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10 Tips For Startups Sourcing Products From China

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I had the pleasure recently of interviewing Michael Fox, who is the co-founder of the online store Shoes of Prey. What I loved about talking with him is that most of their brand has been built by word of mouth and the use of social media influencers. One of those social media influencers was Juicystar07 aka Blair Fowler, who sent more than 700,000 people to the Shoes Of Prey website in a very short period through a Youtube video she shot.

In the first three years, none of the founders took a salary, and the money they had each saved was what they lived off. In June 2012, they raised a $3 million AUD round of funding which they used to ramp up their hiring and experiment with marketing channels. In November 2013, they raised another $2 million in funding. Finally, in November last year they did a big round of $7 million to help them grow even further.

Shoes of Prey are predominantly an online business with a small retail footprint that allows women to design their own shoes, which they make and then send to their customers. The options for designing women’s shoes on their site are literally in the trillions and you can change things like the toe shape, the back shape, heel type, decorations, leather type and colors of the shoe.

The biggest success they have had in recent times is their partnership with Nordstrom in the USA, who have 120 department stores. They currently have two retail stores in Australia and six retail stores that they have partnered with Nordstrom over in the USA. After being introduced to Nordstrom they took feedback on their design and spent the next 12 months tweaking things for the USA market. This resulted in them getting a yes from Nordstrom. The main crossover was that they are both fanatical with customer service so this was a good foundation to build a partnership and relationship on.

Michael, his ex-wife Jodie and Mike Knapp started the business while they were all studying at law school. The three of them were fairly entrepreneurial and started out with regular jobs. Michael was doing advertising sales at Google; Mike was a software engineer at Google and Jodie was working in advertising. When Michael and Jodie would book holidays, Jodie would always like to book stopovers in Asia because there were stores where you could design your own shoes.

On her second and third trips, her friends started asking her if she could design shoes for them because they had seen the cool shoes she was wearing. The three of them wanted to start something in the online space for a while and spent many years diligently saving up their money to do so. When Jodie’s light bulb moment came with the shoe design concept, the idea ended up becoming the now famous Shoes of Prey.

The future looks bright for Shoes Of Prey so expect them to be opening more stores, raising more money from investors and introducing new product lines such as boots, handbags and other leather accessories.

Below are the ten tips Michael Fox gave me to help you be successful in sourcing products from China for your startup.

 

1. Find smaller suppliers at the start

When you are first looking for suppliers, you want to try and go with someone who is a bit smaller because they will be hungrier for your business and might be more open to doing something a bit different. Michael said that the economy also helped them because during 2008 the Global Financial Crisis hit the smaller suppliers, and their orders were suffering as a result.

Shoes of Prey had to find fairly unique suppliers in China because they were sourcing custom made shoes one at a time and sending them to a customer rather than ordering containers of product. Rather than using websites like Alibaba, which is great for generic products, they attended trade fairs in China and met with shoe manufacturers. The first obstacle they had was that the minimum order was often a thousand pairs of shoes, and they wanted them made one by one.

 

2. Stand out with your product to avoid copycats

To avoid copycats copying your product and affecting your sales, you should consider the concept that comes from Seth Godin’s book “Purple Cow.” The analogy in the book is imagine you’re driving past a paddock of brown, black & white cows, you wouldn’t pay any attention because you have seen this before but, imagine you saw a purple cow, you would be posting photos on Facebook and telling everybody. What your business can learn from this analogy is that you want your product to be like the purple cow and to really stand out from the other products in the market so that you will attract buyers that can’t go anywhere else for what you offer and avoid copycats. It’s this concept from “Purple Cow” that inspired Shoes of Prey to start their eCommerce company.

If there is a way for you to develop a unique product, you won’t have to deal with the issue of your suppliers selling the same products to your competitors. You can try locking them into exclusivity, but you will need the volume to do this.

 

3. Get the volumes up with your marketing

From the beginning of the Shoes Of Prey business, they marketed via word of mouth and on the first day they sent an email to about eight hundred of their friends. The email told their friend’s what they had been working on for the last few months along with a coupon that gave them a $50 credit. This $50 credit also allowed their friends to forward the same coupon onto other people to try it out too. Michael believes that word of mouth, along with a unique product and awesome buying experience will see your online sales quickly grow. Through this process, it’s a good idea to pay close attention to your net promoter score, which will help you attract repeat customers.

