← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
585: The $100K Mistake Most Founders Make with Manufacturers (and How to Avoid It) (Best of Foundr)
00:38:22
Kian Golzari is one of the world’s leading experts in sourcing and product manufacturing, developing over 2,500 products and visiting 500+ factories—Here's What He's Learnt.
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- [00:02]
A
Hey, founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works.
- [00:17]
B
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- [00:19]
A
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- [00:49]
B
Hey, guys. Welcome back to the founder Podcast. Today we're joined by one of the world's top product sourcing experts. He's a good friend of mine, Kian Gulzari. He's personally sourced over 2,500 products, work with major brands like NBA Olympics and FTSE 100 companies. And he's built his career by going deep inside factories, not just behind a laptop. Kian breaks down everything from how to properly develop and validate a product idea, the exact way to negotiate with manufacturers, and why most entrepreneurs, they leave a huge amount of profit on the table just by not understanding their supply chain. So if you're thinking about creating your own product or scaling an e commerce brand, this episode is a must.
- [01:29]
C
Listen, hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.
- [01:43]
A
The first question we ask everyone that comes on is, how did you get your job? AKA how did you find yourself doing the work you're doing today?
- [01:49]
C
Yeah, well, I was extremely fortunate, really lucky. I mean, I got. I started in a family business and I guess it started off from curiosity because my dad went to China. Like, he had this idea, I want to start my own brand. He had his own shop, and then he went to China when China started coming out of a communist rule maybe 35 years ago. And as a kid growing up, I would just always see my dad going to China. And then for that, I was always curious. He'd bring me back these, like, weird gifts, these cool products he was working on. So my whole life I was like, I wonder what it's like in China, because I just heard all these stories. And then when I graduated university, my dad was like, hey, do you want to take over? Do you want to come to China? Do you want to look at how I do the products and stuff like that? I was like, yeah, absolutely. And what was supposed to be a two week trip ended up being a three month trip and I ended up moving there, setting up an office there. So it all started from curiosity, but that was led from my childhood and from my dad, so I can't thank him enough.
- [02:35]
A
Yeah, there you go. So you've sourced now over 2 and a half thousand products. You've worked with a lot of big companies, big and small. Right. And you really help people when it comes to sourcing and developing products and also supply chain issues, which has become a big thing now with everything going on in the world. Like, what are you getting right? Like we're going to go deep here, but I'm just curious to hear from your perspective. What are you getting right?
- [03:00]
C
I would say one of the most important things is attention to detail because that's the way I've always developed products. That's always been the way I've selected my suppliers and negotiated prices and stuff like that. And I feel that like in the past, before we had all the supply chain issues, like maybe a lot of things were overlooked in supply chain, but as long as you do things right, you know, like I used to split my content between like, okay, are you beginner? Intermediate and advanced. And then we would kind of look at, okay, here's some strategies, but you can throw that to the side now it's like you either do it right or you don't do it at all. You have to be following the right principles in order to master your supply chain. And luckily, having gone to China, when I started my journey, like I didn't start my journey online sourcing products, it was in the factory, in the trenches, like touching and feeling the product, like making, making an item myself, getting to know the factory, get to know how they think.
- [03:44]
A
I'm curious, so you spent over 12 years, how many times you been to.
- [03:50]
C
Well, so I lived there for like about five years and then when I moved back. So I grew up in Scotland. When I moved back to Scotland, I would travel back and forth to China like every three months. So if I was to look at my passports, I would say I've probably made like over 50 trips to China. I've been to over 20 Canton and that's like the largest import export exhibition in the world. And I used to just travel to that all the time, but it was always so much fun. All those trips were a lot of fun.
- [04:16]
A
Yeah, well that's awesome. So can you speak Mandarin and what's your opinion on drop shipping?
- [04:24]
C
I've never really been a big fan of dropshipping because like you don't really get to tailor that customer experience. You don't really get to. Because when you're mass producing something you, because you have that volume and scale, you can make it exactly per your requirement requirements and really build that brand message, brand story, brand identity. But when you're drop shipping something, you tend to just sort of take what the factory has available and there's not that consistency in terms of like okay, well product 68 is going to be exact same as product 350 and you don't really necessarily know that. So. And for that reason the delivery time is also a bit longer as well. When you order something online, people expect it the next day, but when it's drop shipped it can be a few weeks and that really frustrates the customer as well. So I've never been such a big fan of it because you have less control on the production process.
- [05:07]
A
And so what's your take when it comes to, I guess, you know, selling a branded product versus a non branded product?
