How To Grow Your Product Margin with Steven Selikoff and Amy Wees

OTS 151 | Grow Your Product Margin

 

Have you ever been in a position where you’re feeling stuck about the pricing you have? Have you sold to a retailer and the money that is coming back is not what you want it to be? If so, then this episode will be a treat for you. Timothy Bush sits down with two experts in the field, Steven Selikoff and Amy Wees of The Canton Fair Experience, to talk about product margins. They get deep into the discussion about creating some efficiencies that will change your product in a meaningful way and, thus, upping your margins. Sharing The Canton Fair Experience, they give us a peek into this gathering of the largest exposition of suppliers, as well as talk about sourcing in China, negotiating the cost of your product, and more.

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How To Grow Your Product Margin with Steven Selikoff and Amy Wees

Our topic is margin and how you can possibly get more margin even if you think that you can’t. With me is Amy Wees and Steven Selikoff. Our topic is margin. The reason that this came up, Amy and I were talking and specifically for my Big Box readers, I know because I get calls on this all the time. I have readers that feel like they’re stuck with the margin that they have. They’re stuck with the pricing that they have. If they’re selling into a retailer and the money that’s coming back to them is not what they want it to be, a lot of times I think that you’re saying, “This is just my lot in life. Until I revamp my product or until something changes, I can’t do much about the product that I have right now about its pricing. I’m going to have to live with these low margins.”

A lot of time we have these discussions and we talk about how they can create some efficiencies, but when you change your product in any meaningful way and you’re already in a retailer you have to disclose that to the retailer. In a lot of cases, you’re going to have to send them a new sample. You’re going to have to explain to them what you’re doing and why you’re doing it. It can be complicated. I know that at The Canton Fair Experience, we talk extensively about pricing, extensively about margin. I wanted to have a discussion with the two of you to let the Big Box readers know that there is alternatives out there to just living with your current product.

Amy: I think also that’s something that a lot of people struggle with. You and I are both in the consulting world and we work with entrepreneurs and so many of them want to scale further with their current products. People love them, they’re selling well, but they just don’t have the margin for the turnover that they need, for scaling their product as much as they would like. Definitely, that’s something that we focus on in The Canton Fair Experience from the very beginning. It’s getting those numbers down, understanding what you need to source your product at, what price you need to source your product at. Understanding the variable costs that you might be able to reduce the price, the current manufacturing price of your product or cost of your product. Then teaching you how to work with your supplier in partnership with your supplier to get that cost where you need it and where your supplier also agrees with it so that you can work together in partnership to scale the business. What’s good for your business is also good for your manufacturer’s business when it comes to scaling. That’s what we’re trying to teach in The Canton Fair Experience, is understanding when your numbers need to be at and how to work with a supplier to make that happen.

Steven: Negotiating, it’s very different when dealing with China than the US, but whoever your manufacturer is, talking to them and working with them to bring your prices down is definitely something you need to be looking at when you want it to increase your margins. In China with The Canton Fair Experience, you get to meet your suppliers, your factories in person. That itself will start giving you opportunities to bring the costs down. They love meeting you in person. They love having one-on-one time with you. You start building something called Guangxi, which is unique to China. It’s a Chinese word that means the relationship, the business relationship that you build. We don’t even have a word for that in English. That’s how important relationships are in China.

A word in English, it’s the phrase that’s called, “Let’s get it done.” That’s all that we have here in the US.

Amy: It’s a little different in the US though. When you go to a business meeting in the US, you sit down across from each other and you say, “Let’s get it done.” What do you owe me and what do I owe you to get it done? You’re very focused on that and you come into that meeting and you leave that meeting with your do outs and you’re ready to go. When you’re dealing with a supplier in Asia, that whole dynamic is completely different. If you’re going to that meeting with the mindset of, “I’m going to get with this supplier and I’m just going to get it done,” you’re going to have a completely different result than if you understand how to develop a business relationship in that culture, including that pouring over into your costs and your pricing.

Steven: The words instead of “let’s get it done” is “let’s have some tea.”

