Claus Lauter [00:00:00]:
Welcome to the ecommerce Coffee Break podcast. In today's episode, we discuss how to master product sourcing and importing, and we talk about how to choose the right product and why merchants should avoid complicated items. Joining me on the show is Brendan Elias, founder and CEO at atozformula.com. So let's dive right into it.
Voice over [00:00:22]:
This is the e commerce coffee Break, a top rated Shopify growth podcast dedicated to Shopify merchants and business owners looking to grow their online stores. Learn how to survive in the fast changing e commerce world with your host, Claus Lauter, and get marketing advice you can't find on Google. Welcome. Welcome to the show.
Claus Lauter [00:00:48]:
Hello and welcome to another episode of the ecommerce Coffee Break podcast. Today we want to talk about product sourcing, about importing of products. And obviously that's something on the list of every merchant out there, specifically the ones who are just starting or have not even started yet. They, they have the big problem to find the right products and obviously to source the products. With me on the show today, I have Brendan Elias. He's the founder and CEO at atozformula.com. Brandon has been importing products from China since 2001. He has built a seven figure business around this, selling imported products and selling them on eBay, Amazon, working as little as 10 hours per week.
Claus Lauter [00:01:25]:
Despite his legal and economic education, Brendan's entrepreneurial blot proved too strong to ignore. He leveraged his wealth of experience and built several successful business that made billions of dollars by importing high quality merchandise from China and selling at a profit. Brandon now teaches people from all walks of life to realize their dreams of leaving their nine to five rat race to become successful importers and merchants, obviously in their own rights. So let's welcome Brendan to the show. Hi, Brendan. How are you today?
Brendan Elias [00:01:51]:
Hi, Claus. Doing great. Lovely to meet you and thank you for the awesome introduction. I couldn't have said it better myself.
Claus Lauter [00:01:57]:
Great to have you on the show, Brandon. Let's dive right into it. Product sourcing seems easy, but it's not. And obviously, it's the core of every business. If you don't have a product, you don't have a business. And a lot of merchants struggle to come up with a plan to find the right products and then once they have them, to source them, to import them and everything that comes with it. Give me a bit of idea from your experience. Where do people struggle the most with in the beginning?
Brendan Elias [00:02:24]:
The biggest problem most people have, especially beginners, is what product to actually sell. Anyone who's medium enterprise or large enterprise. Well, they're already going concern, right. So their problem more is what to source or how to source it, where to get it from, how to get good quality. So depending on where you're at. So let's say for the beginners, right, then the first thing you got to determine is who your market is. And that will answer the question about where to source it from and what to source. Right.
Brendan Elias [00:02:52]:
So if a lot of people are just doing things on, say, Amazon, then, you know, you've got to run that through either Songuru or your helium ten s and see how much competition there is. So basically we have five kind of principles. The first thing that we will, in terms of sourcing, well, not choosing, forget sourcing, choosing a product is, is it simple and not complicated. So what I mean by that is really what I don't mean by that. So I mean don't do anything that you would ingest initially or anything that, you know, would go on the skin or anything that could have any danger like that. Those are good products but not for beginners because of the regulations and whatnot. And what you got to watch out for is it small and light? So Amazon have standard, you know, we've all seen what an Amazon box looks like. There's usually a small standard size or larger standard size that can fit in that box.
Brendan Elias [00:03:40]:
Is it light, which is, you know, under 20 pounds or ten kilos if we're using the metric versus imperial system. And then once you've got those, then you've just got to take care of the profitability side and the competition side. So if we're talking Amazon in terms of profitability, it's got to be, you don't want to sell anything less than $25, right. Because you want to make some profit and you want to be able to sell it. I used to say four times, but now I say five times than what you bought it for. So it means that if you buy selling stuff at 25, it's got to cost less than $5. Right. So that would be the thing.
Brendan Elias [00:04:17]:
You get it for three or four. Fantastic. If selling for 50, then you can, you know, buy it for $10. Right. So that's in terms of it. So five times what you buy it for is what you sell for. And also it's got to be above $25. So that's it.
Brendan Elias [00:04:30]:
So then you've got the profitability side and then there's just demanded competition. So let's just to recap, is it simple? Is it small and light? Is it profitable? Is it got enough demand or is there not too much competition? So lets talk about demand. So this one everyone has a different formula here and I would say theres no right formula right. But what we do in terms of demand is we look at we rather through Zongur or through helium ten or whatever and we just want to check that when we add up the sellers and the total number of sales that when you add up the average then there's more than 3000 units being sold a month right. If it's 28 2900 it's okay. But if there's only 100 units being sold there's not much, much demand for it. So that's what we say in terms of demand and obviously the higher the price point. So if a product's like, you know instead of something for $25 so like for $200 then you know instead of having 3000 a month you could get away with 1000 2000 units a month because it's still not demand there.