- [05:16]
C
I think brand is so important and it's where like you can really have long term success in this game because I feel that you can identify, here's an opportunity to make some money online, I'm going to sell this random product. Or if you build a brand, it's like, well, I'm really building something that I believe in, something that I'm passionate on, something that I can build a community around and add a result. A lot of people are looking to, you know, build and grow and scale these businesses and then exit them. But if you have a brand, you can demand like a lot, a much higher valuation, a much higher multiple because you've built a community. Like think of all the products that we buy. Like there's cheaper alternatives and then there's a branded ones. Branded ones. So you can always afford to charge a little bit more. So I feel like you are leaving a lot of money on the table if you don't develop your products into a real brand experience.
- [05:59]
A
So somebody's watching this right now and they're thinking about creating a product. They've got an idea, they believe that there is something there. Talk to me about your strategies around product development research and then I'd love to talk through how you source it or how would you recommend sourcing?
- [06:16]
C
Yeah, for sure. I mean I always feel the best products are coming from the Ones which solve a problem. So like, if you're ever walking down the street and you pick up a product in the store or you have something in your house and you're like, I wish they made it like this, or I wish this product would do this. Like that's your starting point to be like, all right, well, let's see if this exists. If not, let's work on it. Because I'm just solving, I've just solved the problem for myself. And I think product development really comes from a deep need to solve problems in the market. But a lot of people look at products online and be like, hey, I'm going to make this product like a little bit lighter or I'm just going to add this changes pattern or change this color. But if you solve a problem, that's where you can essentially really bring value to the market.
- [06:54]
A
Yeah. So do you have any, I'm curious, do you have any case studies or any stories or experiences you can share with companies you've worked with when it comes to sourcing products and also helping with margins as well?
- [07:09]
C
Yeah, I mean, like, margins are really important because I feel like a lot of sellers don't really understand like the true cost of something. Like you get the price of the product online, maybe look at it on Alibaba.com and then you essentially need to calculate your shipping cost, your import duty costs. But when I talk to a lot of sellers, they like to tell me about their revenue on the seven figure seller. I'm an eight figure seller and I'm like, that means nothing unless like you're extremely profitable. And like really understanding your supply chain is going to determine how profitable you actually are. Like, where can you save costs? And it can be like, you know, in the product, it can be in the packaging. It can also be like in the delivery of your products, your strategies, working for suppliers, for them to hold on some stock, for you to drip feed it to, working with shipping companies. So there's loads of different ways we can save cost and I would love to go over all of them in great detail. But because I've done over two and a half thousand products, I've got loads of case studies of products that I've developed and I've got some favorite ones, but I don't know if there's a particular story there.
- [08:04]
A
Tell us one of your favorite ones. I'd love to hear just because I think, you know, we were talking about this offline before we, you know, hit record and you said something that was really interesting. You said Look, Nathan, like, a couple of years ago, when E Commerce wasn't what it is now, people didn't take sourcing and supply chain really seriously. But now it can be the difference between having a business that is viable and super profitable and not. And I'd love to hear just kind of any stories you have or the experiences you could share, because this is so important for people that have E Commerce businesses or looking to get into E Commerce.
- [08:42]
C
Yeah. So I would say, like, one of my favorite things to do, and for anyone at home who, like, really wants to understand the cost of their product and where they could save the most, is if you're. If you're able to go into your factory, one thing you can do is, like, make one item yourself. And if you can't go into your factory because of, like, travel restrictions and stuff like that, then you can deconstruct one item yourself. But for me, I was very lucky because the first factory I ever went to was a backpack factory. So before I went into that factory, I always thought of one backpack in a store on a shelf. But when you go into the factory, I saw it in 30 different pieces. Like, I saw the shoulder straps, the foam that goes in the shoulder straps, the webbing, the zippers, the buckles, the pullers, the waterproof fabric, the inside lining, all that sort of stuff. And then when you actually can see the product, it's almost like you can think of it