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Struggles and Problems with Amazon FBA Supply Chain in 2021

by Tomer

April 30, 2021

Supply Chains Problems

Supply Chain

Tomer [00:00:00] So today we are here with a new guest he’s an expert in the field of supply chain, quality control and supplier relationships, is currently the director of business development at Noviland.

So everyone, buckle up as we listen to the experience of our guests and the knowledge that they can share with us, Francois Jaffres. Did I pronounce it well? 

Francois [00:00:27] Jaffrey or a Jafferson? Depends where you are if 

Tomer [00:00:33] Tu parle le fracios? Good, your name, like really french sounds to me.

Francois [00:00:39] Very French, yeah, it’s,  it’s actually my grandfather’s name and I’m a first generation American, and so my dad’s side of the family, they’re all from France. 

Tomer [00:00:46] OK, got you. I do have family and friends too. So you know why for those that you know, first of all, welcome to the channel and being a guest here. Thank you.

And for the viewers that don’t really know about you, maybe you can share a little more about your background and what are you working on currently? 

Francois [00:01:04] Yeah, yeah, definitely. So it’s actually exciting that the way that I arrived even here at Noviland, and how Noviland came to be, but my background is in industrial engineering, that’s what I graduated with. That’s what I have a degree in.

And a lot of that is just process building. Of course, we had to focus in supply chain and manufacturing and understanding a lot of the technical details. But a lot of what you learn in school is not the reality, right? You can’t translate.

I would say 80 percent of actually what I learned can’t be translated over to the real world when it comes to supplier relationships, when it comes to communications with them, when it comes to developing a product from scratch, as an entrepreneur.

A lot of times I’ll teach you, oh, you know, you have a product designer, you have an engineer that does this. You have a mechanical engineer that you test these different limits.

And it’s very complex and it makes sense because that is more of the traditional way, I guess, for larger businesses to go.

But now we’re seeing this huge rise with Amazon sellers. Right? And so it puts us in a very weird time.

But I’m going to go down that rabbit hole in a little bit, just, I guess, back up a little bit.

I joined the New Zealand team as part of the founding team about a little bit over five years ago. And I was just an intern at the time and the dream was really just to where the vision was, just to make supply chain and cross-border commerce simple and streamlined.

That was the goal because the last thing I did something like that was Alibaba. And they were tremendously successful, obviously. Great marketplace, great platform. Of course, just like everything else, there’s nothing that doesn’t come with flaws, right?

And there are problems that come up when it comes to finding investing and communications and after-sales support, and they have some great tools and features like Alpay that, you know, empower trade assurance, I think it’s called, that empowers you to sort of have safer transactions.

But still, there’s nothing that’s ever guaranteed or hundred percent just like in life. Right. So we came up with this idea to sort of create a platform that simplifies and streamlines the entire supply chain from the initial sourcing and requesting quotes through gathering samples and consolidating them through getting real time updates when it comes to logistics and logistics pricing to wherever that destination may be and combining all this in a very easy to use platform, a very digestible.

And so, yeah, the platform was launched in 2018, and I’m not going to make this a sales pitch if you want to check it out. They could check it out. That’s a little bit of what got me into supply chain.

And I have the privilege of personally working with tons of Amazon sellers, and now I’ve spoken with thousands of businesses about their needs, about their problems, and finding new solutions to them. So that’s really what you can’t learn in college, and it’s something that I love personally. 

Tomer [00:04:04] That’s very cool, and thank you for sharing this with us. I know that you part of what you guys do is a big part of the supply chain, but what are the supply chain issues that you guys and everyone else are facing right now? 

Francois [00:04:20] Yeah, I mean, I think covid really exposed a lot of holes in businesses, supply chains, in particular e-commerce businesses that tend to rely on more of this lean manufacturing and just in time manufacturing, right?

This is a lot of people don’t realize they’re even going with this GITTE process, as some call it.

But it’s something that Toyota actually came up with. And it’s more of, hey, let’s produce the items as we need them and not keep as large of a stock or inventory, so you have less overhead, you have more capital to reinvest in your products, but it relies on every step of the supply chain working.

