EP #358] [ENG] - How sourcing from China is changing in 2026 - Lyden Smithers

EP #358] [ENG] - How sourcing from China is changing in 2026 - Lyden Smithers Unknown Speaker: Welcome to The Ecommerce Lab By Ecomcy. This is the place for everything related to Amazon private label and e-commerce. Learn exactly what you need to start or scale your business. Get insights from the top industry experts who will discuss the latest trends and best practices in the world of Amazon. From choosing products and sourcing from a supplier to setting up your Amazon account and marketing your business, you will hear it here. Let's get started. Here is your host, Vincenzo Toscano. Speaker 2: Hello, guys. Welcome to another episode of The Ecommerce Lab By Ecomcy, the place of air related to Amazon FBA, private label, and e-commerce. My name is Vincenzo Toscano, founder and CEO of Ecomcy. And today we're bringing a close friend of mine, Lyden Smithers, co-founder of Titan Network, which I would say is one of the top networks out there when it comes to supporting Amazon sellers and ecommerce entrepreneurs to really succeed in their journey into scaling their business forward. And that's why I wanted to bring Lyden today, because beyond strategy, he's also very knowledgeable around everything around sourcing, specifically from China. And we know in 2025, it wasn't the best year when it comes to sales from China, given the tariff situation. So I'm very keen to see what has been going on, how suppliers are shifting the game, especially in 2026. And also get a sense about how entrepreneurs and Amazon sellers in general are feeling about this year, because let's be honest, also, last year was more about survival, right, and scale. So I want to know, you know, what is going on, what people are talking about and what are the strategies that potentially can make that happen. So, Lyden, welcome to the show. Pleasure to have you. How are you doing? Speaker 1: It's an honor to be here, man. Speaker 2: Good to see you. Thank you, man. Thank you. So, you know, for those that might not know you, just give us a brief introduction, then let's go from there. Yeah. Speaker 1: Yeah, cool. My name is Lyden. I've been selling online for about 10 years now. As you say, sourcing predominantly from China. Changed my life when I went to China and realized the business you could get done on the ground and get in there in person and build those relationships, which you know I'm big on. Yeah, co-founder of Titan Network, which is a community mastermind for ecommerce sellers. I run a trip to China called China Magic, where we take sellers from ecommerce to China to Canton Fair twice a year, teach them how to navigate the fair, negotiate the best deals, the right questions to ask, and just access a lot of supplies that you simply won't find online. Yeah, I've been selling a little while, been involved in exits, in acquisitions, in selling all different types of products across all different marketplaces. But my passion, as you know, is obviously the sourcing and supply chain side of it. But yeah, excited to see what questions you've got for me today, man. Speaker 2: That's great, man. You have seen it all. Speaker 1: Good. Speaker 2: So I guess, yeah, let's start with sourcing. I think, I mean, you have this conversation, I'm sure, on a daily basis with manufacturers you deal with or even a part of the members. I'm part of the Titan Network. So tell me, what are your feelings going on, especially now entering 2026? Are you seeing the landscape changing a bit? When I say landscape, are they willing to be more aggressive now when it comes to pricing, payment terms? Are you seeing actually a big migration out of China because, you know, 2025 is all about, oh, let's get out of China. Let's go to Vietnam. Let's go to India. Let's go to Indonesia. Is that something from the past or is it actually happening? Like, what do you think? Speaker 1: Obviously, at the beginning of the year, it was a rollercoaster of the year when it came to the tariff, right? And the more ridiculous it got, like 154, 174, whatever, I was like, okay, good. At least I know it's tactics and it's not going to stay at that sort of level. Well, that was what I thought anyway. And luckily, luckily, it didn't seem to stabilize a little bit. It's a little bit higher than what it was before. But actually, I was talking about this earlier in the year, and my initial approach was don't panic. China still has the is the only place on earth that has the infrastructure to produce the quality, the volume and the price that they do. Now, obviously, there are other options and you should definitely have a backup. And we learned that this year. And I think a lot of people did have a backup. But I was always sort of saying, people don't just jump ship, let's figure out how to become better business owners, because 50% or whatever it might be, breaks down and sounds very scary. But when you actually convert that to how much you have to save on COGS, for example, or improve on PBC, if you could shave 1% of your PBC spend, 1% off your shipping