in 3D. So if I have a $15 product and I need to make it a $12 product, I've got 30 different calculations I can make in my head in terms of, here's where I can reduce the cost. Or if I have a product where I want to improve the quality, I can now think, here's 30 different places where I could actually improve the quality without maybe adding so much cost. But I wasn't really able to think in that way. And until I actually went into a factory. And when I went into the factory, I started to become obsessed with that. And then I went to loads of different factories. But for someone at home who's maybe got a few samples, you can also just deconstruct your samples. You can cut them apart to be like, all right, how thick is that foam inside? Is it sponge back foam? Is it eva foam? Do I want to make it shorter than when it wider? So you can really play with the product and understand the product and really attention to detail, as we said before, like, really understand the materials. So if you have, like, say, an outdoor furniture chair for your Garden right online. They look the same, but they're different prices. And one might be polyester fabric, one might be nylon fabric. Within that polyester fabric, is it 300D, is it 600D, is it 900D? And the D just stands for denier, which is the amount of threads in there. Is the tubing steel or is it aluminum? What's the thickness of the steel? And you might be sitting home thinking, well, I don't know, what are the right components I should be doing? But the beauty is that you can ask all these questions. Like, let's say you identify. Here's the top five suppliers I want to work with. I would also find a list of the top five suppliers that I don't want to work with. And I'm going to ask, ask them all my questions to learn about the product. So I would say, what's the price difference between polyester coating and nylon coating? What's the quality difference? What's the difference, difference in weight between steel tubing and aluminum tubing? And you're like, okay, cool, I'm going to go for steel because it's cheaper, it's a little bit heavier. I'm going to go for a nylon fabric because it's higher quality. And then I'm going to make that specification sheet of what I want. And I'm going to go to the factories that I do want to work with and be like, look, I want a 600D polyester. I want this thickness of steel. And that supplier is going to be like, wow, this guy actually really knows what he's talking about. And he's going to give us their best service from day one. And they're not going to mess you around with the price because they know you know about the product. But you learned it from the suppliers that you didn't want to work with. And then you applied that to the suppliers that you do want to work with.
- [11:30]
A
Yeah. Wow, this is game changing. So no one ever thinks like this, right. You usually just go on Alibaba and you just assume that's how it's going to be. And you're saying that that is, that's the old way and the new way is actually breaking it down and looking at some of these, like, economics and getting down to the nitty gritty.
- [11:50]
C
Yeah, for sure. Because like, you know, you can look at any product on Alibaba. Let's go back to that outdoor furniture chair, and it might be like $8. And then you're like, okay, I'm going to negotiate this right 650. Awesome. I got $1.50 off the price. Really proud of myself. I got it for 650. But you didn't actually know that the real price of our product was actually 550 and you're overpaying for it. But to find out the real cost of a product, it starts with that specification sheet of like, here's all the details that I want in the product, here's the Pantone colors, the dimensions, the packaging, the testing that I need, and here's a one pager, and I'm going to send that to all the factories. But we're going to get pricing back now from five factories. And the pricing will come back, you know, 650, 670, 680. And so we know the prices of the product is around that price. So we are now negotiating from a position of knowledge to be like, I know how much this product costs, so I can maybe bring it down like 5 or 10%. And if you get a product price which is like $3, you know, it's too good to be true and there's going to be quality problems. And if you get a price which is like $10, you know, that factor is just added on way too much margin. But from knowing what you want, creat spec sheet, sending it out to your top five suppliers, which I show you how to do in the course as well, now you're able to actually negotiate the PIP price from a position of knowledge because you understand what the market price is, so you know how far you can actually bring it down.
- [13:01]
A
That's gold, man. So I'm curious as well. Like, one thing when it comes to sourcing and manufacturing is it can be quite intimidating because you don't actually. A lot of the times you actually don't even see what you're spending all this money on for your minimum order quantity or, you know, you just keep ordering stock, you don't see the quality. How do you work that out, like, and how do you overcome that fear of just kind of not knowing and like, you know, translation and, you know, Barry is there as well with languages and.