And so what covid showed us was that, you know, if, let’s say consumers are locked down, they can’t spend, right? The manufacturer/ manufacturers or brand owners are not going to be placing orders to their factories. If factories are not producing, then there’s no reason for shipping carriers to have any sort of, you know, commerce back and forth and any sort of shipping.

When there’s a lack of shipping, there’s a lack of commerce. So it’s a never ending cycle of, you know, no one wants to buy anything.

So no one’s going to make anything. If no one makes anything, no one’s going to ship anything.

And so it’s almost like a flywheel. It’s very much actually a flywheel, this traditional Amazon flyway that everyone talks about, very similar in supply chain.

And so right now, for example, what we’re facing are huge raises in raw material costs. And we’re seeing this across the board, whether it’s paper, plastic, metal, no matter what the product is you’re going to see, yeah, and it’s you know, I’ve spoken with a lot of businesses and they’re going to fight to get the best price because that’s what they do.

You’re not doing it right if you’re not fighting for the best price.

But one thing you have to realize also is that comes with quality. Right? And so and it comes with relationships. And a lot of times you’ll get a better rate even if, you know, let’s say the rise in raw materials was 20 percent or 30 percent, they might not pass along the same conversion or multiplier that they typically would in products.

So it might be a two to three multiplier from the raw material to the finished product, or that’s just an example, but. They may instead say, well, look, you know, you’ve been ordering a lot from us, you’ve been growing with us, you trust us and we trust you, that you’re going to continue doing business with us.

So we’re going to start you off with, let’s say, a 15, 20 percent increase on your product. Naturally, you’re going to come back and say, hey, I want something a little bit lower. It’s a big hit. And so you might come down to 12 percent. But that’s all done through relationships. 

Tomer [00:07:02] You absorb them just like as well. 

Francois [00:07:04] Yeah, right. Right. And so they keep you competitive. And it’s also something that, again, your competitors are going to be seeing these rising costs.

It’s just like when we encounter the trade war back in 2018 , it’s kind of all up in the air and everyone immediately starts thinking, well, let’s go to Vietnam or let’s go to India or let’s go to Mexico. And that’s the immediate thought, right? It’s not.

Well, let’s work out this issue with our supplier and let’s figure out how we can solve this together. And this is a huge issue. I see typically not just in medium to large size businesses, but particularly with entrepreneurs that are handling a lot of this themselves, and in particular that they are doing this for the first time.

And all they’re relying on is YouTube and courses. And that’s where they’re getting their business experience from. Yeah, I mean, I know I heard a few of your episodes, and I know that you started off back in the day sort of sourcing yourself, right? 

Tomer [00:08:04] Yeah. So I sourced myself. I did use some sourcing agents, but they think that they tweaked my system, my processes to a level that kind of give me the same results as a sourcing agent by me showing the suppliers I negotiate with.

They know whether the real prices of the items, you know, so they can they feel they can like, you know, give me prices from nowhere. So I think a key of negotiating is knowing, OK, what is the bottom line price that they can offer it to you? Obviously, you want the suppliers and factories to make money. You want them to be happy as well.

You can just cut them to a point that they don’t really make any money. But, you know, once you know the real price of an item, you know how much you can stretch and kind of negotiate with them. So that works for me very well.

But right now, like when you mentioned that the prices of raw materials are going up like crazy, I see it with my items as well. One supplier that we buy from a lot actually increase the price, like double the price of the item, like four and a half dollars, he wants like nine dollars.

So then, look, I can’t I just can’t, like, sell it. I would have to just this item go if this will be the prices. So I might talk to you maybe up later about this specific item. But definitely for me, you know, it’s all about what you’re looking, like, I think.

And you should always test and try, you know, I tried sourcing agents. I tried doing it myself. I think it depends on many factors like whether you should do it yourself or with sourcing agent or a company that help you in. You know, obviously, there are a lot of a pros when dealing with a company that that’s what they do.

You know, they have all the experience on how to negotiate that to get the best payment terms, all these connections and networking that they have in China. So this is something big, I think, you know, if you decide to do it yourself or not, but definitely to try it like that yourself or outsource.

But thank you for sharing the challenges that you guys have, knowing all these challenges with the prices and prices afraid, the logistics, and how competitive it is right now.

What do you think sellers should do to be more prepared than like 2021 and especially for Q4 ahead of time? So not really last minute they realized that, OK, there is not enough containers or the freight costs X and they have no choice and shipping it air shipping or like kind of.