Let’s slow down a little bit. I think I was excited at the beginning, but let’s slow it down. I know that Steven mentioned that I’m going to be at The Canton Fair Experience this year in October and I’m going to be part of the prep courses getting into that. Big Boxers, if you were to be part of The Canton Fair Experience, I will also be there and would enjoy meeting you in person. Let’s back up to talk a little bit about what The Canton Fair Experience is, why it’s important, what you can possibly get out of it. Even if you are already selling a product, even if you’ve already sourced a product from China from wherever, why is this still a viable place for you to go? In some cases, even more so than just starting out. Although it’s good for anybody who has an idea all the way up to people that are already selling a product. Amy, Steven, you guys can fight over who’s going to give an overview of what The Canton Fair Experience is. Who’s going to be? Amy, let’s give an overview of what The Canton Fair Experience is and why you guys decided to do it.

When it comes to scaling, what's good for your business is also good for your manufacturer's business. Click To Tweet

Amy: We should address what is the Canton Fair. It sounds like a carnival. It sounds like a state Fair. The Canton Fair is the largest exposition of suppliers. It takes place in Guangzhou, China twice a year, in April and October. To give you an idea of the sheer size of this, it is like the size of three large airports. If you had to walk the whole thing, it is 217 football fields worth of walking. There are a ton of suppliers. There are all these different factories, trading companies and supplier booths, 60,000 booths and full of their most innovative things. If you’ve been sourcing online, on Alibaba or any of the online sourcing websites, those products that you see, there are not what you are going to see at Canton. You’ll see some of those products, but the level of products that you see at Canton is just unreal. To give you an example, I’m in the pet space and I had been for some specific pet fountains that solve a problem for my customers that I wanted. I had been sourcing those, looking for them online for over two years and was unable to find them.

Here I am walking through Canton during phase two and I see them at three different booths, exactly what I had been looking for. I’m blown away because I’ve been looking. I’ve been turning over every stone and I have all these resources at my disposal and I could not find these things and here they are at Canton. I walk in and I talked to the supplier and I’m like, “Where are you exporting this to?” It’s all Europe and various portions of Asia. They weren’t even exporting to the United States yet. That makes sense why I can’t find them. My market was not a target yet for that. I was so excited to have the opportunity to bring those unique products to my brand. It was just so cool the fact that I had been looking for them. You’re going to. You think when there are 60,000 booths of suppliers, these suppliers want you to enter their booth. They work all year to bring their most innovative products to market to display at their booth so that you go into that booth and you talk to them and they could be your manufacturer.

You’re going to see some very cool, innovative products that you can put your own spin on or that you can exclusively bring to market. It’s a game-changer for business. There are three phases to this fair. Each phase lasts about a week and during each phase, there are 60,000 different suppliers. The scale of it is incredible. When you walk in, you feel how big of a game-changer this is for your business. That’s what the Canton Fair is all about. It’s this incredible opportunity to source just amazing, unique things for your brand. Steven and I came together and we said, “Let’s prepare people to source.” We put together a course to teach entrepreneurs how to come up with great product ideas or how to make changes to their existing products that customers are going to be raving fans over. We worked together on that and we wrote this awesome course. We brought in experts like Tim Bush to tell folks how to make it happen with their products. We put together this 40-plus hour course and then we allow you to meet us in China at Canton Fair and apply the knowledge that you had from the course. That’s what The Canton Fair Experience is all about. That’s why we call it The Canton Fair Experience because we want you to experience the Canton Fair like nothing else.

Imagine if you had decided and maybe some of you have been to the Canton Fair, been to China or been to your factory, but a lot of the people that I meet generally meet a middleman or they buy a product off Alibaba. That product has certain margins built into it for the people that are displaying it, brokering it and doing all that stuff. Imagine going to Canton Fair. If you’ve never been to China, you fly in, you go to this place, 60,000 booths. Where do you even start? What do you even say? Can you speak the language? How are you going to negotiate? I just think personally, I’ve never been to Canton Fair and if I went, I would probably not get as much out of it as I would if I had a guided tour. One of my favorite things is I’m going to Halloween Horror Nights and it has this thing where you can pay X amount of dollars and you get a private tour guide. You get to the front of every line. You get to go back and you get to meet the actors. You get to do all kinds of cool stuff. You get to learn the history of Halloween and stuff that you would never even know.

