Original subtitles

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Alright so so before we go into 2

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showing you guys how to find a good 3

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supplier on Alibaba 4

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I need everybody to understand the 5

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difference between a trading company 6

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and a manufacturer. 7

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So we're going to explain that in this 8

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video. So we're going to describe 9

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like a scenario where you might actually 10

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want to use a trading company. 11

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But most of the time you're going to want a manufacturer. 12

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So we'll tell the differences 13

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when you would want to use one 14

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or the other 15

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and how you identify 16

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a trading company 17

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and how you identify a 18

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manufacturer. 19

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So what is a trading 20

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company and what is a manufacturer. 21

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Well a manufacturer is 22

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somebody who's going to 23

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assemble 24

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and create this product 25

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for you. I mean pretty self-explanatory. 26

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Whereas a trading company 27

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if they're like a middleman. 28

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OK. So if you know a drop shipping is 29

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a drop shipper will just 30

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they'll find they'll do the marketing 31

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they'll make the listing 32

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and they'll handle the customer 33

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service and all of that 34

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and then they find somebody to ship it 35

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for them. OK. 36

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And so that is what 37

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a trading company is. 38

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So there are different types 39

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of trading companies where 40

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there's some where they'll literally 41

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just sell off the shelf products 42

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with from manufacturers. 43

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And then there are ones that 44

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will be kind of like your agent 45

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where they will work 46

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with that manufacturer. 47

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So let's say you want to customize like 48

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I talk about doing 49

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they will go 50

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and do that. 51

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They'll be your liaison 52

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or whatever 53

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but that's not always 54

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good. 55

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You ever played the game telephone. 56

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Things get lost in translation. 57

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So not only do we have 58

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you trying to communicate 59

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with this trading company 60

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who is then translating 61

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and you know they are probably 62

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native Chinese speakers. 63

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So are they're probably 64

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native Mandarin speakers so 65

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there are already losing in 66

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translation there 67

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and then back and forth you're going to 68

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have even 69

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more difficult. 70

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You're gonna have a really difficult 71

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communication lines if you especially 72

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if you want to get a lot of customization done. 73

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And then now you don't have 74

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that direct relationship 75

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with the supplier. 76

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So if something goes wrong 77

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or you need something rushed 78

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you don't have that equity 79

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with them in that relationship. 80

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And in doing business 81

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in China it's about building relationships 82

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because contracts are useless. 83

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They're not really enforced. 84

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If you're in the US 85

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and it's a 86

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Chinese company 87

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even Chinese company it's Chinese company 88

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they don't necessarily enforce contracts 89

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laws are different there. 90

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So it's all about building 91

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that trust. And then here's the other thing. 92

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The trading company is going to 93

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the trading companies can take a cut. 94

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You know they got to make money somehow. 95

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So that is 96

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what a trading company is 97

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and probably why you don't want to use 98

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it. But why would you 99

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want to use trading company. 100

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So let's say you're building a bundle 101

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OK and 102

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you find you just want some 103

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high quality products several of them 104

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and you put them together in a 105

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package form that 106

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nobody else is offering. 107

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OK understandable. 108

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Now that trading 109

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company is if 110

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it is a well selling product 111

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they have purchasing power 112

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and relationships 113

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with the manufacturers. 114

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So a manufacturer is going 115

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to charge a lower price 116

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if they're guaranteed 117

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a lot of volume. 118

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You know just basic economics. 119

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So you might be 120

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able to actually get a better price 121

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if you're buying something that's not really 122

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customized. 123

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If you're going to the trading partner. 124

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Now like I said though you don't 125

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don't buy and just put a label 126

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on something that is a bad plan. 127

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That is a plan for disaster 128

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in 2018 even 129

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2017 130

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and anytime after. 131

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So don't do that. 132

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But I actually 133

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for my goggles we 134

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need the frames 135

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and then I imported lenses 136

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from a different country in the world 137

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and then we assembled 138

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and then made our. 139

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We did additional stuff too. 140

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And then we made the packaging 141

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so I gathered a look 142

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bits and pieces 143

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from all around the world 144

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and to make in 145

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it because essentially I couldn't get 146

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everything all together in one place 147

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and made in time. 148

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So we actually 149

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just needed premade parts. 150

