#395 – Mastering the Art of Supplier Negotiation and Sourcing with Lyden Smithers

#395 - Mastering the Art of Supplier Negotiation and Sourcing with Lyden Smithers Speaker 1: Welcome to episode 395 of the AM-PM Podcast. My guest this week is Lyden Smithers coming to you from Down Under. He's British originally. Grew up in Tenerife, which is an island off the coast of Morocco, belongs to Spain. But he's been doing this sourcing and procurement stuff for a long time before he's even doing Amazon. Started Amazon in 2015 and he's become a really master negotiator. And we're going to be talking about some of his techniques that he uses to get terms with suppliers, some of the tricks and little things that you can do to actually get them on your side and to help you really grow your business, as well as some of the numbers that you need to be paying attention to. It's a really good episode with Lyden. I think you're going to enjoy it. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast. We explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Here's your host, Kevin King. Speaker 1: Hey, what's up everybody? Kevin King here. You know, one of the number one questions I get is how can you connect to me? How can I, Kevin, get some advice or speak with you or learn more from you? The best way is with Helium 10 Elite. If you go to h10.me forward slash elite, you can get all the information and sign up for Helium 10 Elite. Every month I lead advanced training where I do seven ninja hacks. We also have a Live masterminds every single week. One of those weeks I jump on for a couple hours and we talk shop, we talk business, do in-person events. Helium 10 Elite is where you want to be. It's only $99 extra on your Helium 10 membership. It's h10.me.me forward slash elite. Go check it out and I hope to see you there. What's up, Lyden? Such an honor to finally get you here on the AM-PM Podcast. It's about damn time. Speaker 2: It is about time. Thanks for having me, man. It's an honor to be on. Speaker 1: Cancun was an awesome event. That's the last place I saw you back in, what was that, February, I guess. Yeah, that was a really good event that you're part of a group that does a lot of training, a lot of high-level stuff. And I was really impressed with the way you guys are doing things. I don't think there's anybody else doing it like that in this space. Speaker 2: Yeah, we're quite excited about that was obviously for members releasing the new strategies that we've been applying in our own brands. I think the good thing is we've got So many of our own brands and then operating other brands for our services side. So there's a lot of testing that goes into it. So when we release a new strategy or training or framework, it's been through the mill. So yeah, we were excited to get that one out there after sort of six months of building it and some great results internally. We were glad to get that one out there. Speaker 1: Yeah, we'll talk about that a little bit more in a little bit, but you go back, I mean, one of the founders of that group, Dan, who's actually a Dream 100 member, my Billion Dollar Sellers, he's in the Dream 100, which for those of you that, if you're not on my newsletter, you should be, BillionDollarSellers.com. But twice a month, I actually, I, someone is honored, I guess you could say by being put into the Dream 100. And these are the people that I think she should be following in this space. And the first 90 of them have already been chosen. So there's people out there, Kevin, how do I get in? What do I, what do I got to do? It's like, well, your name has to get drawn out of the hat. It's totally random. So there's 90 out of 100 are chosen, 10 of them are not because there's people that are out there that I just haven't met yet. They run in different circles or whatever, but you never know who's going to be there. But Dan Ashburn is one of those and you guys like, I think Dan is one of the smartest people in the space, super smart guy, super smart entrepreneur, but you guys grew up together, right? Speaker 2: Yeah, so I was born in England, obviously, as you can tell by my accent, but I actually moved to Tenerife, which is in the Canary Islands, so Spanish islands off the coast of Morocco, actually, about age six. And then by about age 12, this guy, Dan, shows up and we become friends. And whilst I was outside kicking a ball around and playing football or soccer, as you'd call it, Dan was finding ways to make money online, right? And then Dan and I did a couple of things. Yeah, Dan was trying to teach me about these things. He's like, look, we can make money this way and getting clicks on certain pages and stuff. So yeah, the point I was making is Dan always had that brain. When I was like, come on, let's go out and kick a ball around. He's like, well, I'm playing on the computer because I just made 50 cents or whatever. He was always wide that way. So I knew later on in life when we'd grown up a bit, I was like, that's the guy I need to be in business with, right? Speaker 1: So, y'all did that when you're young and early teens. Did you continue to do stuff throughout your teens or was it later on, like you said, 10 years later before you really reconnected on other business stuff? Speaker 2: Oh yeah, so Dan and I reconnected in 2015. So I stayed in Spain, in Tenerife and Dan went into the military and then back to the UK. When I moved back to the, and I actually went into, I became a real estate agent when I left school at 17. I didn't go to university or anything. I was ready to go and start earning money. And I would, from the age of 14, I worked in a video store. So back when people used to rent DVDs and even VHS, Before that, and I'd go into there straight after school sitting there and I was all about wanting to earn money. Of course, I continue to learn and be a student of life and constantly learning, but I really wanted to put the money in my pocket. So from a young age, I was very driven to these other things. When I moved back to the, I went on from there and I worked on the family business and helped my dad run a construction company, refurbishing hotels, nightclubs, bars, restaurants, which was a lot of fun. In Tenerife, yeah. So yeah, working with my dad on that and sort of running teams and there's a lot of things that I didn't realize until later that I could apply to what we do now. And it was sort of like obviously sales comes into it and then the design, he used to design kitchens and bathrooms and figure out how to fit things into certain spaces and furniture and stuff like that in the carpentry workshop. Along with sort of importing materials, we're a small island, right? So a lot of materials need to be imported and then negotiating payment terms, right? Which is why when I got into the Amazon game, no one was really doing it. I was like, it was part of my daily thing when I was working with my dad in the construction because you get a deposit from a client, you've only got a certain amount of money to be able to get the materials to be able to do the job and import those materials and stuff. I learned a lot in that, which I could then apply to the Amazon world. So yeah, back in 2015, I moved to the UK and I rang Dan up and I was like, yo, what's going on, man? What do you got to me? I was like, I bought a house, but I need to pay the mortgage and I don't have a job or anything. I've just landed in the UK. He's like, don't worry, come and work with me. And he had a digital marketing agency. So I went to work for him and sold a few websites and stuff that I didn't really know what I was doing. And then he was, this side hustle going on, and he was doing this and I was like, look, I don't really know what I'm talking about with these websites. But