- [13:36]
C
Yeah, it's a great question. And to really, like, you know, protect yourself against that. The sample process is so important, right? So we talked about that specification sheet and we chose our suppliers. Now we're going to maybe pick our top three and we're going to ask them, right, go ahead and make some samples now of exactly what it is that we want. And when you get those samples, you might tweak it a little Bit those are like your development samples, right? I've given my idea, I've got my sample. But until you get a sample in your hand of like this is 100% perfect. This is what I want to order. This is exactly the colors, the dimensions and materials of what I wanted. Now I'm going to place my deposit. Now I'm going to place my purchase order. Because this is a sample I confirmed to go into production. So now we get started. Then after that they take maybe 45, 60 days to do the production. And because I've developed a good relationship with the factory, I'm going to see photos and videos of the production line and things like that that they'll send you an email to be like, look, yeah, production's finished, I'll be okay, cool. Now send the pre shipment sample and I'm going to compare the pre production sample. This is what I confirmed for you to go into production with. And this is a pre shipment sample. This is exactly what the production is you've made me. And it should be 100 match. It should be exactly the same. And if there are any discrepancies, well, your products are still at source and you've not actually paid your manufacturer the full amount yet. So they can be fixed at source, but, but most times they will be absolutely correct. So that's another way to protect yourself. And then on top of that as well, you want to organize for a pre shipment inspection with a third party company. It costs about like 200, but they'll go into the factory and they'll see, right? Kian ordered a thousand goods. We have a thousand here. We'll go into the boxes. We've grabbed number, sample number 37 and 222. We're grabbing them out, take photos, videos, packaging, all that sort of stuff. And now you're going to receive a 60 page report of all information about that production. So you confirmed the sample, you paid your deposit, you confirmed your appreciation shipment sample, you sent in your pre shipment inspection. And then only when the goods are actually shipped and set sail on water is when you pay your remaining balance. So you know the goods are on the way to you before you actually pay your supplier. So those sort of ways you've given yourself that protection. And then on top of all that, when you're paying your supplier, you can pay via Alibaba Trade Assurance. So if there's any issues with the stock, you can also get that money back as well. So that kind of sample process, pre shipment inspection and the way you pay your supplier Gives you ultimate protection. But on top of all that, the most important thing is the relationship that you build with the supplier. Because at the end of the day, the day people buy from people. And like, just a quick tip on how to build a relationship with your manufacturer. You know, add them on WeChat, do some video calls with them, share some photos. You know when, you know when you're watching your favorite TV shows or like, you know when you're out with your buddies having a beer, like, hey, we're just out on the weekend having fun. What are you guys having for dinner? And now you sort of have that sort of communication with them on the app, like obviously on email, stick it to like the more formal delivery dates, prices, all that sort of stuff. But now I've got like, I've got video communication with my supplier through the app and I've built that relationship. But I can also say to them, hey, the goods are going to be ready on the 5th of October. And I might call them on the 4th of October and say, hey, do you mind going down to the factory floor taking a quick video for me while I'm on the call and let me see the production. So now you've got eyes and ears inside the factory because you built that relationship as well.
- [16:40]
A
Yeah. Wow, this is gold. So I'm curious as well. You talked about the inspection, man, we've always done inspections. We don't really do physical products. We do a little bit of founder, but through my fiance's company and other things I've done, they often fail.
- [16:57]
C
Yeah.
- [17:00]
A
What's up with that? And can you trust talk to me about that? Because you laugh because you know what I'm talking about. What does that mean?
- [17:08]
C
The most important thing to look at on the inspection report is the AQL level, which is the accepted quality level. And on an inspection, you'll get get minor, major and critical faults, right? Minor, you're allowed 4% defects, major 2.5% defects and critical 0% defects. So say for example, we're doing like a kid's scooter, right?
- [17:28]
A
Yeah.
- [17:28]
C
A minor defect might be there's some scratches on the scooter. A major defect might be the handlebars are a little bit too short. The handlebars still work. They're just a little bit too short. So that's major. And a critical might be the wheels don't turn, like the products don't work. Right. So it's very important to be able to read an inspection report because sometimes inspection companies can be overly harsh. And overly critical because at the end of the day you're paying the inspection company, not the factory. So they want to keep you happy. So sometimes when I see a fail I never like really get worried or freak out because I'm like well first thing, what is the root of the failure? What actually happened? And it turns out that maybe 5% of the goods that they tested had some scratch marks on it or some dust marks on it it And I can easily correct that. I can use that information. I can say to the factory, hey, can you just open them all out? Can you polish them, can you clean them, can you wipe them? Etc and then do it. And then here's the key thing, if your inspection ever fails, you must do a re inspection but at the factory's expense because you paid for the first inspection. And I would always write in the terms and conditions of my order and maybe on the purchase order as well, I will pay for the first inspection. But if the inspection fails, factory must pay for the reinspection and they sign and they agree to that, that so you'll tell them what things that they need to correct and then they're going to re inspect at their expense and then the goods will be absolutely fine. But yeah, the important thing is like not to freak out when your product fails because sometimes it's actually absolutely fine. It's just the inspection report inspection company trying to help you out and cover you basically.
- [18:51]
A
Yeah. So when it comes to defect percentage, what are you usually comfortable with?
- [18:56]
C
Anything within the AQL level. So if it's less than that 4% because and the thing is like they're always, they're also being like overly critical as well. But, but to prevent all of that defect rate as well, it's going back to the sample process because on that pre production sample, if there's anything I'm not happy with, I need another sample before I confirm this to go into production. But a lot of people mistakes that they make might be right. I found this product on Alibaba.com and they just hit order without receiving a sample. So of course you're going to have production issues. Or they might get that first sample and they'll be like, you know what, like this material isn't right. They might say don't worry, we'll correct it in mass production, like okay cool, go for it. But you have to see, touch and feel and confirm and sign off, label that sample, date that sample, take photos of it, take videos of it and like this is what I'm confirming to Go into production, I would never, ever place a deposit, place an order, until I've got something in my hand to be like, this is 100% what I want.