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And one thing that 151

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was cool was 152

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with the trading company they 153

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were actually had them on hand. 154

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So it's such a high moving item 155

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that they they were 156

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stocking it because they knew they would sell 157

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them. So I was able 158

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to get a literally 159

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in four days for a 160

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lead time on my product 161

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in an air. 162

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I would get it in my house in three days 163

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so I would order 164

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and then seven days later 165

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out of the product at my house 166

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ready to go. 167

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Now you're going to 168

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with a manufacturer. 169

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They are not going 170

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to have product right away 171

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and even some trading companies most 172

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of them aren't going to 173

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but their are in this 174

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is that fringe case that I'm talking about 175

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where it was actually in 176

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my benefit to be 177

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I couldn't have made 178

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and the success that I had without 179

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using a trading company that 180

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pre had this 181

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inventory 182

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and had this great relationship 183

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because let me tell 184

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you I couldn't I couldn't 185

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build out this relationship to 186

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get you know so sometimes 187

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they didn't have that on stock 188

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from the supplier because I bought up all their supply 189

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but they had that relationship built 190

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up and they were saying hey we need 191

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this I need this order 192

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now. 193

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And he used his relationship 194

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and all of its purchasing power leverage 195

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to get that to happen. 196

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I couldn't have done that. 197

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Now you could use the 198

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sourcing agent which we talk 199

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about later but that can be more 200

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advanced but you're trading 201

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company is going to be kind of like a 202

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they're they're 203

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essentially a sourcing agent. 204

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Yeah. Yeah yeah they're a sourcing 205

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agent but 206

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you just gotta understand what you're dealing 207

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with. 208

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And yeah as a 209

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trading companies probably just one guy 210

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in an office 211

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or several there 212

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sometimes they're the rather large 213

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though I've even seen them at the camps 214

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and fair. 215

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So I mean those are 10000 216

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boots and they had a they 217

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had relationships 218

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with several suppliers. 219

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If you think about it retailers 220

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are kind of trading companies they're not 221

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selling their own products. 222

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Typically they're just selling 223

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other brands 224

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and so now 225

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these trading companies are kind of selling unbranded 226

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products. But 227

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with the approach that I suggest 228

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that everybody takes you want to get 229

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and have that relationship 230

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and you want to have the leverage 231

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and you want to customize 232

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and then 233

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make more products within that 234

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and build out your brand. 235

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So a trading company is not 236

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going to be the way to go for most of you. 237

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But like I said that 238

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if you go with the bundle 239

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or you're somehow 240

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in my rare scenario where 241

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I somehow was able to find all 242

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the perfect parts from different places 243

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of the world and put it together 244

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and make my own product. 245

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But yeah. 246

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So I hope that this explains 247

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that and now 248

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I guess I will show you guys 249

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how you can see if the company 250

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is a trading company 251

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versus if it is a 252

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manufacturer 253

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and so I'll show you how to do that on Alibaba 254

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in the next video. 255

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So I just want to add onto this you 256

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don't need to use a trading company to 257

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make a bundle 258

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or assemble multiple parts because 259

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there's a great network of manufacturers 260

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in China and the manufacturer almost 261

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always knows somebody who can do 262

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what you're looking for 263

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but you've got to make sure that 264

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when they're adding on those extra pieces 265

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that you get actual 266

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fair price for that. 267

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OK. So I had times 268

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where I was sourcing my hippie glasses 269

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Originally I wanted to get a 270

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nice microfiber cloth 271

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and like a case for it 272

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and he's like Yeah we could do that. 273

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You want like 45 cents each for 274

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it. And I was like well I could get it on 275

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Alibaba for 13 cents 276

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and then he was like OK we'll do 13 277

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cents so you just gotta be careful 278

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and the only reason why I did 279

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that assembly in the United 280

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States was because the 281

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lenses were only available 282

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in Europe. There's only one factor 283

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in the world that made it. 284

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And I just couldn't do it from China 285

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otherwise I would have had it done 286

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and assembled in China. 287

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But that was a really rare case. 288

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So ninety nine percent of the 289

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time you're going to be using a manufacturer 290

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in China and a trading 291

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company is very rare to use 292

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but it just so happened that it worked out 293

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for my case.