I said, with that, I can be an expert at that. That Amazon thing, there's a lot that I can relate to there and that excites me and I can be an expert. So I called the bank and said, Can I have a loan? And they're like, yeah, you can have like 10,000 pounds. I went, cool, I'll take it. And then I gave it all to... I didn't have much money, but I was just starting out and just moved country. I just gave it all to Dan and said, make me a partner. Let's do this Amazon thing. I don't want to be involved in a digital marketing agency. I'll become an expert selling on Amazon. And that's where it all started back in... Speaker 1: So you became partners on like an Amazon product business or on the agency stuff or both? Speaker 2: That was when we used that money to buy stuff on our own brand. So Dan tried a couple of products, but he was very busy in his agency, right? So I was like, I'll take control of this. I'll invest and we'll order some products. And man, we made some mistakes. Speaker 1: What category was that in? Speaker 2: That was PET. So the first product I was really involved in was dog nail clippers. And people have heard me speak about these dog nail clippers and it was great. We got in the US, we got bestseller badge and then we're in the UK, bestseller badge. And then we went into all these European countries, Italy, Spain, and you remember how small they were back then. I got bestseller badge in eight countries. That's great. Well, we're losing money in six of them. So it was great for my ego. But that was the first lesson like, Just calm it down, man. You need to know your numbers, which I'm big on at the moment. I've just done a presentation on knowing your numbers because we got hit with that one. Yeah, we sold. Then we went into home and kitchen and we sold some salt and pepper grinders. I scrimped on the packaging. So we launched. Back then, you could acquire very cheap reviews, stick it at the top of the page with the overhanging algorithm. I was like, this is great. We're going to be rich. These sell so well. We got great profit. I know the numbers are good. Until the reviews started coming in, I received a box of glass. So like $20,000 worth of stock all smashed on the way over to the US. So yeah, and like other mistakes that we made like the weight was wrong, FBA fee was higher, we were over the 18 inches on a big knife that we sold and yeah, we made some mistakes. So that's why what led to being involved in China Magic and then the membership that we've got now is that we can stop people making mistakes we did because we made them all, Kev. We made every single mistake you could make. Speaker 1: So on this glass one, did you not do like an inspection or did it just get damaged in transit and you didn't have insurance on it? Or did you not do an inspection before it shipped? Speaker 2: Oh, we didn't know what we were doing, Kevin. This is back in 2015. We'd done an ASM course. We had some success on a couple of products. We're like, right, now we're ready to go for more expensive products. And I think that was the lesson that we learned. You have to do an inspection, make sure the packaging is good and stuff. And yeah, it was a bit unlucky and a bit stupid, I think. Speaker 1: I think there's no better way to learn than to know it's money straight out of your pocket. Yeah, you don't make that again, you learn, you learn for sure. So you evolved into that and so in like 20, when did you first go over to China for like the China Magic trip? Speaker 2: Yeah, so Athena met Dan at a conference and invited him to come and be involved in China Magic. Speaker 1: So she met him probably at Danny's conference or somewhere, right? Or something like that? Speaker 2: I'm not sure where they met. Speaker 1: She started doing that in like 2015, 2016, somewhere around in there? Speaker 2: Yeah, something like that. So I think this must have been like 2018 when we went over. So Dan got invited to speak because obviously he'd been there. I was more behind the scenes, which I am still a little bit. People don't know I'm the third partner in our membership, right? Dan was invited to speak and he said, like, come along because you can source our own products. You can go to Canson Fair and stuff. And Athena's invited me to speak. I'm like, that's great. So we're over there and Athena's like, well, I've seen you like helping people, which is great because like you've come on my trip for free, basically. And I tagged along with your buddy, Dan. But I want you to speak on stage. I'm like, that's not me. I don't do that. Like, I don't want to speak. I don't want to do it." And she was like, well, you're on my trip for free. You've got to. And she forced the microphone into my hand and I was like shaking. I went to the bar, had a stiff whiskey. Actually, when I met Justin Dyson at the bar, he was like, what's wrong with you? And he's become one of my best friends now, Justin. And he was talking to me. I was like, oh, she's making me speak and I don't want to. And I did a presentation and then Yes, on that day in China Magic, Athena turned me into an international speaker. So I've got to thank her for that because she forced me to overcome that sort of fear and stuff. And she said, look, you've got a lot to give and you're happy giving it sat down, but like you need to do it. So I put together some slides and yeah, people coming up to me afterwards and telling me it was great. It sort of gets you over that imposter syndrome a little bit and gives you the confidence. So yeah, that was, yeah. A lot happens and China Magic is very dear to my heart. I did one China Magic, then the following one, and I've done them all since. In fact, the last two or three, I've run myself with Kian. I can't say myself, with Kian and then some great mentors and stuff, but I've sort of been the lead on that trip. I hope I'm doing Athena justice with her baby because it was her creation all those years ago and it's an honor that she trusts me to lead the trip and last three, I've led the trip. Speaker 1: She's not going as much anymore, right? She's busy with all the other stuff that she's doing within the group, right? Speaker 2: Yeah, so within the group, we love to all three of us go to everything, right? But we have to divide and conquer. With my role and sort of leading the operations and across our own brands and then the managed brands, we still have that agency from years ago that Dan and I accidentally built to help us fund our own brands, but we have to divide and conquer and that's my wheelhouse, like the negotiation with suppliers and working with product development and stuff like that, that's sort of my wheelhouse. I've sort of assumed that role, and I love doing it as well. So I find myself as we grow more and more in a day focused in spreadsheets. So to get back to the fun stuff in the beginning and be involved with products and people and suppliers, I just love that stuff. Speaker 1: You've got some, let's talk about some of that. I think that presentation I saw that you did and you've refined it and gotten better since then was about dealing with suppliers. And you had a very unique strategy of how to negotiate with them and how to like lay out a plan. Like, don't just say, I need better terms, but like show them why. And like, can you explain that process so people listening can grab a little of a nugget of knowledge there that they probably don't understand when it comes to supplier negotiation? Because most of them think, well, it's just 30% down, 70% wind shipping. Maybe over time, once I get a relationship, I can do a 50-50 or if I get lucky, maybe, you know, they'll let me pay when it's delivered here. But you've got a whole strategy in the way you present it and you forecast it