You can go to Canton Fair and try to walk around and I would imagine you’ll become overwhelmed. You won’t do as much as you could because you’re going to be wandering most of the time. You’re going to walk up to a booth and you’re going to be a little shy. Like, “What do I do? Do I just jump in there and say, “How much is this product?” What do I do? Contrast that with the Halloween Horror Nights, you arrive in China, you meet up with a group of like-minded people that you already know. You’ve been in a mastermind with these people plus me, Amy and Steven for two months. You jump on a plane, you go to China and then what do you do? You meet all these people face to face. First of all, it’s like this big reunion. I can imagine. You have dinner and everybody gets to know each other. As a group, you go to Canton Fair and you’re guided by Amy and Steven and they’re explaining to you where to go, what to do. There’s not all this wonder in your mind and you’re not wasting valuable time.

Once you find a place you want to go into, then you have them explain to you. This is what you do, this is what you say and this is how you negotiate. These are questions that you ask. I think about the possibilities of what you’re going to have when you leave if you did it that way, as compared to if you went on your own. To me, it’s also like you just launched your product, you’re trying to get it into retailers. You’d think about doing a trade show. I’m going to do the International Home + Housewares Show in Chicago and I’ll probably put down between $15,000 and $20,000 when it’s all said and done with my booth and everything. I don’t know one thing about putting on a trade show or putting on a booth, how to get people to come in, what to tell them or say to them or do it, but I’m going to do it.

When it’s all over and you are not as successful as you want it to be, you may blame it on the trade show, “That wasn’t a good trade show to go to.” The bottom line is you weren’t probably prepared. You didn’t have appointments set. There are a ton of things to do when you’re getting ready to go to a trade show. Having a customized program is I think the key to success with anything. I know I quote Jim Rohn all the time, “Why try to do it yourself if you can learn from somebody who’s already done it and crushed it?” Anyway, what else?

Steven: One of the things that goes on at the Canton Fair and with your existing suppliers, whether they’re in China or not, is just the ability to negotiate the raw cost of your product down. We talk about that as part of the course. For example, you can discuss with your manufacturer the different components that go into your product and identify where individual components can have their costs lowered and that then impacts the entire cost of your product. You can look at things like printing. Do you want to change from screen printing to digital printing or back and forth? The number of colors that you have on there? The fabrics, is it microfiber? What’s the GSM? There are opportunities looking at each individual component. That’s very important that bringing the price down. That’s something we talk about both for China, but it applies to all of your existing products. There are price breaks. Have you negotiated price breaks? I’m constantly surprised by people, particularly when they source from China who starts off and negotiates a price but doesn’t negotiate price breaks in at the beginning.

OTS 151 | Grow Your Product Margin
Grow Your Product Margin: The Canton Fair is this incredible opportunity to source amazing and unique things for your brand.

 

Now that you have your set price, what’s the price going to be after I hit this threshold or that threshold? You have those prices in there. The same thing for terms because terms are very important. We are in a cashflow business. You need to make note of negotiating those terms right upfront. People talk about MOQ and what happens if you are under MOQ and how do you bring surcharges into that equation? How do you get those surcharges refunded back to you?

These are the types of things that we talk about in in The Canton Fair Experience. We’re going to China. Each one of those is just as good hints for whether you’re sourcing in the US as well. Always talk to your suppliers, break down the components and see if there are cost savings within those components. Talk about your MOQ. Talk about terms because the price of money is expensive. If you can get terms, that lowers the overall cost as well. Talk about the surcharges and refunding them and lower than MOQ orders.

I’m sure some of you were saying, “How much is it to go to the Canton Fair,” and we’re going to get to that. If you just learn one thing, if you take the course and you learn one key thing over the course of your product in the course of your distribution, in the course of your overall program with this product, imagine how much ROI you’re going to get on that and how quickly you’re going to get your money back. In fact, I think we have an example that went up onto your website, Amy?