What do you think are the steps that center should take to be more prepared? 

Francois [00:10:52] I think it’s an answer. First of all, it’s an answer that I haven’t said anywhere else.

But and it’s an answer I think a lot of people are going to hate because they’re going to think that they already do enough.

But I think it’s do more preparation when it comes to supply chain. I think it’s learning and not just learning that, you know, that ever given was stuck in the Suez Canal and looking at the meems and but also realizing “hey, this affects twelve percent of all global trade that goes through the Suez Canal. How is that going to affect me?”

You know, how are these containers that are stuck right now in the canal going to affect the global container shortage?

And how is that going to affect pricing? So now how do I need to factor that into my business? Now I might need to think, well, you know, there’s a lack of containers, typically, I do have a container load at a time.

I know that prices are going to go up because the vessels are stuck, because there is that lack of containers, because the shipping carriers are going to see this as an opportunity to surge in some of the pricing.

So maybe I’ll get ahead of the curve and I’ll order a full container load and this will hold me over for the next eight months instead of a traditional three to four months. So it’s a lot more planning, I think that could be done when it comes to forecasting and being well prepared in supply chain.

It’s it’s very.

To a lot of people, it’s very boring and it’s very unsexy, right? It’s not P.C., it’s not marketing, it’s not product research, it’s not what a lot of people talk about, but it is one of the most important and vital aspects to your business.

Without the supply chain, without a steady supply chain, you’re nothing. I mean, unless you are producing the products yourself, without a steady supply chain and a great relationship with your factory and knowing what logistics are, knowing what real prices, just like you were talking about are, you’re nothing, you’re at your complete business is stacked on top of, you know, very loose cards or it’s a house of cards, I guess, as they call them.

And so it’s just being it’s just waiting to be crumbled. And it could be crumbled by one aspect. It could be crumbled by lack of containers, could be crumbled by raw materials prices going up.

And now you’re considering potentially not selling this product anymore. Could be your hero product, right? This could be the product that you’ve been selling for the past 10 years.

And you’ve always been able to rely on this, but without knowing, hey, you know how to read the Baltic index and how to track my raw materials and what goes into my product, it can all crumble and it could go to nothing.

So it’s important to do your research and do your homework and follow supply chain, sign up to the newsletters, not just to all the, you know, the Amazon leaders, but also to the supply chain leaders and, you know, looking on LinkedIn, connecting with them, reaching out to them, finding out what different prices are and what’s going on with the price coming up, not just, hey, I need 10 percent lower, it’s how can I achieve that 10 percent lower given the current circumstances of the market.

So it’s something I think a lot of people are going to hate because they already do a lot. And that’s your job as an entrepreneur and as a business owner to do. But Supply-Chain is vital. So I would say that is my suggestion. 

Tomer [00:14:08] Yeah. Yeah. You mentioned people who could age you for that answer, but I think there is that’s that’s great that you share and you’re honest and you keep it like, you know, like real with people what they actually need to focus on. I, I can agree with you more on that.

I think that’s really an area. And I only realized that like this,  like maybe a year ago, I realized that I don’t put enough emphasis on this, and by me focusing more on supply chain and inventory, whether that’s with my team or, you know, by myself, it could save me a lot of money and not just could save, it could lead to a great growth without really, like launching more products and stuff, just if you’re like, prepared enough.

And in my opinion, there is nothing more annoying than maybe getting out of stock or maybe you have delays knowing that you could be more prepared.

So, you know, there is always more to do. And I think even to myself, you know, it’s sometimes, it’s on my list, but they, you know, to check something related to inventory Supply-Chain, but they just move it to the next day sometimes, but it’s something that is super important, in my opinion. 

Francois [00:15:21] Oh, yeah. Knowing the behind the scenes stuff, like what cargo ready dates are and when booking average booking times are, you know, if traditionally when everything is good and all the markets are perfect.

Let’s say three years ago everything was dandelions and roses and everything was great. You’re ordering from your suppliers. You get it done within twenty days and you know, they can book the container within a week or so.

And so if you just continue running your supply chain this way, you try to do that today. I mean, you’re looking at about a three week lead time to book a container to actually load your products.

