Today’s episode features sourcing expert and business partner, Afolabi Oyerokun. In this episode, we discuss a variety of sourcing tips, tricks, and advice! Dealing with suppliers, warehouses, and sourcing agents can be confusing and expensive. But hopefully with the tips provided in today’s show you can save money and grow your Amazon/ E-Commerce business!
Afolabi has always been passionate about finding hidden treasures, haggling and negotiating prices. This obsession for finding high-quality products at bargain prices led him to help several 7-figure Amazon brands increase their profits immensely by buying intelligently in Chinese marketplaces.
For over 20 years, he has been learning and developing the best logistics strategies, relationships and tactics to streamline and improve profitability for his clients.
He is a big believer that “You’ve got to make money when you buy, not just when you sell”. His company is behind successful launches of several multimillion dollar products on Amazon and other retail channels.
An entrepreneur at heart, Afolabi loves helping entrepreneurs develop their ideas and inventions into great & successful products.
Date: September 1, 2020
Episode: 6
Title: Norman Farrar Introduces Afolabi Oyerokun, King of Sourcing, Co-owner at HONU Worldwide/Trillion Source.
Subtitle: Setting up the ideal profile by finding the right sourcing agent.
Final Show Link: https://lunchwithnorm.com/episodes/31-shop-with-amazon-kevin-king/
In this episode of Lunch With Norm..Norman Farrar introduces Afolabi Oyerokun, King of Sourcing, Co-owner at Honu Worldwide/Trillion Source.
Afolabi Oyerokun likes saving money. He tackled several topics to save money, especially in the tariffs of importing products. Also discussed the tips on getting the best and honest sourcing agent to boost profits on e-Commerce business. He co-owned Honu Worldwide, an optimizing logistics and supply chain.
If you are a new listener to Lunch With Norm… we would love to hear from you. Please visit our Facebook Page and join in on episode discussion or simply let us know what you think of the episode!
In this episode, we discuss:
Our favorite part of recording a live podcast each week is participating in the great conversations that happen on our live chat, on social media, and in our comments section.
In this episode, we mentioned the following resources:
Join our discussion network here!:
Norman Farrar: 00:01
It’s Norman and Afolabi, the old guy is trying to do this modern stuff. So we’ll probably flub this a few times. So just, I don’t know how to do it. I’m not even sure how to turn this off Afolabi. So we’re gonna know. What we’re going to talk about today is just a little bit about sourcing. There’s so many people that are new to Amazon, and they don’t know what to do. They just go down or they just go to Afolabi.com, they just go to Alibaba and they try to source from there and it’s nice and easy. But it’s not always the best place to get your product and so what we wanted to do is just have a kind of a casual conversation and just show up, give a few tips on what to source and how to do it where you can save a few bucks. Afolabi, you’re the king sourcing, why don’t you, first of all, introduce yourself.
Afolabi Oyerokun: 1:00
Hi, everyone. So I’m excited to talk about these because I live and breathe sourcing and we’re going to be sharing some really cool stuff today. I’ve been sourcing for over 20 years. I love it, love it, love it. I just like saving money. I like negotiations and just beating prices down until trouble starts, pretty much. So yeah, we’re gonna have a good time today. We’re gonna touch on several topics that will help you to save money. We are here to save money and supercharge our profits as we sell on Amazon or wherever you’re selling. So let’s do it.
Norman Farrar 1:52
Yeah, this isn’t for Amazon. I mean, yes, there’s a lot of Amazon users that might be watching this, but it’s also any type of e-Com. It can be anybody that needs products. So it’s not necessarily Amazon people. But anyways, why don’t we start with sourcing, okay? Most people go to Alibaba and tell us why right off the bat, Alibaba, you’re going to and I’m not bashing Alibaba, there is an awesome platform where people can go and get products. But if you want to save a few dollars, like you were telling me one of the things that blew me away is I didn’t know about the profiles. So tell me a little bit about that.
