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
- 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?
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