3 ms·

It sounds like you have some expierence. Would you mind elaborating on how one would enter this space, aquire supplies/products, examples of licensing deals. Ev

It sounds like you have some expierence. Would you mind elaborating on how one would enter this space, aquire supplies/products, examples of licensing deals. Even just some trusted resources would be fine. This fascinates me, as I have wondered how some sellers on Amazon (or eBay but no thanks) become so large just by reselling other people's things on Amazon -- at the same time Amazon is the one who really wants to be that middle man. Ideally, I would love to begin some sort of revolutionary alliance that tries to fight off the behemoth Amazon and how they use their market size, analytics, and predictive analysis to see what's hot, and then either buy or make it at a cheaper cost and a lot of times---a better quality.

forgingahead 6y ago
Sure happy to help. Your email in your profile appears to be invalid, but I'll write a few things here in case other folks are interested. They become big because the competitive edge is not in the supply, it's in the demand, as in, they have access to a customer base. Of course, one can't sell complete crap, supplies/products should fulfill a certain market demand, but supply is always secondary to having access to customers. If you're thinking about becoming a trader or distributor, start backwards from your potential customers. Who are they, what do they want, and what price point and average buying quantity makes sense for them. If you're trading B2B that is quite different from sourcing from a supplier to sell direct to consumers in your market. In the former, your customer is the physical retail stores (or their equivalent), in the latter it is actual consumers themselves. The usual customer profile work should be done here. Once you have an idea of your customer profile, then you can start sourcing. Luckily there are very few barriers to entry in 2021, you can google for product names or categories, find the suppliers online (China or otherwise), and you can just email them to inquire on their prices. If you're starting out, be a simple as you can: a) What are their prices and minimum order qtys b) Can they waive the minimum order qtys while you test out the market on the first few orders (suppliers always have excess stock on previous production runs. You can do them "a favour" by buying that - they recover their costs, you get things for cheap). c) Pre-sell if you can. That could be as simple as walking to stores with a catalogue, or just a sample to show them. Then collect pre-orders from 50 customers (ideally with some money down), use that to make your first supplier purchase. d) Ideally, you have exclusive rights to the distribution for several years. When you're starting out, you don't want to spend the money to "buy" these rights, so again, it becomes a negotiation. The supplier isn't selling in your market, so you're helping them reach a wider audience. It's in their interest to support you. e) Make sure besides exclusive rights, you get collateral support in terms of marketing materials, graphics, ads, freebies, etc. This stuff is huge when you're building up a customer base. The best structure is pre-sell, purchase from your supplier to fulfill existing orders, then the stuff arrives and you just pack it off straight to your customers. Rinse and repeat. High volume items give you about 10-15% gross margins, but standard is about 30-40% gross margins as a trader. Again, all depends on how you negotiate your total costs. Freight is often a huge win -- get some good freight charges, and your profit can literally double on a specific shipment. Ideally in your customer identification process, you'll have found some product ideas that they'll want to buy. You are valuable because: 1. Your customers don't want to buy the volumes a supplier would require, they just want a small subset of that total. They're happy to pay a larger price for smaller quantities. 2. Suppliers don't want to sell bits and pieces, they like having someone buy large quantities from them. So they'll give you a good price for bulk purchasing. They also don't want to do the legwork to find the 100-1000 smaller customers to fill a large production order. Your profit is the difference between the two numbers. So you do the legwork to get that upside. If you're attempting to sell on crowded locations like Amazon, then you will need to spend/invest on ads to drive the purchasing from you (vs. someone else with the same or similar products). Most marketplaces reward sellers with existing sales volumes, as their algorithms figure you've completed sales before, you'll continue to do so. So that's a game you do need to play to start building a seller reputation. If you have your own Shopify-or-whatever site, it's the same, you'll need to do FB/Google ads to drive that initial customer acquisition. There's a lot more info, but I'll stop here for now. Happy to write more if folks are keen.
- grogenaut 6y ago
  That's already a great bit of info. Thanks much. I always ran up against the can't win the but box on your own product issue. Can't believe I didn't consider ads as a bootstrap.
- lotsofpulp 6y ago
  > e) Make sure besides exclusive rights, How are exclusive rights promised by a manufacturer in China enforceable by a small time buyer not from China? What is the recourse in the event it’s found out the manufacturer violated the exclusivity agreement?
  - forgingahead 6y ago
    The same like any other relationship - have it in writing, with penalties specified, and besides the contract, do basic due diligence with your supplier. China is not some lawless backwater, despite the fake news bogeyman in recent years. You can get played out just the same by a supplier in Belgium - like any business relationship, you take steps to mitigate the risk, but nothing is ever 100% iron-clad. You should still get a written agreement. *Edit: "Who else do you supply to" is a very common part of interacting with a supplier, and most of the time they are chomping at the bit to share their "famous customer list" with you. In fact, some suppliers even have pages on their website listing who their "authorised resllers/distributors" are. Having a chat with any of the others helps, and like any business relationship, it's a human relationship with some trust involved. You back things up with legal protections, but in the end, business is about the human aspect of things.
    - lotsofpulp 6y ago
      > China is not some lawless backwater, despite the fake news bogeyman in recent years. Interesting. I always heard stories about designs being copied and sold under different names in very short time after releasing a product. And in Belgium, you have the EU courts to back you up in simple cases, but I was not aware if its similar in China (unless you had a certain amount of weight to throw around like a F500 company or something).
lotsofpulp 6y ago
> This fascinates me, as I have wondered how some sellers on Amazon (or eBay but no thanks) become so large just by reselling other people's things on Amazon -- at the same time Amazon is the one who really wants to be that middle man. All the evidence I see indicates Amazon does not want to be this middle man. Amazon wants to be the payment and platform middleman, that’s where all the profits lie due to infinite scale-ability and near zero marginal costs. They removed the ability to let you filter search results for items sold by Anazon.com years ago. Amazon does not want to be in the 2% profit margin retail business where they are liable for inventory risk and other liabilities like product safety, etc. They want to be like Visa and take a cut of each transaction. I would too, considering Visa’s profit margins versus Walmart’s.
- travem 6y ago
  > They removed the ability to let you filter search results for items sold by Anazon.com years ago. That feature is still available on the amazon.com site as I write this
  - lotsofpulp 6y ago
    Where? I just searched for microSD card, and there is nowhere on the left side to filter by seller. There used to be an option where you could check mark which sellers you wanted to see offerings from. I definitely remember 10+ years ago, being able to restrict searches to items sold by "Amazon.com" by clicking the check box. Then they gradually removed it for certain searches. Sometimes, the option to filter by Amazon.com would show up, and sometimes it wouldn't. I thought I was going crazy for a while. Then I realized what they were doing, and then in a few years they got rid of the option completely. Not that it would make a difference anyway, since Amazon commingles inventory with other random sellers so you never know which supply chain you're actually getting the item from.