Amy: I think it’s a good point to bring up that we have many participants in our program that already have established brands. We have the brand new folks that are just getting started and then we have those that are established. In all cases of the people that came with us, we’ve had some great results on differing levels. Because of everyone, depending on where you’re at with your brand, those differing levels of success or what’s good for you. We had one of the couples that came with us. They had an established brand already and they were doing pretty well and very good monthly revenues selling on eCommerce. They were able to use the techniques that we gave them. They had been to the Canton Fair before. They had a good relationship with their supplier, but they were able to use the techniques that we gave them to lower the prices on their products by 30%. Because of the partnership they were establishing with that supplier, the supplier was working to lower an additional 10%, up to 40% off their costs. It’s was a game-changer for their brand. It allowed them to go back and amp their sales, amp up their advertising and add more products to their line.

That was a great example of a success story of an already established brand and already established relationship with the supplier that they were able to make even better. We had another participant and this is the one that you were discussing that we shared. Her name was Jacqueline and she was sourcing online from Alibaba. She was putting together some amazing products and some unique bundles. She was doing very well. She’s a very smart businesswoman. She had her own company before she went into retail and eCommerce. She decided to come with us on this trip and source direct from Canton. What she was able to do, she said she has placed four orders since returning from Canton. Three are for products that she previously sourced from Alibaba, but she was able to find new factories at Canton and get much better pricing. Let’s break down her savings. The first item, she saved $2,500. The second item, she saved over $7,000 on her order. The third item she was the most stoked about because she saved over $17,000 on her previous order. Right there, that’s over $30,000 in savings over three orders. That’s game-changing. You’re scaling that over your retail sales. Imagine her profitability.

Getting back, think about that. You are not changing anything but creating a personal relationship with your supplier and understanding the negotiation process. You didn’t cheapen your product. You didn’t cut corners. You changed manufacturers and negotiated a better deal. In doing that, over three orders, you saved over $30,000. I don’t know anybody that couldn’t use an extra $30,000 and imagine what you could do with that. What are you going to do with $30,000? You ramp up your advertising. Get somebody to help you out with your social. There are all kinds of things or maybe you’re going to pay yourself back because you’ve been losing money or your margin has been so slim. The previous person you talked about, I think that’s important to just ponder on that. Remember what I was talking about? If you went by yourself. Somebody’s already been to Canton, somebody already has a product and somebody who is already selling, they were able to still get a tremendous amount of value and make some significant changes.

That’s why I wanted to get involved with Steven and Amy. That’s why I am taking the time out of my October, as long as it doesn’t correspond with Halloween Horror Nights, to go to the Canton Fair because literally Amy and Steven are helping people. This is not the value that you get out of this course. I’ve talked to a ton of people. In fact, some of their participants are in one of my monthly mastermind groups, already what they’re telling me is that the value that they received was far more than what it costs them to go. Steven and Amy are completely over-delivering, which is one of the things that I wanted to get involved in. I hope that you’ll at least go to TheCantonFairExperience.com. You can go there to check it out. If you have any questions, you can always shoot them to myself. Anything else that people need to know that’s important for them to know?

Steven: I love a phrase that you love using, which is “How much does a mistake cost you?” I’m living proof of that. I’ll let you use the phrase.

Terms are very important because we are in a cashflow business. You need to make note of negotiating those terms right up front. Click To Tweet

It’s the $5,000 Rule. I was telling Steven, I don’t remember where we were talking about that, maybe it was on a Facebook Live. When I had bought some franchise stores, I didn’t know what I was doing. I didn’t get an expert to help me. I didn’t reach out to anybody to ask anybody’s advice. I felt like I knew what I was doing. I made a lot of mistakes. I always like to say every mistake costs me about $5,000 or more. I did it enough times that I created the $5,000 Rule. If you are an entrepreneur and if you have your own business, I know you know what I’m talking about. I know that you’ve turned left when you stood to turn right and it cost you $5,000.

I know that you’ve probably got a product sitting in your garage that is still sitting there because it was the wrong purchase. I get calls about that all the time. It’s not just the money that you’re going to save when you get better pricing. It’s not just the time that you’re going to save because you know more. It’s also the mistakes that you’re not going to make that is going to save you so much more money than you could possibly imagine and you won’t know about it because you’ve dodged that bullet. If you’ve ever been where I was, where every mistake seemed like it was $5,000, then you know what I’m talking about. Think about this, one mistake missed going to the Canton Fair.