out and everything that's really brilliant. And a lot of people aren't doing this or they don't understand how to do that. Can you explain that a little bit? Speaker 2: Yeah, so like I say, it was like second nature to me because I'd had to do this with importing materials into Tenerife because of this small island and having to spread out payments. It was sort of second nature and I was working on a couple of projects with Scott Dietz and we were looking to exit, we were growing businesses then using him to exit and he was on the same page as me with the negotiating better payment terms of suppliers. So I worked on him with it and then developed a strategy off the back of it. So we're getting some great results now but A lot of people will say, I just say, have you asked for a better payment terms? I go, yeah, I emailed them and they went, no. I said, what did you say? They go, oh, can I pay later? I'm like, well, of course they'd chuck and said no. Like, what are you talking about? So we've got like a six step plan on how to do it, but it's all to, we've got to prepare it. And first, understanding your numbers is key, right? So it's great getting better payment terms, but unless it actually stops you from needing to borrow money and saving the cost of lending money, then it makes no sense. So understanding your numbers is the first thing, but then the presentation, which obviously you're referring to there, is showing any proof of why it's been successful so far. And then also planning out, forecasting out the next 12 months and saying, look, This is what I expect to do on the current products as we grow them. I'm going to go into new marketplaces and that's going to add these extra sales. And I want to launch these extra products, which you can supply to me as well. And they go, that's great. That's great. And I go, I want to give you half a million dollars this year. And they're like, that's amazing. And we talk about the year because obviously annualize it so the numbers are bigger. So that's great. Yeah, yeah, let's do it. You go, but your current payment terms means I can give you 150K. And they go, oh, I said, but if you give me better payment terms, then I can give you 500k. And they go, oh, well, I'll give you better payment terms then. Like, as long as they can. So, because they've all got their own cash flow issues as well, right? So, for me, it's always about presenting the before and after. It's like, currently, this is what we can do together. If you can give me better payment terms, and it becomes a win-win, You get a bigger order, we make more sales and we grow this and Kian, who you've probably had on here and you know very well anyway, we both talk about like the relationships. So going to China, meeting with them automatically puts you on a leg up and just building that relationship and having dinner with them, having a beer with them and growing that relationship allows you to get these terms because an email from or through Alibaba with some guy in the US or UK or Australia that they've never met, Do you think they're going to say yes? And funny story actually, I was in October, we were in China and I went to see one of our suppliers in Shenzhen and I met the sales rep and she was like so excited. I was like, why are you so excited? She goes, I've never seen a white person before. I was like, why? She's like got like 100 or 150 clients and she deals with them on a daily basis and she owns, and ours is one of her accounts, right? And I was like, what do you mean? You've never met any of the people that you deal with? She goes, no. And I think that's just testament to the fact that we met, she came out with the boss, she helped translate with the boss and then we built a relationship. I took her a gift, I took the boss a gift, went out to dinner, had a few beers, gambe, we got amazing terms. We actually got a 20% deposit, 80%, 180 days after. So we've sold twice before we got paid for the majority of it. But imagine we have a great lightning deal, we have a great Christmas and we're running out of stock and I go, can you bump my production up to the front or can you help me out? Do you think she's going to help me or the 149 people she's never met before? So, having that relationship and having that leverage with your supplier just by going over there, flying to China and meeting your supplier pays for itself 100 times over. Speaker 1: What kind of pushback do you get on that? Obviously, if you haven't met them, you're at a major disadvantage, but even when you have met them, like you said, going from 150,000 to 500,000, Someone's got to foot that bill. And so are they doing it? Is Sinoshare doing it behind the scenes for them? Is it a combination of them? How do you overcome that trust? Like, well, how do I know I can actually trust Lyden when he says he's actually going to pay me in 180 days this half a million he owes me? Speaker 2: Yeah, exactly. Exactly that, man. But yeah, there's certainly pushback. And I've never had, after I presented in the way that I presented, I've never had someone go, I don't want to do that. But I have had people say, I can't do that. Because if you're in rural China in a small factory and their own cash flow doesn't allow them to do it. So one of the biggest Questions that you need to ask with these guys, because they won't tell you unless you ask is why. Like, why can't you do it? And answers might be that, well, a lot of the production of your products is a lot of raw material costs. 40% of the cost of it is raw material. So, okay, cool. So, let's up the deposit. And let's buy the raw material and then the only thing you're footing the bill for is the labor, and then you can get things around it. So an important question is why, like what are the reasons why you are unable? And they say, well, SinoShore don't work with us, for example. Like you said, SinoShore is an insurance company that sort of gives them the reassurance they're going to get paid if you don't pay them. Speaker 1: They send the Chinese mafia after you if you don't pay, I think it's Sinoshare. Speaker 2: Yeah, then don't go back to China, certainly. A lot of my factories, as we've got bigger, we've got more buying power and scales of economy, but it's all about building that relationship. In certain cases, and I say this on that presentation you've seen, is like pay more per unit, like work with them. I'd rather pay more per unit to them so they make more money and give you the better terms than pay SinoShore their 1% per month, whatever it might be. So that's something that I sort of do as well. If you're going to pay for the money from SinoShore, I think it works about 8% per year, why not give them the money and just say, why don't I give you the percentage? And then they're winning and you're winning and you can work together. But it does come down to trust. And it's all about painting that picture of the longevity of the long-term relationship and Going and meeting in person is where you get that trust. Like, oh, don't get me wrong, during COVID, I was having these negotiations over Zoom with terrible Chinese internet and through a translator, which made it difficult, but we did get some results, but you're never gonna get the results unless you go in person. Speaker 1: Yeah, in Chinese culture, a lot of people don't understand it's Guang Ji. You know, it's FaceTime, basically. It's super important. Sitting down and having a beer or eating some crazy food that you would never eat otherwise or just that. It's super, super important in their culture and a lot of people, I think, just don't understand that or they're afraid to go to China. It's too expensive for me to go over there. If you're going to be serious about this, you need to get your butt over