forgingahead 6y ago

Sure happy to help. Your email in your profile appears to be invalid, but I'll write a few things here in case other folks are interested. They become big because the competitive edge is not in the supply, it's in the demand, as in, they have access to a customer base. Of course, one can't sell complete crap, supplies/products should fulfill a certain market demand, but supply is always secondary to having access to customers. If you're thinking about becoming a trader or distributor, start backwards from your potential customers. Who are they, what do they want, and what price point and average buying quantity makes sense for them. If you're trading B2B that is quite different from sourcing from a supplier to sell direct to consumers in your market. In the former, your customer is the physical retail stores (or their equivalent), in the latter it is actual consumers themselves. The usual customer profile work should be done here. Once you have an idea of your customer profile, then you can start sourcing. Luckily there are very few barriers to entry in 2021, you can google for product names or categories, find the suppliers online (China or otherwise), and you can just email them to inquire on their prices. If you're starting out, be a simple as you can: a) What are their prices and minimum order qtys b) Can they waive the minimum order qtys while you test out the market on the first few orders (suppliers always have excess stock on previous production runs. You can do them "a favour" by buying that - they recover their costs, you get things for cheap). c) Pre-sell if you can. That could be as simple as walking to stores with a catalogue, or just a sample to show them. Then collect pre-orders from 50 customers (ideally with some money down), use that to make your first supplier purchase. d) Ideally, you have exclusive rights to the distribution for several years. When you're starting out, you don't want to spend the money to "buy" these rights, so again, it becomes a negotiation. The supplier isn't selling in your market, so you're helping them reach a wider audience. It's in their interest to support you. e) Make sure besides exclusive rights, you get collateral support in terms of marketing materials, graphics, ads, freebies, etc. This stuff is huge when you're building up a customer base. The best structure is pre-sell, purchase from your supplier to fulfill existing orders, then the stuff arrives and you just pack it off straight to your customers. Rinse and repeat. High volume items give you about 10-15% gross margins, but standard is about 30-40% gross margins as a trader. Again, all depends on how you negotiate your total costs. Freight is often a huge win -- get some good freight charges, and your profit can literally double on a specific shipment. Ideally in your customer identification process, you'll have found some product ideas that they'll want to buy. You are valuable because: 1. Your customers don't want to buy the volumes a supplier would require, they just want a small subset of that total. They're happy to pay a larger price for smaller quantities. 2. Suppliers don't want to sell bits and pieces, they like having someone buy large quantities from them. So they'll give you a good price for bulk purchasing. They also don't want to do the legwork to find the 100-1000 smaller customers to fill a large production order. Your profit is the difference between the two numbers. So you do the legwork to get that upside. If you're attempting to sell on crowded locations like Amazon, then you will need to spend/invest on ads to drive the purchasing from you (vs. someone else with the same or similar products). Most marketplaces reward sellers with existing sales volumes, as their algorithms figure you've completed sales before, you'll continue to do so. So that's a game you do need to play to start building a seller reputation. If you have your own Shopify-or-whatever site, it's the same, you'll need to do FB/Google ads to drive that initial customer acquisition. There's a lot more info, but I'll stop here for now. Happy to write more if folks are keen.

