R Has a Plan B Hypothesis

Hey R,

This is complicated, and now that is see the product in the pix, I have 1,000 words of explanation...

I can see why the guy offered you a straight ten percent....  you won't get away with a mark-up since any customer will simply go direct and cut you out of your mark-up...

Exclusives cannot hold in int'l trade, so that won't work.

The maker needs a sales person, since the product is ready to go...

To your questions...

Questions: 

I am really caught up on the concept of minimum orders. What should I expect, what is a reasonable quantity and price point? 

***Well, you will be offering to retailers, who will have a one box minimum...  but I think you need to know the distribution system in Canada...  my guess is a distributor with 500 small retail clients in in say Vancouver (and there would be say 10 total in Canada...) would buy a minimum to stock and there would be 500 retailers with a  sample set.  But find out:  this is wall covering...  how is wall covering distributed in Canada?  Do you know someone in the biz?  Do you know someone who has bought high end wall covering in the last couple of years?  How does it work?  That is what you work within...***

He sells his flooring and wall coverings by sheet. So would the order be in weight or number of sheets??

*** M2...  ***

I have sent along some photos hopefully it will give you an idea including part of his pricing sheet that's in American dollars. Each sheet is around $100! What's your opinion on that price?

***My opinion is always the same.  What is the customers opinion of the price?  Usually no opinion.  The opinion that matters is of the product, since in that specialty market the price does not matter.***

Also should I include in my proposal that I will be buying from him in Brazilian dollar? That would be ideal for me! I don't make Canadian dollars anymore ... Shucks ....

*** It very well may be the only reason he exports is to get USA dollars...  but then he gets paid in brazil currency domestically so he is used to it..*** 

The brown box is full of samples, the entire box can be left with prospective buyers! 

***at $10 per box, times 500 boxes?  You got that?  If you pursue this, start with maybe one distributor and he tests with ten of his clients.

What is your hypothesis on this plan b proposal?

" I believe if I can get this high end wall covering into distributors (appropriate?) they will market it to retailers who in turn will buy enough to cover the suppliers minimum in a workable amount of time, profitably."

Is that your hypothesis?  If so, then you need to affirm to whom you would be supplying (since it is not you in Canada) and then test to find out if the distributor is not better off going direct.  (What value are you providing?)

If you will be in Canada soon, you can check this out fairly easily...  some pointers:

1. Do not discuss this with friends and relatives.  They are not customers.  Any time spent talking to them is time not spent talking to people who would be customers.

2.  Do not figure out how to overcome the market structure to get around any preference the market may have for going direct (exclusive, secrecy, etc).  Look for a trade line that is not being served and no one else will work in...  EG, you buying wholesale direct in Brazil against orders from NA and shipping 12 m2 ($2000) at a time to a specialty design firm that uses the stuff as an accent in wall covering in tiki bars...  find a market that no one will serve, as opposed to trying to outsmart everyone in a market that is served.

the 10% commission offer only makes sense if you'll live in Canada.  The next rational thing is to sell to a Canadian importer, but that entity will simply go around you.  It seems to me you market is whatever else is not being served.  You need to test that hypothesis on your next visit....***

John

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Pay With EBT, Ship the Food To Caribbean

This is old news, but with Costco studying the China market, there may be a twist.

“Everybody does it,” said a worker at an Associated Supermarket in Prospect Lefferts Gardens, Brooklyn. “They pay for it any way they can. A lot of people pay with EBT.”
Customers pay cash for the barrels, usually about $40, and typically ship them filled with $500 to $2,000 worth of rice, beans, pasta, canned milk and sausages.
Workers at the Pioneer Supermarket on Parkside Avenue and the Key Food on Flatbush Avenue confirmed the practice.
They said food-stamp recipients typically take home their barrels and fill them gradually over time with food bought with EBT cards.
When the tubs are full, the welfare users call a shipping company to pick them up and send them to the Caribbean for about $70. The shipments take about three weeks.

