Episode 36: Francois Jaffres

Francois was my tutor today. The topic was supply chain.

In this episode we discuss:

  • Differentiating what you need vs. What you wish you had on your first order
  • Key quality indicators to be aware of
  • A checklist of items you want to rattle through before you approach a supplier
  • Getting better terms from suppliers and how to build a relationship
  • Educating yourself on supply chain for Amazon
  • The risk of not understanding the logistics of running an online business
  • The triangle of; price, quality, and MOQ

You can connect with Francois on LinkedIn here.

Other resources:

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Click here for the RAW unedited transcript
[0:00:01] George Reid: Welcome to It’s Always Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week on the podcast you’re going to hear industry experts brand owners on Amazon employees share their answers to the basic yet fundamental questions you should be asking yourself about your Amazon business. Now let’s jump in. Hello, ladies and gentlemen, Thank you for joining me today on another episode off. It’s always Day One today. I’m really excited to welcome Francois. Who’s gonna be going over from sourcing, perching supply chain, all the sort of stuff that I’m actually completely hopeless at eso Francoise. Welcome to the show. You want to give us that 22nd background and we can dig in some questions?

[0:00:43] Francois Jaffres: Yeah. Yeah, definitely. Well, first of all, thank you for having me. It’s an honor to really be on your show, my backgrounds and industrial engineering and supply chain. So I work with Neverland, the director of this development here, Been with the company since the founding team. Since we didn’t have a platform since we barely had a concept and idea. But the general just that it is really just simplifying and streamlining supply chain and all facets of it on doing so with technology based behind it. So having everything done, one centralized platform, I think is is so needed in the industry today. Uh, that’s a little little e guess. Synopsis of where I am in life right now.

[0:01:24] George Reid: Mentally, emotionally, financially, work wise, always summarized, Beautiful. I like it. So what I want to dig into a little bit on. It’s selfish, to be honest, because I would understand the supply chain little bit Mawr. You’re somewhat on expert. So when I ask them questions around that, that’s okay with you

[0:01:42] Francois Jaffres: completely fine

[0:01:44] George Reid: with that. Hopefully we’re gonna deliver some actionable insights to the audience as well. So to kick things off, let’s think about the current situation. What are some of the core challenges brands are facing with sourcing right now on how can they look to overcome them?

[0:02:01] Francois Jaffres: I see. Actually, it’s ah, it’s a common trend. It’s something that I’ve been noticing before Kobe, but I think was really highlighted during Cove It and thats preparedness and willingness to put in the effort when you’re starting your sourcing journey on. What I mean by that is there’s a lot of businesses that want to continue doing business as usual, where they just say, Hey, I want let’s say water bottle right And they’ll say, I want a water bottle and has to be insulated And it has toe pertain, heat and the cold for six hours. And those are all my requirements. Well, they’ll approach the factory with that. They’ll say, Oh, I want this and I want, you know, 500 start off and I promise I’ll get bigger and this and that is something that the factory has heard and has been given to go around a few times, at least to say the least. Um, the issue with that is that as soon as the factory receives that they’re probably receiving a dozen other requests exactly like that. That air just sort of not really well thought out. I don’t know what you want for packaging. Do you need a private design on it? What colors are you looking for? Um, you know, what is your ideal target pricing? Because that, of course, has to do with quality. The cheaper that Ugo, it’s it’s hands down. Always gonna be a cheaper product. I mean, that’s just natural right. There’s always that cliche if I want the best quality at the best price. But no one wants to elaborate on what does that quality actually mean? Eso itt’s taking all these facets of a project and spending a few hours and putting enough thought into them that if a manufacturer receives them, they can say, Okay, they want, you know, a double wall insulated, uh, tumbler. And they need their own logo on the bottom of it, and it has to have a stainless steel trim to it. And it has to have a Matt finishing, and it’s going to come in a double pack and we’re gonna have a blue in a pink for maybe a his and hers. Um, and that packaging is not gonna have their logo. It’s just gonna have a sticker with their company brand on it. They want 500 to start. You know they have a budget of 8 to $10,000. These are all questions that we dive deeper into with all of our users, particularly on on the first go round. But it’s something that not enough businesses they’re doing when they’re approaching suppliers on let’s say Alibaba on, and it’s really, uh, when we audit our factories and we asked them, Hey, what are some of the pain points that we can help take away? That’s one of the key things that they bring up just hey, the quality of our of queues or just tanking. How can we get Mawr, you know, official request? Because when they get these requests, they see it as a half fast. Well, I’m not sure if I can,

