Episode #46 Will Tjernlund Interview Part 2 of 2
Suppliers
Many people worry about getting ripped off by a Chinese supplier but it doesn’t make business sense - there is a lot more money to be made selling repeat orders!
What are your main tips for beginners on finding suppliers?
You can find them on Alibaba or via a China Sourcing Agent.
On Alibaba, just make sure they’re a gold supplier and so forth.
If you need peace of mind, Asia Inspection will do a factory inspection for $100.
Have them send pictures of the packaging and product while they are being produced.
Any main dos and don’ts for working with suppliers?
Choose a product that is as simple as possible - that way, it’s hard to mess up making it! A hunk of rubber, wood, plastic. So: very few moving parts, no electronics, hard to break, etc.
Keep it simple! That’s how Will is able to travel the world with a laptop! Don’t follow weird passions like Robotic toys! Many people overcomplicate Amazon. Don’t try to make it as hard as possible; make it as easy as possible!
How do we make it as simple as possible?
Think of everything that can go wrong. If you can’t think of anything, that’s a good product choice!
Will likes to sell (mostly) to Needs not Wants, e.g., Polka Dot underwear vs. a bolt.
It’s not just about price. If you sell a 10 inch bolt for $8 instead of $12, most people will buy it because all bolts look the same. They’re not saying “Some day I’m going to buy this 10 inch bolt”!
Also if you need to liquidate such a product, there’s a clear market for it, to reduce your risk.
How can you build profit into that for yourself?
Email the supplier and ask how much would it be for 1000 units of this product?
If they say, $1 a unit landed cost, do some quick math[s]: If selling for $8, paying $3.60 or $4.50 in fees, so still making $3 each. So for every one dollar invested, he’s getting $3 back.
Do you have a minimum or max selling price?
No it’s more like a timespan to profit ratio. Also it’s about time you’re spending for what return. If you’re spending all day on something with a 15% return, that’s not as good as something with a 33% return where you simply reorder every 3 months.
So it comes back to cashflow?
If I gave you £10 million now, could you make $2 m back in a year? Yes! If I gave you $500K, could you? No. [But if you returned 20% every 2 months on it, you’d end up with $1.492 million - Michael]
So it’s all about getting cash back as fast as possible.
Compounding interest is the 8th wonder of the world, so you need to take advantage of it!
How do you deal with increasing competition in Amazon Private Label?
As competition grows in a niche, Will sends his products directly to Amazon, and Amazon gets nearly 100% of the Buy Box. The margins are lower but Will gets the sale nearly all the time.
Vendor Express (where you can apply) and Vendor Central (invitation only) are the places that Amazon will do that.
If you have some kind of sales history, Just go to Vendor Express, tell Amazon “I want to sell these items directly to you”, you offer a price, they tell you if they accept that or not-they often will. If they accept, they will start placing Purchase Orders and you sell directly to them.
You’ll have to keep some inventory to hand, [and you’ll have to accept getting paid 59 days in arrears!-Michael]. But if it’s a Private Label product, Amazon will outrank all others for the product for that keyword.
Is that open to everyone?
Vendor Express is - just google it and sign up!
Is that what you do when PL is not viable for profit any more?
It’s not normally a price war - it’s usually if someone else optimises their listing etc.
