Navigating Tariffs & Supply Chain: Impacts on Amazon Sellers Round Table

Navigating Tariffs & Supply Chain: Impacts on Amazon Sellers Round Table Unknown Speaker: Welcome, fellow entrepreneurs, to the Amazon Sellers School podcast, where we talk about Amazon and how you can use it to build an e-commerce empire, a side hustle and anything in between. And now your host, Todd Welch. Hello, hello. Speaker 3: Welcome, everybody. Another Amazon Seller News Live. We've got a really good one for you today talking about tariffs and the joys of importing products from overseas, especially right now in this turbulent time with tariffs going all over the place, it feels like. But today we've got Mark from over at Sellerview joining us, Afalabi from Tariff Terminator, and Danan, of course, from EcomTriage. So, Afolabi is an expert when it comes to tariffs, and then Mark is an expert when it comes to just overall trying to control and track your costs on your products, which, of course, both are very important when you're doing e-comm, because if you're not keeping track of all those costs that you have, you can eat into that profit pretty quickly and potentially start losing money. As they say, most e-commerce businesses go out of business not because of necessarily being unprofitable, but because they run out of money. And if you're not tracking those fees and things like that, they can eat into that money and stuff real quickly. So guys, I appreciate you joining me. Speaker 1: Yeah, good to be here. Speaker 2: You're welcome. Speaker 3: Yeah, and we've got a lot of fun tariff talk today. Anybody who is not living under a rock has heard about Trump being in office, Elon Musk and Doge having lots of fun in the federal government as well and cutting things. And as we were talking about before we got going, Trump's goal, it sounds like, is trying to eliminate the IRS, the Internal Revenue Service, in favor of the ERS, the External Revenue Service. Speaker 4: So you get no complaints from me, I don't think. Of course, there's a lot of data to consider on that. But, you know, I mean, one, go ahead, Mark. Yeah. Speaker 1: I was like, I might even move back if that was the case. Speaker 3: Yeah. It's going to be a lot of work, but honestly, if he was able to make it happen, I think the economy in the US would just explode. All the business would want to come back to the United States as fast as possible. Speaker 4: Yeah. Speaker 1: Yeah. I mean, just think about all the money that's sitting offshore, you know. Speaker 3: Yeah. Speaker 1: You know, even the big ones, you know, Google, Apple, Amazon, you know, shipping products, profits probably overseas too. All that would come back. Speaker 4: Yeah. They don't call it a tax haven for no reason. Speaker 2: Yeah. Speaker 3: Yeah. Sure. Speaker 1: Yeah. Speaker 3: Yeah, it would be tough. They have to figure it out because they could not cover all of the income tax with tariffs alone, even if they tariffed at like 100% and somehow kept sending products here. Speaker 4: But then again, if they eliminate 40 bajillion and a half dollars of unnecessary spend, maybe they can. Yes. Unknown Speaker: That would be one big thing. Speaker 3: Slash the government immensely. And then in my calculations, if they did something like a 3 or 4% national sales tax on brand new products only, that could help cover the difference as well. Speaker 1: Yeah. And also I think even going back to when tariffs were first introduced and there was such a You know, shell shock, you know, what we have eight years later when we have, you know, this increase in tariffs. I mean, I think, you know, as long as you, when getting charged the right tariff, you know, understand your tariffs, understand your tariff costs. You know, you can do a price differential. It's not necessarily the end of the world. I think when people hear the word tariff, it's like, oh my God, my business is dead in the water. And that's what happened, you know, 2016. And it wasn't the case. It was just a matter of, okay, let's adapt. I did see a lot of people that didn't adapt, didn't price adjust, didn't know their costs, and like you said earlier, were dead in the water because they didn't factor in the costs. Speaker 4: I'm in that boat. I just wrapped up my private label, just stopped. Speaker 1: Yeah. Speaker 3: Yeah. You got to know how to play the game and either get your manufacturer to reduce prices, increase your prices in the US or a combination of both to try to offset those differences. Number one, you got to know exactly what you're actually paying. It's easy to kind of get lost in the weeds and not know exactly what those tariffs are until you get hit with a big bill at the border. Speaker 1: I was just thinking, Todd, where have you been all my life? Because that's what I've been saying. You got to know your numbers in order to play this game correctly. And I think far too often we see people not knowing their numbers. Not doing these little things that you should be doing because you're so focused on driving revenue. At the end of the day, I think it really hurts your bottom line. Speaker 3: Yeah. Well, I know that well from first-hand experience. When I first started selling way back in 2014, I was doing a lot of retail arbitrage and stuff. I was selling about $90,000 a month and I thought I was doing really well. I quit my job and did it full time and then suddenly I didn't have enough money to keep buying stuff because I know my numbers good enough. So I learned that lesson the hard way. Speaker 4: Yep. Me too. Speaker 3: I made my way out of that hole. Speaker 4: Yep. I, I spent like a millionaire and realized I didn't profit like I didn't profit as a millionaire. Unknown Speaker: Yes, for sure. Speaker 3: Yep. Speaker 2: Another thing I found out, uh, was, uh, so because every seller, uh, has been kind of programmed to just go to, uh, research tools like helium 10 or, uh, any jungle scout, just go find products, you know, go short list product and just, you know, look at the, look at how much it's going to, you're going to make to manufacture it and how much nobody thinks about tariffs. And it's a big number. It's a big number. And for, for me, uh, I just noticed that some, you know, some, you know, I think in 2020, 2019 or 18, uh, I mean, I got served a huge bill from my freight forwarder and I'm like, why is the shipping cost this high? And he was like, Oh, bunch of it is the duty. Like why is the duty high? Give me the document. I want to see the documentation. And then I stumbled into a customs entry form 7501 and I saw that I was paying 35% in tariffs and I looked at the product description and it wasn't even My product. And I'm like, why? Why am I paying 35% on this description of, the product description on this customs form doesn't even describe my product. That was the aha moment for me. But many, many sellers don't look at it. And I'm learning more and more that some sellers don't really, especially the little ones don't really care because they're cheating anyway. They're not paying tariffs. They're not doing anything. So they really don't care until the day they're caught and belly up. Speaker 1: And the inventory goes. Speaker 2: Exactly. Speaker 1: Yeah. What's actually crazy about that is it is a wild amount of sellers that don't look at that form. Hey, the bill and it's not, you know, like it might be like, you know, like a like not a massive seller, maybe a seller that's selling between 50,000 to 150,000 or 200,000 a month. You know, 2 million a year, you know, they're bringing imports and they're not paying attention to this. And on that tariff bill, it's probably about 10% more than they're paying. Speaker 2: Correct. Speaker 1: Just because, you know, they're just blindly trusting, you know, the freight forwarder that they've actually allocated the thing right. Speaker 3: Yeah, for sure. Yeah, you got to pay attention to all those little details if you're going to be profitable in e-commerce for sure. Speaker 1: Yeah. Speaker 3: Anybody that's out there watching, if you have any questions or comments as we go through the show, throw them in the comments. I'll see them on the side here and if it makes sense, I can bring them into the show and we can talk about them. Anything you got out there, let us know and we'll try to answer any questions for you. But before we go any further, let's go ahead and talk about this first news article here real quick. So US-China trade war reignites as both sides impose new tariffs. The US and China have reignited their trade war with President Trump imposing a 10% tariff on all Chinese imports. Prompting immediate retaliatory tariffs from China, these new duties affect key goods like laptops, toys, crude oil, and agricultural machinery, while China also restricted rare metal imports or exports and launched an investigation into Google. For Amazon sellers, this escalation could mean higher prices on imported inventory, particularly for electronics and consumer goods, potentially impacting margins and pricing strategies. However, if trade negotiations lead to a tariff reduction, sellers may benefit from lower costs in the long run. Now, of course, China's not the only one. We've also got Canada and Mexico, which potentially have 30% tariffs, I believe, coming up here in March if they don't help secure the border. So, could get very interesting very quick. So, Afolabi, why don't we start with you? What are your thoughts on the current trade war that's going on? Speaker 2: I mean, I'm not a politician, but we thank goodness we have to look at economic economies of things. So my first question that I have rolling in my mind is, you know, This trade war and this tariff increases, I'm guessing only the big companies will feel it. Only the big US importers will feel it because the small guys don't pay tariffs anyway. They ship their products to LCL, less than a container load, and the freight forwarders falsify the documents. And I know Trump is getting to that very soon. I hear it from You know, some trade, some customs publications that I'm a part of, that I, you know, that I subscribe to, that they're really using magnifying glass to go really deep. In the next few months, they'll start catching up to all those falsifications or false claims act. But I also see the side of Trump that says, look, drugs are flowing into the US and killing people, and you have the power to stop it. Why aren't you stopping it? And also, there's also another side whereby, if you are charging us If you're charging the US import taxes, why shouldn't we charge as well? I'm just trying to be fair because I love China. I have friends that are based in China. I'm not the kind of person that will say, oh, the Chinese are bad or something. No, I think they're super smart people and everybody's smart in their own way. It's just like, I don't know anybody selling in Amazon China. Have you ever seen anybody? Speaker 4: I've seen one maybe two people and they both said that it's a humongous pain in the butt and the approval process is awful and they have to have I think like citizenship there or something along or have somebody. Yes. Speaker 2: Extremely difficult. Speaker 4: Yeah. Speaker 2: Because that's the way, you know, China structured its economy. It's going to be very hard for you to take money out of that country, you know, but, you know, they like to import from, they'd like you to import from them. They don't like to import your product with, you know, which, I mean, any smart country want to do that. So with the, with the trade war, I think that it's a negotiation tool, one, and also to create trade balance. If you're looking at trade between two countries, there should be some sort of balance, because if it's not balanced, your currency will be falling. I don't know if anybody's tracking the US dollars over the past four or five days. It's super strong now. I was just looking on TV. I was looking like Bloomberg and I'm like, Oh my God, I should send money to the UK now. Because it's like, I think it's for the first time, I think it's stronger than pound sterling now. And you know, this is all, you know, trade is what's making it happen. So I think the, the, the, The trade war, the tariffs are going to go up and down based on how each country is responding to each other's demands. So Trump says, Canada, I'm going to hit you up. And Canada says, oh, OK, what do you want? And let's say Canada caves in. OK, it's going to remove it. So you're going to have to have to monitor your tariffs a lot in the next four years. Speaker 4: On that note, Afolabi, I believe that both Tariff Terminator, I know for sure, has tariff code monitoring. Mark, if I'm not mistaken, Sellerview does as well, correct? Speaker 1: We have a team that monitors for our private clients. Speaker 4: Okay, cool. Speaker 1: Yeah. So inside, before you're creating a purchase order, it double checks, just verifies what To verify that there hasn't been a tariff change or something. Speaker 4: Yeah. Speaker 2: Yes. Speaker 4: So that's going to be critical for everybody because as this little trade war, I say little, massive trade war goes on, I think there's going to be huge turbulation and changes on how things go as everything settles out over the next five years. Speaker 1: But also I think there's an opportunity. Speaker 2: Yeah. Speaker 1: Because I think There was a trade war. The possible factories might be a little bit open to negotiating. I just had one client who had never negotiated with this factory. I said, hey, why don't you just go there, say this to the person, give them some data, show them your trends and this kind of stuff. Anyway, he didn't even ask for a percentage. He was like, Hey, can we like, can we get some better pricing? The factory came back, he was paying $1.80 per unit. The factory came back and said, how about 90 cents? Speaker 3: Wow. Speaker 4: Yeah. And he said, no, I want 70 cents. Speaker 1: Yeah. Like the 10% proposal is, you know, your product costs two bucks. It's going to cost 20 cents. You know, it's not a massive, you know, a hole in your wallet, you know, obviously tracking that cost and making sure that obviously you still profitable on that product is key. Speaker 4: Yeah. Speaker 1: But also, I think the other opportunity here is, I think it's going to drastically reduce competition on Amazon. I think there's going to be a lot of foreign