The other part to Shoes Of Prey’s marketing strategy was to open small stores within larger department stores to leverage their brand. Every time Shoes Of Prey open a store in the USA they contact all the local fashion bloggers, Instagrammers and influencers and invite them along to the store events. This helps to get people talking about them, and the traditional media are also very useful for these events too.

Shoes Of Prey had an amazing story where a video blogger on Youtube spoke about their product, and they got more than 700,000 thousand visits to their website. This volume of traffic was more than what they had had in the nine months prior to the video being posted! Check out the video  from Juicystar07 below.

Go through your own customer database using some of the tools available online, which allow you to lookup your customers Instagram accounts to see who the influencers are and then invite these people to your events. Consider also using a PR agency that will have access to a lot of the top fashion bloggers and journalists.

 

4. Work with multiple suppliers

Michael said that at the start the approached about twenty suppliers before they picked two suppliers and began placing orders with one of them. With a business like customised shoes, you can’t work with two suppliers because one factory might make a totally different shade of red shoe than another. When three months with one supplier passed, the relationship just wasn’t working out which is why it is always important to have a second supplier as a backup. The next supplier that Shoes of Prey used lasted for three years. Michael’s advice would be once your startup gets big enough, it’s a good idea to think of building your own factory in China, which is what they now have.

If you only have one supplier, then that company know that strategically you are not in a strong position and this can lead to them dictating both price, delivery times and quality.

 

5. Make it easy to send orders to your supplier

Before they had their own factory Shoes Of Prey developed an online order form that had a built in translation system that could translate the order from English to Chinese and then be sent to the factory to explain the individual shoe that needed to be made. Once the order form was in the factory, all the components of the shoe would be put into a box and go through various stages to make the shoe before going then proceeding through to quality control.

With custom made products it’s important to price the shoe at a lower margin when you begin so that you can still be competitive, once the volumes rise you can then increase your margin because your buy price is lower.

 

6. Be careful of intermediary shipping

China is like the Wild West for doing business and if you have the money to spend you can source almost anything very quickly. The negative is that if you don’t have enough shipping volume in the early days to deal with the large shipping companies like DHL, you are forced to use an intermediary. What Shoes of Prey found was that because the intermediary were paid by the cubic metres of the shipping parcels and then they in turn were charged by DHL in cubic metres, they would unpack their nicely packed shoes boxes, and cut down the top off the shoe box to make the shipping cheaper for them.

Customers began telling them that the shoes were great but the boxes looked horrible, and Michael couldn’t figure out why. Being a clever entrepreneur and understanding the power of customer feedback, he drove around to one of the customer’s houses in Sydney and inspected the box. On closer inspection, Michael could see the shoebox had been cut around the top to save space.

 

7. Keep a close eye on the payment terms

In the early days of your startup, you should expect to pay your Chinese suppliers up front. In the case of Shoes of Prey, they would get the money in full from the customer at the time of ordering, and once they had a relationship with the supplier, they could typically pay 14 days from the invoice. What this did was put them in a positive cash cycle and allowed them to grow. For you to be successful in importing products from China, you must be continually renegotiating your supplier payment terms to make the cash cycle as good as it can be.

 

8. Keep the design process simple at the start

Shoes Of Prey Design Process - David JonesInitially, Shoes Of Prey used the Chinese manufacturers design of the shoe to start with and so that it wouldn’t burden the relationship too much early on. If you go down this path, consider flying to China and seeing all the samples yourself. If you only deal with them by email, it can be tough to have any sort of relationship. As things have progressed, Shoes Of Prey now do all the design work and styles themselves. The continual theme here is to start with a simple arrangement with your manufacturer otherwise you will find it very difficult to get your first one. As things move forward, and they can see orders coming in, they will be much more open to trying new ideas with your product.

 

9. The first employee you hire should be in China

Overcoming the language barrier when dealing with Chinese suppliers is definitely possible as a lot of them have English speaking sales and business development staff. Very early on in your startups journey, it is a good idea to hire English speaking staff that work for you and are based in China if you’re going to be sourcing products from there.

The nature of manufacturing anything in China is that you must have rigorous quality control standards, and this must be done by you. For Shoes Of Prey, the first employee they hired was based in China to do quality control before they even launched. As you expand you should eventually have your own factory with a workforce of employees that you employ directly – small steps should be taken early on.