Amy: I think it’s also in the power of your network. I started on this journey to invent a product and bring a product to market. I knew I could do it in eCommerce because on Amazon there are no barriers to entry. It’s pretty easy, but I wanted to scale my product into retail. I struggled to find the right answers. I was going to my local small business association. I was trying to find whatever resources I could find. There is power in this network and that’s why we brought you in, Tim. It’s not just us in this program. We have reached out to the best experts that we can find in the field so that we can give you access, we can give you a Rolodex. It’s going to make a difference in your business. You get our experience and we’re going to overdeliver.

Our heart is in this to help you. We don’t only want you to get our experience. We want to teach you from our failures and we want to teach you from our successes. We want to expose you to those people that we have met along our journey that made that difference. Those people that if I hadn’t met that person and had that resource, I would have saved myself $50,000 on this. It just molds alone. We’re teaching you how manufacturing works and how to get your molds done in China and all that. That stuff is so key. I can’t tell you how much I spent paying for a liaison in the United States. I’m happy that I did that because of where I was in my journey at the time.

Now, looking back when I could count up all of the savings that I would’ve had, had I had these resources at my disposal, it’s so priceless. We not only want to expose you to Tim, Steven and myself and our journeys and what we’ve been through. We want to give you all those resources. We also introduced you to other experts in the field such as how to protect your intellectual property in China because that’s a big deal. A lot of people are worried about that. We bring in experts like Dan Harris of the China Law Blog. We help you with the independent retailers. We help you with understanding, prototyping. Maybe you have an idea that you don’t know how to get after. We are helping you with that. We want you to be able to just have every resource at your disposal that you’re not making those $5,000 mistakes.

You come away from this program with, “I just went to Canton. I met all these great manufacturers. I know how to prototype. I know the manufacturing process. I’m not afraid to visit the factory. I know exactly the language that I need to be speaking. I know what I’m supposed to be doing.” Most importantly, when you get back from Canton, that’s when the real work begins. That’s when you need to start reaching out to suppliers, getting samples, moving forward and breaking down your pricing. Our program allows you to remain in a mastermind, the same group that you went to China with, you remain in a mastermind with them forever, for as long as you need to be and you’re supporting each other and holding each other up along that path.

That I think is key. That level of support after you get back from China is a game-changer. We’re watching. We’re in the private Facebook groups with our folks that just got back in there. They’re putting their samples out there and sharing. Everybody in our program, it’s a small way. We limit the number of participants and everybody in our program signs in NDA and you do get to know each other. You get to be like family. They’re sharing samples. They’re getting opinions on designs, branding, packaging and all of that stuff. It’s helpful to see them help each other into this long road and sometimes short road, we hope, to success as an entrepreneur.

Steven: I love the fact that you use the word Rolodex best. Just that’s classic. There are lots of companies and people who can step in and do all of this for you. What we do is we teach you how to do it for yourself. That’s critical. You don’t need to speak Chinese. You don’t need the liaison or the third person or the third-party company in between you. You don’t need the middleman. We teach you how to do it yourself. When it comes to lowering margins, that’s a big cost that you’re taking right out of it right there because you are doing it yourself. You’re doing it correctly and you’re doing it with the right support system. That allows you to take away that extra person who’s trying to make money off of every step that you’re doing. That itself becomes a great way of lowering margins as well. Maybe you can update your Rolodex into a computer.

OTS 151 | Grow Your Product Margin
Grow Your Product Margin: When you get back from Canton, that’s when the real work begins.

 

I know it sounds like we’re drinking the Kool-Aid, but to coin Cory Booker in the debate, “We are drinking the Kool-Aid, but we do know what flavor it is.” I know it seems like we’re gushing on this. Originally, what we started out with was margin, but there’s not another opportunity out there if you’re looking to expand your product line and if you’re looking to gain more margin. If you’re looking to create face to face direct relationships rather than have people in the middle of your factory relationship. If you’re looking to understand the process so that you are knowledgeable, so that you know what’s going on, so that you know how things are done. If you’re wanting to do all of those things and save yourself from the $5,000 Rule, The Canton Fair Experience is going to get that for you. I’m super honored to be part of it and I hope that, Big Boxers will see some of you there. Any last things?