and visit a factory. And like, just like you said, and maybe a great step to doing that if you haven't been, or you're afraid to go for some reason, is go with on a trip, you know, like a China magic trip that you guys do that you literally know where you're going with a group of people from the US, you're there. And a really nice hotel. You still use the Four Seasons, right? Yeah, yeah, yeah. Speaker 2: I've looked at other hotels and tried to, but I don't want to leave. It's like going home. I turn up the doors like, welcome back, Mr. Smithers. And I'm like, yeah. It's a home from home. Even when I'm not in China Magic and I'm in Guangzhou, I stay there. It's a great hotel. Speaker 1: Yeah, it's a really nice hotel. So go on a trip like that if that's something that you're serious about doing business. What do you think about this, the everything now with, though we're talking about China and FaceTime and everything in China, it's a yes culture, but what about everybody that's saying you got to get out of China because there's tensions between the US and China, nobody knows what's going to happen with Taiwan, all this political stuff, so a lot of people are starting to look at Vietnam or India or Mexico or Turkey or other places. What are your thoughts around that? Speaker 2: Yeah, it's a weird one, right? Because I've tried to source from Mexico because I want to go to Mexico to go and see my factories rather than go to middle China, right? Why not? And eat tacos instead of chicken heads. But no, I've tried to source from there. I've sourced from Pakistan. I've sourced from India. I've sourced from Bulgaria, UK, US. UK and US are the worst places I've sourced from. For example, in terms of like reliability, making sure that things are done on time, being able to negotiate the terms, the trust there. But all of those other countries I mentioned outside of UK and US, they just don't have the infrastructure to be able to produce at Volume, the way that China can. And they can't do it the same quality. Forget the misconception that quality in China is bad, like you get what you pay for. But yeah, they can't produce at the quality and they can't produce at the price or the volume that you can in China. I've sourced from Mexico and they can do 500 units a month max and don't have any sort of desire to grow it to be able to produce more. But I'm selling 2000 units per month, so it just doesn't work, right? I understand there's some worries, but I can't see there being an issue. And it's a bit like when the Trump taxes come in, everyone's like, that's the end of China. We need to get out outside of China. But at the end of the day, everyone was in the same boat, right? Everybody had to push their prices up to account for it. And yes, for six months while some guys had stock sitting on the ground in the US that they had to sell through, but eventually everybody's prices came up to match it, right? So I think everybody's in the same boat and I just can't see a way around hitting the quality, the volume and the pricing that you're gonna get from China. It's still the number one place for me. Speaker 1: And China can do the smaller quantities too. I mean, you call up someone in the UK or US and say, I want to test 500 units. They don't even return your call. Speaker 2: Yeah, on the other end of it, like going to China, and it's harder again by email, Alibaba or whatever. But if you go there, like I'll go to the phone and go, look, I need to test this. But the key to that, Kev, like what I do with negotiating terms is like, I want 250 units. I go, come on, man. I'm like, I want 250 units. And if it goes well, I'm going to order 20,000 units by the end of the year. And they go, OK, yeah, cool. Let's test it. And you need to pay $1 extra per unit, fine, yeah, if I can test it. So it's all about painting the long-term picture rather than just focusing on what you're trying to get done there and then. Speaker 1: Yeah, I print, one of my products is wall calendars and we used to print in Hong Kong like 20 years ago, now we do it in South Korea. But I remember a couple of years ago, my supplier, I used a broker out of Seattle that handles it all DDP for me, just turnkey. So I've never even been to the factory, but they're an agent that just handles printing like this stuff. I remember he sent me a message from the factory a few years ago and said, oh, Kevin, bad news. Price is going up this year. I hope it's going to be OK. We want your business. And they sent me instead of $1.52 a unit. Now, mind you, I sell these for $19.95. Instead of $1.52 a unit, it's going to $1.54 a unit. Okay, but that shows you though that they work on some pretty tight margins over there and two cents is a lot for them, but for me and you in the end game, a lot of times two cents is no big deal. Speaker 2: It doesn't make much difference to us and what I do find with some people as well is that The way that they source is they're trying to get the price down and they're hammering these guys. Well, these guys need to eat too, right? Like, it might be a big factory, but they're working on small margins, 5-10% a lot of the time on some of these margins. So, the approach isn't, how do I get them to lower the cost? It's like, how do we work together to develop the product slightly differently that might bring the cost down to make it viable to sell? Like, I talk about the win-win scenario with, look, if you give me better terms, you get a bigger order, that type of thing, and the economies of scale that come with that. It's the same when you're negotiating the price down, like, how do we make this cheaper? We're in partnership together. This is a long-term relationship. How do we, together, how do we make it cheaper? And Kian talks about this stuff as well. He comes with us on the trips and helps me run the trips in that he wants to go through the factory and understand exactly how it's made and what material's being wasted on that backpack and how they're doing the stitching and can they use a different machine. For example, in October, I was at a factory, salt and pepper grinders, so we went back to it in the end. We're selling them again. But they're putting the logo on and we're getting like 10% of them in the inspection saying the logo's crooked. I'm like, mate, show me where you do the keys are called Chris. I'm like, Chris, show me where you put the logos on. Why they keep coming out crooked, mate? It's a joke. I've been talking to you about this for last six orders. Like, why do I have to keep paying for the inspection company to rip them out? You lose money, I lose time. Like, what's going on? They showed me this rickety old wooden printer. I'm like, why the hell are you using that, man? Why is it coming out crooked? And he's like, oh yeah, you can get a bigger, a better machine, like a stainless steel one. It'd be like two grand. I'm like, I'll give you two grand, mate. Like I said, you have to ask why a lot of the times, right? Unknown Speaker: So I go, what are you doing? Speaker 2: I'm like, $1,000 each, we'll buy the machine. He's like, yeah, done. I'm like great, like we could have fixed this months ago but until I was there and asked why are those logos coming out crooked, you don't realize until you actually go there because like I say on China Magic, I'm like the most important question is why? Why is this happening? Because they won't tell you unless you start questioning. Speaker 1: I think it's Ken that says when he goes in there too, he likes to see the waste, not only for his product, like, you know, if it's, they're trimming off an inch because it comes in a sheet of a certain size or whatever, the fabric, but it's also his competitor's product. So he's seeing stuff laying around and he's