Brendan Elias [00:05:35]:
And the last thing is competition. In terms of competition what I like to do is firstly I type in the keywords and I want to see how many results there are. For me if theres more than 1000 results then its too saturated. The sweet spot would be less than that. But for a product has maybe 2000 results. But all the other metrics check out theres a bit of wiggle room there. So its not gospel, its not black and white. So thats it.
Brendan Elias [00:06:01]:
In terms of the number of search results there's three things. We look at a demand, we look at search results, we look at whether there's any other key competitors and we look at reviews. So in terms of reviews what we like to do is just check out the total number of five star reviews of the top ten sellers and we want to see that there's a gap there. So if you have ten sellers and all ten have 10,000 reviews then it's going to take too long to get traction there. People are not going to buy for you. So we want to self find at least four people in there out of the ten who have less than 50 reviews right. If it's less than that that's good. The less of course the better.
Brendan Elias [00:06:37]:
And in terms of brands you don't want to go into an industry where there's a key competitor who's a brand name. So I would go into mobile phones and go up against Samsung and Apple for example. I would go into writing shoes and try and compete with Nike. So our play is private label. Rather there's money wasted in the cat. You can do arbitrage where you buy low, sell high, but to us it's, you know, we'd stay away from that. So just to recap on the choosing, simple, small, light, enough demand, not too much competition, profitability. Right.
Brendan Elias [00:07:10]:
So that, and that's for Amazon if we're going to Shopify, because you're a lot of shopify people, then you know you're not going to be using Amazon's traffic. So then Amazon analysis isn't going to be as relevant. So then you're going to decide if you're going to sell it through Google Ads or Facebook ads, then you want to really be seeing what the cost is per click of that product and whether you have a cool offer and page and whatnot. And remember you're doing a lot of order bumps and all that sort of thing. So that would be my five minute version on choosing for the beginners.
Claus Lauter [00:07:41]:
I think that was already a master class and a sort of very long list of homework for somebody who really wants to get started. If you don't meet any of these criteria, then move on, try to find another product. 100% agree to everything that you said. From my experience, your spot on your point on there. Now once you have find one or more products that might be suitable to sell them either on Shopify or any other Amazon, any other marketplace, sourcing, importing is the next point. Can be very complicated. How do you go around that? Or how do you get started with that?
Brendan Elias [00:08:15]:
If you go through that checklist and it doesn't check out with all five, then you just don't do it, you know, go off or check out, but you know it's 100 kg. Then you just get bails, right? With sourcing you can source from any country in the world, right? You don't necessarily have to go to China, you can source from Mexico. A lot of my students will be doing that as well. Lately you can even source from the USA. But what you're looking for is usually product that you can private label. So that's you can mass manufacture. So I'll go to China. Alibaba is the well known one, right? You've got HKTDC, you've got global sources.
Brendan Elias [00:08:49]:
People say which one's the best one. There's not really a straight answer for that. There are good people on there. You can source for them and scouts, but you can just get away from, you get away with just doing Alibaba. So you go there, you type in the keyword, understand that some keywords, some products might be called different things in different countries. So, for example, if I look at the product, the most money I ever made of any product was when I was 21, right? And I was importing motorcycles out of China. They were pocket bikes. There were 49 cc engines that were like this big or this big.
Brendan Elias [00:09:18]:
An adult would ride on them. They would go at, you know, 20, 30 km an hour, whatever that to be dangerous. I used to sell them for 400 and buy them for 80. For a motorcycle, we see a container with 330 in them. And that was very, very, very profitable, right? So that was a really cool product. But I couldnt find them initially until I looked at the other names. It was called a monkey bike. So when I looked at funky bikes instead of pocket bikes, then I found, like, way more people offering it.
Brendan Elias [00:09:43]:
So just be aware that it might have another word. Like, just a funny example I talk about is that when one of my suppliers came to Australia from America, because I was selling from America, I said, let's go to the beach. And he's like, cool. I said, hey, I've got a collection of thongs in my place. You could pick whichever of my thongs you like and we can wear them to the beach. He looked at me like I had two heads. Of course, in America they wear flip flops to the beach and a thong is a g string. Whereas in Australia they call thongs, in New Zealand they're called jandals.
Brendan Elias [00:10:16]:
Don't ask me why. So they're important to know those cultural differences, especially around the words. I don't know what you call them. You know, in Germany, what. What the words are. Maybe it's just sandals.