[0:04:38] George Reid: so

[0:04:38] Francois Jaffres: it’s a half ass effort, right? And you can expect a factory to stop everything that they’re doing and a sales person to get you a quote by working with their engineering team by working with the products product team on the floor and saying, Hey, you know, these are all the parts and pieces. How much do you think we can give them? Eso? A lot of times, you’ll see a project that should only take about a week to quote out. It’s gonna take 3 to 4 weeks on. That’s really because it’s not prepared from the beginning on. That’s where you’ll see issues with with that initial relationship building where the factory just doesn’t want to deal with you. You’re you’re asking a million questions you’re asking, You know, if I’m the fact that you’re asking me to develop your product for you, basically, I have to yank what you want for packaging out of you. Uh, it’s a lot to ask of for them. And when they have to do this for dozens of companies that are requesting the same thing, you need something that makes you stand out. And that one thing is always gonna be preparedness s. So I think that’s sort of the trend that I’ve been noticing that our factories have been I talked to us about

[0:05:43] George Reid: on in order to make this easier. Festivities, er, in order to create templates, Kate systems process in place, which is the only way to really scale. In my opinion, I’m guessing there is a checklist or something or other that you typically have in mind that you go yours. Refer to this. So we’re answering these 50 questions on may be dropped into an excel she on. Maybe that is what you’re sending over to the potential factory or three different factories. Would that be correct? Correct what I’m thinking.

[0:06:14] Francois Jaffres: 100%. And after this, I’d be more than glad to share. This are cute. Guideline and checklist, actually with you. Um, I’ll make sure I get least on board with that. And she’ll get that over Thio and s Oh, yeah, it highlights. You know, what are some of the common product specifications that we look for? What is something that maybe you didn’t think about for packaging. So if it’s a coffee mug, right and you’re selling it for a brick and mortar store, then you could probably order about 50 per master carton. And you don’t necessarily have to have each one individually wrapped with style film because they’re fairly safe. They’re going into a container. They’re going directly to a warehouse. They’re going directly on the shelf. But when you’re working with Amazon, you have to think about Hey, where is this? How is this gonna be handled? Right. So now I have to think about the packaging and have to think, Hey, this should probably go into bubble wrap and then into Styrofoam. And that box should be a little bit looser that we have some slack. And, you know, if it bumps around, it won’t just immediately crush um there’s a lot more to think about. And in this guideline we touch on, you know, what are those product requirements? What are the packaging requirements and what are the quality requirements and emphasis on that quality requirements? Eso We have something called key quality indicators that I think everyone should add on to their to do list on toe. Any time that you’re sourcing a product immediately, think about Hey, what is someone gonna really like about this? But more importantly, what are people hating about this product? What sort of one star reviews on my competitors getting, uh, you know, how are they going to use this? Is it gonna break easily? Do I need to include some spare pieces or parts just to have a better experience for the customer? Uh, these are all questions that have to be asked and up front. Um, and one thing that I’ve I’ve kind of been toting lately is creating this need and a wish list. And what I mean by that is that if you are sourcing those mugs right and you have a set budget, particularly for new Amazon sellers, they have a set. Let’s say $5000. They can’t spend more than $5000 for the order on day. No, I have to order 700 units. They have to be X dollars. I can’t go over this budget. They create a needless and a wish list. That wish list will have. Hey, what is going to deliver? The most amazing experience If I got this product, if I opened it has maybe a little letter in it. And it has a nice even, you know, brand coloring throughout the entire thing. And when they unbox it, it’s just amazing experience, right? You can add all these, uh, really added values into the wish list, but think about what you need. What you need is a good quality mug. What you need is a ah packaging that will protect it to get it to the door. What you need is a label for the fns ke you for your brand. Maybe on top of it, you don’t necessarily need that card insert to test the market. Eso creating a needless and a wish list I think are very important. And as you grow, you can start to ADM or of that wish list to the need list, you could start to say, Hey, maybe I will spend the extra 10 cents for card inserts because now, instead of ordering 200 units, I’m ordering 2000 units and I’m getting better, you know, pricing for shipping, because now I’m using a full cubic meter instead of paying for a few full cubic meter. But, uh, sort of advertising that throughout 200 units instead of that 2000.