sellers, aka Chinese sellers, that have gotten away with not paying tariffs. They've gotten away with Not paying tariffs. Everyone else is paying tariffs, has to charge way more on their price to actually make any money when these other foreign sellers are selling on Amazon, driving the price way down because they're getting it for dirt cheap there, which actually, since I think like all this time, I would say probably in the last like five years has really affected We're private label sellers on Amazon because how do you compete when I'm playing by the rules and I'm paying my tariffs and I'm paying everything that I have to pay and I'm paying sales tax and I'm doing all the things that I have to do to be compliant. But then 75% of the sellers on Amazon sliding under, not paying sales tax, not doing this, not doing anything. I think the opportunity there is one, negotiating with suppliers, negotiating with your freight forwarders. That's one of the things that we do as well when we have a preferred network of freight forwarders. If someone comes from Sellerview, we're giving you all the data upfront, packed list, everything is organized in a nice way for you. Can you give us, our users and clients, a 5% discount? Let's get some savings there. But then on the flip side, I think we're going to see a reduction in competition. Speaker 4: I hope you're right. I hope we eliminate all the people that are breaking the rules. Let's be honest. Dealing with Amazon is similar and their operations are similar than that of a government. A few people really screwed up for the rest of us and then all these rules come in that affect millions of other people negatively. But the ones that screwed it up in the first place don't follow the rules. They get implemented. So we pay the price for that. So I hope that This I really hope this forces out the shady players that cost end up costing us and that we can have a equilibrium on. We'll never have equilibrium on people not breaking the rules. Speaker 1: There's always going to be someone. Speaker 3: There's always going to be trying. Speaker 1: I'm hoping it's going to eliminate these farms that basically clone your product, counterfeit it, bad review, bad review, bad review, bad review, just to pump them up. Speaker 4: I deal with that all day. Speaker 3: We had that problem the other day with a brand that we were helping launch their new products on Amazon. Product took off really good, out of the gate, was selling well. We were climbing in the rankings and then suddenly a knockoff came on that wasn't even the same product. It was just a junk knockoff and they cut the price in half and it took us almost a month to get them off of the listing. And it's just been an uphill battle to try to get back the momentum that we had from the original launch. Speaker 4: Was that the two ASINs that you sent me, Todd? Speaker 3: It was one of them, yes. Speaker 4: Yeah. So there's not that many reviews there. It doesn't take a lot to kill a launch. If I remember correctly, there was like 12 or 15 or 17 written negative reviews and it drove that rating down to a 3.8. Yeah. You know? Speaker 3: Yeah. And most of them, you know, are I'm sure from that knockoff product because it was the product that they have is kind of like some of the other ones out there, but it's got some additional modifications that make it more effective. And the knockoff didn't have those. It was just a copy of the thousand other ones that are out there for sale. And so, you know, those negative reviews come in and plus then we couldn't run any deals for Prime Day because the price was lower before. You can't run this deal because it's not a deal. I'm like, okay. Speaker 4: And there's a certain star rating where you can't run deals or, and then in another certain star rating that you can't even run PPC. Speaker 1: That would be one of my wishes if I had a genie, you know, the magic, the lamp, be like, no one on my listing on Amazon, please. Speaker 4: Yeah. Speaker 3: I don't know why they don't do that. I guess the only reason is they don't want to be in that, having to be the arbiter of who is a proper seller and who's not. But the AI could totally see that this was a knockoff product. I mean, any human that looks at a listing is like, this product forever has been selling at $40. And has never had another seller on it. And now it's selling at $15. I wish that were true. Speaker 4: I wish that were true, but I don't think it is. Speaker 3: Obviously, though, the A.I. could figure that out and know that that is a knockoff product. Speaker 4: Yeah, but I think it would take time. I think the damage would already be done by the time the A.I. like if you think about. I don't disagree with you, it could definitely figure it out, but I don't think it would be soon enough. I think Amazon's battling with two things here. Their founding principle is if you have this product to sell, you can sell it on this listing and all listings are under this one product as opposed to like eBay where it's like a thousand listings of this product. They just consolidated that, right? So that was a founding principle of Amazon. But now Amazon has turned into this whole huge behemoth of people like us that are private label sellers, wholesale sellers, et cetera. And those of us that are private label sellers go, well, this is my product. And Amazon goes, well, if anyone else has it, they can sell it. And you say to Amazon, nobody else has it because I invented it. This is my brand. This is my label. I'm brand registered. I'm trademarked. This is my patent, blah, blah, blah. And Amazon says, oh, well, they're not breaking the rules. And so Amazon's system is broken. To the degree that you can't, despite the fact that they have four different systems to protect your products, you still can't protect your products and each one costs you money. Speaker 3: Yeah, the only real good way to protect it right now is with the transparency program. If you're selling into retail and other places like that, you're supposed to technically put those codes on every product and you still have that opportunity for other sellers to jump on the listings and such. It's different with private label if you're only selling on Amazon. Transparency is a good program for that, but yeah, it does add five cents for the code, and then you gotta print the code and put it on, extra labor, extra barcodes, and everything else. Speaker 4: Yep, and it's still not infallible. Speaker 3: Yep, definitely. So, back to the tariffs, guys. I was thinking, too, we've gotta keep in mind that It's only been one month since Trump has gotten in. He's moved at the most rapid pace of any president in history. So it feels like he's been in there for four years already, the amount of stuff that he's gotten done, or that he has done, I should say. So I think, you know, with these tariffs, A lot of what we're seeing right now is reactionary stuff from pride of leaders of other countries, right? You know, oh, we're going to hit you back kind of thing. Speaker 1: Yeah. They probably got a shell shock from the old status quo. Speaker 3: Yeah, it's gonna settle out, right? And that's gonna even out the sides. They're gonna