Claus Lauter [00:10:25]:
Sandals, flip flops. Yeah.
Brendan Elias [00:10:27]:
So then we type it in and then we have the template, which is how to actually approach the factory, where we ask about 20 questions which are designed to make sure that you weed out the scammers. Because I understand that there are a lot of people, especially sitting in Nigeria and Lagos, who are pretending to be factory. So we send those out. They're designed to make sure that no one is cheating you, but also to make it position you as an expert. And what that does, it helps the factory to give you a good quality price. So a good quality product at a good price. So we'll send that out to 20 factories, let's say half a reply. And then out of those ten, let's say, you know, we're selling a product.
Brendan Elias [00:11:07]:
Let's just say, for example, I'm drinking my coffee from a ceramic cup, right? So let's say that, you know, hypothetically, you would sell this ceramic cup for whatever it is. I know we said $25, but for this example, let's say ten. Yeah. Then you'd want to buy it for $2 because it's a five x thing. So you have ten factories. One's at others at $1.20, the other is $1.80, 192. So how do you pick? Well, we take the top 20. So we average.
Brendan Elias [00:11:39]:
Add them all together. Average. If we find the average, right, we want to take out the top 20%, the one thats a dollar, 81, 90. Cut those out because we want to make profit. But also the ones that are less than $0.50, we also cut them out. And people are like, hang on. We want to make profit. The thing is, if its too good to be true, that theres usually a reason for it.
Brendan Elias [00:11:58]:
And that's where the scammers lie. Right. Also, sometimes that can be stock. That is, you can buy in a job lot, but they're discontinued. So if you have a going concern where you have customers who are going to buy more and more and come back and buy more, then you can't get that same stock again. So why do you want to do that? Because you're trying to build a business here, not just make a one off payment, one off cash flow injection. So that's it. So we take the top 20%.
Brendan Elias [00:12:22]:
But then what I like to do is out of those, I pick the three that communicate to the best. When I say the best, it's usually the fastest, right. That they come back faster. And you want to avoid trading companies if you can't deal directly with the factory, so there's no extra margin. And then out of the ones, I'll pick the three that's the best communicators. And I'll get a sample from them. And the sample might be dollar two, but the shipping might be 50. So I'll pay dollar 52.
Brendan Elias [00:12:50]:
The factory. This is where people come unglued, beginners especially, because, oh, I don't want to pay money unless I know it's going to work. Well, you have to have a little bit of risk money. So I'll pay $52 times three to three factories, $154. I'll ship them and I'll put them side by side. And whichever one I feel the most comfortable with, that's the one I'm going to order. So then I place the order with the factory. Now, the goal here is not to get the best price.
Brendan Elias [00:13:15]:
The goal is to get the lowest moq, which is minimal order quantity. So if I want factory charging me, lets say a dollar, but I have to order 50,000 cups, ceramic cups. Or I have another factory charging me $1.20, but they let me order 500. Then I will get the one that lets me do 500, because then ill pay dollar 600 versus $10,000 or whatever, so that I can keep my cash flow. Your goal is not profitability, its just to prove the concept. So whatever you can do to conserve your cash. Sometimes the factory will say, no, we need to do this order of this amount. In that case I say, look, you're charging me a dollar.
Brendan Elias [00:13:51]:
What if I pay you $1.20 for less? Will you let me do it? And often they'll say yes. Also, one thing I forgot. You can get the samples for free. People get hung up on that. If you say, when I place my water, can I get my dollar 52 back against the order. And I've never seen a no to that question. So you get a free sample, but it depends on your placing an order. Now the next step is you pay 30%.
Brendan Elias [00:14:11]:
So let's just take the example of $1.20 times 500 cups. That's like. Let's do a bit more. Let's say it's 1000 cups at $1.20, right? Then we'll say what most people do is the factory will say, here's an invoice for $1,200, please pay it. And then you pay it. And then the goods never come. The reason why is that you lose your leverage. So you need to pay 30% upfront.
Brendan Elias [00:14:35]:
So it'd be 30% of 1203 hundred, $60. That gets the job started. And then 30 days later the goods are ready. And then you pay the balance. Once the goods are ready, don't pay it all upfront. I like to give a story about the clever bank robber and the stupid bank robber. So the stupid bank robber goes in, robs the bank, gets all the money, million dollars in cash. And then the police.
