China has emerged as the favourite import hub for most American sellers. Cheap labour, low-cost resources and higher profit margins make Chinese imports a lucrative option especially when selling on platforms such as Amazon. The recent Fulfillment by Amazon program and the advanced e-commerce tools have also tempted many sellers to try their luck with selling imported goods. The Amazon fulfilment facility has helped sellers improve the supply chain and logistics by sharing their burden and ensuring that the goods reach the customers on time.
While both the imports from China and the FBA facility for international imports by Amazon are a blessing in their own way, most new sellers struggle when it comes to balancing the two parties in a single selling strategy. This is because dealing with Chinese suppliers is tricky in many ways, especially if you are a newbie. At the same time getting the hang of the strict Amazon FBA regulations can be a tad bit complicated especially if your supplier is not experienced in handling FBA orders. This is where third-party sourcing companies come into the picture.
Sourcing companies such as Leelinesourcing help you find the right supplier and handling your inventory along with prepping and packaging it for your FBA orders. However, most sellers who are looking to maximize profits prefer to eliminate this additional cost of middleman and feel that they can make higher monetary gains if they take a more direct route. While on paper, cutting off the middleman might sound more financially logical, however, in essence, it is financially safer, and in some cases, more profitable option compared to the direct seller to FBA route. Here are 3 ways in which your business can benefit from hiring a sourcing service.
Under most circumstances, your supplier in China will be a manufacturer or a wholesaler dealing in the product you intend to import and sell on Amazon. It is logical to assume that you will not be his only client and therefore he would want a smooth and quick supply chain cycle. Unfortunately, the Amazon FBA inventory regulations are such that you might want your seller to store the major chunk of inventory and forward the inventory on the basis of order, and that too after prepping it as per the FBA rules. This will not only incur additional costs for the supplier but will also slow down the entire process since specialized prepping is not their forte in most cases. The supplier will transfer that cost to you as a consequence.
On the contrary, if you hire a sourcing service that is specialized in FBA prepping will incur much lesser costs. This is because they are usually working with multiple FBA sellers at the same time, providing them prepping services. As a result, they already have an established system in place to prep and process and inventories at a much lower cost and quicker time frame thereby reducing your costs.
Imagine that you have specified you, supplier, to directly process the goods for FBA but your supplier is not aware of the regulations or fails to pay the required attention during the prepping process. As a result, not only you can end up with your inventory getting stuck in the fulfilment centre but you can also end up getting your Amazon account suspended in some cases, and in, either way, you will be in for a huge financial loss. Working with a specialized prepping service can help you eliminate that risk to a great extent.
Benefit from Bulk
As a profit-maximizing seller, your strategy needs to be largely focused on achieving cost efficiency, which is why most sellers believe that they can cut down costs by eliminating third parties. Unfortunately, most sellers, especially those who are new in the field have small order sizes. This means that the supplier will charge them higher costs due to the higher cost of production.
Interestingly, if a third party sourcing service can help you benefit from economies of scale and save costs without increasing your order size. Most good sourcing companies have a network of suppliers and they will place your order with a supplier who is already handling similar orders for their other clients. Likewise, they can help you save storage, prepping and freight forwarding costs by joining many smaller orders into one large order and gaining a cost advantage.