[0:09:41] George Reid: Really? Really. Not that mindset behind the wish list and needless. And I think it’s perhaps often overlooked. People are probably taking very early on a lot of the wish list, dipping it into the need list, but I like how you’re then reinforcing that off. We just wanted to test the market to begin with, right? It’s it’s validation to the highest degree of Will people buy this? Is it going to meet certain criteria? Have we overlooked something? Is there demand there? That’s where the needless comes in. When you kind of scale up, then you look at that wish list and go. Hmm. We now need to start building reviews, for instance, so we need to improve our review collection process through a very nice insert, or we need to figure out a way to retarget people. So we’re gonna change something on our packaging slightly. So there’s a nice Q R code on it, or we need to start getting additional clicks, not just finished another podcast. Do we need to think about our packaging again? Because we’re not getting enough clicks in the search results because our packaging

[0:10:49] Francois Jaffres: isn’t

[0:10:50] George Reid: quite enough on that first image amongst all the competitors, it doesn’t quite stand down. We need probably in the image, because for that clicks, there’s no sale without no cells, no business. So I think it’s a really good mindset that you kind of pulled up on that. So my question then following up to that is at what point should brands that having conversations with supplies? Because some of the things in your wish this and need list completely makes sense. But when you talk about validation and things like that, people coming through at the moment, some of the more successful brands have They done a lot of validation already. Are they going? We’re going straight to the supplier. We haven’t really tested the idea. We haven’t built an email list. We haven’t built out the following any assets. Nothing. We’re just going off our God. I’m going to supply. Do you feel that’s a waste of time? Kind of what? The conversations you’re hearing a lot for the more successful players.

[0:11:45] Francois Jaffres: Yeah, I think it’s it’s definitely, uh, I would say, even a 50 50 split. We definitely worked with companies that are more than willing to invest in a full container load or half a container load of a new skill. But it’s usually because they have a firm understanding of the market, not necessarily the product. So they know. Hey, these air we already built out these email lists were selling on Shopify. We know that we can sell X amount eso. They’re fairly certain that they’re gonna be able to sell through half a container. Um, and they understand also like they’re going to get the best shipping rates. If you fill up that half of the container and then you fill up the other half with items that you 100% no, we’re going to sell. But we also have those that are a little bit more reserved and want to test the market with, Let’s say, just 500 or 750 units. Ah, lot of it, I think, comes down to strategy. Some of the ones that start off with those higher quantities that are more willing to do giveaways. They’re more willing to, you know, do what Amazon hates, which is sort of exchange a product for a review. It happens. I mean, it’s there’s no sugar coating it. It does happen out there. Um, while those that are sort of just trying to test the market very early on with just that 500 units. Um, I think in a sense, they do have their own need and wish list. They know, Hey, we have to buy the product for this amount to be able to sell it for that amount. So what can we do to get there? And when they will submit there are refused to us, and product specials will let them know. Well, you know, we’re about 15 20 cents off of what your target is. What you can do is remove the card and what you can do is not go with a full custom packaging eso. Now we’re getting back to the basics, right? What do you need on? But I think it’s It’s exactly that they realize that they don’t need that custom packaging. They don’t need that card insert. They need to validate the market. Um, and so it’s it’s really Ah, it’s split. It’s based on what sort of resource is you have, right? Everyone has, Ah, different amount of resource is now how much risk you can take with those. Resource is whether that be money, whether that be time. I mean, if you have the time and you order 10,000 units, you could sell it over the next five years. I’m sure hit up a bunch of friends on Facebook, right? Join the Facebook groups. Um, but, you know, if you have a goal, I want to sell these in the next six months. You might just want to start with those 500 units, and in those cases, you might just wanna work with a trade agent or work with something that’s less customized. Um, might be a little bit more expensive, but and you have less customization on it, but it gives you that need. It gives you the need to test the market.

[0:14:19] George Reid: Andi, are you seeing people? Mawr, particularly when they first starting out. Are they leaning into trying to get the best possible price orm or thinking? I just I don’t mind paying 2030% more because my quantity is very low. But I know that I’m gonna get this quantity him. I’m gonna get some good validation of people are willing to pay X for it. I’m not gonna make good margin to begin with my margin come in the end because that’s always been my her thought process of going. Even if I pay ВЈ8 instead of five, don’t be tempted with the five just to get like the volume up in the better price because you’ve got no idea that your marketing is gonna work. You got no idea how quick it’s gonna take to get to Amazon, how it’s gonna take to get accepted. How long it’s gonna take your Facebook hours working on your advertising, working. You don’t know how long that is going to be. Competition can then increase. The market can change whatever, Andi, You could be in a completely different situation going well, let’s be risk a lower take a lower risk option, pay a little bit. Mawr make no margin whatsoever, but proved the concept. Where do you see people more leading towards or is it still like 50 50 Split?