And you’re seeing an increase in rolling rolled cargo, which a lot of people don’t even know what road cargo is. All they hear from their factory is, oh, we missed the boat. What does that mean? You didn’t just missed the boat. It means, you know, you probably paid very low cost when it comes to freight forwarding or for that container spot.

Let’s say you paid four thousand dollars for that container spot. Well, someone just beat you with forty two hundred and they were willing to pay the two hundred dollars extra.

So now you’re going to have to wait another week. Why? Because you went with the cheapest price.

Well, now I’m encountering all these last minute fees or charges. Well behind the scenes there’s actually sort your charges, there’s demurrage, there’s truck yard fees, there’s a truck waiting fees. If, for example, their driver has to wait at the three PL. for more than two hours, typically they’ll start charging about 50 to 100 dollars an hour while Florida is going to charge you for that.

But they might not have told you. And, hey, it’s not their job necessarily to tell you. Most of the time. It’s they just expect you to know.

So that’s why it’s so important to understand what all of these different processes are. Behind the scenes are about supply chain. 

Tomer [00:17:00] Yeah, for sure. Something that you mentioned, knowing how things work. So when I started, I didn’t really understand how things worked as far as logistics that much.

But by the time I you know, because I was always really on the borderline of me getting out of stock or investing in stocks. I was trying always to tweak it, so I can, with the same resources, get better results.

And I was having a meeting with my friends were there just so I can understand how things work. She told me, Tomer, look, when you actually tell us to pick up something business from the supplier, it doesn’t give the same day, but it was under the impression they pick it up and they put it on the boat and it goes, and obviously it doesn’t work like that.

So I figure out why her ,OK, so for our regular sea shipping, the loading, the container loading is like on Wednesday and for the mudstone for the past Saturday.

So by me knowing when are the dates, I can coordinate with the factories that make the items that if they tell me, oh, it’s going to be ready Tuesday, then I know it’s not enough time for the regular shipping, so I will tell them “Can you try to make it ready for Monday morning pick up?” Then they have enough time to load the container and make sure that it’s ready for this Wednesday.

So knowing all these things can help you with the supply chain, like 100 percent agree with that. 

Francois [00:18:27] Hey, that was done through relationships. That was done by you talking to your freight forwarder and not just looking for someone different right? That’s the amazing part about it. 

Tomer [00:18:36] Yeah. Yeah, for sure. Like relation, and here’s the surprise, when you ask them that they will give all the information they want to help.

And I think that by you understand all the details, you just create better workflow with the supplier or with the, you know, with anyone.

And I think we talked about this the other day, me, you, and Lisa, by, you know, me wanted to go to China, just so we can create better relationships, but I did like a pay a translator to go to a factory so we can have a meeting and then it’s like the same of me being there.

So that’s part of how you build relationship. And I want to talk with you about this, but this will be my next question.

But you mentioned something about that, not something, but about the threats, Canal, this vessel that was stuck there. Could you share?

So people don’t know about it, I did make a video like a couple of days ago with the Amazon FBA News. And I did explain about this why it’s so important, the canal, it’s basically saved them a round trip around Africa from Asia.

It doesn’t really affect the US dollars a lot. It’s more for Europe, but it’s going to affect this long term, I think, with, you know, delays and container, but want to hear from you, what are those effect, is it still there? It’s stock? What is the situation like? 

Francois [00:20:00] Yeah, no, it’s been freed.

But what this is going back to the knock-on effects, so this was stock. Now, all the vessels that were expecting to go through the Suez Canal that were right behind, and these are hundreds of vessels that are carrying thousands of containers, right?

Tens of thousands of containers and some of it being cargo that are perishable, right? Food and different types of drinks that they’re importing.

So now all the perishable items, they may be impacted by it. The cost within Europe might be impacted by it.

But then, once that I believe it is called ever given what was cleared, then they had to inspect it, then they had to transport it, go get the containers unloaded from there, all the all the vessels that were waiting behind it.

Now, they also are waiting in line to get unloaded. And so it’s creating a backlog, continuous backlog, right? And then let’s start tracking this back from Europe to Asia.