costs by getting more efficient, negotiate your pricing down by a couple of percent and break it down that way. You could sort of break even. That's what we did across our portfolio, is used it as leverage to go to China, Sit down with our big suppliers that we have great relationships with and sort of put the problem on the other side of the table and sit and try and figure out like, listen, how do we get more efficient? How do we order more raw material? How do we leverage currency? How do we leverage storage in China rather than storing in the US and figuring out ways of becoming better business owners? And I think it taught my team and myself how to be a little bit more efficient in that supply chain and just running efficiency across the whole business, I suppose. In terms of in terms of the impact it had. By the time it's settled out, we're probably slightly more profitable through all the deals that we did and the trips to China. But yeah, going to China a couple of times last year, there was a little bit of nervousness. I know you've been to China plenty of times, been to Canton Fair. It was the only time I told people, don't mention US market, like tell them you're a global brand and talk about Europe. Yeah, and talk about selling globally rather than just US because it might put them off a little bit. But they're still hungry, right? They got affected the same as us. Speaker 2: They need business. Speaker 1: And going to China, being face-to-face shows that you're, I'm still here, right? Even current suppliers, I flew to China pretty quickly and went, I'm not going anywhere. I still want the products, but we do need to try and negotiate a bit. So I think they were hungry for business, but China aren't silly. Like for the last 16 years, Since Obama was in and started talking about tariffs, they've been looking at other options. So they've been reducing their reliance on the U.S. Not to say that it's not a huge part of their export, but you see at the fair, there's a lot less U.S. citizens there and a lot more Europeans, South Americans. And different. They're looking to hedge their bets, but they're certainly not looking to remove the US as a target marketplace because it's huge. Obviously, the opportunity is huge there. Speaker 2: Yeah, yeah. In fact, it's funny because even these countries I was mentioning, like, you know, Indonesia, Vietnam, you know, India or Mexico, all these alternative people are looking into. Most of the time, these are only proxy factories done by the actual Chinese. So you think you're actually sourcing from people in this country, but they're just Chinese that they move the manufacturing capabilities from these countries to avoid tariffs. By the end of the day, you're still dealing with the Chinese. I'm sure you have seen this as well, right? Speaker 1: When you're walking around the Canton Fair, and I did this with my when I took my group in October, like you see those, it says, oh, we've got a place in Myanmar, we've got a place in Vietnam, we've got a factory here. A lot of them would sort of seen this coming and set up factories there. Which is great. And they're using Chinese machinery, local staff, Chinese management. But what happens there is it might end up being slightly more expensive. The shipping is more expensive because there's less ships leaving. And then those countries also got hit with a tariff as well. And also what's happening is they're Some factories are making the product, shipping it, they're putting a label on and shipping it out. But a lot of legitimate factories, a few were doing that, I heard, but a lot of legitimate factories were making it there. But the raw materials will come from China. So instead of being 30 to 45 days manufacturing time, you're looking 60 to 90 days to manufacture, and all of a sudden your money's tied up into that product much longer, you need to plan ahead more, and by the time it actually came to fruition, the tariffs are stabilized, end up costing the same money anyway. It's good to have a backup. It's great that some factories have backups, but a lot of the Chinese factories that set those up, they've pulled out of them now. They never really got them going. They can't control the quality as well there. The quality control is not as high over there as well because they just don't have the presence that they have. Yeah, there's a lot to take into account. It isn't as simple as, oh, there's leather in Pakistan, let's go there. Speaker 2: I know, I know. And you mentioned like, you know, that this year you guys are entering to with a more profitable kind of landscape already. And I'm sure that has to do with the fact that you guys doubled down in China last year, right? Get out of China, which is what most people did. And that's why they're struggling because I feel last year a lot of people got distracted with shiny objects. Like, oh, China is not a place anymore. They start spending all this money moving operations and manufacturing to other countries and then encounter the issues that you say, payment terms, quality, shipping being more expensive. And