All immigrant groups rock the welfare payments (you think they come here because of our freedom?)  There may have been a time pre-1964 "Great Society" welfare regimes when people came here to work and look for freedom, but now we cannot know if it is 'freedom" or "Free $#)*."

Whatever, but USA sent $522 million last year to the Caribbean in Foreign aid.  This goes to the Harvard educated elites to keep these satellites in poverty and dependent on USA.  This EBT card scam also helps.  USA food processors, the biggies, get the profits, the taxpayers take the loss, and the Islands never develop a domestic retail trade, nor do they bother to grow a domestic retail trade commensurate with their potential when they can get food "free" from the USA.  The elites then compliment USA Imperialism by repeating the mantra "our people are culturally inferior."  Break his legs then criticize him for not walking.

Costco is getting a handle on sales of its Kirkland brand to China.  In doing so, Costco will figure out what percent is EBT-scam based (the amount of China sales that does not originate in China after it is easier to buy in China) and this will be private trade data, information no one in government policy making will have.  Not that it would matter, since get big or get out, the USA policy imperative, either way General Foods, General Mills, and other Big Food companies products are being moved and taxpayers are subsidizing their profits.

WE are not going to get rid of the EBT cards, or the welfare state, these things cannot be backed away from.  Empires just fall and become fond memories and whimsical lapdogs to the next empire, like the UK.  Not bad, but delusional.  Or they may become somewhat dignified like Italy.

It ain't the hand you are dealt, it's how you play the cards...  and there is no judging a man for how he plays his cards.  But we can say, "hmmm... instead of buying Fritos and Pepsi and Kentucky Fried Chicken (yes allowed) with your EBT, why not buy Foie de gras, raw milk sour cream, organic lemons, caviar, all products no Big Ag makes, only small AG products, and then improve your health as you starve the beast?"  This will divert money meant for big ag to the struggling small ag that is specifically targeted for avowed destruction by the USDA in particular and the federal government in general.

Smile at that single mom with the screaming kid checking out in your upscale grocery paying for excellent foods with an EBT, and offer to help her with her groceries.  Make them most welcome, they would be revolutionaries.

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Compete on Design Not Price: Do Better than eBay

Callum sends in an article which is fairly common experience, and aligns with what I teach, Plan A.  Everyone seems to thing importing is about Plan B, just buy something from overseas and sell it here. No, you have to design your own.  Here is an example...

But a lot of what McGrath sells is just what he thinks can be profitable — like remote-controlled boats, which he used to buy from an importer in Long Beach at around $14 and could resell on Amazon for $34.95.

So far, the usual start-up.  But then he finds two problems, there is always someone who will charge less than you, so you will always lose at the game.  next, taxpayer subsidize the freight rates to the advantage of the Chinese.

But as Chinese companies began logging on to Web marketplaces like eBay, Amazon, and Alibaba, they started taking advantage of the shipping deal to sell directly to American consumers. And so it’s never been easier to get something cheap and Chinese delivered to your door for a startlingly low price: $4.64 for a digital alarm clock; $2.50 for a folding knife; $1.88 for aniPhone cable — all with shipping included....All this should be a reminder that any trade deal has winners and losers and unintended consequences. 

Yes.  This is what governments do, pick winners and losers.  Simple solution, deregulation.  And corporatize the USPS.  Take away its monopolies.  But unintended consequences.  how can you know exactly what will happen then claim the result was unintended.  how can you say "I had no idea if I let go of the pencil it would drop.  I really thought it would rise up."  You get more of anything you subsidize.  Econ 101.  Sigh.

But anyway, The fellow goes on, and what is his reaction?  To go to plan A...

To insulate his business from foreign competition, McGrath has tried different ways of making his products stand out. He likes to tell people to sell what you’re passionate about, and McGrath loves indoor pistol shooting. Recently he designed his own kind of mattress holster, which hangs a gun and a flashlight from the side of the bed for easy nighttime access. He contracted a company to manufacture the holsters, and they are shipped out in bulk from — where else? — China.