As founders, you should expect to be spending a fair bit of time China yourself keeping on top of the quality control, and perfecting the business.

 

10. Control the production time

If the manufacturer knows you can’t go to another supplier, it can be very challenging to hold them accountable for production times of your product. One solution to this problem is to keep the backlog of orders on your end. For example if you had 100 outstanding orders for shoes, you would send 10 to the factory, they would produce them, and then 24 hours later you would send an order for another ten of your must urgent orders and so on. This can help them keep the production time under control.

Shoes Of Prey Founders Michael Fox, Jodie Fox, Mike Knapp

Shoes Of Prey Founders Michael Fox, Jodie Fox, Mike Knapp

Visit the Shoes Of Prey website to find out more about their products and latest styles.

Tim is best known as a long-time contributor on Addicted2Success. Tim's content has been shared millions of times and he has written multiple viral posts all around personal development and entrepreneurship.You can connect with Tim through his website www.timdenning.net

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Startups

You Are The Problem With Your Business

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A great way to screw up your company is to get into the habit of blaming your suppliers, the market, your staff or your product for your failures.

I recently heard a story of a business that had set up a website. They sold various products and services focusing on helping people with psychological issues. The business owner was smart. The product solved a problem.

Unfortunately, the company was making almost no money. They’d hired someone to help them with their digital marketing and it wasn’t working.

Plenty of traffic was coming to the site, users were having a look around and then not buying a single thing. Who’s fault was this?

Well, according to the business owner it was the person running their digital marketing. As a result, they wasted approximately eight months marketing a website that couldn’t make any sales. The reason the business was failing according to the owner was because of the keywords that were being targeted in the marketing campaign. This is a horrible excuse.

The reason your business fails is because you’re blaming someone other than yourself. It’s the quickest way to bankruptcy. Don’t do that.


Your company is a reflection of you.

It took me a long time to figure out that a company is a reflection of its founder.

One of the businesses I had, had a toxic culture and a bunch of people that were rude to customers, arrogant and not nice people. That was a reflection of exactly who I was at the time.

The company was reflecting the flaws of my own life and what I refused to admit.

In the case of the business owner above, what was obvious is that they were good at telling lies to themselves. It was easy not to change as a business owner and insist that the change needed was nothing to do with their vision.

The issue of their company was not the digital marketing strategy but their lack of understanding around what their customer wanted.

The thought that their products were too complicated, not solving a real problem or priced incorrectly was an admission of guilt they wanted no part in. Hence the eventual demise of their company.


Take responsibility and it will change.

When you own the business, everything is your fault.

You have the power to solve any problem you choose. It starts with you being brave enough to admit that there’s a problem, and then secondly, being bold enough to insist it’s your fault and that you can change it.

The problems in your business can all be solved. That’s what it took me a very long time to understand. When I changed as a person and faced up to my hidden battle with mental illness that I didn’t want to talk about, the odds turned in my favor.

Had I have not taken responsibility for my mental illness, I would have never become a leader in a business or started another side hustle. I would have been crippled by the big, bad world that I thought I could control.

Control came from responsibility, and responsibility solved the major problem in my business: me.


Change is a must.

Not with your digital marketing strategy.
Not with hiring new people.
Not with developing a new product.

Changing yourself is the *must* because YOU attract the problems and the solutions into your business”

You can’t find the solutions or stop the never-ending problems until you stop the cause of it all: you. You’re the problem with your business. The good news is that it’s entirely within your control to fix.

Change you.

Not the business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Startups

The Different Ways of Measuring the Success of Your Start-Up

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Image Credit: Unsplash

You’ve probably heard people use the term “unicorn” in a business context. This means a privately held start-up whose value has grown to at least one billion American dollars. Think Airbnb, Uber, and so forth. There is no doubt that some start-ups have been major financial successes. And many smaller-scale start-ups are doing great as well, working hard and turning a steady profit. But that begs the question of whether finances are the only way to measure the success of a start-up. As it turns out, they might not be. At least, not always and not on their own.

How to Evaluate Success

As anyone who’s been involved with start-ups knows, you need a fair amount of flexibility to do well in this environment. Take the division of labour for example – rather than strict roles, you’ll often see everyone do a bit of everything. The same principle extends to measuring success. It can be vague and mean different things to different people, and it can change over time.