then it's like all was done for nothing. And now a lot of them are going back to China again, which is why I wanted to have this conversation. I think now this year is going to be the opposite. I feel now Chinese are going to have an extra influx of requests again. And that might drive prices up again on the manufacturing level. I don't know if you think that could be the case. Yeah. Speaker 1: Yeah. And you know, I talk about like the importance of relationship and having that face to face contact and buying each other gifts and having dinner together, doing the gambe and shots of horrible drinks, as I'm sure you've done in China as well. But having that when the as you expect, and I expect the same thing that they're going to have an influx of people coming back to China after the shiny objects of different countries. If you've if you've been to China and you've spent time with them, you're still at the top of the list. You don't want to lose importance with your factory and get pushed down the ladder when it comes to who they want to work with. So I think that relationship was definitely important. And you mentioned obviously people looking outside of China to source products from different places. Luckily, I had that shiny object syndrome a few years ago. I tried Pakistan and Bulgaria and Sweden and Turkey. And Thailand and Mexico. And I went and years ago I did this, which is why I knew not to do it this time around, because nobody has the infrastructure China has to produce at the quality, speed and volume that we need them to, right? Speaker 2: Yeah. Now, let's talk about the payment side of things, because One of the things I see people struggling a lot, especially coming out of 2025 is cash flow. People is dry. They don't have cash in the bank. It's a big issue. And that's why a lot of Amazon sellers are closing shop. They cannot continue essentially filling inventory purchase. And I think a big trick here, if you know what you're doing, is dealing with payment terms. So you need to be very smart in terms of how you navigate this when you manufacture. So I'm keen to hear from your side, like how you've been using that to your leverage when it comes to that. Like, especially now in 2026, did you manage to negotiate better terms? Or are you keeping the same ones? What is the take there? Speaker 1: No, I use it to double down and get better payment terms. In some instances, I have 0% deposit and 180 days payment terms. In other ones, I paid zero deposit and I just pay once it's sold. So it's different with every factory and I think it's important to understand that each factory It's important to understand how big they are, right? When they're smaller, perhaps they don't have the cash flow to help you. And when they're bigger, maybe you're not important enough. So you still need to match the factory at the part of the journey that you're at and find a good match, right? But if anybody's heard me speak before, I talk about six step process I have for negotiating better payment terms. And it's simply sort of selling yourself and the reasons why you can grow the business. And why you're so good at the marketing side of it and your success on Amazon or previous endeavors or access to influencers or whatever it might be. And then showcasing the future. I always annualize everything and talk about here's the orders I want to give you for the next 12 months. And then on the current payment terms, I can only give you 25% of that. If you give me new payment terms, I can give you much bigger orders. So where people make the mistake is they go in and say, can I have better payment terms? Can I pay later? And they simply get a no. You have to present a win-win. It has to be a win-win for both sides. What are you going to give them in return for the payment terms? And I think a lot of people skip that part. And it sounds simple. Now I'm saying it out loud, obviously, but there's a bit of a process to it. But just talk about the future and make sure you're giving in return for those payment terms. Speaker 2: And invest in the relationship, which is what you've been doing all these years. You know, that's why they trust you in China, because you've been there, you've been spending time and they know that you're not only about the money, you're also about, you know, the partnership we're creating together, which most people just skip and they just keep it. Very basic and they just tried to flip a few dollars here and there, you know, so and that's why you don't get the payment. Speaker 1: The guys that are winning and ended up more profitable after the whole Trump tariff roller coaster that we went through are the ones that went to China, saw their factory and said, I'm here. I'm not going anywhere. Speaker 2: We're going to make it together. Speaker 1: We're going to make it. This is going to be fine. Like, what do you think? How do we solve this together? The ones that got on a plane for a couple of thousand dollars are the ones that are reaping the rewards now. Speaker 2: Yeah, for sure. For sure. Now, on all this sourcing, What is your take on