Brendan Elias [00:14:56]:
And he's got ten hostages. And the police say, what are your demands? And he says, well, I want a limousine to the airport. And then I want to fly to Argentina, to Buenos Aires, right? So I can hang out with Claus. Not that you would associate with these kinds of people. So then, okay, what happens next? So the police say, okay, cool. You tend out, send out the ten hostages, right? You got your million dollars. Now you tell me, if you were the police and the robber released the ten hostages, what would you do next?
Claus Lauter [00:15:22]:
Well, go for them directly. I mean, it's like the police.
Brendan Elias [00:15:26]:
But. So that's why you only release three hostages, right? The two women and the child. And now you've got seven men in there. Then you get in the limousine, you drive to the. So the clever robber will release three holsters, go to the airport, in the limousine, get to the airport, and then as these planes taking off, you gently push them down the escape slide and fly to Buenos Aires to have some argentinean beefsteak with you and some Malbec. All right, so that's how they do it. Now, why the hell am I talking about back robbery when we're talking about sourcing? Well, the same thing. You three hostages is 30%, 770%, right? So you wait till the goods are ready and you pay the 70%.
Brendan Elias [00:16:03]:
But what I like to do is to just do an inspection, which costs two, $300 to make sure the goods are actually existing and that they're good quality, then it's safe to pay. So that's essentially. So it's step one. Use my proven template. I'm not sure how it works, but if you want, I'm happy in your show notes to give a link to the template. People can download for free. I usually charge my students for that. If that's something you want me to do, have to do that.
Brendan Elias [00:16:25]:
You guys can just copy and paste that, just put your own details in. And then once they do that, then you place your order, do your inspection, you pay your balance. That's essentially, that's a summary of it.
Claus Lauter [00:16:36]:
Hey, Claus, here. Just a quick one. If you like the content of this episode, subscribe to the weekly newsletter at newsletter dot e commercecoffeebreak.com. I score and create 50 news sources so you don't have to, saving your hours of research, grow your revenue with e commerce news, marketing strategies, tools, podcast, interviews, and more, all in a quick three minute read. So head over to newsletter dot e commerce coffeebreak.com to subscribe as said, 100% free. Also, you will find the link in the show notes. And now back to the show. Yeah, I think you giving the farmer away.
Claus Lauter [00:17:06]:
You're giving so much experience out there, and I think that's, that's where it comes from. You're doing this for a very long time, and I have been partly on the same experience past what you did. So I can vouch for what you're saying is 100% right now with your experience. It shows already. If you're coming as a beginner, as newbie to this game, there are so many potential issues that you can run into and lose money and lose your motivation. And what I liked a lot that you said, proof of concept, I think that that's always very, very important. But also having people on your side who have been through this and can help you with the experience that you don't pay money for, mistakes that you don't necessarily need to make. Now, with a to Z formula, you're helping with this.
Claus Lauter [00:17:51]:
Give me a bit of an idea where you help people with and what you offer.
Brendan Elias [00:17:55]:
Here's essentially how I got into it. My dad was born in 1935 in Singapore. When he was seven years old, 1942, world War Two broke out, and he was in Singapore, and he was taken and put in a Changi internment camp, Changi prison, which is now the airport. And he had to learn how to survive. So he had a beautiful singing voice, and he sang to the soldiers, the samurais, and he would get the cigarette. He would swap that for oranges, and hed swap that for sardines. Hed be the king of the camp for a day, the next day to do it again. So he learned four or five different chinese languages, right? And when he came to Australia, my home country, which you can probably tell from my accent, he was able to speak Chinese.
Brendan Elias [00:18:36]:
So he had the first fax machine in Australia. He would send the fax to China. I remember as an eight year old boy, I used to go to dads office and I got to send the fax and press the button, and then it would go. And like 20 minutes later, a single page of information went through. Amazing technology. So for the time. So dad would send it that, and then the goods would come. And back then it was a captive market because there's no Internet, right? So dad would make a lot of money, and my mom and dad actually brought donkey Kong to Australia in the eighties.
Brendan Elias [00:19:05]:
So that was them. So I grew up in this environment. They wanted me to be a lawyer. I became a lawyer. I wasn't a good lawyer. I just didn't like it. Actually, I'm diagnosed with ADHD. At the time, I only found out three years ago.
Brendan Elias [00:19:17]:
I had it. How I completed my degree, I don't actually know. But anyway, the fact is I started making a lot of money online. 2009, we started teaching how to do it. So we're actually the longest running e commerce education company on the planet. No one's done it longer than I. And we're around because we care about the students and we want to make sure that we get a great result. Sometimes we have to tell them stuff they don't like.