Now, all the vessels that were expecting to leave from China to go to Europe and this this situation happened and they realized, well, “Hey, it’s going to our boats are going to be docked, the shipping carriers are taking this. Our boats are going to be docked. We’re going to have to pay thousands of dollars in fuel every day that they’re docked and just waiting to get to the port or waiting in this in this huge queue.

So we’re not going to ship these out.” Now, that’s causing congestion in China now, causing congestion in China at the ports means that the containers that were supposed to be loaded, let’s say those ports are going to the US are going anywhere else.

Now, those containers are stuck at those ports because the vessels are stuck and because those containers are stuck.

Now factories are backlogged with items in there where I mean, it’s a never-ending chain and this is why they call it a supply chain.

And as you go upstream, it gets worse and worse. And so they have to pick that flywheel back up and they have to say, OK, let’s fix this. It’s going to be very expensive. Shipping carriers are going to charge extra for it. Lead times are going to increase.

But you need to find solutions with your suppliers. You need to find solutions with your freight forwarders. You need to come up with the best business solution for keeping stock, right?

Because you don’t want to lose all the momentum for marketing. And so, you know, if you’re going to Europe, you might instead of going with ocean freight, you might use rail freight.

Now, because ocean freight is so congested and so many people are switching to rail freight, rail freight is starting to get congested. Prices are starting to go up. Right.

So it’s and this is why it’s important to understand what the supply chain is and how it works globally because it will impact you no matter where it’s going. If it’s being transported to Africa, it’s going to impact you in the US if something goes wrong, going to Africa.

And so a lot of times there tends to be this skewed view that, well, if it doesn’t impact me in the U.S., then or if it’s not directly on the West Coast ports of the East Coast ports or it, then my items are going to be perfect.

They’re going to keep going along great. That’s not the reality of it. Everything has a knock-on effect and its supply chain, the smallest thing globally, the smallest thing will impact you no matter what. 

Tomer [00:23:07] This is something that they didn’t know. So thank you for sharing.

Like the fact that, you know, I didn’t think that it’s affecting U.S. senators a lot because it’s a different route, but by you explaining the whole chain on how it works, it’s much clearer now how things work. In the fourth, loading boats will, know vessels will not go out. That’s very fascinating to me.

Actually, it’s funny, but yesterday didn’t plan to, but just before sleeping, I opened National Geographic and I saw, you know, a TV show about the canals, like won the Panama One and the sweats and how they’re expanding it, how crazy it is, and it’s really really interesting, really recommend to anyone just you know, it’s interesting to know when, especially when you see something that you work with related to it. 

Francois [00:23:56] So take an hour out of your day, hey, you’re going to sleep just like you pull up National Geographic. Google, how does international supply chain work?

You could have been doing this for five years. You could have been working with your suppliers on Alibaba, working with freight forwarders.

Everything was fantastic, and covid hit, now you’re tremendously impacted.

Go home tonight and Google how does international supply chain work? And just watch the videos. 

Tomer [00:24:20] Are you guys the first result? 

Francois [00:24:22] We’re not. We’re not. I mean, we’re not going to be up there, and that’s perfectly fine.

I mean, there’s amazing videos. I still go home and watch, you know, how does manufacturing work, let’s say in Germany and how does that supply chain work all around? You’ll be interested to see how the rise of manufacturing in Germany actually increases exports eastbound going back to China.

And a lot of the machinery that they make in Italy is actually utilized in China for manufacturing a lot of items.

And then I could go down some deep rabbit holes because I go down there and I’m kind of, I nerd out with it, but it’s interesting to me because I see it as, hey, everything is based on this infrastructure supply chain.

And no matter how successful your businesses, if you’re not very in tune with your supply chain, it can crumble at any moment. And so that’s why I see it as so vital and that’s why I tend to nerd out with it. 

Tomer [00:25:19] Yeah, yeah. That’s that’s great wisdom that you share with us here. So thank you. You know, building relationship with suppliers.

I know it’s something that you guys deal and do and it’s something that you have a lot of knowledge as well to share.

But, you know, what are the things or what you can share with us building great relationship with suppliers that we’re afraid for there or with anyone that you work in, in China thinking in mind that, you know, different with the culture difference.

Francois [00:25:53] Yeah, I think, number one, it’s breaking this consumer mindset that the consumer is always right or the customer is always right.

That does not hold true with supplier relationships or because suppliers should be your partners, right?