- [19:48]
A
Yeah, look. And there's something really special about when you get that sample. It's fun creating these products. Like, that's really fun. And there's something so rewarding about creating it, holding it, touching it, feeling it, and then seeing people buy it.
- [20:03]
C
Yeah, right.
- [20:04]
A
And you're solving a problem.
- [20:06]
C
Yeah, for sure. And it's such a. A nice feeling and a proud feeling, you know, for anyone who's gone through that sample process to be like, I had an idea for my product and now I've got it right here in front of me. And then it's kind of like reps in the gym. Like, the more you do, the stronger you get. Like, the more samples you develop, the more suppliers that you talk to, you just get better at it. And then to your point as well, when you see it in the street, I mean, like the proudest moments I've had, it's when I've products, I know I've been long hours, late nights in the factory making those products and I'll just see someone wearing it down the street and it's just like they've got no idea. But I've just. I feel so good when I see that. It's the best feeling in the world.
- [20:40]
A
I agree, agree, agree. And I've seen that many times with founder and other things we've done. So I'm curious, timing, how long, from your perspective, do you believe it should take to take a product through these phases from coming up with the idea, sourcing and manufacturing to get the samples, then to run and do your first moq. What kind of timeline do you give yourself when you're working with a client or working on your own projects?
- [21:12]
C
Yeah, great question. I mean, like, I would kind of allow myself about 10 days to find the right suppliers online, communicate with them, share with them what I want, and then after that, maybe two weeks for them to make the actual sample, depending on how complicated the sample actually is. And then maybe allow yourself a week for that sample to be sent from China to wherever you're located. And then once you have that gold seal sample, in terms of. Right. This is what I want to order. I would normally allow two months for production. Those lead times can extend a little bit because of supply chain issues at the moment, but generally two months, it's kind of 30 days for material preparation and then 30 days for actually manufacturing and QC and stuff like that. And then depending on where you're shipping it to, whether it be the U.S. allow maybe another 30 days for shipment. So, so of me having this idea for a product going through the sample production and then delivery of it, you could allow maybe three to four months in that window period. But in the sample stage, we just talked about two weeks. But it depends if you're developing a product from scratch. And I think the timing of that is really important, depending on the level of innovation that you're doing. If I'm developing the next electric toothbrush which brushes your teeth on two rows, it's never been done before. I'm not under the pressure of time because no one knows that product is actually coming out. So I would kind of judge it by what's the level of innovation of your product, and then use that to allow yourself how much time is your window of opportunity to launch that product.
- [22:32]
A
Got it, Got it. So three, four, five, six months, give or take, depends on how fast you move, et cetera, et cetera.
- [22:38]
C
Yeah, but if it's a reorder, normally just. And it's something you've been happy with before, like two months for production and then one month for shipping. 90. I would say 100 days is a safe measure. And stick to be like, here's your order to when I get my stock. 100 days.
- [22:52]
A
Yep. I'm curious as well. Do you ever worry about over developing.
- [22:56]
C
An ide A hundred percent. And I've been guilty of it many times as well. Because, like, as product developers, we're all perfectionists. Like, we want to launch that perfect product. And if you spend too long developing it, that's when the window of opportunity could actually pass. Because while you've spent so much time developing it, other people have launched their version as well. So I always say, like, develop until a product is 80% ready. Because it could take maybe, you know, a few weeks to get that from 0 to 80%, but it could take nine months to a year to get it from 80 to 100. So you're killing yourself to get it from 80 to 100 when you've lost the opportunity. So I would launch it when it's 80% ready. And then while it's in production, while it's selling, that's when you're working on getting it from 80 to 100. And a lot of people are worried about, oh, well, what if someone copies my product? Well, if they copy your product, they're copying what is already out there. So they're copying what you've already made, but you're working on the newer version. So by the time they bring that copied product to market, you've brought out your newer version. So as long as you stay innovating, stay on top of your product, always be one step ahead of the competition.
- [23:58]
A
When it comes to, I guess, ideas being stolen during the development process, that's a big thing that a lot of people worry about. You hear horror stories. I'd love to hear if you got any good stories there or if something people should be worried about.