figure out what they're gonna put on for tariffs, what they're not going to. And the trade imbalances may or may not get better. We shall see it. I think they will. But right now, things are changing really rapidly. So we've gotta keep your eye on it as it's changing. Speaker 4: Yeah. Speaker 2: Yeah, and the US has A big advantage because of the population and the spending power here. Something I noticed, the side of tariffs that I noticed recently that I've never seen before was So the next day or the day after the election result was announced, I was just watching, you know, before I sleep out, you know, Bloomberg is what would just scroll. The second day, the moment Trump was declared president. Speaker 3: Hey Amazon sellers, tired of losing money on storage and shipping fees? Well, Amazon Storage Pros is here to take the headache out of logistics. We manage everything from inventory and creating efficient shipping plans to working with 3PLs and Amazon's AWD so that you can focus on growing your business. Start with a free storage cost audit and discover exactly where you're overspending and how to fix it. Don't let logistics eat into your profits. Visit AmazonStoragePros.com. That's AmazonStoragePros.com to get your free storage cost audit and start saving today. And now back to the show. Speaker 2: There was a huge increase of Chinese manufacturers Uh, making requests to their government for subsidies. So when Mark said today that the suppliers were, the supplier was asking somebody cutting a price on their own without even asking, they're cutting the price. Kind of, I'm like, wait a minute. So when the tariff goes up, China is forced to introduce a subsidy to help the manufacturers. Speaker 3: Mm hmm. Speaker 2: So they're pretty much, that's, could it be what Trump was really after, exactly after that subsidy money? Unknown Speaker: Exactly. Speaker 1: I mean, they're all, they're all already getting, they've been getting subsidy money since, Who knows when, like the 90s, the 80s, they've been getting this money forever. They're getting the subsidy money and then all of a sudden, 2012 or 2010 comes along and all the courses on how to sell an FBA explode. All of a sudden, you go in Upwork, there's a million VAs that can source products for you. The factories in China are like, payday time, we're getting subsidies over here and all these private label sellers that have no skills in negotiating, they don't know about supply terms, they don't know anything about anything. They go on the product tools, like you said earlier, I'm like, search your product. Oh, I'm going to sell a spatula. Hey, Mr. Supplier, can I have a spatula? And the guy goes, yeah, sure, it's $2 a unit. You pay him $2 a unit and he's getting a dollar over here. Where it should be, I'm going to pay you a dollar, you get a dollar from over there, and now you got your two dollars. Speaker 4: Yeah. Speaker 2: Exactly. Speaker 3: Yeah. Well, like you said earlier, Mark, you know, first step is just to ask, right? Ask for a discount. Speaker 1: It's amazing. Yeah. I mean, you just ask, you know, and you present it in a way that you are, you know, obviously You're growing. You're building. You want a relationship. You want a long-term. We're in this together. The more I order from you, the more you make. Speaker 2: Correct. Speaker 1: The more better terms I get, 0% today and I'll pay you 90% when it sells, it's better for them. It's good for you. They all have this in their mind anyway. It's just about positioning. Speaker 3: One thing I like to tell people when they're negotiating discounts and a lot of times I'm negotiating discounts with my suppliers because I do wholesale more than private label. But I usually say that if you ask for a price and they give it to you, you didn't go low enough. So always counter with a higher price, otherwise you paid too much. Speaker 1: Does that go back to the whoever says the first number loses? Speaker 4: Yes, exactly. Speaker 3: Yes, exactly. Yeah, they should always come back with a higher number than what you get. So whatever you're looking for, you know, go a little bit lower than that. And, you know, if you get it, you didn't go low enough. Speaker 1: Yeah, very true. Speaker 3: Don't go too crazy, though. Don't try to get a $10 product for a dollar. That might not work, but if you got a $10 product, ask him for six. Speaker 4: Yeah, see, there's a fine technology in negotiation, and you have to know more data than just how much are they selling it to me for. You need to know, you need to look into, I'm assuming, I'm no professional at this myself, but Afolabi, you are. But you need to know what's the price of raw materials, what's the price of shipping, what's the price of all the pieces that make your product because you can track backwards roughly what is costing them and then account for, oh my gosh, they're making 1,000% profit on this. I don't need them to make that much. I want 1,000% profit. And then make an initial lowball offer that doesn't insult them and then go from there. Speaker 1: And also knowing the competitors. If you have an understanding of what all the competitors are and where their prices are, taking into account that, I think you're You're on a good, yeah, a wicket to, you know, just make that negotiated and go your way. Speaker 4: Yeah. Speaker 2: Well, I call it like a, I call it an internal bidding war, which is when I'm sourcing products that I use two or three techniques to, to get to that bottom number. So sometimes like Danan said, I, to escape the MOQ trap, I'm like, okay, I'll buy the raw materials. How about that? You keep it for me. I still don't want to order 5,000 pieces. I only need 500 pieces. So if it's an MOQ issue with your supplier of this cloth or material, I'll buy the raw materials and then you keep it for me, one. And the second thing with what Mark said is by the time you get prices from like 10 different suppliers, you'll be surprised How volatile that price is. The price, how much room, how much difference from supplier A to supplier Z. It's so different in the pricing, which is when it comes to getting the samples to really know you're comparing apples to apples. But the greatest weapon in negotiating prices is really silence. Speaker 4: Same thing with closing and sales. Speaker 2: Yeah. So silence. So somebody, I bring this sales rep to my WeChat or WhatsApp and I'm like, so let's say I really want to pay a dollar or I want to pay $1.50, but they're saying that, you know, they're stopping with $2.50 or $2.25. I'm like, look, I have other suppliers I can buy this from. But anyway, I want to pay $1.50. So they say, Oh no, no, no. I spoke to my boss and you know, he says, no. So I just say, I just keep quiet. I never replied them again. And somebody says, how, for how long am I quiet? I'm like, for as long as it takes. So I keep quiet. I know by day five or day six, they're pinging me. Speaker 4: Yeah. Unknown Speaker: Hello. How are you? No reply. Speaker 2: I let it go on for another week. Speaker 4: Really? Okay. Speaker 2: By the time it gets to like the eighth day, they're already negotiating with themselves. Okay. Okay. Okay. Okay. I spoke to boss. Boss says, you