Diversifying is the Way to Increase Profitability of an Amazon Business

Essential Guide to Increasing Profitability of Your Amazon Based Business as an Entrepreneur – Part 3 – Diversifying Your Sourcing

Now let’s turn to diversifying where you get your products from / diversifying the source of your products.

The vast majority of you that are getting products for your own brand are getting products from China, and many of you are tied to one factory. Now, we have staff in Shenzhen, China, which is where all the electronics are made. We have staff in Yiwu, China, which is huge for textiles, and the next best city next to Shenzhen for Amazon sellers, the largest concentration of Amazon sellers, is in Hangzhou, and guess what? We have staff there as well.

The first thing you need to do is if you’re getting products from China is to make sure you’re getting products from multiple factories.

I have seen with my own eyes factories that on Monday, have one name on the door and on Tuesday they change the sign, it’s another name. You need to fear your factory. When you are having products made in China or any place else in the world, because I don’t want to give China a bad rap, wherever you’re sourcing your products, you need to make sure that your own factory does not control who you are.

There’s a saying in business, “If you owe the bank a million dollars, the bank owns you. You owe the bank 50 million or a hundred million, you own the bank.”

The same thing applies to sourcing your products. If your factory supplies you with 50, 60, 70, 100% of your products, that factory owns you. If they start selling your products someplace else, you’ve got no place to turn to, you’re going to have some downtime, that’s going to be a delay.

If the factory stops producing products for you, same thing. You are dead in the water until you get into another factory with another prototype, make sure it’s up to your quality, and if Amazon should trace the source of your products back to one single factory, and I don’t care if it’s in China, India, Vietnam, Costa Rica, doesn’t matter where it is. If Amazon should approach that factory and say, “We want a million units,” they’re going to stop working for you and they’re going to start working for Jeff Bezos.

So what you need to do is make sure that your products are coming from more than one factory, even if it’s in the same country, never be beholden to one factory in China.

If you need help finding other factories, contact the office. We will put you in touch with factories. I will even loan my staff to you wherever you are sourcing your products from to help you diversify the factories producing your products, even if it’s the same exact product.