How to optimize your sourcing and shipping costs and be more profitable in 2024

Right now there are TWO FACTORS affecting your sourcing and supply chain time and costs.  If you don’t plan ahead, your ecom business could SINK in the midst of this storm.  

FACTOR 1: The Suez Canal crisis is increasing ocean freight shipping costs 2x to 3x. 

If you haven’t already seen on the news, there literally are pirates shooting missiles at shipping container ships!  It sounds like a scene out of a “Pirates of the Caribbean” movie but this is real life and this is affecting your business whether you realize it or not.

The Suez Canal was a shortcut for containers traveling between Asia to the Middle East and Europe.  Now to avoid being shot at, the ships need to take the long way all the way down south of Africa, past the Cape of Good Hope.   

And then North back up Africa to Europe and the Middle East. 

At the end of the day looking at global shipping container prices that are 2x to 3x the container costs.  And this is affecting you even if you’re not shipping to Europe.  

China to West Coast US (Long Beach, etc) have doubled as well from Dec to late Jan 2024.  

So why should you care as an Amazon and Ecom seller? 

The inflated shipping costs are impacting your product landed costs and it’s cutting into your margins if you want to be price competitive in 2024. 

FACTOR 2: Chinese New Year Shutdowns

This is an expected disruption but every year around late-Jan to mid February, all of China shuts down to observe the longest holiday of the year – Chinese New Year. 

This means that your factory, your sourcing agents, the raw material supplier, your inspection agency, your logistics partners, EVERYBODY in China will be on vacation for up to A MONTH.  

While we wait for China to come back, this is a critical time to review how your sourcing and supply chain is performing for you.  

These disruptions, combined with soaring expenses, a soft economy, and increased competition, underscore the urgency to keep costs competitive as we aim to have a profitable 2024.  

That’s why the TAKEAWAY is this: 

Right now is the time smart sellers are optimizing their supply chains

One way to do this is to sell close to the source to bypass this fiasco altogether. 

One of the best ways to do that is to sell into Japan. Doing this bypasses the Suez Canal because China and Japan are neighbors.  

You are going close to the source and you will save a ton of MONEY and TIME on shipping. 

In fact it only takes 7-10 days for a product to ship from China to Japan versus 30-45 days (or more) from China to the US.  

Last year I spoke with Brandon Young, an 8 figure seller selling on Amazon Japan and after explaining to him the short shipping times from China to sell into Japan, a light bulb went off in his head.

He concluded it was a no-brainer to sell in Japan.

Think about the cash flow with the less inventory you have to hold.  

Because you can place smaller orders given your short lead time.  Instead of placing 2-3 months of inventory now you can place orders for just a few weeks or a month of inventory.   

That frees up your cash flow to reinvest to scale your business even faster than your competition that’s still waiting for a slow boat from China to the US or EU.

The second way to optimize your sourcing is to consider sourcing away from China. 

If you sell in Japan, Japan actually has free trade agreements with many, many countries all over the world.  

So if you shift your sourcing from China to India or Vietnam or Thailand and sell to Japan, you can lower your duties and get some products imported duty free.  

So that means you will lower your product landed costs immediately

• Approximately 25% lower product costs because there are no US-China tariffs (depending on your HS Code) 
• Additional lower duties from the free trade agreements.  

That could mean savings from 40-70% depending on your product categories and your country of origin. 

In summary, if you want to optimize your ecom business’ supply chain and make more profits in 2024 then I recommend you take these two steps: 

A) Evaluate new marketplaces to sell in (to circumvent the trade war and tariffs) – Japan is one of the best right now given it’s close to the source and it’s the 4th largest Amazon marketplace in the world.

And

B) Consider alternate sourcing destinations (other than China) to eliminate tariffs, reduce duties and lower your product landed costs.

If you want to learn more about selling in Japan, I’d like to invite you to join me at the 7 Figure Seller Japan Mastermind, a 3 day in person conference to show you the roadmap to selling in Japan.  

Taking place in Okinawa, Japan from Apr 8-10, this is for you if you are a seller already selling in Amazon US or EU marketplaces are are looking to add an additional $300k-$965,000 in revenue in 2024.  

Learn more here https://7figuresellerjapanmastermind.com/

Gary

Recent posts