know, a dollar 50. Silence, nothing. Okay, okay. And you see, it's amazing how the supplier starts negotiating himself down to the point like, okay, they say this is our final cost or something like that. I also want them to make money so it's not like, you know, you're beating them up. But I found out to use a combination of all these tools, they really work well. Speaker 1: And also coming back to what you just said, the price fluctuations is also depending on who you're talking to. Are you talking to the factory? Are you talking to the actual factory? Or are you talking to a middleman that's taking a little bit of the spread? Speaker 2: Yes, the trading company. Oh, something I wanted to say when Todd was saying something. So on the trade war, I'm a big believer in US manufacturing, but I had my frustrations because I tried to switch some production to the US and the price was probably five or 10 times or something like that. Just some ridiculous number. And then I met this guy or someone introduced me to this guy. He has like seven or eight factories in the US. He actually told me, he's like, my price is lower than anything you can get from China. I'm like, what are you making again? So he supplies all the big guys like Walmart and Target. He makes private label for all these big Fortune 100 companies. Speaker 1: What's his name? Speaker 2: He has injection molding companies all over the US. He's making spatulas, all those private label products. Brands you see in all these big stores. Speaker 4: Off the lobby, why are you keeping this a secret, buddy? I think you need to build a website for this and start doing PLUS.US, man. Speaker 2: I don't want people to clog this factory before I give them too much work. Yeah, for sure. But he has a lot of capacity and I was so happy because a friend of mine that was making a product in the US, I'm like, Why are you making your product? Tell me, what's the secret? It's like, oh, I got a factory that makes it for me in Texas. I said, Texas. And she... Speaker 4: Mark's already looking it up. Speaker 3: Rock, what factories in the country? Speaker 2: So Todd, I do believe that the trade war I think the tariff, I think it will bring some serious business to US manufacturers that are realistic, especially the ones that do injection molding, the ones that do automated or robotic manufacturing. I think they're going to benefit a lot. They are already benefiting and I think it will continue. Speaker 4: But Avalabi, let me ask you this because this is my understanding. Please correct me if I'm wrong. My understanding is that most US manufacturers are not equipped or set up to be able to handle private label sellers of our size that go, I only need 500 or 1,000 or 2,000. They go, no, no, no, no. You order 500 containers. That's the minimum order quantity on this. And I know you order large quantities, massive quantities. So you're in that upper echelon category, but does knowing this manufacturer exists help us that want to test and create our own product? Speaker 2: Yes. Yes. There are some certain products that definitely could be made in the US. They are being made in the US. Now, these are some of the things that are faced and I hope some manufacturer is hearing this So this week I went to a manufacturer here in Pennsylvania. I was, I wanted to buy some machinery. I could buy it in China, but I'm like, let me, let me go to this manufacturer. They're like an hour drive away from me. Let me just go poking. The moment I entered, I hope they're watching this show because I couldn't say this to their face. The moment I entered into their company, I saw like a lot of people, like a lot of cubicles, a lot of people. I'm like, why do you need all these people to be able to make a piece of machinery? They have different sections. They have people that, and I've been to several machinery making companies in China. They don't have all these kinds of people. And they make 10 times the capacity of what I saw this week. I'm like, I told my wife, I'm like, I can imagine how much this machinery will cost. This will cost a fortune. So I looked at one of them. I said, Hey, if I want this machine, how much is it? It's like $17,500. The same machinery that is less than a thousand bucks in China, you're selling for $17,500. Wow. It's because you have all these people. Speaker 4: Because you're paying 17 people for that one machine. Speaker 2: Exactly. Yeah. And I see so many people idle and talking, they're on their phone. Everybody's just, I'm like, this is one of the reasons why. It's almost impossible to make some products here in the U.S. Speaker 4: because... So, Alphalabi, here's what I'm hearing you say. We've got Musk going in and finding all the waste in the government. You need to do it manufacturing money. Speaker 2: Exactly. Exactly. You see, they need a doge, right? I came into this country, I'm like, I could get rid of 75% of your workforce like this. Speaker 1: Actually, what they need is a US Alibaba. That would be amazing. Speaker 3: Mark, you're 100% right because I've looked at creating a couple of products in the United States. And I've reached out to manufacturers and one thing that is sorely lacking with manufacturers in the US is any kind of. Customer service. Speaker 1: Yeah. Speaker 3: And follow up. They just ghost you. Some of them have just disappeared on me. They stopped replying to emails and stuff. And when they do reply, it's not with very good information. If you're on the phone, it's very nonchalant and not to the point where with Chinese, Manufacturers, I mean, they're on top of it. They're bugging you every day trying to get you to move forward and the US is exactly the opposite. Speaker 4: Yeah. Speaker 1: Well, I would be surprised if these tariffs between Mexico and Canada actually materialize. I mean, I think it's more of a bargaining chip to secure the borders and make sure there's obviously none of the drugs and all the other stuff that's coming through. But I would say like what would be absolutely amazing if there was a marketplace like Alibaba for North America where you could go on and be like, you know, like the guy that you're going to send us after this email about your friend that makes a spatula. Like if you could go in there and be like, I want a spatula. And all of a sudden it's like, you know, Alibaba, like, Oh, someone in Pennsylvania makes spatulas or someone in Colorado makes, you know, little widgets. Speaker 3: Yeah. Speaker 1: That, that would be, you know, a huge win for, you know, us, which, which I would also think would like, All of a sudden give a little more like, you know, gas to the fire where people are like other manufacturers be like, oh, yeah, let's bring our manufacturing into the US because, you know, there's a lot more like people are searching, you know, and more awareness. Speaker 2: Yeah, I think I think a guy, I think a guy is doing that already. He's starting to build it because he saw one of mine. Speaker 4: Yeah, that's right. Speaker 2: He saw one of my podcasts. I think in that podcast I was expressing my frustrations about US manufacturing. Guys, I'm bringing products and projects to you and you can't even reply emails and I