[0:15:33] Francois Jaffres: Uh, I would say there’s actually a third option out of those two options on, and it’s one that we see. I would say, with the majority of new Amazon sellers or just e commerce sellers in general Andi, that’s that They want a very low M o que. They want a very, very low price. They want the price that you would typically get for a full container for low M o que and they want the quality that you would get at the best, you know, retail, big box store. And so it zits, this little triangle where you where you have to give on at least one of them. And if you’re giving up on price, then you will likely get a better m o que a better quality. If you’re giving up on quality, you’re going to get a better price and likely a better M o que, um so it Z, you can’t really have all three. And if you do find a factory that could give you all three. Cherish that relationship. That’s the number one thing I could say, because that is similar to a unicorn on, but it takes a while to get there. It definitely does. S o, I would say that the third thing that I always see new sellers sort of ah, approach factories and approach us in general with is that they do want those ridiculously low Emma keys. I’m talking like 200 units of completely customized products that would typically require a tooling or molding on day. Don’t want to pay for the molding or they don’t, uh, let me take that back. It’s not that they don’t want to pay for the morning is that they don’t understand what molding really is, and they don’t understand the tooling behind it on dso. I think it’s an education thing, but they do want the low m o que the great quality in the great pricing. And it’s it’s a very misleading because they will see that on the marketplaces. And I won’t name the marketplaces, but it’s the ones where you can see 100 m o que for two cents and then you start talking to them and then they actually tell you, Oh, you want this many? It’s actually 30 cents, and, uh, they’ll waste your time. Basically,

[0:17:26] George Reid: eso

[0:17:27] Francois Jaffres: it’s it’s somewhat misleading.

[0:17:28] George Reid: Yeah, I completely see where you’re coming from. It’s a bit of a jungle out there for those who have started. If you talk about, then terms just a little bit. Obviously, the bigger you get, the better terms you’re gonna You’re going thio achieve. But how come brands get better terms from supplies as a whole lot of things and questions need to be asking, What what leverage do they have? How would you approach the conversation? We’ll be kind of kings. Have your thoughts.

[0:17:56] Francois Jaffres: So it’s It’s all about relationship when it comes to terms. When it comes to pricing, it’s all about how can you improve efficiency? But when it comes to terms, it’s all about relationships with number One thing that you can do, uh, is stick to your guns and be honest when you’re talking to your suppliers at all times on DSI it as a two way street, that there are going to be the good times and there are gonna be the bad times. It’s completely inevitable. If you do it long enough, you’re going to run into issues, right? The ones that don’t run in issues. Typically, it’s it’s you haven’t been in the game long enough. That’s just, you know that’s gonna be the case. It’s all about how you handle that issue. Eso if the factory, let’s say, made the wrong color and they shipped whole container of the wrong color to you, are you gonna point at the factory and wag your finger and say, Hey, you messed up. You have to fix this. Give me better this. Give me better that take all my items back or are you going to say, Hey, okay, how can we fix this together? You know, I understand. I can’t sell these, you know, Can I liquidate them? And then I’ll use whatever I liquidate for the next order. And then you have to give it to me at cost or try to find the solutions with them. And I think not enough businesses, particularly as they’re growing, use that opportunity. Uh, instead, they use it as a again wagging the finger, you know,

[0:19:16] George Reid: Uh,

[0:19:18] Francois Jaffres: right, right, And that zbig opportunity missed. When you do that, as you grow with them, they’re gonna want to give you better terms as they see the larger volumes when they start to see Hey, you know, they started off with 500 units over the past year. They’ve grown 200%. They’re expecting to grow, and I know it’s a 203 100% over the next year. I understand this is affecting their cash flow, you know, telling them, telling them all of these things, while at the same time not just saying. Hey, I don’t have the money to finance my order. Uh, it’s Hey, I want to take this as an opportunity to grow and to grow with you not to grow with any other supplier I want. I would like to give you the business because you’ve been treating me good. Um and so as you sort of grow with them, make sure that you highlight the times that they do a good job. The times that they do a bad job find a way to work together through them. Um, and you know, at that point as you grow, you could start toe sort of incorporate the conversation of I know we’re working on 30 70 terms, but I have this new opportunity to, let’s say, expand onto Shopify and I need an additional 5000 units, uh, for Shopify. But right now I’m really hoping to expand into, let’s say, net 15 terms after paying 50% up front. Uh, and you know, they’ll see that as an opportunity for them also to be able to produce more items and as long as you’ve paid on time as long as you haven’t tried to strong arm them in the past Asl ong As, uh, you’re nice to them. I guess this is an easy way to say it. Uh, you’re cutting out all the flush. As long as you’re nice to them, you treat them well. I think there will be more receptive to hearing, uh, you know you need better terms so you can grow.