like, wait, that's sitting there. We can make something out of that. Give me a much better price. You know, if I turn, use that excess fabric that you're just going to throw away or burn or recycle or whatever. Give me a really good price on that. And you can make some money out of your waste. And I get a good deal on stuff too. Just by going to a factory and just watching, like you said, what they're doing, a lot of times there's so much inside their own head and their own little world that they don't... And they don't see the outside. Like you just said, a $2,000 machine fixes a massive problem on six orders. And that's a no-brainer. Speaker 2: Exactly. The first time I came across that, which made me ask the questions, and it wasn't when I was in China, it was those dog nail clippers I talked about, right? Which was sort of my first product. We were paying $1.80 for them, selling them for $15. We started at $20, then $15 because we didn't patent our new design because we didn't know what we were doing. And it came down and down. I spoke to a supplier and then I was like, look, how do we get this price down? They're like, well, if we just built a new mold, then We could do it for like 99 cents instead of like $1.80. I'm like, you can half the price by building a new mold. I'm like, how much a new mold costs? $2,500. I'm like, I'll make that back in the first order. I'll pay for the mold, don't worry. And they're like, oh yeah, I didn't think to tell you. I'm like, you can see me trying to, I'm negotiating the price down constantly, but you didn't tell me that this is the way. So listen, we're talking about relationships to get better payment terms, to get better pricing. But you're selling a product and thousands and hundreds of thousands, millions of units of this product to people. You need to understand the product itself, understand how it's made. And I'm a bit of a geek when it comes to that stuff. I like seeing how things are made. But understanding the production line, you won't... People who haven't been to China and been to their factories, understanding the production line will give you an insight into creating a much better quality product, get you better pricing, better terms, building the... Ideas that come out of pivoting, innovating the design and coming up with a different one or new product ideas. Like Kian says, first thing he wants to do is go into the storerooms and stuff and see what, oh, that was a product that we started creating, but then we got rid of it. He's like, well, no, that looks like a good product idea. And he gets to get the creative juices flowing by seeing the type of products they're working on and innovating. Speaker 1: So what about the Canton Fair? So those of you that don't know, there's three big, I guess you could call them trade shows or whatever, or sourcing markets in China. There's a bunch of them, but there's three major ones. The big one that's year-round is Yiwu, which is in Ningbo, and that's mostly trinkets and like dollar store stuff. You find a few other things there, but it's like seven buildings of just Three or four floors of little 10 by 20 stalls basically of factories with reps there. And then you have the Canton Fair that happens twice a year in April and October and that's what Lyden leads trips to for sellers from the Western world, from the US, from Europe and from all over and helps you navigate that and that's over a three-week period and it's broken into three different groups depending on product category. One four or five day period is this type of product. The next four or five days is this. They call it phase one, phase two, phase three. Typically, most Amazon sellers fall on either phase two or phase three products. So, that's where they focus the trip around and this is huge. I know they just built a new building there and it's been a few years since I went but it's It's like seven buildings, six, seven buildings, something that's huge, these huge freaking halls. And you go in and there's tons of booths and it's all organized in such a way. But what I've found is when I go, it's a great Idea place, but I never have, I personally have never sourced a product off the Canton Fair floor. I've sourced products, yeah, I mean because everybody else is seeing the same thing. And so, I come back from there and there's a bunch of other, you run into other Amazon sellers, you run into other people, but what I do get is ideas. And so, I see a lot of cool stuff and where I've gotten the value is asking them, hey, what do you get there under the counter that you're not showing? Because you they don't want their competition, you know Chinese knocking each other off left and right So if one guy's got something in the booth and he's seeing people paying attention He's gonna be like going and trying to get a copy over taking pictures and I'm gonna go make it himself But where I've gotten the value is either they got something under the counter that they they secretly coyly show me or they say Kevin We'll pick you up tomorrow and we'll take you to the factory, you know Take you to our real showroom and we'll show you this stuff. That's where I've gotten the value. What do you find? When you go to the, when you lead people to the Canton Fair, do a lot of people end up sourcing something off the actual floor and actually having good success with it? Or do you find it similar to what my experience has been? Speaker 2: Yes. Unknown Speaker: Yeah. Speaker 2: We do a lot of pre-event training and getting people ready to go and we teach a lot around innovating products. Like you say, buy it and badge it. Those days are gone. That's what I used to do, right? But yeah, product, put a badge on it, put it on Amazon, buy some reviews, stick it at the top of the page. But it doesn't work that way anymore. So whilst you're seeing products on the canton flare and on the booth shelves, I'm always looking to innovate and build a moat around the product and how can we innovate the product? How can we patent a certain design or get a utility pattern on it? So whilst you're seeing a factory that can do all these stainless steel, salt and pepper grinders, how do I change that? And like you said, if you speak to them and go, what are you working on? And you start to build up the rapport, can I come to your factory and build up that rapport? Then you can find out what they're working on and we've got quite a lot of exclusivity deals now because whilst we're innovating and we consider ourselves leading the pack in terms of changing how we're developing a product to try and differentiate from the competitors, these are engineers and product developers in the factory. So going to speak in with them and giving them an idea and working out How to change it. There is one way to go about it, but they're already developing products. So get an exclusivity deal. So for the first year, you're the only supplier on amazon.com and then maybe you don't have enough orders to keep them from selling it to other people after that first year. But I've done it before. And then by the time that first year has ended, I've got 1500 reviews. And I'm quite happy because I'm sat at the top of the page and then the competition could come in, but I'm that far ahead. So, yeah, like... Speaker 1: So, is that what you do to protect yourself when you do innovate? Like, I agree with you. You got to go to the Countdown to Fair. How can I make this unique or different? What can you do to change this up a little bit? Sometimes that's just packaging. Sometimes that's adding something to it or accessorizing or changing the shape or adding a feature. But once you do that and you give them the idea like, oh, Lyden, that's a really good idea. We can do that for you. What do you do to