This is what I learned 40 years ago working while working ten years for others, and went on my own since then.  It is what I teach and write.  Last Saturday in at Cal Poly someone asked me if what I teach makes people successful.  No, they make themselves successful. what I teach saves time adn money.  Everyone does plan B and wastes times and money.  Eventually they get to Plan A.  I teach start there.

Coming up I have live seminars in Portland Oregon October 25 and in the San Francisco Bay Area November 1.  I also started online seminar last week, in which you can still enroll and get caught up.

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More Hard Advice

On Sep 10, 2011, at 4:16 AM, P@aol.com wrote:

We have also as I mentioned, given this to people we know to actually test and ask them would they honestly, buy it in a shop, to which the answer was yes. These people dont sign purchse orders but they are potential customers.

***Unless you plan to sell door to door, they are not potential customers.  Their opinion is neither valid nor reliable. Retailers are your customers, and they are very likely to tell you no.  The "no" is often "no, because..."  and if you fix the objection, there is still a chance, but the most likely is "no."  Until you are in front of purchase order signers, you have zero customer input in your plans.***

 

I was hoping you would be able to share your experience of shipping procedure and these distribution problems but may thanks for your input anyway.

 

***You do not have any distribution problems, because you do not have any customers.  I could tell you 100 options for distribution, and their costs, but it is possible not a single one would apply.  You would know instantly the single one that applies to you if you were to start with the customers, and not everything else under the sun.  In fact, most stores tell you exactly what freight carrier to use.

Six months ago, had you brought in a dozen cases to usa, and pitched a case directly to a dozen stores, price 2 times your cost, delivered one case at a time yourself, and followed up in  a month, you' d know exactly what you need to do.  You'd have a dozen stories about a dozen price points and what happened. Worrying about forming biz, license, customs, "market research", exclusives, patents, biz planning based on no real information, etc, all a complete waste of time.

Your efforts are probably the most common approach people make, and it rarely if ever pays off.  At some point you MUST approach real customers.  Why not make that the FIRST thing you do?  If nothing else, you then learn what the right questions are.

John

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On May 10, 2011, at 5:37 AM, Robert wrote:

Hi John,

I'm glad you agree that it mightn't be possible to manufacture anything, and you might have to set your sights lower in order to get started. I think it's important to emphasize to bear this in mind in relation to what products to research and pursue.

***I still think let passion (experiencing a problem) as the genesis, with joy as confirmation, is to be the guide as what to pursue.  Look at where Apple started and is today... what we start with is often a compromise...***

Something in your new book interests me:

'As a buyer for an import company many years ago, my job was to find intriguing items overseas and ask the supplier what the minimum order was..   [later] modify the product so that it would sell even more'

***right, with the first company that went out of business... my insistence on competing on design has to do with watching one company fail and another thrive no matter what the economy...***

I saw your video on plan B, although I don't think you're pursuing this one? As there are steel knives already in the USA, although they are very niche, your plan would be to market it more effectively to a wider audience? A lot of importers seem to have started with a new product but there are also many like (as you mention) Hadad the Henna dealer.

***Right... plan B CAN be done, but it is unlikely and denies us all the good of an individuals contribution.  That contribution may be new packaging, presentation, teaching how to use knives, but then one is back to competing on design...***

Another interesting thing from the book was that you mentioned your job as a buyer was to source items abroad and then sell them in trade shows around the US. I didn't think there was any selling involved in this- are we still required to be present at trade shows, or have you changed strategy with using sales reps?

***Trade shows and reps are still in the game, especially in specialty...  there are no circumstances in which I would sell to govt, costco, walmart, etc...***

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More On Chinese Knives

So I sit down at the counter in a Chinese Restaurant and order a mess of Tomato Beef Chow Mein, and a beer.  Chef Henry Chen is prepping veggies for the night rush.  He grabs a plate, and then....

uses the bisque (unglazed rim) base as a steel to put and edge on his knife!  Whiskey Tango Foxtrot!

So I ask what he is doing, and he shows me very closely...  I ask if I can take a picture... no problem he says...  he shows me the rim and how it is discolored from use...