But amongst all that vagueness, one thing has become clear. Predicting the success of a start-up is very difficult for external observers. As a matter of fact, it’s often impossible. Therefore, in order to evaluate how successful a start-up has truly been, we need to know the goals of its founder(s).

“Success means we go to sleep at night knowing that our talents and abilities were used in a way that served others.” – Marianne Williamson

The Numbers

When people think about business, it’s common to boil matters down to the finances. And it certainly is possible to use numbers to measure and predict the performance of a start-up business. Net worth, gross margin, customer acquisition cost – these can all be indicators of success. But, a start-up can post impressive numbers for a while, perhaps even attract large investors, and still shut down in the end. So does this make it a failure?

The answer to this depends. If the founders wanted to start a lasting business, then yes, they failed to meet their goal. However, that isn’t always the case. If they were looking for a short-term solution and came out with more money than they had coming in, a closed-down start-up needn’t be unsuccessful. It can actually be the opposite of that.

So, looking at the figures isn’t enough, and there are different perspectives to consider. When they start planning their business venture, start-up founders may not have any particular numbers in mind when it comes to profit. Instead, they can judge their success according to some of the following criteria.

1. Happy Customers and Solving Problems

The story of a start-up often begins with a problem. The desire to help people overcome a specific issue can be the spark which ignites the creation of an entire business. And in the end, that may be all that matters to the founders.

This is closely connected to the happiness of the customers. If the resulting product or service has made people happy by helping them solve a problem, that is all that may be required for a start-up to be a success. Now, no business wants unsatisfied customers. But in cases like this, happy customers aren’t the way toward the ultimate goal – they are that goal.

In other words, some start-up founders don’t just use financial reports to measure how much they’ve achieved. To them, the one metric which stands above all others is the quantity of positive feedback they’ve received. The main area of focus is customers who use the start-up’s products or services to solve a problem they were having.

2. Impact

Every start-up founder likes doing well in terms of revenue. But for some of these entrepreneurs, the profit is merely a side effect of what they actually set out to do – impact the world in a positive manner. You can see an example of this line of thought with Elon Musk. He said that back in college, he had wanted to be a part of things that could end up changing the world. The continuation of this philosophy is evident in his electric cars (which aim to reduce pollution) and the SpaceX program (which strives to break down some of the barriers of space exploration).

In both cases, the furthering of mankind is the ultimate goal. Many other start-up founders feel the same, even if they have smaller goals in mind. To these people, there is no greater proof of success than if their company has had a positive impact on society or even a small segment of it. In their view, to make a difference is to succeed.

“The only limit to your impact is your imagination and commitment.” – Tony Robbins

3. Freedom

For some, starting up their own business is less about getting rich and more about gaining the freedom to conduct their business the way they want to. In this case, financial success is just a means to an end. The endgame is to be your own boss.

The fact is, some people don’t do well when they’re constantly receiving orders. They are simply hardwired to be free thinkers and they require an environment that allows them to do things in their own way.

Being in a position where you hold all the cards can be exhilarating. The knowledge that your decisions are final is very empowering, and many strive for such freedom. If a start-up can allow such people to go from being a regular employee to being in charge of making all the decisions, then it has already achieved all the success that it needs to.

4. Time for Friends and Family

As many people know all too well, a job can easily turn into the focal point of your daily life. Instead of being a way to support your lifestyle, your work dominates your time. And when that happens, the time you have to dedicate to your loved ones becomes scarce. Combating this is precisely what some have in mind when they decide to take the leap and start their own business.

Now, running your own company is no mean feat and it will require a lot of effort. But the beginning is the most time-consuming part of the process. Later on, it can be possible to create a system which leaves you with a lot more time on your hands. You can spend this time with your significant other, your children, or your friends. A start-up which gives you this opportunity is perhaps the greatest success of all.

A start-up is an extension of its founders and so are that company’s goals. Some entrepreneurs are in it for the profit, but not all of them. In the end, there is no single way to measure the success of a start-up. It all comes down to the specific aims of those who established it. But if the founders can end their day on a happy note, then the venture is a success even if it doesn’t fit some standard definition of the term.

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Startups

The Problem Is Not Your Website Or Your Product.

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spend a lot of my time talking to business owners. They focus on their product, their marketing channels and trying to make more profit.

I met one such business owner who was in the plastic surgery business. Their product (boob jobs and nose jobs) was not working. Their website sucked and people clicked off as soon as they visited it.