- [24:12]
C
Yeah, yeah, yeah, for sure. Because it's one of the most like common questions I get asked, right? It's like, what if someone copies my idea? But I think the most important thing is to be self aware of, of how did I get my idea in the first place? Because you might have got your product idea because you saw something out there and you're like, yeah, I really like that. But I can improve it by doing this. But then when someone does that to us and they take our product and they change it a little bit and they're like, oh, this guy stole my idea. So it's like I would. So there are forms of protection if you're worried about, well, what if my manufacturer copies my idea? You can get them to sign an NNN agreement, which is non use, non disclosure, non circumvention. Write it in English and Chinese, Proper contract act. So like, it's good. But that goes against what we said before about, you know, developing a good relationship with your supplier. Because it's like, hey, I trust you to make my order. I like you, but I think you might copy my product in the future. So I need you to sign this like you're not setting your relationship off on the right foot. But if you do have something of real innovation, then you can design, you can get a design patent or a utility patent on that product. So a lot of people think your manufacturer is going to copy them. In actual fact, it's not your manufacturer, it's a competitor which will copy you. They'll give it to another manufacturer and then they'll copy your product. So don't protect yourself, yourself against your manufacturer. Protect yourself against the competition. And the best way to get that is through a design patent. And if a design patent is too expensive for you or utility patent is not worth it, well, how innovative was the product in the first place? And one final thing I'll say about that as well is that let's say we do have this new product idea, this new innovation like that electric Toothbrush which brushes two rows. Right. I'm not sending that product idea to the top five suppliers that I find on Alibaba.com I'll maybe find a similar product, just a normal electric toothbrush and then I'll find top five suppliers and I'll get my samples, I'll do my negotiation and you know, find out who's got the best communication and then with my first choice supplier, that's who I'm going to share that new idea with. So I still went through the filtering process but only one supplier actually saw my idea.
- [26:04]
A
Yeah, love it. And when it comes to you talk about Alibaba, is that the go to or what you preferred?
- [26:12]
C
My preference is always building relationships in the factory face to face, hands on with the product. But Alibaba.com is the best platform that we have at the moment for online and credit to them. Like the platform has improved so much in the last like three years. So they've really taken this opportunity to be like, well you know what, big companies can't come to China anymore so let's make sure our platform looks right. And there are horror stories that have happened on Alibaba. So there are like really bad suppliers there, but there are also really good suppliers and, and the purpose of using Alibaba correctly is to find the best suppliers.
- [26:45]
A
Yep. Awesome. And talk to me about like the supply chain issues and navigating them right now because you can still start a successful e commerce business in today's climate, there's nothing stopping you. Yes, there's more competition but you can spin up the Shopify store. As long as you've got a great product, great idea and the unit economics work out, there's nothing stopping you. You can use TikTok, Instagram, organic traffic, off you go. Don't need to run ads if you don't have to. You can just start small as plenty of people doing this every day. Talk to me around supply chain and navigating it right now. What are things that people need to be thinking about?
- [27:24]
C
I would say supply chain issues is an opportunity because you know, you could look at the supply chain issues. Oh, shipping cost has gone up, lead times are longer. Why is this happening to me? But if it's happening to you, it's also happening to your competition. So what can I do about it right now to get ahead of my competition? So if it's shipping prices, I'm asking my manufacturer, hey, this has been the increase in shipping goods. The increase is like $5,000 per container. Can we split that 50. 50. So I can pass that saving on to my consumer. If I can pass that saving on, I can sell more. If I sell more, that's more orders for you. So it's all about, like controlling those conversations and controlling those situations. If, for example, like, you need shorter lead times. Well, if you're, if you were ordering, you know, 2,000 units per order, but you ordered, you know, 10,000 units over the course of the year, I'm going to ask my manufacturers, hey, can you hold the raw material of my product in stock in your factory? So let's say I'm doing this black hoodie and can you get this, like 10,000 pieces worth of this black polyester in the fabric rolls and, you know, store it in your factory? And then when I need to order the products, then you can cut and sew and manufacture. But at least all the materials are there in stock. And the good thing is, one, if you've got a good relationship with your manufacturer, they're willing to do that for you. Two, if you were ever to, like, not take the goods and not order it, this is a black polyester that they can sell to other customers as well. So it's not just dependent on you, but you've kind of half your lead times because they no longer have to go and order as material. You've also reduced your cost because they've. You've got that economies of scale. You bought it all in bulk upfront at once, and you're also not paying any storage. So these are the things that we need to do to have an advantage over our competition. But if everyone thinks, oh, I'm stuck, supply chain issues, I'm not going to order this product, well, you're leaving so much money on the table, you're not developing that next product and you're letting your competition get ahead head. So it's like, what are the problems? And then come up with a solution, which also I want to cover in great detail as well.