Freight forwarders should be your partners. At the end of the day, you’re relying on them and they are relying on you. You’re both going to make money. And also realizing something that is just not talked about enough, that suppliers are vetting you as a buyer just as much as you are vetting them as a supplier.

So if you approach them, let’s say with a questionnaire of fifty questions and half of them probably don’t pertain to your particular product, but you just wanted to vet them?

Well, you know, a very good factory that typically, you know, they mainly speak Chinese at the higher levels, at the management and executive and ownership levels. They’re going to look at that as, hey, you know, this person that I have no clue about is asking me 50 questions, and they want detailed answers about my machinery, about my the number of people here about. 

Tomer [00:26:59] And it’s not the right guy, right? Yeah. 

Francois [00:27:02] And they’re like, well, I mean, I didn’t even give this person a quote, like they didn’t even tell me their specs yet, but they want to know all this information on me. I’m not going to spend the time because I’m going to have to invest more and more and more and more time. And remember, 

Tomer [00:27:16] they show me interest, right? Like this, the potential, so if they don’t see potential when you ask 50 question, it doesn’t make sense for them. They will just ignore you. 

Francois [00:27:25] Or just like you were saying earlier, if you’re not very in tune with what your product is and what the actual costs are, and if you can’t talk the language, they may see you not necessarily as a sucker, but someone that is going to be a little bit harder to work with and someone that, you know, you are going to charge a little bit more because you are harder to work with.

So you might not get that best pricing because now they have to answer more questions in some instances, actually, and a lot of instances where we audit our factories.

They told us, hey, we actually have to develop the products for these people and there’s no guarantee that they’re going to follow through with it, but I have to set aside an engineer, you know, three hours, four hours a day.

And now they’re telling me that they only want 500 units. And while the product is only about a dollar fifty, so I’m only making six hundred and fifty dollars. Where’s the benefit in this? Right? Where’s where am I winning?

And so a lot of times a buyer will see that as, oh, I need to continuously vet them. They have to be really good to me. They have to answer my questions. They have to resolve my issues.

But if you make their life easy, if you treat them as a human and you just approach them with, hey, how’s your day? You know, hey, these are my products. This is the product that I’m looking for. Here’s all the specifications that I’ve gathered.

If you have, you know, alternatives or better solutions or any of your customers are doing something better, I would love to hear about it.

But in my experience, these are the best materials to use. Is this something that you can produce? I’m looking to have a budget of about five thousand dollars. Not I have you know, I don’t know what my budget is, you’re going to say, well, your business you’re asking me for five hundred units, but you don’t know what your budget is?

But do you want fifty thousand units? I mean, are you OK with a container load? So it’s approaching them with this project and this business mindset.

Again, not with this consumer mindset. I think it’s very important to break and again, just treating them like humans because that’s what they are at the end of the day, right? And humans, as humans, we love storytelling. We love relationship building. We love the little chitchat “Hey, how’s your day going?” Yeah. “Hey, you know, it’s it was your son’s birthday. Did they enjoy their birthday? What did you guys do?” You know, it’s these little things that can get you much further.

And I’m talking about one hundred x further than just “Hey, I need this product, I need it for five percent cheaper than you could give it to me, and that’s that’s a done deal. That’s the end of it. That’s all I’m going to say to you” Not because you’re going to say that it’s, hey, this person is just very transactional. You know, they could do without us.

Well, then we could do without them. We have five other people that are requesting quotes. That means we have five times the potential with other customers, right?

So it’s a very skewed mindset that factories are just waiting around and wishing that you would place an order from them when the reality is, you know, it’s a very supply and demand market. It’s about 50/50 on both sides are going to be receiving new inquiries. Quite often the smaller ones are more open to smaller orders. They’re more open to smaller projects, a little bit more difficult of customers, the medium to large-sized ones.

To be frank, they cut out a lot of the B.S. and they’re like, just tell me what you want, we can build a relationship, but I need you to be professional with this. I need you to at least sound like you know what you’re talking about at the very least, and be kind. I mean, right.

I mean, it’s a lot of times where people are very cutthroat and it has to be this way, like it or not. Otherwise, I’m leaving. Would you tell your wife that? Would you tell your husband that?