[0:21:04] George Reid: E think. Yeah, I’ve been reading a lot of Dale Carnegie recently. How to win friends and influence people. There’s so much to be said off just straight up being nice to people building those relationships, building report, remembering small things, whether it’s a particular time of year, which is important to them or whether it’s their child’s got the flu or risk birthday or whatever. I think there’s the small touches like that. But the overall consensus off you’re looking to build a relationship. Ah, business relationship, yes, but also a personal relationship on. But however you can force that relationship is only gonna be supportive off your your business relationship. Um, that’s Yeah, fantastic. I like that. Like that summary there eso only kind of final question would be What? What are your thoughts in terms of the biggest threats when Amazon business. Right now. Ah, lot of the answers we get is related to Chinese supplies coming direct. So I’m really keen to understand of where you see the big threats on if that is something that you feel is a big concern for brands today.

[0:22:18] Francois Jaffres: Yeah. Ah, and I’m gonna have t r horn a little bit here because this is something that we’ve been, uh, pushing for about over a year now on that’s education and supply chain. Uh, I think that is the biggest risk to most online businesses. Actually, most businesses want to do things as usual. They want to run with this just in time manufacturing, uh, business where they have something being manufacturer. They have just enough inventory. Toe lasted until that manufacturing run gets to the warehouse. Right? And a lot of businesses don’t wanna have that carrying costs associated with their inventory by using something like a three pl or having their suppliers hold inventory for them. Um, but even though they are costs, uh, they’re not necessarily, uh something that’s bad for your business, their investments into mitigating your risks. And that’s what we’re all about here, actually. So I think it’s educating yourself with what are your options and what risks are are my is my business actually taking right now on? And I think when a business actually analyzes their supply chain, they’ll see that they’re taking tremendous risks by solely relying on Amazon FDA by Onley having just in time manufacturing done by not having that additional inventory by Onley using one freight forwarder, um, about having I mean something that I’ve heard a lot more recently For some reason on Maybe it’s just targeted towards me. But I’ve seen a lot more people, Uh, except a supplier based QC report. And the supplier was the factory will tell them. Oh, yeah, We’re gonna do the QC. Don’t worry. Don’t worry. Don’t worry. Uh, well, that’s that’s actually a main cause for concern. You know, if they do QC on let’s say your new seller and you don’t wanna pay $200 to a QC third party inspection company You just wanna just have qc done because you hear that you need Keesee. Well, now you’re gonna get those products in the Amazon. Now you’re paying FDA fees. Now you’re going to start to get returns and reviews once our reviews for any products that actually failed QC and you would have caught that while it’s in China on That’s a risk, right? That’s a risk that our business is willing to take. So I think education and supply chain is one of the most important. It’s I think it’s most important. More important than PPC. It’s more important than, uh, inventory management. Just inventory management, because I understand the marketing is important. Of course, on advertising is important. Uh, but if you have a risky supply chain, your supply chain just completely craps out. You’re not gonna have any products to market on That’s what we saw in 2020 I think. Because of co vid.

[0:25:07] George Reid: Yeah. I mean, it comes back Thio. I have an old kind of structure called the Mountain Strategy or operations Brand advertising operations are your your base, you build on top of it without all that you’ve got nothing. There’s no part of advertising if you can’t fulfill. There’s no part of building a beautiful brand presence if your supply chain is never gonna get the product and it’s never is never on on offer. Really, really allow that Somewhere around the educational pieces huge France, we’re going around things up. There’s a lot to keep things short and sweet. Thank you so much for 25 minutes off your time today. Onda look forward to hopefully speaking the future make

[0:25:46] Francois Jaffres: yeah, 100%. I appreciate you having me on and, uh thank you.

[0:25:51] George Reid: No worries part. I dropped some links to help people connect with you afterwards on dial. Speak to somebody, Shout Bye. Hey, guys, just a quick one. If you are enjoying the podcast on either have some actionable next steps or new

[0:26:04] Francois Jaffres: ideas I’d really

[0:26:05] George Reid: appreciate if you could one subscribe to the show and leave us a review Thes are really, really important to us. As you probably know, being in the Amazon world,

[0:26:14] Francois Jaffres: Aunt to If

[0:26:15] George Reid: you’re looking for additional support with your brand, head over to the website, it’s always day one dot co dot UK. We’ve got links to other resource is as often our guys speak soon.

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