My Amazon Guy

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

August 12, 2020 Season 1 Episode 74
My Amazon Guy
7 Secrets of Product Sourcing with Norman Farrar - I Know This Guy #74
Chapters
My Amazon Guy
7 Secrets of Product Sourcing with Norman Farrar - I Know This Guy #74
Aug 12, 2020 Season 1 Episode 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
  • Future of manufacturing, coming to the states any time soon?
Show Notes

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
  • Future of manufacturing, coming to the states any time soon?