How much do you know about freight forwarding? Are you at the point in your ecommerce businesses growth where you need all the information on that topic in one easily accessible place? Look no further! On this episode of The Amazing Seller, you’ll hear from Scott as he welcomes special Michael Gallardo to the podcast to give you all the info you need on freight forwarding. In their conversation, Michael and Scott cover when you should start using a freight forwarder, how to deal with common issues with customs, the difference between air and sea shipping costs, products that first time sellers should think twice about, and much more! You don’t to miss a minute of this informative and fascinating episode!
When should sellers consider using a freight forwarder?
When is it the right time to start using a freight forwarder? The last thing you want is to start the process too early or too late! On this episode of The Amazing Seller, Scott welcomes Michael Gallardo to the podcast to unpack freight forwarding for the TAS audience. Michael starts off by encouraging any sellers who are using sea shipping to connect with a freight forwarder they can trust. This will help sellers eliminate a lot of the legwork they would have to do themselves and really makes the process a lot more streamlined and efficient. When it comes to air shipping, Michael says that a good rule of thumb to use is if you are shipping more than 250 kilograms (about 550 lbs.), you need to consider connecting with a freight forwarder. To hear Michael expand on this topic and more, make sure to listen to this episode!
It’s time to connect with a freight forwarder, what should you expect?
Now that the time has come where you can no longer rely on the simple shipping methods that work early on, you need to connect with a freight forwarder. What should you expect when starting that process? On this episode of The Amazing Seller, Scott and his guest Michael Gallardo go over what you need to know and have ready to provide when you connect with your chosen freight forwarder. The process may sound intense and intimidating but it doesn’t have to be! Most of the info you have to provide up-front will be kept on file and the process will get easier with time. To hear all the ins and outs of this process from Michael, make sure to listen to this episode!
How FlexPort can help sellers.
As you ecommerce business grows and you really have orders moving quickly, you are going to need to reach out to a logistics expert or organization that can help make your life easier. That is exactly what Michael Gallardo and his team at FlexPort want to do for sellers like you! On this episode, you’ll hear from Michael as he opens up about FlexPort and all the ways they can partner with you to streamline and simplify your shipping process. They work hard to equip and empower their clients with all the info they need to make the decisions that work best for their unique situations. If you are ready to take your business to the next level with a freight forwarder like FlexPort, make sure to listen to this episode!
Nothing replaces action!
If you’ve been around the TAS community for very long you know that Scott loves to preach about why it’s so important to take action now, and often! On this episode of The Amazing Seller, you’ll hear that same message from another voice, Michael Gallardo. Michael joins Scott on this episode to give you all the info you need about freight forwarding, but he also shares pieces of his story and why the message of taking action is so vital for success. Find out why this important message of staying faithful to the process and taking action will really lead to results on this inspiring episode, you don’t want to miss it!
OUTLINE OF THIS EPISODE OF THE AMAZING SELLER
- [0:03] Scott’s introduction to this episode of the podcast!
- [2:30] Scott welcomes Michael Gallardo to the podcast.
- [5:00] How did Michael get started with freight forwarding?
- [9:30] When should a seller consider using a freight forwarder?
- [14:00] Michael talks about running into difficulties with customs.
- [18:00] The difference between air and sea shipping costs.
- [20:00] How dealing with a freight forwarder works.
- [32:00] Focus on the one thing you need to do next.
- [35:00] Products that first time sellers should think twice about.
- [38:00] Important freight forwarding info sellers need to know.
- [44:00] Michael talks about dealing with customs.
- [47:30] Nothing replaces action.
- [50:00] What does FlexPort do? How can they help sellers?
- [55:00] Closing thoughts from Scott.
TRANSCRIPT TAS 479
TAS 479: Shipping and Freight Forwarding Made EASY (Everything You Need Know)
[00:00:02] Scott: Well, hey, hey, what’s up, everyone? Welcome back to another episode of The Amazing Seller Podcast. This is episode number 479 and today we are going to be talking all about…
[read more=”Read full transcript…” less=”Read less”]
…shipping and freight forwarding and a way to make it easy or at least easier and we’re going to talk about everything that you need to know, everything from knowing your products to selecting the shipping type, to creating a shipment plan, packaging your shipment, labeling your shipment, getting through customs, all of that stuff that sometimes seems a little bit overwhelming. So, I invited on one of my friends, also someone who works at Flexport who’s kind of an expert in this field and his name is Michael Gallardo and I met him in Florida actually at Seller Summit, but I met him before that online. He and I were talking about this, about freight forwarding and shipping and all of that stuff, and we became friends and then we met up in Florida and then from there, I decided to invite him on to really kind of go through this and do a deep dive.
From him working with a whole bunch of different sellers, he kind of sees where people get stuck along the way. So, what he's also done for me which I wasn't even expecting this is he had his team create a free guide that will actually go through all six of those steps in detail. It'll also give you ways to see what your product falls under so this way here you know the code and again, we’ll get into all that stuff because there are certain codes that will either throw up red flags and getting through customs and all of that stuff. So, that free guide can be found at TheAmazingSeller.com/Flexport and that will give you that guide with those six topics, those six steps really walking you through what exactly you’ll need to get this stuff going. And really how to make it easier than thinking you have to do all of this stuff yourself. So, that’s there for you as a resource.