prevent them From sending it out the back door to the neighbor down the street. Do you do in and in deals? Do you just try, is it just a trust thing? Do you just do like you said, okay, give us the exclusive on Amazon for a year and hopefully they honor that? How do you actually enforce that? Speaker 2: Yeah, we've got quite a lot of products that are patented now. We've got product designers over in the UK and the US that are working on developing unique products and we tend to get patents on them when we can. But when I'm talking to a certain supplier and perhaps I've got this product idea and I'm like, well, I don't know them yet and I don't want to give the keys to the kingdom away because I don't really know these guys yet. We might say, okay, cool, I've got this product and I want to make it into a different shape, which will give it a different utility, but I won't give them the exact idea, but I'd give them the same. To get a price or to find out whether it's possible, I might give them, instead of using triangle shape, I'd use like a hexagon shape and go, this is the route I'm sort of going down. So might change it slightly on those first conversations, but what I found in, and since COVID as well, these guys, They're about the relationship, like we said, and they don't want to f*** you over, right? They want to build long-term relationships, and they can see that that's short-sighted to do that. Of course, there's bad in everywhere, but I've found that I've got good relationships with the suppliers, and I've been, and I've had dinner with their families, and I've been out and met them, and a lot of the time, it is built on a certain amount of trust, and it's always good to have a NNN agreement in place, but If it did go to court, what are you going to do? Go over to China for six months and start going to court appearances? You're not going to, right? But having a signed bit of paper like this is our gentleman's agreement that we're not going to try and do each other over is always a good sign. But yeah, a lot of it is built on trust. And yeah, something else going to the Canton Fair, if you've already got a supplier that I like, is just telling the supplier that I'm there. Because they know that all of their competitors are at the fair, right? So if I'm going in for terms and pricing and stuff, they know that I'm going to see, to the Canton Fair as well and see that the supplier's there. So even just telling them I'm going to, you could be sat in the Four Seasons cab and not actually go to the fair, but being there when the fair's on gives you great leverage on your current suppliers too. Speaker 1: Do you do stuff in your contracts that my products are not allowed to be exhibited at any event or any fair? Speaker 2: Yeah. Speaker 1: Yeah, a lot of people don't do that. They actually don't realize they should even actually do that in their purchase agreements. Speaker 2: Yeah, you should get it in the purchase agreements, but before Canson Fair, we email all of our suppliers, just reminding you, we're going to be at the fair, we don't want to see the products on display with our logos on. So yeah, we do remind them because you don't know who's in the team is going to be, oh, grab some, if they're rushing to get to the fair, like you might have agreement with the boss, but then another employee might be, just grab whatever's off the shelves or in production and take it with them. So yeah, it's good to remind them that you don't want to see your products exhibited there. Speaker 1: So, how do you think sourcing and supply chain are going to need to change based on all these new Amazon fees? It's in, you know, for storage fees and low inventory fees and all this kind of stuff. What do you see coming? You know, there's companies like Skew Drop that have a pretty cool business model where you store it cheaper in China and they ship it over weekly in smaller amounts. There's people like Arnie Shields there from Australia who shows all these complicated spreadsheets, not so complicated, but Spreadsheets about how if you order in smaller amounts, you can save from having to borrow money. You know, if you get your cadence and your rhythm and stuff down right, it can actually make you money instead. Like you said earlier, when six out of your eight products are markets, you're losing money, but he shows you like, yeah, that's probably true, but here's how you can fix that. By adjusting, I always say the money's made in the sourcing, not in the selling. And so, what are your thoughts about what sellers need to be thinking about with all these increasing Amazon fees and ways you got to manage your supply chain now? Speaker 2: Yeah, so I completely agree with you. And if you don't know your numbers, you don't know the business. I learned that early on. And you really need to understand your numbers. And I did a presentation a couple of weeks ago. I was asked to co-host an event here in Australia, Ecom Tribe. We've got a great community over here. And I did a presentation there on some of the trainings we've got in our group. And one of the things I said was, because of the fees are getting bigger, appetizers get more expensive, margins are getting squeezed. I see a lot of people just dropping off going, oh, there's not enough money and this is dropping off. And I'm like, that's great, because unless you're a serious competitor and a proper business owner, you're not really into this and there's less competition there. But I pulled up an example where people are trying to find 5%. Let's say you're sat at 15% margin EBITDA and you're trying to get to 20% to make the business viable for exit, for example. Most people go, right, 14% tacos, I need to get to 9% tacos, so cost of advertising. It's just not feasible in this day and age because of the cost of ads to try and get to, it used to always be a target to be 10% tacos, but it's very difficult to get to that anymore. So what I said was, and I showed an example to say, right, if you could take 1% of tacos, does that seem more reasonable? Everyone's like, yeah, of course. And then I can shave 1% off the cocks. And I can shave 1% off the shipping by getting two, three different quotes for shipping to the U.S. And I can get 1% off storage because I'm using SKUdrop, for example, or my supplier's storing the product for me. And then I can get 1% off loan interest because I've got better payment terms, meaning I don't need to borrow money. Now, those five points there gets you to the same result, but it's much easier than trying to cut down your ad spend by 5%, right? So where I'm going with this is that you really need to understand your business and analyze the P&L on where you can make savings. That's where I think people's focus should be and that's what I've been focused on. In Southern Sellers Fest, I did a similar presentation talking about the The ratios of a successful Amazon business, there's not these huge bloated margins in anymore. We have to really get into it, be business owners and understand the different areas of the business. So yeah, fees are going up, Amazon ad spend is going up, but those people who treat this like a real business really understand their numbers. They're in a great position to really succeed. Speaker 1: Where do you think the biggest waste is and the sellers that you work with in your group, where do you see like, oh man, here we go again, where do you see like people just can't seem to get this right when it comes to what they're just blowing money on when they don't know their numbers? Speaker 2: I think, where to start? Ad spend is a big one. Do you know that our group's done a training recently in the wasted ad spend and being very hyper relevant on the keywords that you're going after and not