Today we talk about the huge demand on logistics in the pandemic and how costs are spiraling out of control for brand owners. Joining today will be Kian Golzari to talk about how you can adapt at this time.
A bit of a background
- Kian Golzari is from Scotland and has lived in China on and off for ten years. He has shipped a lot of containers and products.
Best approach to freight forwarding during the pandemic
- There is now a container pile-up in China.
- Now China has to manufacture containers and send them out to the world.
- Air freight uses commercial flights, but flights have now cut down.
- The capacity has gone down 35 times.
- There is a lot less capacity so that prices have gone up.
- Prices have gone up by 4x.
- Sea freight has gone up but by a margin.
- A lot of people still maintain air freight because it is faster.
- Sellers have to consider how much they are losing when they go out of stock versus how much they need to pay to remain on page one by using air freight.
- You can split your shipment by air freight and sea freight:
- 75% sea freight and 25% air freight.
- If you are planning to ship into Amazon, you have to get your method of shipment approved by Amazon.
- It is very important to know your costs before sending anything.
- Three things hit the shipping industry:
- Trump tariffs
- Chinese New Year
- Shipping is prioritizing healthcare needs at this time.
Point of recovery
- What is difficult is tracking your container from the port to the warehouse.
- But you don’t have truckers who will come out and deliver your container to your warehouse.
- We do not know when the quarantine will end.
- The point of recovery depends on how fast people can get out of quarantine.
- We might see forwarders going out of business.
Preparing for the worst case scenario
- All the buyers operate on LinkedIn, you can go to LinkedIn and you can search for people and company.
- Use the alumni network to influence and connect with people.
- Look for ways online that you can build relationships.
- Identify what retailers would want to sell — you build the relationships now and you can grow until things get back to normal.
- For retailers, you can not force stuff on them.
- You “can” force products on retailers BUT if it doesn’t sell then they will never buy products from you again.
- Do only what is right with the retailer.
- Understand where your retailer sits, what they sell and do better than them.
- You can get very big orders by just convincing one retailer.
- If you can build a relationship with a retailer, you can get big orders.
- Before you get into a relationship with a retailer, you have to decide if you are ready to supply a retailer.
- Do you have the cash flow?
- There can be a five month period from when you pay the product to when you get paid.
- Do a financial health check and see if you can sustain that.
- Fluctuations in the exchange can happen in between.
- The retailers will return damaged products to you
- This is why inspections are really important!
Essentials and non-essentials
- Companies are prioritizing medical supplies.
- Raise your prices to adopt to the current situation.
- Have a good point of contact with your suppliers and be ready to pull the trigger if needed.
- Negotiate your way with manufacturing companies.
- Look at who the manufacturers supply with high MOQs.
- You can get your product or packaging from those companies that they supply and buy low MOQs from them.
- The key is that everyone needs to make their mark up.
- Look for all your component and build your product.
- Keep your options open, do not rely on only one source overseas.
- Check you local manufacturers.
- Take your products apart and source the components from different manufacturers.
- Downside: when the manufacturers run out of the products you need.
- Then you can mark up your product.
- Check the podcast with Steve Simonson to get the 3PL options.
- If you are worried about your non-essential items, consider getting a 3PL in China to help you out with your shipment.
- Check everything on Amazon daily!
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About SellerSessions 2020
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