- [29:14]
A
Yeah, man, this is gold. I'm curious as well when it comes to working with manufacturers and rates and how do you manage them over time? You've given us a few examples around kind of materials. What are some other examples? And like, yeah, obviously you go in depth in this program and on our platform, but like, yeah, do you have any more just for people to help.
- [29:37]
C
With rates, raises in like, prices of product?
- [29:40]
A
Yeah.
- [29:41]
C
So you know, you know, we cover like the specification sheet. That's the most important thing to really understand what is the actual price of the product. And then from There I can negotiate down having them hold materials in stock for you as well. But a quick hack you can do as well is always ask your manufacturer, what materials are you holding in stock? Because quite often manufacturers are holding materials for maybe items that were canceled by other customers and stuff like that. Like they might have like some lime green or purple fabric that like, hey, that's been there for like a year now. And like that customer is like gone out of business. And they. But you might say like, oh, yeah, cool, I'll take it. But they're just willing to give it to you at like half the price or 75% off because you just want rid of those materials. So asking manufacturers as well what items they have in stock can sort of give you some great price advantages as well.
- [30:26]
A
Yeah, interesting. And when it comes to, I guess, testing your products and seeking feedback, what advice do you give there?
- [30:34]
C
Yeah, so most important is test it yourself. You will be the toughest critic of your actual product. Like, when I'm making outdoor backpacks, I'm climbing the mountains, I'm making sure that the water bottle fits nicely on the side and making sure the sleeping bag fits in the backpack. If it's a tent or a sleeping bag, I'm sleeping in it to make sure I actually stayed warm at night. Even if it's something as simple as a coffee mug mug, I have to make sure I'm drinking five cups of hot water out of that. And then like, you know, it doesn't chip, the handle doesn't fall off, all that sort of stuff. So you are your own toughest critic of the product. That's first. Once you're happy with it, you might want to send it off to a third party company for like actually doing the legal and product testing if it's required. Like if it's an electronic, there might be legal testing required. I also like to send it. You know, we talked about like building a community in the course and like, you know, if you have that Facebook community, you might offer it to be like, hey, I'm launching this new product. Do you guys want to be one of the beta testers? And then you get that feedback from your inner circle as well. And then the other thing is also the final one is like working with influencers. Because working with influencers can be quite transactional in terms of like, hey, if I give you this product, can you post it? Right. How much are you going to pay me? But if you work with an influencer who's actually someone which would use your product as well, I might say, hey, I'm developing this travel backpack. You talk to a travel influencer, like, hey, do you mind? Like, I've not launched this yet, but I'd love your feedback on it. If you use it and test it, you let me know what you liked about it, what you didn't like about it. And then they might say, you know what, the shoulder straps were a little bit too thick. And then you might say, all right, cool, I'm going to reduce it. So then when they promote it, they're going to say, hey, I was involved in the product development process of this product. I didn't like the shoulder straps. They changed it. Credit to the brand. So get the influencers involved in the initial stage and then they'll be more compelled to sort of share it with their audience when it's launched as well.
- [32:11]
A
Yeah, Gold. And I'm curious, like, You've sourced over 2,500 products. What's been some of the biggest mistakes you've ever made? Tell us some war stories, man, because, you know, you have a wealth of experience.
- [32:26]
C
Yeah, I had a couple of horror stories where I had a couple. Yeah, so we, we were doing military boots for the army and it was, we had done like many, many orders and stuff like that. And something can happen in China called a quality fade, where like, gradually your manufacturer can start reducing the quality of the materials to maybe save a bit of coffee. And I was, you know, inspecting my products all the time and I was testing my products all the time. But because within so many orders I was like, you know what? I stopped doing. It took my eye off the ball. And then we had like two 40 foot high cube containers of military boots. And I remember when they arrived, like a few weeks later, we started to get a few returns like all the souls were splitting. And it was like 2 returns, 5 returns, 20 returns, 50 returns, 100 returns. And then the stores were like, we're sending all of it back. I was like, what has happened to these here? And I looked at the soles and like when he flexed the sole just like tore. And what happened was the manufacturer had used less rubber content. It was supposed to be 40% rubber sole, but they maybe gone down to like, maybe 32% just to save a bit of cost, a tiny bit of cost, but because the volume was so high, that would be good for them. But ultimately products ended up failing. Now I was able to turn it around and I was able to fly my manufacturer over, went over the products with them. They took responsibility for it because they're an honorable supplier because, like, you know, if you, you go through that selection process and you work with bad suppliers, they will just wash their hands of it. But if they value you as a customer, they'll put the hand up. Look, I messed up. It was a mistake. And then they remade the goods at their own expense. And then we were able to, to go from there. But that just shows you, like, don't take your eye off the ball. You should be inspecting every order because sometimes these mistakes aren't intentional. Sometimes they might just order the wrong material. But if they were tested at the source, I could have fixed it there before shipping it out and getting all those returns.