told you I'm bringing you 5,000, 10,000 pieces of products to keep you busy monthly and you can't even reply a simple product, a simple email. Also what I found out with what Todd said was US manufacturers are very project-based, like they're very project-oriented, they're not manufacturing-oriented. So there's a difference between the two. Project, you get it done and you're done. And then you move on to another project, which is completely different, right? So that you can make so much money. Because you're going to quote on the project and, you know, make a lot of money and that project is gone. But in manufacturing, there is this whole section of your warehouse that everything they do is they're making hats. Or they're sewing buttons. And it's a very monotonous, repetitive task. It's buttons, buttons, buttons all day. And then you move it to who sews the sleeves. And then you move it to the person that sews or does the finishing, right? That is manufacturing stages. But in the US, It's, they don't have stuff like that. Speaker 4: It's all assembly lines, you mean? Speaker 2: No assembly lines. Speaker 3: Yeah. Speaker 2: Very rare assembly lines. Everything is all fabrication and then they want to build one piece and they want to make a killing on that one piece. So when you show up and you give them, oh, I have an Amazon seller wants to give you 500 units or 5,000 units of this product. One, they don't believe you because they don't know anything about Amazon selling. They're like, how can you sell 5,000 of those? I'm like, don't worry about it. Can you make 5,000 of this product? They're like, we don't believe you. It's impossible. Speaker 3: Yeah, I've had that. Unknown Speaker: It's weird. Speaker 3: Yeah, it's like they don't want to do it because they don't believe you're actually going to pay or something. I don't know. Speaker 2: Exactly. Exactly. And then the mindset is not just there yet. Some people are catching up to it. And, you know, a lot of, you know, robotic manufacturing and stuff like that. I'm starting to catch up to it. On my side, what I'm doing to contribute to this is, which led me to shopping for machines, is because we're producing skincares and cosmetics and all these things that we want to start doing for private label sellers, 100% made in the US, because there's a big hole. If you're selling supplement or if you're selling skincare, You have to like order 10,000, 20,000, you know. It's this niche that we want to kind of help in this little niche of starters. Somebody who wants to only make 250 units, just test the market all the way to making 5, 10, 15,000 a month. Because many of these manufacturers, if you don't make 10,000 units, they don't even want to look at you. Speaker 4: That's if you can get a hold of them and that's if you can find them to get a hold of them. I went searching for a long time for somebody that could make down blankets for me in the US and I searched high and low and I couldn't find anybody and those that I did find, most of them never got back to me and those that did said, nope, sorry, we don't have the right machinery for this, right? And so I used, Al Falabi, you probably know this one, Thomas Nett. They've updated their website but still like, Now, granted, this is just based on my experience, both past and recent, but like 50% of the people in there, you try to go to find out more about them and it goes to a 404 error page. It's like, it's just crap, you know? And I think a lot more, I would love to be a part of a revolution that brings us sellers into US manufacturers. Speaker 2: Yep. I mean, that's the way we could do it. Honestly, if we go robotic, if we go automated in the US, because we don't have a labor. We have people sitting down. I'm from Nigeria. I got into the US and I see people sitting now getting government money without doing anything. I'm like, really? Who pays people to just sit down all day and do nothing? Speaker 4: Those of us that pay our taxes. Speaker 2: Yeah. Get everybody to work. Speaker 1: Let's go. Not for long. Hopefully you have the external service helping you. Speaker 4: Yeah, right. I'm not going to pay my taxes anymore. Speaker 1: The bookkeepers are not going to be happy about this call. They will be like, no. It's like a whole industry that's... Speaker 2: It's time to teach our kids the value of work, the value of, you know, getting stuff done. You know, there's no shame in working. There's no shame in getting, you know, you know, if you have to take a holiday job or summer job at a factory, you know, So be it. You know, but now there's no, even if we have opportunities to create products, there's nobody who wants to do the job. Speaker 4: Production is the basis of morale. You ever seen someone that accomplishes nothing in life, like super happy, like, oh man, I've got so much nothing going on in my life. I love it. You know, I'm just sitting here and doing nothing. Or you have someone producing and that goes to another thing. So production is the basis of morale. And if you want something done, you give it to a busy person. Speaker 2: Yep. I agree. I agree. Speaker 3: We've got a little over 10 minutes here left. I want to make sure we touch on four people who are being affected by the tariff increases and stuff like that. This will be for both Mark and Afolabi. What are you doing to help people with that to try to decrease their tariffs? And why don't we start with Mark and then we'll go to Afolabi. Speaker 1: I mean, the first thing that like what I do for my clients is we want to get a baseline of what our current costs are and what our contribution margin one is. So if you don't know what contribution margin one is, it's your revenue minus your landed costs. So now we know this is our baseline. This is how much, this is our gross profit that we're going to make. And then from there, you know, later on you're factoring your fulfillment costs and your ad spend to get your actual margin. If we have a number and we know this is it today, how do we make this better? Negotiate with suppliers, making sure that we're getting the best rates, best terms, best whatever we can from them. The next situation is logistics. Let's have a look at our freight forwarding. Are we getting the best rates from our freight forwarders? And sadly is I've been with a freight forwarder for 10 years or however long it's been. And I've never, ever got another quote from anybody else. And I've just trusted that this is the best quote. And all of a sudden, you know, we had COVID where all of a sudden container prices went through the roof and freight forwarders are like, Oh, I like this. So it came down a little bit, but not enough. But if you go into multiple freight forwarders and getting quotes, You're going to get the best price. I think a lot of people are like, oh, I know my freight forwarder. He's amazing. But there are a lot of amazing freight forwarders out there, and they all deliver five-star service. And one might be $300 cheaper than the other one or $500. But have five in your Rolodex where that you can go to be like, hey, this is what I want to ship. What can you offer? And get an estimate and get a quote from your top five favorite ones. And