grogenaut 6y ago
That's already a great bit of info. Thanks much. I always ran up against the can't win the but box on your own product issue. Can't believe I didn't consider ads as a bootstrap.
lotsofpulp 6y ago
> e) Make sure besides exclusive rights, How are exclusive rights promised by a manufacturer in China enforceable by a small time buyer not from China? What is the recourse in the event it’s found out the manufacturer violated the exclusivity agreement?
- forgingahead 6y ago
  The same like any other relationship - have it in writing, with penalties specified, and besides the contract, do basic due diligence with your supplier. China is not some lawless backwater, despite the fake news bogeyman in recent years. You can get played out just the same by a supplier in Belgium - like any business relationship, you take steps to mitigate the risk, but nothing is ever 100% iron-clad. You should still get a written agreement. *Edit: "Who else do you supply to" is a very common part of interacting with a supplier, and most of the time they are chomping at the bit to share their "famous customer list" with you. In fact, some suppliers even have pages on their website listing who their "authorised resllers/distributors" are. Having a chat with any of the others helps, and like any business relationship, it's a human relationship with some trust involved. You back things up with legal protections, but in the end, business is about the human aspect of things.
  - lotsofpulp 6y ago
    > China is not some lawless backwater, despite the fake news bogeyman in recent years. Interesting. I always heard stories about designs being copied and sold under different names in very short time after releasing a product. And in Belgium, you have the EU courts to back you up in simple cases, but I was not aware if its similar in China (unless you had a certain amount of weight to throw around like a F500 company or something).

lotsofpulp 6y ago

> This fascinates me, as I have wondered how some sellers on Amazon (or eBay but no thanks) become so large just by reselling other people's things on Amazon -- at the same time Amazon is the one who really wants to be that middle man. All the evidence I see indicates Amazon does not want to be this middle man. Amazon wants to be the payment and platform middleman, that’s where all the profits lie due to infinite scale-ability and near zero marginal costs. They removed the ability to let you filter search results for items sold by Anazon.com years ago. Amazon does not want to be in the 2% profit margin retail business where they are liable for inventory risk and other liabilities like product safety, etc. They want to be like Visa and take a cut of each transaction. I would too, considering Visa’s profit margins versus Walmart’s.

travem 6y ago
> They removed the ability to let you filter search results for items sold by Anazon.com years ago. That feature is still available on the amazon.com site as I write this
- lotsofpulp 6y ago
  Where? I just searched for microSD card, and there is nowhere on the left side to filter by seller. There used to be an option where you could check mark which sellers you wanted to see offerings from. I definitely remember 10+ years ago, being able to restrict searches to items sold by "Amazon.com" by clicking the check box. Then they gradually removed it for certain searches. Sometimes, the option to filter by Amazon.com would show up, and sometimes it wouldn't. I thought I was going crazy for a while. Then I realized what they were doing, and then in a few years they got rid of the option completely. Not that it would make a difference anyway, since Amazon commingles inventory with other random sellers so you never know which supply chain you're actually getting the item from.