bidding on keywords that maybe I'll get a sale because it's sort of related. It's like forget, you've got no business going after those until you've really focused in on the hyper relevant keywords. So ad spend, there's a lot of wasted ad spend that just doesn't need to happen. Before we get to that point, shipping, for example, every single shipment we do, we get three. Some people just say, oh, I'm very happy with a certain shipping company or the supplier's recommended shipping company, and I'll do that every time. You can save 50 cents per unit by doing a comparison on every shipment. Yeah, going to China, understanding the cost of goods and bringing the cost of goods down by understanding the production line and going to see what the other suppliers are charging at Canton Fair and understanding that. So, there's a lot of different areas. Storage as well. I'm being overstocked on Amazon. Long-term storage fees, that drives me mad as well, like making sure that you're not overstocked in Amazon when Q4 comes around and those fees go up. There's a lot to be looking at but there's so many different areas of the business but ad spend and then the quickest ones to focus on are ad spend, make sure you're targeting the right keywords, the immediate short-term ones that can fix it and then your shipping I suppose is a big one. Speaker 1: I know in Cancun you guys were introducing, I think it's built into your tool and your group, this 80-20 thing where a lot of people have, you know, let's say they got 50 SKUs and really only about 10 of them are actually profitable or even if the other 40 are technically on paper profitable, they're really not. They're tying up valuable cash flow. I've always had a rule since way back that this is just my personal rule that if after six months of selling a product, if it's not throwing off at least $3,000 in contribution, I think you guys call it CM3 in your group? Speaker 2: CM3, yeah, contribution volume three, yeah. Speaker 1: Yeah, and I get rid of the product. And a case that I always give as an example is I used to sell a crepe maker. And I would order 1,500 or 2,000 or so of these crepe makers at a time. And I would sell through them, but it would take me six months to actually sell through them. And I made a profit on each one I sold, but I'm tying up that money. I forget what I was paying for these, let's call it $20 a piece. So I was tying up, if I was ordering 1,500, 30 grand for six months. And to turn a profit and I get I don't know what my profits were back then, but say I made 20 grand in profit on that. Let's just say of the total. So that 20, it took me six months to make 20 grand in profit. But if I took that same $30,000 and put it in one of my hero SKUs or put it in one of the, maybe even a new product, testing a new product out, you guys are always saying, always be launching. It's another one of your mantras. And because you're always trying to beat the, I call it the control and in direct mail, we call it the control where you have a letter. This letter always gets a 3% response, but can I write a better letter that gets a 3.2% response or 3.5 and then we get rid of the old letter. And now that one becomes the control. So you should be doing the same thing in products and balancing out. And sometimes it's better to have less products than more products. And you guys are some of the first to actually really start to really hit that over the head to allow your sellers in your group and stuff. And I was pleased to see you do that at the Cancun event where you're making people aware of this because a lot of them don't understand that. Speaker 2: Yeah, and we built the tool for ourselves, obviously, internally. But that quintile analysis, so it's like dividing your portfolio into five separate sections. The reason I really like it, like you said, the ones at the bottom, you're like, these are losing money, like why am I reinvesting? And it's not just the profit or how much you're losing on the profit, like you're tying up capital in slow moving stock as well, right? Where, like you said, that capital could be used somewhere else. And the reason I like it is that once you review that and you get these guys at the bottom, you either get rid of them or fix them, so they move up. But it's like a ladder, right? If these move up, something's got to move down. So it forces you to look at those ones at the bottom. These ones are the worst performers now. Speaker 1: It's like the English Premier League. Speaker 2: But it pushes you to constantly be innovating, constantly striving for better and not just accepting, oh, this gives me decent money, I'm going to stay with it. It's like if it's in the bottom group, your eyes are drawn to it and you're going to focus on it. So it constantly pushes you to be looking at your entire portfolio and cutting what's not performing and constantly trying to improve and innovate. Speaker 1: It's like the English Premier League, right? Where the bottom two teams get kicked out every year or something like that. Isn't that how it works? Speaker 2: It's exactly that. Yeah, yeah. And another example of that, Kev, is what I see is coming back to my ego of having my thumbnail clippers in every European country and three units a day in Italy, bestseller badge and losing money. My ego, but it's understanding people. Sometimes when we look at an account, I look at an account and go, okay, so all this stuff going on in Europe is taking up 50% of your operations, like your mental capacity is contributing 5% to your revenue. And it's holding $40,000 on the ground in Europe. If you cut Europe out and apply that $40,000 into a couple of new products or one new product in the US, would it contribute more than 5% of your revenue? Yes. Okay, cool. So shut Europe down. It's great for our egos to be an international company and be in these different countries, but you might have seen me speak about you should go into other marketplaces and diversifying your revenue to go into Europe, for example. I'm an advocate for it, if it makes sense. You have to make sure that it's actually going to contribute. And again, that would be part of your portfolio analysis. Is it worth being in Europe, for example, or another marketplace or Etsy or Walmart? Speaker 1: You're in Australia. I think a woman took you to Australia. And so now is it worth being in Australia, selling on Amazon? Speaker 2: So across our entire portfolio, we don't have anything in Australia. So the opportunity isn't that big yet. And what I found out about the, so I've been here a couple of years now and we're growing our membership community here. And I spoke at an event, we're actually putting on an event here, Kev. We'd love to see you over here in June. If you want to come and get involved in our events, we're putting on our own event over here in June. And I'll get you some details on that. But yeah, the more I find out about the culture here, In Australia, people tend to buy local and they're not into like big franchises and chains and if you look at the restaurants and stuff like that, it's not necessarily like that the culture and people trust locally owned businesses and buy off Shopify and stuff and they used to wait because in the middle of nowhere, let's be honest, they used to wait for something to be delivered. So it's not like the UK, like, I want it tomorrow, I don't want it at all. Or the US, it's like people are willing to wait. So whilst I think Australia is growing, and I think the last data I looked at is about 10% the size of the UK, right, to give you a bit of an idea. But yeah, so there is opportunity here, but yeah, it's not worth tying up a load of cash in inventory just yet. But like anything, do the analysis. Does it make sense? And