Afolabi Oyerokun: 2:36
Well, so when you go to a sourcing website, I mean, I love Alibaba, they’ve done a good job in setting up and everything. When you get to where you’re setting up on sourcing platforms. You tell them how much your sales are or how long have you been in business. Some people even use Gmail, email accounts, so they use Yahoo accounts, all those things will not let you get really good suppliers. So when you go on sourcing looking for products or you fill out an RFQ, the supplier will look at your profile before they even decide if they’re going to answer your email. If they’re going to reply to your inquiry, they’re going to check you out, they’re gonna sniff you out, to see what kind of person it is, oh, I have one person here who is selling $10 million a year and you are a newbie. You didn’t even put your sales, yearly sales into your profile so they’re not going to pay attention to you, if they do, they might just give you their very new rep, sales rep, to take care of you. So you wouldn’t really get a good price.
Norman Farrar 3:57
Yeah, with that sales rep. I mean, you’re not talking about a sales rep, you’re talking about, like a broker out there, a trading company, right? Most of the time, at least what I found is that the factories themselves will not deal with you directly. You just don’t have the volume especially as a new amazon seller.
Afolabi Oyerokun: 4:23
Yes, even if the factory deals with you, they will give you their very low sales rep because you’re not high volume enough for them and then you’re also prone to fall victim of import and export companies or trading companies that are posing as real suppliers so your prices are going to be definitely high. When you don’t have your profile set up or even when you have it set up the right way, trading companies pick up on you and say, Oh is a newbie let’s pick up on this one and they’re going to give you as high price as possible as much as they can milk you out. That’s what they’re going to give you.
Norman Farrar 5:04
So if you’re new, what is a high quantity? Cause somebody might think a thousand units is a high quantity. Like to get taken seriously, you’re talking a lot of, depending on what you’re selling, 250 units or 1000 units or 5000 units, I mean meeting their MOQ, which is their minimum order quantity, they’re really not going to take you seriously and sometimes this is kind of leading into the tip of you could get overcharged by going through these easy to use platforms. That’s why, for me anyways, a sourcing agent was always better for me. So you can save a lot of money just by finding the right sourcing agent and asking the right questions. So why don’t we get into that. What do you look for or what should people look for in a good sourcing agent and what are some of the services that they can use? What type of money can they save?
Afolabi Oyerokun: 6:06
A lot, a lot. That’s if your sourcing agent is honest with you – that’s the first thing.
Norman Farrar: 6:14
So what do you mean by that?
Afolabi Oyerokun: 6:15
Well, sourcing agents can save you money, but do they pass the money? Do they pass the savings to you is the main problem. They can save you, they can probably save you 40%. Will they pass it to you? No. In most cases, they don’t. So the first thing to ask is, ask your sourcing agent, what’s your fees? Some charge as much as 10-15% just add-on, on to your product cost. So you have to know their fees upfront, and I think the best way to also get a sourcing agent is to go by referral. Let somebody who has tried them and is happy with them do the referral. Because if you just go online and you’re looking for a sourcing agent, you’re going to fall victim of fake ones or trading companies.
Norman Farrar 7:16
So if I was going out there, what would be a good price for sourcing? I’ve heard them all over the map. So can you give kind of a ballpark what people should look for when they’re first involved with a sourcing agent?
Afolabi Oyerokun: 7:32
Well, I can tell from my own experience. Some sourcing agents don’t charge you any money up- front, but they know how to get it. You’re actually going to pay dearly for it at the very end. You’re going to pay 10, 20 sometimes 15% markup on your price of products. So let’s say this sourcing agent doesn’t charge me any money up-front, is doing all this work. He’s not doing it for free. So at the very end, you’re buying 1000 units, and each unit costs you five bucks and he’s hiding 50 cents to your cost. By the time he was buying 10,000 units, you were losing $5,000 on every single sale. So he’s making that money no matter what he’s making it. So from my own perspective, especially at Honu, we would prefer to charge a small amount first, because it will cover our costs, but at the very end, we’re only charging 5% markup.
Norman Farrar: 8:36
Okay, so I guess it’s important. One of the first tips really is to get all of those hidden costs on the table and ask the agent what they are, if I’m paying $99, if I’m paying $500 to get something sourced of what are the other fees and get the percentage upfront. So the other thing I was wondering, I think we should talk about is once a sourcing agent gets the order, then what can you expect? Like, should they get one sample? How many factories do you sort? It’s like, how do I know that I’m getting the best price?