then the other one is probably what FLOB is going to touch on is Are your tariffs correct? Are your HS codes matching your material? And can they be better? Can they be engineered to be better in a way? And if you're just going off blind faith that you're straightforward as saying, hey, use HS1105, because I just came up with that number and it was easier to tap on the 7501. Then you're going to end up paying. And then wrapping that all up is make sure that when you are calculating unit costs, that the tariff code that goes to that SKU is calculated and assigned to that SKU correctly so that there might be a seven and a half tariff on one product. But a 25% tariff on another one, don't assign the 25% tariff to the 7.5% tariff. Make sure that your cost thing on the factory and inbound are accurate to a T, and then you can make better pricing decisions. But you can't do that if you're flying blindly. Speaker 2: Correct. Speaker 3: Absolutely. Speaker 2: Correct. In addition to what Mark said, You could design your product to pay zero tariffs from day one. Or you could design it to at least pay very minimal tariffs. So when you're doing your product research, and you, let's say a friend of mine who was selling ceramic came to me and I'm like, so after I did an audit on his product, I'm like, look, Ceramic and porcelain, they look alike. Do you care if you make this product in ceramic or porcelain? He's like, I don't care. I said, you just saved yourself $16,000 by that, by this answer because I didn't want to feed him with anything. I wanted him to, I wanted to know where he was going. So it's like, I don't care. I just want, I said, go tell your, go tell your manufacturer to change to porcelain. Because this product looks exactly, in fact, people call porcelain and ceramics interchangeably, right? Go make it with porcelain. You're going to save yourself a lot of money. Speaker 1: Yeah. Isn't it like a 6% difference between the two? Unknown Speaker: Huge. Speaker 1: It's a huge difference. Speaker 2: And I told him, I said, look, number two, if you sell your porcelain in sets instead of in pieces, you're going to save, probably it's almost duty free. So why don't you have another SKU that is going to be a set of four or a set of two. On that set, you package it together like that and bring it. It's probably duty free. Right. Speaker 3: Why would it be duty free? Speaker 2: Because that's just the way the government said it. In US customs. So there's over 13,000 lines of HCS codes and tariff codes. And you'd be amazed that some products, if they're made from rubber, or made from PVC, there's a huge difference in tariffs. It's the same product. So a large manufacturer reached out to me recently and they moved volume and they heard about me somewhere. I'm like, okay, what do you have? So they import this special product into the US as a component to add into their production. And they were paying, I think they were paying like, uh, who knows, maybe 10% or plus 25%. So while we were digging and digging and digging and doing the research and auditing it, I said, I asked him, I said, I'm curious. Do you know that if you, are you okay by just putting an end cap on this product? It's like, Oh, actually we were thinking about that. You know, I said, does it change anything in this product by just screwing a hand cap? It's like, Nope. I said, so go buy some two cents end cap from China. Make sure the end caps are screwed on both ends of this product and your duty rate just dropped from 11 or 12% to 2%. Same product, but in the duty code, if it has end caps, it's a lower duty. So the first thing to do, like Mark said, is first check if you're even using the right duty code. In my own case, my freight forwarder was using the wrong code. And I paid for years before I realized it. Go find out if you're using the right HCS code one. If you're not, then you have to go to step two. You have to reclassify your product. Get an expert to reclassify the product for you. And if they try to reclassify the product and it's still If your product has huge tariffs on it, then like Mark said, go to tariff engineering. Tariff engineering just means make some tweaks in your product. Instead of using ceramic, start using porcelain. Instead of using PVC, start using wood. Instead of using enamel or PET, You know, plastic, start using another thing that has lower duty rate. Yeah. Speaker 4: And then get yourself a ruling letter. Speaker 2: Yeah. Speaker 1: What do you think about the, like when, um, like the freight forward is aggregate the, you know, like I, I've got a pack list and I have like 15 or 20 products on my pack list, but then I get this, I get my customs and entry bill and I have like five listed and then there's, and, but then when I look at my, my list, There should be a lot more amounts, but put the two together. One tariff might be 16%, but the other product is in there too, but it's also 12%. Speaker 2: What you just said, Mark, is one of the biggest fraud of Cam in the shipping business. So they put a product that has 25% tariffs with the one that has 2% tariffs. They ship them all together in the same container and they declare it as the 2% tariff one. Now, the reason why I say this is scam is one, they're cheating the government. Two, Thank you for watching. Prison sentence offense, right? But it's huge. These people are making a killing just doing that. And then when they get caught, you are the importer of record. The government is coming after you. Speaker 4: Mark and Afolabi, after this call, I'm doing an introduction letter to the both of you. I think you guys are highly complimentary services to each other. Speaker 1: Yeah. I mean, I think it would work. I think, yeah, definitely clients would, they need this information because I always tell my clients, it's like, You have your right brain hat and your left brain hat. Your right brain is all about revenue, driving profit, doing all the fun things in your business and your left brain is all the stuff we've been talking about here. Tariffs, no one wants to spend a Friday talking about tariffs. This is all the stuff that should just be done for the seller and so that they can focus on all the revenue, all the fun things like brands and new products and packaging and marketing. All the stuff that we're talking about today should just be like, all right, you guys do it because I really don't want to deal with finances and margins and tariffs and logistics and all that stuff. Speaker 2: Mark, I have a question for you and maybe Todd and Dana can help me out. I see a trend. Of all the companies that or businesses that come to me for tariff issues, It's almost like when you're talking to an Amazon seller about the impact of fixing your tariff, it's almost like you're pulling teeth. It's like, it's like you have to like slam them in the head to really wake them up. I'm like, hello, do you know how much impact this affects you? But when I'm talking to a non Amazon seller, I say, oh, I'll help you reclassify your product for X amount and everything. They're like, that's too cheap. Speaker 1: Well, that's funny you say that. It's funny you say it because what I hear about all the time, and it's