7 Secrets of Product Sourcing with Norman Farrar - I Know This Guy #74

What are the secrets to sourcing products? Today we talk to an expert who will reveal his 7 secrets. Norman Farrar is a entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.

• Pay my tax - experience is key to sourcing.
• Inspection and broker nightmare story - liner on wipes was not in place. 4 containers wasted.
• Buy a factory if you can.
• Secret 1 Never contact online suppliers
  • Alibaba is a broker.
    • 5 brokers are bad.
    • 30% tax foreigner
  • No manufacturer will talk to you directly for 1000 units MOQ.
  • Brokers are good - but only for beginners
• Secret 2 Do not pay or get quotes in USD
  • Increases 5-20% extra due to hedge due to RMB fluctuation
  • Sending money through bank - foreign exchange company like seller funding can be very beneficial and saves cost.
• Secret 3 Know when to negotiate your prices.
  • Don’t negotiate packaging or insert.
  • Negotiate the product pricing. Then talk packaging. Can bring packaging to manufacturer.
  • Store extra packaging at manufacturer if needed.
  • Tell them I’m shopping around and go silent.
    • “I talked to my manager and they approved an extra 7 cents”
• Secret 4 EXW, I’ll take care of it, instead of FOB
  • EXW works 
  • FOB costs 30% more
  • Talk to freight forwarder that’s what you want to pickup.
• Secret 5 - Supplier is not a Shipper
  • They will use their buddy.
  • Never use a site for instant shipping quotes
    • Hidden fees
• Secret 6 - HTS Code
  • Harmonized tariff system
  • Save money with proper code. 
  • Example: Magnetic tape 4.9% + 25% in duty classification cost $2400 + $13,000. Reclassified 2.1% truthfully saving $14,500. 
  • Was classified under aluminum. We looked at it and reclassified as item displayed as warning.
• Secret 7  - Inspections - HAVE ONE
  • Cost is low $300 or less.
  • Inspect agent doesn’t know what to look for, give them instruction. 
  • Example: Skateboard - inspector had to test going left, right, pulling.
• Bonus Secret- Consolidate Samples
  • Save a couple hundred bucks in shipping costs.
• Packaging - wooden box can drastically increase value.
• BIGGEST Golden nugget - Think about how you communicate. In states we use Purchase Orders or POs. In China POs are paper. Pro forma protects you - molds being reused by manufacturer. .
  • Acceptable defect rate in Pro forma for credit.
  • Who owns the product?
  • Molds
• Get in contact with Norm for product development, sourcing, honuworldwide.com
  • Or email Norm at [email protected]
  • https://honuworldwide.com/product-sourcing/
• Future of manufacturing, coming to the states any time soon?