“There’s a few reasons why this is a bad idea,” He says. “How do you know you’re getting the best possible pricing if you’re only contacting three to five different manufacturers? If you contact five manufacturers, honestly, half of ’em won’t even reply to you because they’re so busy or they missed your email.
So now you’re only dealing with two manufacturers and you just don’t have enough options to actually choose from. I tell my students to literally contact forty, fifty, sixty suppliers.”
“That way,” he goes on to say, “when they reply back to you, you will actually learn more about the product itself, you’ll learn more about the manufacturers themselves, and more importantly you will actually get to see on a scale, what’s cheap, what’s middle, and what’s expensive.
And what I mean by that is, once you contact so many manufacturers, they start giving you quotes, it’s very obvious to see who’s actually giving you the best price, who’s kind of in the middle, and who’s just gouging you.”
The second mistake that’s often made is dealing with a trading company rather than the product manufacturer. A trading company is basically just a middle-man who’s gonna take their cut of the deal, which will impact your profit margins. You’ll make more money by dealing directly with the product manufacturer.
So, how do you know if Alibaba is pointing you to the manufacturer or the middleman?
One good way is to look closely at their pictures. Do you see any industrial equipment or heavy tools. If you don’t, then you might want to keep looking. If all you see is a couple cubicles or stock photos of people taking phone calls, then you’ll be leaving money on the table.
That isn’t to say that traders don’t have their advantages. It’s wonderful because they usually have reduced minimum bid sizes. In general, their communication is superior. Even so, you should fight for every bit of possible profit in the early stages of your Amazon FBA business.
The third trap is failing to understand how the item is manufactured. Tom comprehends what is being said. Perhaps you don’t mind. You’re only looking for a quick buck. However, he believes that knowing the specifics is crucial because it may reveal a marketing advantage.
3 questions to ask are:
- What kind of materials do they use?
- Do they make an overall better product?
- Will it improve the longevity of the product?
- Will it weigh more (this will affect shipping costs)?
After you’ve figured all this out, then you will have something to bargain with and they won’t be in a position to take advantage of you. When it’s all said and done, doing your homework on a product will end up making you more money in the long run.
“So that’s the three sourcing mistakes that I see people making all the time on their Amazon FBA business,” Tom says. “If you’re interested in learning more about Amazon FBA, I do have a course called FBA Masterclass you can check out.
Or just subscribe to my YouTube channel if you wanna know if Amazon FBA is a viable business option for you or not.”
Tom made a 7 figure fortune when he sold his first FBA brand, Sdara Skincare. He’s currently working on doing it again.