Afolabi Oyerokun: 9:21
Okay. Typically, you should have your sourcing agent to at least three to five factories. So that you can, I would say five is good. Sometimes you can go as much as 10 because the prices are so different. That’s the only way you can know what kind of prices, price range you’re getting. So if you get only two prices from two factories, and one is $1.50, and the other one is 95 cents, that’s not so good. lf you get like five, or even up to 10, then you can see the range of maybe the range goes from 95 cents. Three of the prices stay at about $1.25. Fourth is about $1.40 then you’ll know that’s the range. But you see what if you see one of the quotes go like 75 cents, you’d be like, this is weird. So I would always advise to get at least five quotes from five different factories, it will give you a better idea and to answer your sample, I would say you collect the samples from all these five, sometimes you can tell by just the photos, when they send you the photos, you can tell, no, this is not a good product and so they send you the samples. Your sourcing agent should collect the samples and do some examination on the samples. Now if you get samples that are not so good from a factory, it’s almost impossible for that factory to make you good quality products. If the best sample they sent you is a crappy sample I would say run and run really fast. You cannot make them do it better, because they are different. There are different levels of factories in China. Some do make really cheapy products, some make medium qualities and make really high end. So if you want to make high end products, go with a high end factory- pay a little more, or go with high end factories, if you will. If you’re selling at $1 store, or you’re selling the dollar product, yeah, go with the lower one. That’s what I think.
Norman Farrar 11:35
But, it’s interesting about the multiple factories because I know when I got started, I thought two was pretty good and on Alibaba, I would probably reach out to four or five and I get one or two back and then I thought, Oh, this is great. there’s two people and the funny part of it is they probably went to the same factory and they were representing the same factory. But anyways, one of the things that you can look at and this is so important, we talk about it with our clients is that you, you want to not only have the quality, but out of those five or more suppliers, do they offer something different? Do they offer an add-on? Do they offer something that can stand out from what’s on the marketplace today? Or if they don’t, can they recommend something, because a lot of the times, you could get into simple product development that might be able to make you stand out and then, if it’s a higher search volume or a more competitive price or a higher price point, I, you could start looking at Oh, maybe I’ll just add this and it means a different mold but you pay for the molds. But a lot of the times the supplier can just say, hey, look, try this combination, or Yeah, we could do it instead of green. We can do it in black, everybody else’s green. So those are things to look at and then the other thing with the samples, so you’re talking about consolidating samples and if you do this properly, you can save 100 even thousands of dollars over a period of years, depending on how many product launches that you do. So consolidating getting them all in. So that’s either, using a sourcing agent and having it come to wherever they are in China, or it could mean going to the freight forwarder or logistics company that you’re working with, and getting them to consolidate and then send it off.
Afolabi Oyerokun: 13:41
Yes and those are the different levels of sourcing agents. So some sourcing agent, you’re just a transaction to them. They don’t have time for all this product development stuff, the more you’re wearing them out, which your specific needs in a product, they don’t like you because they want you to come to source the product, give you the price, place an order and they’re done with you. It’s like a factory is your transaction, but a real sourcing agent should be able to suggest other things that will make your product better. If they see you’re requesting something that would be that would not be really good for your product, they should tell you and say, well, well, why don’t you try this material, it’s been found to be a little bit problematic. Why don’t you switch to a better material? Or why don’t we help you do this. They go the extra mile to help you in your product development phase instead of throwing you out to the lions, because they will say, well, it’s none of my business. He just wants these products – I’ll get him exactly what he wanted. But a good sourcing agent should be able to help you out better, I mean, make your business successful because if you are successful, they are also successful.
Norman Farrar: 15:07
Right, and one other thing that an agent can do for you, especially right now, building that relationship with the supplier and negotiating much better terms than what somebody back in the US could possibly negotiate. So I think that’s really important and right off the bat. When I’m talking about negotiating price, it could be that 70 or 30% deposit, 70% when completed, I mean that’s the standard, but it could be where you’re getting, some slight terms you may be 30 days or 60 or 90, but I’ve never found unless you’re doing huge volume, that sitting back in North America or in Europe and trying to negotiate with a factory, you’ll get some leeway. But if your agent is in China and they’re talking from their office to the factory, usually you can get better terms.
Afolabi Oyerokun: 16:16
Yes, yes, you could get better terms, especially it works with relationship. The longer you are with this factory, the better negotiations you can get. You can even get, I’ve seen factories be able to negotiate even monthly payments with factories if they see that you’re really moving volume, they will work with you. We’ve negotiated , deals whereby people pay monthly as they’re getting paid by Amazon or whatever, they have a payment schedule that we’re sending to the factory, bi-weekly or monthly and the factory , as long as you’re not trying to cheat the factory, you’re not trying to play some games with them. Just be very very honest and fulfill your words, you are going to have a really, really, really good business with them.