And so I remember it’s a relationship. It’s not a transaction. It’s a partner to you. It’s not just a supplier. 

Tomer [00:31:10] I think you gave your really amazing tips. You really described it very well. That’s something that I always try to improve on and really like the examples you gave are related also to my next question.

And now you can get a better payment terms and buy what you said. You can implement it to any request or anything that you have to really want from your supplier because that’s the basic of everything. When you think of when you ask them something, it’s not like a consumer mindset that you ask question and you expect them to explain you everything and really show everything and make you educated.

That’s not their job. The job is to make a business. And like you said, they have more people. And when they do have to explain all over, like from scratch something to you, it’s taken away from their time dealing with more factories or producing more orders or whatever.

So you really have to come, and when you ask them something at the beginning I was, oh, I need to ship this tomorrow, talk to him, you know, to talk to the supplier. Here’s his contract, and they will do it.

But now I’m giving them more details. Hi. Let’s say, you know, Mendy’s, the lady I’m dealing with the freight for there. So, Mendy, look, this supplier is going to be ready on Tuesday. We are going to have thirteen cartoons or five pallets. We have to ship it, that type of shipping, like I’m giving her as much details and making our life is much easier as I can.

And, you know, she will do the same. So you can just come and just take. You have to really give back, you know,  gifts and things like that, you know, always can help and asking really like genuinely, really asking them how they feel, how they are remembering the, you know, during the pandemic like asking are you safe? Do you need something? They were also asking me they would sending me masks because we couldn’t get the masks here so they would send me masks, express shipping.

So we kind of build that relation. I think that’s really like people don’t understand the importance of building the relationship enough.

And maybe in the future we can have a video just around that with you, I’m sure would like you have so much more knowledge to show.

Francois [00:33:30] between both of us. I mean, with your experience, too, yeah.

Tomer [00:33:32] Yeah. But what do you think? Like for paramount payment terms, are the keys in order to really get payment terms from suppliers? Because it could make a really big difference in your online business. 

Francois [00:33:43] 100 percent, I 100 percent agree payment terms are a tremendous proponent to your business, whether it’s an Amazon business or any other business, payment terms with their suppliers, as is, should be key every time. It should be what you’re you’re looking towards, not towards just a discount on the product itself because it improves your cash flow heavily.

You have a lot more options. But when it comes to payment terms, specifically with suppliers and particularly with those overseas, I think we need to keep one thing in mind and we need to lay down one piece of foundation is that this is all based on trust.

No matter how many contracts that you have, no matter what repercussions you know, you layout in those contracts, it’s based on trust. When you pay them 30 percent for a fully customized product with your logo on it with something that they might not have experienced selling, they’re trusting that you going to pay that other 70 percent.

So just basing that foundation based on that foundation, let’s remember that this is all based on trust.

But to improve those payment terms, to say, hey, instead of paying 30 percent upfront and 70 percent prior to shipping, I, you know, I really need to be able to order two thousand units.

But I can’t do that because it’s going to affect my total cash flow. And, you know, I need to spend more on PPC and in competition is growing, so I need to lower my unit price. And you can list out the things, the reasons as to why you need better payment terms. I think that’s the first step.

But then it’s, you know, building that relationship with them to where they can trust you to say, OK, I understand that you can’t do the 70 percent on shipping because, you know, there’s a 35 day lead time between that and the West Coast and the is taking five weeks to check it in.

And, you know, it takes about two weeks to start with the sale. So maybe we’ll give you a net 30 term or net 15 term just to help you out initially for the 70 percent.

And this is all based on conversations, this is all based on they understand that you’re having issues not necessarily with cash for the orders that you’re ordering, but issues to grow.

And these are growing pains, right? And they want to grow with you. It’s in their best interest to continue producing your products because they have experience, because it costs them more to acquire a new customer because of all the back and forth, because of the sampling process, prototypes, all of that.

So they understand that they’re not dumb and understand that it’s better to keep you as a customer and help you grow because they’re going to grow as long as you’re a good customer to them, right? And you treat them well, so building the relationship with them and having those casual conversations of, you know, how are you doing? How’s your kids doing? What can I do for you? How can I help you? And being prepared, just like you were saying, you know, giving as much as you’re taking, these are important components to the relationship, ultimately very important to trust, deliver on everything that you promise if you’re telling them I’m going to grow. Order over order. 