all the changes that have been coming out when it comes to AI? Because AI has also been a big disruptor, especially last year, like we've been seeing so many tools being released, some automation. And it's been helping a lot of people to now jump into sourcing way faster than before, because let's be honest, before it would be more time consuming, it would be more difficult for you to verify certain suppliers. Now, you know, there are solutions out there that make it very efficient when it comes to that. So what is your take on that? Are you relying on the solutions like that? Are you still old school? Speaker 1: We are, we are leveraging a little bit. I love Axio, the tool that Alibaba brought out, and I know that you've been playing with it as have I, because they've been asking me to do videos the same as you have. But I think those tools are great. I think that one in particular, but then we can do, we can use other ones. I think the main thing that it's done And what we've done is in this game, speed to market is key, right? I feel like what it's done is remove a little bit of people's procrastination, friction, and dwelling on it and the friction and got people to it to it quicker. Now when it comes to actually sourcing the product, There's still a manual process involved. There's back and forth with samples. We need to feel it. We need to hold it. But it does allow us to provide better images. It allows us to provide better briefs. And I do think it's helped from an R&D perspective. But when it comes to sourcing and all that stuff, relationship is obviously key. And getting your hands dirty. You know what I'm like. I like to go to the factory. I like to walk the floor. I like to go in every single room. I want them to show me the production line and I can point out where things are going wrong, where scratches are made, where we can be more efficient. We can talk about buying machinery together to speed things up or make things cheaper. So I think there's a lot of that still involved. But in China, they're doing the same thing. I spoke to a factory. I was doing a walk around with Canton Fair's media team. And they were filming me sort of having conversations with factories. It was a huge like tin factory. They made like tins to put like biscuits and things in, right? And they said, I said, how many workers have you got? Standard question I asked to get a feel for how big they are. They said, we were, I think they said that we were 5,000. I'm like, but now we're 2,500. I'm like, oh, that's a shame. Is business bad? They went, no, no, business has doubled. We've just used AI and automations and machinery to get more efficient. And I was like, wow. So they've doubled their revenue by reducing their workforce. So it's not just AI, like physical machines and stuff that they're And I'm sure AI plays a part in running or producing those machines, but yeah, it's incredible how the world's getting more efficient for sure. Speaker 2: Yeah. Now you mentioned something there I want to briefly touch, which is the workforce. We all know that after Chinese New Year's, the workforce goes, you know, they go to their homes and a lot of them then come back and usually there's a shortage of workforce. Which has an impact on the quality of the production. Now, do you think with everything that happened in 2025 that a lot of these factories had to lay off half of their staff? Now with the influx of business, they have to hire again, but let's be honest, a lot of them are not going to have the time to train all this workforce. So potentially we could be walking into a season of a few months where quality could be a big issue in China, at least for some of these factories, because they had to ramp up production again to a pace they were not used to for the last 6 to 12 months, right? Speaker 1: Absolutely, man. And listen, that can happen at any time. But off the back of your prediction, if that's if that's what's going to happen, we definitely need to be to be very, very hot on that. And we have processes within our team where we ask for videos and we ask for mid production videos and photos and stuff like that. But we have third party inspections happening on every single shipment. Nothing leaves China without an inspection. Speaker 2: Yeah. And we do it once and then they assume it's going to be perfect forever. Speaker 1: Yeah, because things can change, right? Because if you're growing your order with them, they're going to need more staff. And if other people are growing their orders, like the factories, I've grown, I've grown huge, hugely with some factories that have started off with a small factory. Now they've got two and now they've got three big ones. And they've gone bigger and bigger. Now they can't be the boss that we have the relationship can't be in all places at once, right? Don't get me wrong, their systems and processes are pretty efficient over there, as you've seen. But listen, when there's humans involved, there's errors involved. Speaker 2: Mistakes, yeah, of course. Good. So now I would like to shift the conversation into, you know, the