- [34:10]
A
Any other good lessons?
- [34:12]
C
Yeah, I mean, testing the products yourself will also, you know, sort of surefire you of that. But when you're doing so many products, it's really hard to sort of actually, you know, one thing I will say as well is it's really important to prevent that quality fade is to have all those samples in your office or in your, in your home from every order you do. So let's say, for example, you're doing like those boots, right? And then I would get a sample from every single order, right? But label them, tag them, store them. And what to do is that like randomly you want to take the boots from like order number five and the boots from order number 12 and send them both to an inspection company for product testing. And if there's, if those boots are any different in any way, then you're starting to see a quality fade. But you can always reference them back. And another cool thing you can do as well, regardless, whatever you're doing it, whether it's a T shirt or whatever, I always put the purchase order number on the label of the product. So, for example, if I've had a bad batch of production, I'm getting all these returns. Some of your stock might be in Amazon, some of them might be in the usa, some of it might be in China or other parts of the world where you're selling and you start to get returns, you're like, I don't know which batches were affected, but if you have that product order number on the label, then you know which ones we have to reclaim. You can go to your warehouse and be like, right, that those were the ones from the batch. Let's pull those ones. But if you've never put that order number on there, you don't know which are the dodgy ones and which ones you can sell.
- [35:35]
A
Oh, so it would be like you have a Rotten apple in a tree but not seeing where it is poisoning all the other fruit.
- [35:43]
C
Exactly. Exactly.
- [35:44]
A
Yeah. Wow. Okay, that was a good one. All right, what's a recent product that you've developed that you've seen that's left you speechless? And why?
- [35:54]
C
One that I've developed or one that I've.
- [35:56]
A
You've seen?
- [35:57]
C
One that I've seen? I'll tell you, one that I've seen, which I've, and I've just been so impressed with is it is totally different to what we do, but it's Invisalign rotation retainers, right? Because they mix technology. And so Invisalign retainer is basically straighten your teeth for anyone who doesn't know. But they use the technology and they adapt that to a product. They send you like 20 different products and they straighten your teeth, but it does exactly what they say they're going to do. It's like, hey, we're going to give you perfect teeth. And then they sort of send you one every week. And it just works. It just works. So I was very, very impressed with that product. But going back to something that I've done as well, I think that the best products, as I said, come from like solving a problem. And one of the product examples that I gave in the course was like a U shaped travel pillow, right? So essentially I worked for a couple of guys in Scotland and you know, they were like, you know, this U shaped travel pillow doesn't work. You know, you sleep like that, it doesn't protect you. You sleep on your side, you still get a sore neck. And someone would look at that and be like, okay, let's just make it a little bit thicker. Let's change the material to like some microfiber or something like that. But the actual problem is people can't sleep while they're traveling. So how do we fix this? So what we developed was like a fleece scarf that goes around your neck. It's got a little foam padding inside. And then we created this like plastic shaped curve, can slide it under your neck, you can sleep like that. You can put it there, you can sleep there. And these a U shaped travel pillow. And that particular product cost roughly the same, but one solves the problem. And that product is sold over a million units, but it came from an issue of I can't sleep when I'm traveling. And rather just saying, all right, let's tweak this, let's tweak that. It's like, let's just solve the problem for our product.
- [37:25]
A
Yeah, that's cool. Well, look, dude, thank you so much for coming down to Melbourne and just an incredible interview. Just giving so much gold. So thank you so much, Kian.
- [37:35]
C
Absolute pleasure, bro. Thank you for having me. It's been an honor.
- [37:38]
B
Hey, founder fam. Thank you so much for tuning in today. And if you enjoyed this episode, please take the time to leave us a review and let us know what you think. This podcast is 100 free. We work so hard to go out and find the most successful entrepreneurs and founders in the world. Your feedback, feedback helps us grow, improve, and even bring on more incredible guests and insights. So if you have a second, please take a moment, leave us a review. It really makes a difference. Thanks again for listening, and I'll catch you on the next show.