People would call their office, get put on hold, listen to the on hold message and hang up.

This business didn’t seem all that special. I’ve talked to many businesses and didn’t think for a microsecond that a plastic surgery clinic could ever teach me anything valuable.

I’ve been to Hollywood on holidays and the issues of body image are all too apparent to me. Anyway, this post is not about body image.

I ended up losing this business as a customer — not that I would ever have sold anything to them if it were up to me. I sat down one afternoon and thought about why we no longer did business with them.

That’s when I realized it’s not about your product or your website. All the issues with this plastic surgery clinic and a lot of other businesses I’ve dealt with stem from one thing. Let me explain in more detail.


Your Google Reviews say you’re an piece of work.

I looked up their Google Reviews and their customers said they were assholes.

They spoke down to clients, they didn’t deliver their clients what they wanted, they argued with their staff in front of customers and they treated people like they were nothing more than a dollar sign.

All I had to do was read their Google reviews to see that the problem wasn’t their product or their website.


Your clients tell you every day that you suck.

I asked the plastic surgery what their clients said.

Many of their clients told them that their services sucked and they would prefer to go to places like Thailand where they could get a better product at a much lower price.

The business owner made the mistake of thinking it was their product that was the problem and that a new website will tell clients a different message.

That wasn’t it.


You abuse your staff and they consistently leave.

I spoke with many staff that worked for this business.

Every single one of them hated the company and were not afraid to say what they thought of the business owner.

The business owner would sit outside on a nice sunny day and look across the street at all the yachts and the people boarding them.

They’d sit there and think that every lead they got was going to take them one step closer to owning their very own yacht.

“If only I could deliver more boob jobs, maybe I could have one of those,” they thought quietly to themselves hoping that no one else could hear how ridiculous this sounded.

I can remember multiple times being on the phone to the business owner and having one of their staff burst into tears halfway through the call.

The first time it happened I didn’t think much. After the third time, I got the message. During the short time I dealt with this business, people consistently left. If you made it to the six-month mark, you were some sort of hero and would probably be given a free surgery to say thank you for your work and make you feel worse about your own body at the same time.

It was free noses and boobs in return for daily abuse.

The problem still wasn’t the website all the product.


You don’t solve real problems; you solve your own problem.

A good business solves a problem.

That problem typically affects human beings and solving it is how you make money in business. Solving problems can start out with a problem that affects you, but at some point, you’ve got to start solving that same problem for other people/businesses.

This owner of this plastic surgery clinic was only trying to solve their own problem which was making more money to buy fancy items like yachts.

Only solving your own problem is not just selfish but bad business.

Good business is solving a big problem or lots of small problems for entire strangers who you don’t know thus doing something valuable for the human race.

Solving only your problem will make you poor.

The problem still wasn’t their website or product.


Creating more problems.

Everything this business owner sold created more problems.

They’d film videos to purposely make people feel like their body wasn’t perfect.

They’d write articles suggesting that everyone needs botox to feel young.

They’d take photos of men and women who were supposed to be perfect so that young people would dream of looking like them.

Not only was their business not solving a real problem; it was also creating more problems every day that it existed.

If your business creates more problems than it solves, you’re in real trouble.You need to take a long hard look at the business and become obsessed with doing everything you can to change it — and do so damn fast to limit the whirlwind of problems you’re creating behind you.


The heart of the problem.

It’s the business owner.

The business I mentioned will fail. That part is certain. The problem with the business is not the website or the product.

The problem is the business has no heart because the business owner has no heart.

You cannot focus on your own selfish desires, create really bad problems in the world, treat other human beings like garbage and expect to go buy a yacht and live happily ever after. It just doesn’t happen like that.

Whether you are a plastic surgery clinic like the one I described or a solo entrepreneur, the problem with your business is you.

Fix the problem of YOU. You can’t get away with being horrible forever.
Being horrible is bad business.

Being respectful, kind and valuable is the final answer to the problem with your business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Entrepreneurs

18 Must Read Business Books for Emerging Entrepreneurs and Startups

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business books

Reading is both relaxation and training for the mind. Who reads, dives into another world. Learning, entertaining and breaking out of everyday life for a short moment. One could go even so far as to say reading is the second most beautiful thing in the world! Whether it is non-fiction or a novel of all the world’s man has created, the book is the most powerful tool. That is also, why we wanted to find out which business book you should undertake in the new year. (more…)

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