinking
that Chinese factories need to be able to speak in English.
Well, if they're already communicating with 30 different countries.
Because those countries have people who speak Chinese,
why would they take the time to learn English or hire
someone who speaks in English to ship it to another country?
A lot of them don't want to deal with that,
and that is the reason
a lot of times you can find a factory that won't even show up on Alibaba,
not even a website.
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Mistake number five.
Thinking that most suppliers on Alibaba are factories.
Listen, most of them will tell you they are.
And in Chinese culture, that's not even considered lying.
That's normal. It's just good business.
The truth is, probably over half of them are not actually factories,
they're trading companies.
Some experts in this field would claim that 95% of them are trading companies.
So remember that.
If a factory is doing great in its business, it doesn't have a lot of reason to get on Alibaba
unless they're trying to grow huge.
Let me tell you a quick story just to give you an idea.
One of my friends, who is an expert in sourcing, was at a factory in China.
It was building these amazing glassware.
When he was there, a camera crew came in to the factory
with the state of the art cameras and began to film
all these people, these workers, why they were working on the glass.
But before they film them, they had them put on these schmucks,
these smocks like these vests
that they kind of like the ones that they wear to cover your clothing and laboratory,
these shoe covers and these head covers.
And each of them had a brand, the company, the factory name on the smocks.
What's funny is it was a different name than the factory he was in,
and they filmed them for a few minutes.
Then they went to another part and did the same thing.
A few days later, a few weeks later, he goes on Alibaba
and he finds a different factory
with those same workers filmed and pictures with the exact same brand name.
What's going on here?
They're giving the impression that this is a super sophisticated,
westernized thinking kind of factory.
When in reality they don't need the smocks, they don't need the special shoe covers.
They don't need any of that. They just need to build a badass product.
They understand minimalisticism. That's a weird word.
I said that very wrong. Minimalism. There we go.
I should be minimalizing my language if I'm going to talk about being minimalistic.
OK, this is getting weird.
They just have what is needed to produce you the right product.
That's all that matters.
So what they're doing is they're giving off the impression of a sophistication.
And in our mind we might be think: “Wait a minute.
That means they're cheaters or liars. They're scam artists.”
No, not necessarily. They actually produce amazing product.
They're accommodating to our limitations of understanding how factories work.
Mistake number six.
Assuming that all legitimate factories have a website and an online catalog.
Again, why would a legitimate factory have a website and an online catalog
when they're getting a ton of business from 45 different countries in the world?
They don't need that.
However, what will often happen if you work with a factory in China
who you can't even find on Alibaba, you don't have a website,
you have someone who told you, someone who told you about this factory.
Do you know how they going to have you contact them?
Probably through WeChat or through QQ?
QQ is a platform. You can download it, you get the desktop application,
not the iPhone mobile application, because it's a lot easier to use.
Get the desktop application and you can communicate to them directly.
And the purpose is so that everything you send to them is translated
into Mandarin and everything is sent to you is translated back into English.
And because numbers don't lie and they understand numbers,
if I wrote a two right here and sent it through QQ, that's what they would see.
They would see you two. The numbers are universal.
It is not difficult to communicate with a supplier through WeChat
or especially through QQ, even if they don't speak English.
And sometimes those are the places we're going to get the best,
lowest prices and the most custom
solutions as you build that friendship and that trust.
And that brings us to our eighth mistake a lot of sellers make when working with
suppliers and manufacturers.
Trying to use QQ, the QQ ID as an email address.
Now it's kind of funny.
I'm just going to give you a random example of one, but 2094w3872@QQ.com,
I made that up.
Sadly, that's probably someone's real QQ address.
And if you go message, they’ll probably going to wonder who you are.
But you don't email that, even though it says @QQ.com,
if you drop that in your,
if you put that into two box on your email application like Gmail and try to email them,
it's going to bounce back and say: “What are you talking about?
The server doesn't understand.”
Well, that's because it's only unique to QQs platform.
So you take that ID, you go into QQ and you become friends with the person.
Make them a contact on QQ. OK?
And I sound funny saying QQ, but on QQ that's where you can work back and forth
and communicate with the Chinese factory.
And look, they don't use QQ to communicate with each other in China.
That would be like me going to Google Translate and saying:
“Hey Bob, what are you having for dinner tomorrow?”
That would be weird.
I would just contact you through messages or something like that.
QQ is specifically built to facilitate translation between the two
different languages to make your life easier so you can succeed.
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Watch out for part two of the top 70 mistakes sellers
make when working with suppliers and manufacturers.
I hope you have an awesome day.
Keep crushing out there. Do not stop. You can make this happen.
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