take a look at it, not just for... What you'd find with a lot of people in Australia is, I'm in Australia, I might as well bring some stock here. I'm like, Just focus where the money is. Like Americans will buy anything, send it there. Speaker 1: They'll run off that credit card debt like nobody else, that's for sure. If not Amazon, I know you guys focus like almost primarily on Amazon, but if not Amazon, where would you go next? So I'm in Amazon US, okay, maybe I expand to Canada, maybe I go to Europe, like you said, if it makes sense. But if I'm just one of these guys that I just get, I can't sleep at night because all my eggs are in the Amazon basket. Where do I go next? Do I go on to TikTok? Do I go on to eBay in Australia? Do I go on to walmart.com? What do I do next? I know you guys had some training in Cancun on TikTok, but Michelle is doing that and she's actually coming on the podcast in a couple weeks, so you'll hear her talking about some of that. But what would you go next if you're advising somebody. Speaker 2: TikTok shop's the exciting one for me, I think. And Michelle's doing a great job of putting that training together. So currently, international sellers in Australia, everyone's dying to go on TikTok shop in the US and they can't yet. That will clear and it will, they will open it up and allow sort of foreigners to get on there, but that's the exciting one for me. And we can see like with the fees and stuff like that, they're going hard to try and take on Amazon, right? And some of these other marketplaces. So TikTok shop's exciting. Some of the other things I'm focused on at the moment is through being here and being in certain masterminds here that I've had some opportunities getting into retail. So that could be a good one. And I'm going to be seeing Steven Selikoff over in, when we're in China, and he focuses a lot on retail. So I think for brand recognition, as well as profit, depending on the cashflow and the terms are obviously longer on when you get paid, if you've got good terms, you're a supplier, you can afford to do the get into retail stores. So that might be another thing to look at. But what I sort of tell our students is that Not to get to the shiny object syndrome, right? So you've got TikTok shop, you've got Etsy, you've got Walmart, you've got all these things. And again, it takes up not just cashflow, but it takes up your focus as well. So what I would say is master one thing first, and in our eyes, the thing to master first is Amazon, and then start taking a look at some of these other opportunities and go from there. But whether that be launching into Europe or Canada or whatever, I wouldn't try and take on too much at once. Back in the day, I tried to launch two brands at once and the split focus as well as the split cash flow meant that it failed. I ended up just going with the one brand but very ambitious, shiny object, got the two opportunities. I think focus is a big thing where it stops people from being successful and I think you should do one thing, do it well and then add in fuel to the fire. Speaker 1: So, how important is it to actually get around other like-minded people either at your level or a step above you? You guys have a group that you do that in the Titan Network that you guys do that stuff in. How important is it for sellers, you know, a lot of people are just, they're just at their home in Tenerife or they're just at home in Essex or whatever or Kerbyville, Texas or whatever, just minding their business. Like, I don't want to go out to any kind of events. I don't want, and I'll watch a few webinars here and there or something or a couple YouTube videos, but what's the importance of being around other like-minded people that are on the same journey as you or maybe a step ahead of you? Speaker 2: Yeah, there's a few things there. Like, so if you've got, Let's say I'd never... Nowadays, I can pick up my phone and text you, Kevin, and go, have you come across this? I've got a problem. What do you think? And you go, yeah, I've seen it. This is how you fix it, right? If I'd never met you in person, you and I never had a beer together or a chat or coffee or whatever, then I'd text you and you'd be like, what's this guy want, right? So, I think in-person meeting, it's great to be in a community online and we do a lot of that weekly, obviously, but the in-person meetups are so crucial to your success and having the people around you and this is why Titan was born, right? Off the back of China magic, taking 100 sellers to China, you've got 12 intensive days of learning amazing things, being part of a team, working with each other and then going back and being alone. And the idea was how do we do this all year round? So I feel like having that support network around you and just fast track to success. So there's a book and something that I say quite a lot is like who not how. So don't try and figure it out by yourself. If you've got a community of people around you that have been there, done it, you can just ask them and you can even leverage them and say, oh yeah, you've got a service that you can do this for me and expedite your growth. So having that community around you is just incredibly, incredibly powerful. Speaker 1: Yeah, I agree with you. We do that here at Helium 10 with the Helium 10 Elite. You guys do it at the Titan Network. There's a few other ones out there. They're all, there's quite a few good groups. There's a lot of sh** ones too, but there's quite a few good ones as well. And there's another good one called the Billion Dollar Seller Summit. Maybe, you know, I even see you there in a week or two in Hawaii. You just never know, right? Speaker 2: Yeah, I think so. I think so. I'm definitely, I'm working on it. Speaker 1: Awesome. Well, Lyden, I really appreciate your time today. If people want to reach out and find out more about you guys or what you're doing or going on a China magic trip, how would they do that? Speaker 2: Yeah, you can reach out to me on Facebook or Instagram. I have a pretty unique name, Lyden Smithers. So yeah, they'll see that up there. Speaker 1: It's spelled L-Y-D-E-N for those of you that... Speaker 2: Yeah, L-Y-D-E-N and then Smithers like the Mr. Burns' bitch from The Simpsons. Get that joke out there before everybody else does. But no, Lyden Smithers, you can find me on Facebook, Instagram. As I say, it's a pretty unique name, so you can find me, but I'd be happy to chat to any of your listeners, Kev, as always. Speaker 1: I appreciate it, man. Thanks for doing this. I appreciate it, man. Speaker 2: Appreciate it, man. Have a good day. Speaker 1: Good stuff, as always, from Lyden. It's always a pleasure speaking with him. If you want to learn more about China, I recommend the China Magic trip. I've been on that trip a couple of times. I just did one back in April, but their next one will probably be coming up in October. You go to Chinamagic.com, you can get all the information. I'm sure Lyden will be on the next one as well, but it's a good trip. A lot of good information can really help you when it comes to sourcing and cash flow management and just really understanding the entire manufacturing and Chinese way. So, check that out. We'll be back again next week with another awesome episode. But before we go, I've got some words of wisdom for you today. Your diet is not just what you eat. It's also what you read, what you watch, and what you listen to. It's all the information that you consume. Don't just think of your diet as what you eat. It's everything else that you consume content wise, so what you watch, what you listen to, and what you read can make a huge difference in how successful you are in life and your entire mental state. Have a great week. We'll see you next time.