He says it is common in Chinese kitchens, because you want as sharp as possible when jumping on veggies, especially mushrooms... Yes, he has a steel to sharpen the knives, but if you want a turn a buck in the restaurant biz, you have to keep moving.... can't waste time going to get the steel if you don't have to...

but he'll give me the time to show me a properly clean sliced forest mushroom...

Then one cut with a dull(er) knife... see the raggedy edge at the bottom...parts hanging off...  I know it is hard to see, but the chef knows it is there, and it is unacceptable coming out of his kitchen...

And compared, raggedy on top, clean on bottom...

Below is my video on Chinese knives, plan B... or just go here...

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UK Criticism, Plan A and Plan B

Deep within the UK internet someone has said nice things about my book, and recommended it.  He made some other comments that got me thinking...

And it's not possible to get ANY product manufactured, either.

Well, we conceive of a solution to a problem, as a product or a service, and then we try to buy it, what I call plan A.  This process tells us if the item, or a reasonable substitute exists, and if the idea is a good one.  That double check, "good idea, doesn't exist" is the opening you need to start a business, and is only available from the people you expect to be your customers.

Now in reality, that very process is likely to result in the improving of your ideas, as idea meets reality customer.  The next step is the designer, who also improves your idea.  Next the supplier is another great contributor to the design, and also tempers your enthusiasm for over-engineering and over-specification.  As novices we desire to spend too much to do too much.  Often we are obliged to scale back our initial offering.

Next, he states there are people who import and distribute "off-the-shelf" items.  True.  I call this Plan B.  You local Mercedes Benz dealer, and of course Hadad the Henna dealer.  If it is not big business, or your unique item, then you are likely to get caught competing on price.  But the more important criticism is within you is something unique to you, that needs expression in business, and in the measure you sell off the shelf items, is the measure the world is denied the good of your creativity.

It's the only book out there that isn't a mother lode of platitudes but actually tells you what to do and how to do it. He tends to be an idealist (politics) and oversimplifies a lot of things... for example, there ARE importers who just deal in off the shelf products whatever you may state...

So it is likely very true that not "everything" can be made, but anything we need made to get started can certainly be accomplished.  It may be a matter of much compromise, but it is always a matter of customer satisfaction.

Here is a video on plan B...

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Plan B: Knives

Y'all know my argument for launching a business, and y'all know it is contrary to what most people think an int'l trade start-up is about. I am working on a video here that breaks down and explains what i call plan B, that is how most people believe one proceeds in establishing a company.

Even Plan B is fun... I am starting with a source, and working back to market in USA... in this case chinese cooks cleavers and knives.

Heavy, rust-prone but take an edge like no other and safer than stainless steel light knives.

People get cut when a knife is forced. People force knifes when they are dull and when they are too light to do the work. Adding nickel, chrome or molybdenum jacks up the price, lightens the knife, prevents staining or rust or both, but when the edge dulls it takes more to sharpen.

The chinese steel knives stain and rust if not properly cared for (allow fat to reside on the knife when not in use) but they are cheap since plain steel is cheap, they are heavy, so the knife does the work, not your muscles forcing the tool, and they are quick and easy to sharp by yourself to hair-splitting hone before each use. Advantage: Chinese knives.

Stainless steel knives carry NSF certification, so they are endorsed by the knife makers enforcement division. Chinese knives are not. A restaurant that uses these knives will find themselves earning demerits on a health inspection, so they are not used outside of Chinese restaurants, where allowances are made. Never mind that food poisoning is no more likely in a chinese restaurant than any other, rules are rules. (And never mind that casinos on indian reservations serve plenty of meals, but the kitchens are not inspected by health authorities, because their jurisdiction does not extend to reservations. In spite of no inspections, there has never been food poisoning in a reservation casino restaurant. if you have professional cooks, you won't have food poisoning. We don't need inspectors.

I like the knives. People need these. They are better than what we now use.
So I'll lay out in a video how plan b works, with knives as an example.

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