landscape of, you know, Amazon sellers and what is going to happen in 2026. We saw 2025 being a tough year, like a lot of people struggling with Amazon because, you know, all the fees around Amazon have been increasing, competition, the tariffs, That combined with the explosion of social commerce, a lot of people now jump into TikTok, a lot of people investing more in DTC, but now I'm starting to feel a retraction. I feel like all those people invest so much in TikTok and DTC, Walmart, and so on, they didn't end up with the revenue and the profit they thought they were going to get. A lot of them, at the end of the day, were shiny objects. Now they're coming back to Amazon, I feel. Speaker 1: What do you think is going to happen in 2026? So I think Amazon's continue to grow, right? Like the growth has retracted a little bit. Maybe there's a bit of market share. This and we know we talked about obviously cash flow with Amazon sellers. Interest rates have played a part in that. The economy in general has played a part in that. But ecommerce is strong and Amazon is still the big dog, right? And it continues to grow and it plays a huge part. But it's not the only play anymore. For the last 10 years, you could just focus on Amazon as the sole channel, but you do need to embrace AI and make sure you're showing up in ChatGPT and Google AI results. You need to embrace TikTok shop, social commerce in general, which essentially is TikTok shop. And I think you need to embrace those. But I think to your point, shiny objects, everyone went, right, TikTok shop is great. But perhaps your product isn't, the particular product you're talking about is a TikTok product. So what we need to do is come back to basics. Omnichannel is the future. We can't just be one channel anymore. The amount of information somebody consumes before making a buying decision is through the roof now. There's so many bits of information they need to consume and different ways of shopping and people, it's the biggest shift in ecommerce history, right? So we definitely need to be looking at those different channels. I think retail is going to get bigger as well, and I think people are going to start to enter retail. Great for cash flow, big wholesale orders, as long as you've got good payment terms as your supplier. But TikTok is the one to look at, but don't just presume your product, because it does 10 million a year on Amazon, it's going to work on TikTok. It's a volume game on TikTok. You have to get all that content. You have to test different things and stick with it. But just make sure it's a TikTok product. And if your brand doesn't have a TikTok product, start doing your research for TikTok and for Amazon separately. You need to come back and see this is a product that could work in retail. This one could work in Amazon. This one could work in TikTok. So there's the different channels. We need to be across all of them. Master one at a time for anybody who's new. I don't want to scare people who are starting out and listening to this. Master one at a time, but you need to start looking at your products. And I'm here to talk to you about how to do digital development and research based on the channel that you're looking to sell on, right? Speaker 2: Yeah. And I think a big mistake as well is that when people are expanding to these other marketplaces, they see it as a saviour kind of, with a saviour mindset, right? An expansion mindset in the sense that, well, I'm going to do TikTok because if not, I'm going to go out of business because Amazon is not working out or Walmart or DTC. If you're already going from that scarcity mindset in the sense that I'm going to put now all my eggs on TikTok to see if this shiny object is going to save me. And that's why it's causing a lot of these brands to struggle because they're not doing what you mentioned, which is being tailored. It's saying, oh, maybe TikTok is not the right fit, but maybe it's Walmart, maybe it's Target, or maybe it's having my own website. They just assume because it's working for my neighbor, it's going to work for me. And they're just going blind and putting the last few eggs on it and struggling. So that's why it's happening. Speaker 1: Yeah, absolutely. And we talk about people struggling on Amazon. We see it so many times. You see it all the time. I see it all the time. People have early adopters from five or six years ago that have owned the category for so long. And now what's happening is they're dropping off that top place. Speaker 2: They've lost bestseller. They're dropping down. Speaker 1: It's because of their competitors potentially being on Omnichannel. They're bolstering it. And what's happening is on Amazon, you get a halo effect off the back of TikTok. The more sales you make on TikTok, the more people, Amazon sellers are Amazon sellers. If they want it tomorrow and they want it on Prime, they're going to Amazon. If they see it on TikTok, they're still going to Amazon. If that's how they're programmed, which I don't like a huge percentage of the United States is and they're still going to buy on