Tomer [00:36:41] And I’m sorry. I wrote some notes that you were just following up with some supplies they didn’t follow with a couple of weeks or months. 

Francois [00:36:50] Yeah, it’s important.

Actually, my mentor and adviser from college, Dr. Byrd, one thing that I did take away from him that, you know, this is all I take away from college, it’s all I take away from college.

But it’s, when you promise someone something or when you help something, someone out with something, you inherently expect them to tell you how the result was if you give if you’re asking someone for advice, you should also let them know, hey, this is how I used your advice and this is how it worked.

And same thing with suppliers. You know, if you’re telling them, hey, I’m going to get better payment terms so I can increase my sales volume because I’m running more giveaways and you tell them a little bit of details, you don’t have to tell them your entire strategy, but you tell them why you need these things and then you tell them the result. Hey, you know, look at these payment terms. I want to net 60. You gave me net 15 with that increased cash flow of not having to pay prior to shipping.

Now I’m able to, you know, increase my advertising spend and now my BSR has went from twenty thousand to fifteen thousand and it’s improving and I’m able to place another large order with you.

So remember, tell them, hey, this is doing well, we are working together. I appreciate you as a supplier and as a partner. I hope you appreciate me as a customer. So I mean, I can all based on relationships, all based on trust. 

Tomer [00:38:17] Yeah, communication is a key here. And like you said, I did the exact same thing. So I kept them, explain to them how it works on Amazon to those that didn’t understand like suppliers, and that’s how I got them., and those that they will look, I’m really that close to get the best seller badge.

And if I get it, my sales will double and that’s what happened. So they saw it and they saw to me placing orders right away. And then we came to a point that I was getting out of stock and I told them, look, you really have to give me payment terms in order for me to keep the BSR to keep the best seller badge.

Once they understand how things work, it was much easier for me to get what I want. So just explain him. You know how it works, how your business works, what is your expectations? What are you forecasting? Let them know your plans.

So if you put an internal forecasting, you want to really share it with the factory and your supplier, you want to tell them, look, based on what do we think? This is like our orders for this year, for this quarter, for this month, when you keep them involved, they can be more prepared.

When you surprise them, they will be in stress. When they’re under stress, then they will come to you. So, you know, this is things that I learned on my really own, my business, and you know, I love to share.

And I think you shared their really great knowledge. You’re one of the best interviews that I had. I think you’re talking right to the point. I love the style of how you really sharing the knowledge.

So thank you very much for that phone call. Like I said in the beginning before we started, I want to keep it short and precise and leave people just a of more. So just me. You can be a guest on our channel in the future. I’m going to be a guesting your podcast next week or ten days or so.

Guys that are watching that go to Noviland, whether it’s the Facebook page or the website. So you can, you know, tune to their podcast.

Again, Francois, I thank you so much. Before we wrap it up, is there anything else you would like to add here or how people find about you or your services and your company? 

Francois [00:40:30] Yeah, I sincerely do appreciate the conversation that you also had.

You had actual insights from a seller’s perspective to bring to the table, which I appreciate, because a lot of this is just not talked about again, because it’s not sexy, it’s not the sexy side of Amazon. You can see I get passionate about it. I love talking about it.

So anyone that would like to have a conversation about it, I’m always open to it. Pretty active on clubhouse and it’s just at Francois Jay. You can add me on LinkedIn. We could chat, you know. If you follow Noviland and message their 99 percent of the time, I will somehow see that message or I’ll get it forwarded to me and we can also have a chat there.

So it doesn’t really matter how you can reach out to me if you just Google Francois Jaffres. I’m sure the LinkedIn also pops up and we could chat there. 

Tomer [00:41:20] Sounds good. Thank you again for being a guest here, and I wish you a good weekend and we’ll be in touch. Thank you for the knowledge here. 

Francois [00:41:32] Thank you, Tomer. 

Tomer [00:41:33] All right. Take care. 

About the author

This is Tomer, and I have created Sourcing Monster to share how I started my Amazon FBA business, and how I keep learning and growing. I will share tips proven methods that I USE currently in my Amazon FBA business so you can get value and growth hopefully for your business too! Feel free to comment or share any feedback down below!

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