Brendan Elias [00:19:36]:
To hear, but that gets the results. So we've doing that for, what, close to a decade and a half. And the way that we help people is we have a two day event, which we run every couple of months. And if you're watching this now, there'll probably be a link to the next event. It's free to attend. Well, actually, $5,000 to attend. But if you come through a trusted partner like Claus, then we give you one free ticket so you can come to that. And the only condition is that you.
Brendan Elias [00:20:04]:
You block out your weekend and you give full focus, and you bring the energy up of the people. Right? So we're giving you a free ticket. You have to add energy to it, not suck energy. And that just means asking questions, listening, taking notes, not disappearing and onto your Facebook or, you know, going out for. To go bowling. And then, um, yeah, and then we just show you exactly how to do it yourself from scratch. And then, you know, some people want to use our office on the ground in China for us to just source for them. Um, or to have a coach who, for every week for a whole year, will get on a zoom for half an hour and guide you through it, like I'm doing now, but specifically to your case.
Brendan Elias [00:20:36]:
And some people want us to build their shopify stores or to do the inspections for them, for their product, or to design their packaging and everything. So just using everything I do myself, my own products, I created systems for myself, and then people found that valuable. So about two or three years into 2011, 2012, people said, please don't teach me how to do this. Just do it for me. So we cover both people.
Claus Lauter [00:21:01]:
Both.
Brendan Elias [00:21:01]:
Both have a lot of time on their hands. They want to do this themselves. We say, go for it. And some are like, they don't have much time. They just want something to do for them. And then others have the time, but they're scared and they don't want to screw up. So, you know, that. That's how it works.
Brendan Elias [00:21:13]:
Throughout two day weekend event. It starts early from, like, you know, nine to five on a Saturday and a Sunday. But I have eight guest speakers, friends of mine help me in the business who come and share information. So it's pretty cool. A lot of fun. I love. We love that event. It's.
Brendan Elias [00:21:29]:
I call it infotainment, because people don't just learn. If you just talk at them, you got to tell stories. So by the end, people are enjoying themselves. They're laughing. There's, like, a little bit of a get together at night called wine and cheese, where people can ask direct questions to coaches and get them answered. And we cover everything, all the latest stuff, AI, all that stuff's covered. So it's a lot of fun. And yeah, everyone who is here, if you're listening to this, then you've got a free ticket to attend.
Claus Lauter [00:21:53]:
It sounds like fun. But more importantly, I think it's important to have someone who is in the grind every day, who went through the learning curve and is on top and actually communicates information that is real and actual. A lot of things that you find on the interwebs are outdated, stuff that worked maybe two or three years ago, and if you follow that, then you might have a problem. And also, what I like is the community aspect to it. You meet probably with other people who have the same plans or on the same track as you, and that always gives a lot of synergy in there. Before we come to the end of the coffee break today, what is one final thought that you want to leave our listeners with?
Brendan Elias [00:22:33]:
Don't be afraid. Be prepared and be accepted that your first product may screw up totally. You might bring a product and, you know, whatever happens, your calculations are off or just a bit of bad luck. And it didn't make money. And that's okay because you got to look at this as a learning process. They're my first product didn't make money. So just be fair. It might be your second and third, but as long as you go through and when something happens that isn't to your liking, you analyze why and you fix that the next time around you'll get better.
Brendan Elias [00:22:59]:
I mean, it's like a half life, you know? If you do ten, yeah, there are ten things to do it correctly and you do six correctly and four, you screw up. Then the next time you do it, then you'll make eight correctly and scrub two, and the next time you do it, you'll do nine correctly and screw up one. Right? So just understand that. So be forgiving on yourself and be kind to yourself and just paint your back. Most people don't do this. Most people will work nine or five. They'll work for their boss, make their boss rich. The fact that you get your balls and you put on the line and you do that is a credit to you.
Brendan Elias [00:23:27]:
So I said, anyone who tries that and puts this a little bit of risk of a few thousand dollars, that's going to start changing your brain to become an entrepreneur and not a salaried worker. And they're the type of people we like to help every day of the week and twice on Sundays.
Claus Lauter [00:23:41]:
Brendan, thanks so much. That was a masterclass on sourcing, so there's so much content in there. I think our listeners need to listen twice to this episode, at least to get all of out of it. And I'd like to thank you for that, and I hope to talk to you soon. Again, thanks so much.
Brendan Elias [00:23:55]:
Dylan Dankusto.
Claus Lauter [00:24:00]:
Hey Claus here. Thanks for joining me on another episode of the ecommerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast, simply like comment and subscribe in the app you're using to listen to the podcast, and even better if you could leave a rating. Thanks again, and I catch you in the next episode. Have a good one.