Norman Farrar: 17:07
Now, all I wanted to do today was to do something a little bit different. This is the first time we’re doing a Facebook Live. I did my first Instagram Live the other day, my son had to help me with everything. But hey, we did it. What I’m trying to do here is come back, maybe next week we’ll talk about new inventory strategies, logistics, there’s a variety of different things and even dig deeper into the sourcing agent, multiple facilities, how to put together a pro forma like a proper pro forma. It could be something like the HTS codes. On that note, and we’re going to close up here, but on an HTS code, so it’s the Harmonized Tax Code. Can you explain a little bit about how you can save money on that and what it is?
Afolabi Oyerokun: 18:06
So the HTS code, HTS means Harmonized Tariff System. It is the system by the US Customs or even World Customs Organization where you’re bringing your goods into a country. Every product is identified by this set of codes. For the US is 10 digits, for other parts of the world is six digits. So it is the code that you’re going to use to bring your products into the country and they will assess the customs, the tariff you’re going to pay. But what many sellers don’t know is that HTS code or the HTS system is like a legal document. Two people may be importing the same products and they’re paying two different tariffs, they’re paying two different custom percentages. Some people are paying 25 percent while I see some companies paying 5% the difference between the two is how knowledgeable are you about HTS codes? So many times your suppliers will give you an HS code. So an HS code is different from an HTS code. The HS code is what the rest of the world uses. But the HTS is what the US uses. So sometimes your Chinese supplier will give you an HS code and you’ll put it into the US system and it’s going to spit out a 30% tariff when you’re bringing in $100,000 worth of goods, that is $30,000 you have to pay to the US Customs. Whereas if you let a very knowledgeable agent, look at your product, understand what your product is, you might just be paying 3% or zero in most cases. So that HS code is based on the application of your product, or the materials used in your product. So if your product is a journal, right, it’s a journal, but it could also be a novel, or it could also be a book, or it could also be a notebook. So based on the use of a product, you might find savings, you might find a better HTS code and when you do find a better HTS code, you will be able to save a lot of money. I’m talking thousands and thousands of dollars, just in rightly categorizing and using the correct HTS code for your product.
Norman Farrar 20:42
I’ve told you this before, but I fell into this and I’m in the game. I understand scores. So, I sell soap and it’s really good soap. But I sell soap and I was playing 17% because it’s natural soap, really good natural soap. But anyways, it was 17% and then we looked into it and by changing the category to Castile soap, so you’re not lying – the worst thing you can possibly do is to lie, then you’re going to get into trouble. But the category was castile soap. Well, guess what? I’m paying zero now I save 17% and I know what I’m doing. I thought I knew what I was doing. But anyway, so I just wanted to end on that note, because it’s always good to ask because you might think you’re getting the best price. But you’re not necessarily getting the best price and if I didn’t dig into it, I really did think that we were getting the best HTS code. It wasn’t the case. So anyways, I just wanted to keep it short. I want to just let people know a few different tips about how to optimize your profits when you’re sourcing. I should do it as full disclosure, Afolabi came to me months ago, and there are a lot of maybe a year ago, and he said he was a sourcing agent, and I kind of rolled my eyes. They’ve been in the business for years. I’ve dealt with tons of sourcing agents, and then he blew me away with what he called it “ I’ll show you seven tips that you’ll never hear from a sourcing agent” – anyways, he did. He blew me away and so we partnered up. So I do want everybody to know that Afolabi is a business partner of mine. We do own a company called Honu Worldwide. So anyways, Afolabi, how do people get a hold of you?
Afolabi Oyerokun: 22:50
They can go to the website HonuWorldwide.com or they can just email us at savings @honuworldwide.com.
Norman Farrar: 22:58
Perfect! Alright, sir. Well, thank you and if you’re looking to get a hold of me, this is my son saying this right now. Dad, talk about your social media. So @NormFarrar just add Norman Farrar, go to NormanFarrar.com. How’s that? Better? Perfect. Okay, simple. How to turn this bloody thing off cuz I don’t. There we go. Thanks!