Amazon. So, yes, we're looking for sales and TikTok, but it's going to bolster and maintain our rank and contribute to that and maybe take the pressure off PPC. We talked about being more efficient across your entire business. If we can save some money on PPC because we're getting external traffic from TikTok, then it's more profitable. And then it's taking a look, take it zooming out, looking at the entire business and seeing where it's going to benefit. But don't underestimate the impact of sales on Amazon that a different channel could have, particularly TikTok Shop. Speaker 2: Yeah, I see that a lot. I mean, just like me, I'm sure you're part of so many WhatsApp groups and communities and all of that. And I see that people, instead of trying to figure out the omnichannel approach, they're always asking, oh, what is the trick in the category listing report? What is the extra keyword? What is the extra hack? And they're still in that mindset of the seven years ago Amazon seller, that everything is a hack. Everything is gaming the system for you to be on page one. And they just cannot digest the fact that the reason why your ranking is going down is not because it's a silver bit or exact match campaign you're not doing on PPC, it's because you are not doing what your competitor is doing, which is creating an actual brand. At the end of the day, you only had a listing, you had an acing, you didn't have a brand, but they don't want to hear it, you know? That's the issue. Speaker 1: I see it so many times. It's like music to my ears hearing you say that because I was the same, right? How good was it 10 years ago when you could buy reviews and buy a bestseller badge, right? And do what you need to do. You need to use strategies, not hacks. And you need to be a real business owner. This isn't a side hustle anymore. Like so many of the old school Amazon sellers started out like this is a real thing and you have to look at it strategically. And fortunately or unfortunately, however you want to look at it, we can't just be focused on one channel anymore. Ecommerce has shifted and we need to be across multiple channels. Listen, we have to learn to adapt and listen. Speaker 2: It's an opportunity. It's an opportunity because until now, so many categories in Amazon were a monopoly. They were a monopoly because this random guy launched a garlic press 10 years ago. He got lucky and he's making millions of dollars, but he has zero understanding of marketing. But he just was the first garlic press, right? So now all these people is getting shifted by people that know real branding, real strategy. And that's an opportunity for now these categories to be reborn. Absolutely. Speaker 1: I agree, mate. I agree. Speaker 2: Cool. So start concluding. What is your last, I would say, maybe advice for 2020? What do you think? I mean, we talk about Omnichannel and everything that's going on, but is there anything else you think people should be focusing the most this year to be able to succeed? Speaker 1: I think we covered the two things that I think it's the buying and the selling, right? The successes in the buying as well as the selling. If you don't have a strong relationship with your supplier, whether they're in China or somewhere else, I would get on a plane and go to China. Go around Canton Fair. I've shared this Tip the other day on another podcast that just by going to just before you even go by telling your supplier you're going to Canton Fair, they're automatically going to know that you have access to suppliers that you don't currently by not being in the country at Canton Fair, which are their competitors, and that you're automatically on the front foot when it comes to negotiation when you're going to see them. So if anybody's planning doing their annual planning right now, I would plan to go to China find alternative factories for your products, for your brand, find new product ideas and go and see your current suppliers and negotiate what you need to do. And the other thing is embrace omnichannel, embrace TikTok shop and embrace AI. And yeah, those that one from the buying perspective and one from the selling perspective. And if you can focus on those two things, I think you'll have some success this year. Speaker 2: Love it, man. So tell us, you know, how people can find you and work with you, you know? Speaker 1: Yeah, so you'll find me on social media on Instagram or TikTok or Facebook, Lyden Smithers or lydensmithers.com. I have a unique name, so if you search me in Google, Lyden Smithers will come up. But yeah, I'd love to hear from you. And yeah, if anybody needs any help, I'm here. Speaker 2: Thank you, man. So it's been a pleasure. Hopefully, you know, I'll see you soon so we can have a pint. Speaker 1: Absolutely, man. It's been too long. Speaker 2: Have a good one, man. Thanks, mate. Speaker 1: Bye. Speaker 2: Thank you for your time, man. Bye-bye. See ya. Speaker 1: Bye. Unknown Speaker: Thanks for listening to The Ecommerce Lab By Ecomcy. Be sure to subscribe so you don't miss an episode. 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