actually getting better. It's getting better, I would say, in the last nine months. We've been doing this since 2019. Before, the question is, my costs are close enough. What does it matter if they are just a little bit off? I always come off the question, because this is one I've just been using now, is I always come up with the 18 cents. If you saw 18 cents on the floor, would you pick it up? Outside like Walmart, you see 18 cents, you're like, I'd probably walk past it. I use this for a client because I had this argument with them and she said, what does it matter? I was like, you know what? I'm going to just do an order for free and I'm going to show you a big difference. She was adamant her cost was like $3.39 on a product. By the time we did it, our average was $3.21. So 18 cents difference, like no big deal. She sold 22,000 units in 12 months. So that's $4,000. It's a $4,000 difference. Now, we went into all the products. We found a $97,000 difference. On average, it was a $0.16 difference over the volume of her sales. She was selling her business. We get a lot of clients that want to sell their business. They want to help one get their inventory right, get the lead times right, the stock values right, all of that stuff. All of a sudden, I said to her, hey, listen, my name is Maria. Here's another $97,000 that you can put on your P&L. Broker comes back and goes like, well, that's another $341,000 on your valuation. Speaker 4: I said to him, it's like 18 cents made you $341,000. All you need is 20% of that because you found it. Speaker 1: Coming back to what you just said, it's like I need to increase my rates. Speaker 2: People that don't sell on Amazon or they don't sell online, they value it. These guys, you know, that I told them to put an end cap on their product. They were like, Oh my God, this is, this is major. But you don't, you talk to Amazon sellers all day long. They're like, yeah, I don't, I don't need that. Speaker 4: Dude, I can't tell you how many people I've told about Tariff Terminator, done introductions and all that stuff and they don't take action. I'm like, you are, If you're not doing it, there's something wrong with how it's being communicated to the people like Mark and Afolabi. You guys have such extraordinarily valuable services. You know what I think it is? Most of the people in our industry don't think it's a problem until it's a problem. Speaker 2: Correct. Speaker 4: Right? And so they're reactive, not proactive. Speaker 1: It's a problem when they want to come to sell their business. Speaker 4: Yeah. Yeah. Speaker 1: All of a sudden, you know, they come to the 2%, they're like, 25%. This is a huge liability. We can't buy your business. Speaker 3: Yeah. Speaker 1: You know, it comes to the cost and this is what we see all the time with due diligence. And interesting enough, I mean, the stat on You know, failed sales is 50 percent, 50 percent of deals fall through for the simple fact that the seller comes in and goes, oh, yeah, these are my costs. A little bit of just a normal looking and be like, well, that doesn't add up. Speaker 4: Yep. Speaker 1: And all of a sudden, the deal falls through. And what happens with the deal falls through is because the mindset goes from I'm selling my business. So they take a little foot off the gas, the deal falls through. And now all of a sudden, you know, they got to rise back up to like, you know, scale back up again. If you're doing all these things from the beginning, one, your supply chain is going to be lean and mean. You're going to be making a lot more money, but sellers are so hyper-focused on revenue, on how can I sell more, but at the same time, you're bleeding profits. Speaker 4: You don't even know it because you're not willing to work. Speaker 1: If you flipped it and you started with, is my product the most profitable it can be? And how do I make it better, even more profitable? Perfect. Then I move to like optimizing my listing, making sure all my reviews are off. My listings are great. My pictures are good. I've got emails happening. Great. Then let's start scaling sales with PPC and influence and whatever thing else. And I'm making as much money as possible. It's a night and day difference in business. Speaker 3: Yeah, I was gonna say a similar mark. I think, you know, most private label sellers are relatively inexperienced when it comes to the supply chain and logistics and tariffs and that stuff. And they're just 100% focused on selling more, selling more, running better ads, creating a better listing. And you come in and you're like, oh, you want to take how much for you to do that? No, I'm going to make money. I'm just going to focus and sell. More product. They don't want to deal with the mundane, boring stuff like logistics and all that. Speaker 4: Yes. And that's where their profit lies. Speaker 3: Yeah. 100%. That's how you build a big, real business is really focusing and cutting those costs. Speaker 1: Well, that's the thing. I think everyone that comes into it You know, has aspirations of building this big business and building a thing that they can quit their job and go in all on in the e-commerce business. But they aren't taking the steps initially to make it a real business. Speaker 3: Yeah. Speaker 1: You know, the more money that you get out, you know, like because I always thought, you know, like I saw a new product, I put $5,000 out. I'm going to start selling, but at some point, I'm going to have to put another $5,000 to get more products, but so now I'm 10 deep. I really haven't got back my original investment until it starts ticking over, but you're failing to think like, okay, I put out $5,000, How much of that $5,000 is going to be profit? And if I expand my initial order and get maybe 3%, 4%, 5%, 6% better profit, my cash flow conversion cycle is shorter. I'm getting more money back on the back end. It's going to shorten that time. It's going to take me to be profitable on that product. Speaker 3: Yep. Speaker 1: 100%. But for like a new seller, they're not really thinking about that. They're just thinking revenue, revenue, revenue. And how much money I'm making, I have no idea. Speaker 4: I keep saying this. We're creating a course, an entry-level course to e-commerce. It's got to be done. Somebody needs to do it. Speaker 1: Yes. Speaker 3: Teach the basics. All right, guys. We're over the top of the hour. This has been a lot of fun. A lot of good information, I think, on logistics, supply chain, tariffs, and stuff like that. I appreciate you guys all coming on. Unknown Speaker: Yeah, it's been great fun. Speaker 1: All right, see you guys. Speaker 3: Have a great one. Bye. Unknown Speaker: This has been another episode of the Amazon Seller School podcast. Thanks for listening, fellow Amazon seller. And always remember, success is yours if you take it. Speaker 3: Hey, if you made it this far in the show, I really hope you enjoyed it and I'd like to ask you a favor. Could you head on over to Apple or Spotify or wherever you're listening to this and leave us a review? It would be greatly appreciated and would help us continue to grow the show and offer more episodes for you. Thank you. God bless and have an awesome day.