Amy: No, I think that we pretty much covered it. I hope that we are able to help as many entrepreneurs as possible to get after the best possible price and the best possible quality of their products so that they can have the best profit going forward.

Steven: I’ll quickly add that anyone who was taking a look at this. If you’re looking and the classes have already begun, we do have onboarding for people joining after the classes have begun. We help make sure that you have caught up with everyone else and you’re not left behind. Our goal is to give you the knowledge that you can use to make a successful business.

That’s important to note too because this is going to be out there for a long time. It will always be important to reach out and find out when the next The Canton Fair Experience is. We do have one that will be leaving here this coming October. This one is almost filled. If you have any interest in jumping on this when we’re having our first call. It’s the first one of this coming up session. If you have an interest, reach out because it’s almost full and we want to get you on this one. We want to see you there. Reach out if you have any and we’ll talk through it. Thanks, Steven and Amy. I appreciate it. Big Boxers, thank you so much. As always, I appreciate you and I appreciate what you guys are trying to accomplish. You can reach out to us in a multitude of different ways. OnTheShelfNow.com. You can reach us On The Shelf “Now” our Facebook group and then On The Shelf Now which is our Facebook page and @OnTheShelfNow on Twitter. On The Shelf Now is everywhere. Don’t hesitate to reach out. I look forward to seeing your products on the shelf.

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About Steven Selikoff

OTS 151 | Grow Your Product MarginOne passion, an old TV show, led me to discovering another passion; selling people things they like, and making a profit by doing so. In 1973 I was a vendor at the second-ever Star Trek Convention. I sold framed photographs called ‘stills.’ They were images from the actual Star Trek TV Show printed from discarded film left on the editing room floor. I did so well I set up a mail-order business. I was 13 years old, and I had caught the entrepreneur bug for life.

I grew up, lived as a starving artist (fashion photographer) in New York, Italy and Brazil.
I eventually got ‘real’ jobs, including Business Manager to two Vice-Presidents at Microsoft where I managed the Worldwide Retail Sales & marketing division. But I never lost the entrepreneur bug.

I started sourcing from China in 2006 and began attending the Canton Fair in 2012. And although I started FBA just before Christmas my first year, (one of the very first people to use FBA) my focus has always been on selling to Retailers. After all, e-commerce accounts for only 10% of retail sales. That’s nice, but it’s small. I love the sandbox where the other 90% of the money is made.

My expertise is finding good products at good prices. My goal is to teach you the how-to identify products that sell successfully in both e-commerce, and in retail stores, how to source them in China, to make deals, how to negotiate effectively, and how to get products produced.

In my opinion, it is a lot easier to sell to Retailers than it is to sell on Amazon Seller Central. And you can make a lot more money.

About Amy Wees

OTS 151 | Grow Your Product MarginAmy Wees is the CEO of Amazing at Home Business Consulting. Her coaching focuses on helping brands develop unique products, validate them in the marketplace, source at profitable margins, and launch those products in E-Commerce with amazing brand messaging, copywriting, and search engine optimization.

She shares her skills teach classes at business organizations locally in San Antonio Texas, coaching entrepreneurs around the world through virtual coaching sessions at https://Amazingathome.com, and through a formal business, course teaching these fundamental concepts called the Canton Fair Experience (https://thecantonfairexperience.com). She also covers these concepts on her E-Commerce Tips and Tricks podcast called “The Seller Round Table” (https://sellerroundtable.com/)

Amy is an Expert Planner with 18 years of military planning experience, she holds 3 Undergraduate and 2 Graduate Degrees. She is an Entrepreneur with 3 brands in the marketplace and more on the way, a Brand Builder, Inventor, and Patent holder. She’s also a Teacher and Public Speaker, Search Engine Optimization Expert and Copywriter.

Last year I invented a product from scratch and brought it to the market along with an entire line of products for my brand. I’ve been flipping products as a hobby on eBay and Amazon for close to 15 years. I figured out how to build my brand, launch and grow my sales simply by studying the market, writing a business plan and becoming a master copywriter and advertiser. Now I teach these skills to other entrepreneurs and coaching has become my new passion. My goal is to discover your passion, build your confidence and help you build a brand that will knock your customers’ socks off!

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