All language subtitles for 3. All About Sourcing Is China Still An Option

Okay so I want to start this video off by saying that this situation could last for a much longer period

of time than you might be currently thinking about.

If we have a look at the Spanish flu and we look from the start of the outbreak to when it was over

everything together to roughly each year.

And at that time people didn't know how to stop this.

Right now we can take drastic measures to slow this down a lot and potentially maybe still stop this

knows.

However we should not ignore the fact that this might take a year or longer.

So right now the best assumption is to probably say it's taking somewhere between six to 18 months until

everything goes back to normal.

Right.

And when I say six to 18 months this also means the situation around the world and different countries

can be completely different.

Since China was the first country to have the outbreak and it seems like they're probably going to take

drastic measures to make sure it stays that way.

So maybe China is gonna be fine all the way along.

And just other countries are struggling with it.

So instead of thinking of this overall we have to think of it on a country basis.

And if you think about your supply chain it comes down to where do you sell.

Where do you source.

Let's just start off with the most common case which is sourcing in China.

And I think that's probably 95 percent of people watching.

So from what we have heard from factories and also from amazon sellers it seems like that factories

open back up in China and yes they're trying to process all the backlog that they have and they're not

working at 100 percent productivity but nevertheless factories are open.

Now if you make any inquiries about making products right now or ordering new inventory trust me the

Chinese will say yes but always be sure to question and to get updates maybe from Facebook groups and

see if those factories can actually deliver because they could prove promising you the world to get

you down payment but then they take forever to actually deliver or the situation changes and they can't

keep that promise.

So I want you to understand that this inherent risk that the situation will change from the time you

order to the time you're supposed to get your product.

So if you order today and you make a down payment of 30 percent consider that maybe the factories get

closed again some the situation changes somehow or they just can produce it as quickly and you're 30

percent down payment is stuck with them because you can't sell that inventory unless you got it.

They might even finished a product and you pay them 100 percent but then you can't get the product out

of the country.

And first of all what a lot of people probably don't know is that a lot of the packages that are sent

via airfreight are actually said to be a passenger planes and not cargo planes and a lot of countries

have banned air travel with China.

So you could face problems importing products at airfreight at the moment.

This really depends what country you ordering from.

I would say however I know that the times seem to be longer but at the moment it seems like packages

are being delivered.

Again the best way to check this is probably to be in Facebook groups where there's actual sellers who

are ordering products and who can tell you about their most recent experiences and don't listen to people

that ordered a month ago or two months ago because the only thing that matters is something very very

recent.

So I guess there's two scenarios right now.

Either you still have enough product and you didn't really need to order up to this point but it's going

to become a question and some point in your future if you have to order again or you're already out

of stock you're trying to make something in China or you already trying to make something maybe in another

country and we'll get to that in a second if you still have inventory for multiple months.

That is great but you should start looking right now where you can get your next inventory and you should

be aware that it's not a half percent certain that things go back to normal within a few months.

And so you've got to come up with a backup plan and maybe already start executing that backup plan because

it might take you much longer than your regular plan.

If you've just put in an order in China or you're considering to order from China right now because

it seems like yes packages are arriving so maybe let me order quickly before anything changes again.

I just want you to consider that there's an inherent risk with ordering at the moment just because your

inventory could get stuck at any point and this means your cash is stuck and it's always good to then

have a backup plan and maybe not take all of the cash you have but maybe just take part of the cash

to make sure that lets say your inventory got stuck you could still order from a different place from

different countries find a different solution to again have inventory before you run out of stock.

Now I mentioned multiple times and it's probably something that you've been considering a lot.

If you have an active business should I move my production out of China into another country.

And I've read a lot about this and Facebook groups the past weeks and I've heard a lot of sellers talk

about what they did.

And I know that sellers started shifting their production into other countries.

And while this is a great first step and if you did that and by now you have production up and running

into a different country you're very likely to get the next order that you made in time into the country

where you're selling.

However the way things are developing right now consider that the new country of sourcing from could

be the next country of the outbreak.

So if you shifted your production already and you can receive inventory at the moment you might want

to consider buying extra inventory so you don't run our stock.

Even if the country has shifted to has the next outbreak.

If you're thinking about shifting your production to another country right now I also want you in this

case to consider the inherent risks.

If you shift your production it means you're now reliant on that country and anything that happens within

that country and the supply chain to this country that you're selling it at this point that's really

hard to say.

Which country has the next outbreak.

And you can also see that the outbreak happens rather quickly within a matter of days two weeks until

the country is potentially shut down.

So if you're production time exceeds multiple weeks it's obviously more risky than if you have a local

production time off a few days.

This could also mean that you could consider splitting up your production into multiple phases and in

shipping parts of the production already as they are done.

Maybe this is more expensive but it definitely reduces the risk that all of your inventory gets stuck

into place.

In general it would be a good approach to order smaller lots and then just order multiple times so break

your order down into multiple parts and you minimize your risk because you're only giving them giving

money to the factories step by step.

And if any of your inventory gets stuck anywhere you only have a small part of your cash tied up in

that inventory.

All of these steps potentially increased the cost of your products and you should recalculate your profit

margin and reconsider the price that you truly charge for your products to make sense.

Or if you need to maybe temporarily increase your price now a very interesting option for sourcing is

also to source in the country that just selling in.

First of all this could reduce your lead times allowing you to buy less inventory and be less at risk

of getting tying up capital.

And if your product is being delivered on a truck instead of an airplane going between countries it

is far more likely that your product is going to arrive before the situation gets too bad.

However do keep in mind that the prices for producing a product locally might be more than double what

you're paying in China.

So if you're considering the step again consider increasing their prices and recalculate how much money

you're going to be making on this.

If you're currently unsure if you're able to move product from one place to another.

A good idea is also to talk to a freight forwarding or shipping company because they will have the latest

up to date info if shipping from one country to another one is still possible.