[00:02:01] Scott: Now, I'm going to stop talking because, well, Michael and I talked for almost an hour on this topic digging into all six of those and then a few other things. I even asked him what he felt were some products that he probably wouldn't start with because there are a few more challenges there. Not that you can’t but it’ll just make it a little bit harder when getting started. We talk about those and a bunch of other stuff too. I mean including some workout stuff. I didn’t even know how we got into that conversation. But anyway, I’m going to stop talking so you can listen to this interview or this conversation that I did with my good friend, Michael Gallardo. Enjoy.
[00:02:35] Scott: Hey, Michael. Thank you so much for coming on the podcast. What’s going on, man?
[00:02:39] Michael: Hey, Scott. Thank you so much for having me. Super excited to talk about freight and shipping.
[00:02:44] Scott: Yeah. No, it’s going to be fun and you and I had a chance to meet each other. I think it was, was it last year at Seller Summit?
[00:02:50] Michael: Yeah. It was. That was in Florida I think.
[00:02:52] Scott: Yes, it was. Yes. And that was the first time you and I got to meet each other. We had a lot of conversations before that and we actually got to hang out and talk a little bit and not even just about business but about life and stuff and I think at the time were you talking about Shaun T and Insanity? Were you doing Insanity then?
[00:03:10] Michael: Yeah. I was and now I'm doing a new program and actually, my wife is a Beachbody coach.
[00:03:15] Scott: Oh yeah? Nice!
[00:03:16] Michael: Yeah. So, I swear by it. I mean, a lot of my success is her just forcing me out of bed and forcing me to do it, but it is working and getting results so super happy with it.
[00:03:26] Scott: Yeah. I’m a big fan of Beachbody. I’ve been a part of their program for a long time and right now though I’m into this Peloton thing that I love. Bike riding. So, that's kind of…
[00:03:36] Michael: Oh right.
[00:03:36] Scott: Yeah. Yeah. Riding a bike in the morning and it’s busting my butt and I’m sweating but it’s cool. It’s working. All right. Enough on that but the other thing is, Michael, you’re a lot taller than I thought you’re going to be. You’re a tall guy. We should get you into basketball.
[00:03:49] Michael: I know. That’s what I’m saying. We’re trying to get a basketball team together. I’m about 6’4. My mom is Swedish and that’s where that comes from. Everyone’s always surprised. They see me like, “Oh wow. You’re like a skyscraper.
[00:04:02] Scott: Yeah. You are, man. You’re up there. My son’s about 6’3 and you seemed like you were taller than him. I’m like, “He’s got to be 6’4, 6’5.” Anyway, all right. So, let’s get on to some business here. So, I wanted to get you on and really kind of demystify some of the things that people think about when they hear freight forwarding and really like when should someone be thinking about it but also when they do decide, like what are the steps that you need to consider or that you need to kind of go through to complete this process? Because I think like once you’re first starting, you’re kind of thinking to yourself like, “Man, that sounds like a lot to do to get my shipment from China or wherever over here in the States and into Amazon and it seems like a huge mountain to climb.”
You’ve done a pretty good job of explaining to me especially but also you guys created a nice little report that will give out as well that kind of goes through all the different steps, but I really just wanted you to come on and talk a little bit about that and we can kind of dig into some of those questions that a lot of people have. And I know that you work with a lot of different sellers and I’m sure you hear a lot of different questions, so I wanted to get your take on it and also give people kind of that roadmap that we can kind of go through. Before we do though, a little bit about you, how did you even get into this freight forwarding thing?
[00:05:23] Michael: Yeah. That’s a great question. I came to Flexport trying to get into the sales team for some of the bigger companies that we have but I only had about six months of sales experience. So, very long story short, they opened a position lower than the lowest sales position, so I could start, and they said, “Hey, like there’s a lot of small businesses out there that we’d really like to help. That’s the mission of the company. So, if you want to kind of take that on, lead the charge then we’ll give you that position.” And I was all for it. I love a challenge. I love building things and a lot of my experience was with helping small businesses in the past with other technology companies. So, I just felt like it was a really good fit. At the time, I didn’t know a ton about freight forwarding.
So, really started talking with clients and I got to give you big props, Scott, because I really got to learn like these people and learn what’s important and then how we can be helpful so I started listening to your podcast, learned about what you said like all these miss and kind of things out there about freight forwarding and kind of instantly I was like, “The way that we could help is to really empower our clients to really give them the education. We need to get people that are really smart and then also really helpful, patient, humble, to really help build these businesses,” and that’s kind of been our vision and premise the whole way through. Long story short, we started with three people. We had two operations people and myself.
One of the people, a lot of people on your podcast probably know is Travis. We call him the Kanye of Amazon because he knows so much but he was like the backbone of all logistics and knowing how it works and I went all in, seven days a week, was learning with him, really building this out and just recently we got the investment to open an office in Atlanta, Georgia last June and we’ve grown our team to about 40 people and it’s looking really good. We’re helping a ton of people in that and that’s basically how I got started, just jumping in learning like everyone else. I was basically like all your podcast listeners out there, learning how this works and things like that and just jumping in the deep end.
[00:07:31] Scott: No, I love it. You got my attention. You sent over a video actually and said, “Hey, Scott, I just want to let you know, I’m a fan of the podcast. Love what you’re doing and just wanted to just kind of say hey.” And that was it. And it was pretty cool that you did that, and I talked about how I have done that before too to reach people. But I thought it was cool because I could see right there that you are genuine and that you really did want to help people.
[00:07:58] Michael: Yeah. Like 100%. I’m the first person in my family to go to college. I grew up in like a small farm town in Northern California, so it’s always been about like I don’t feel fulfilled, I don’t feel passionate unless I feel like I’m truly making a difference. And as far as like the videos go, I mean, it kind of speaks to as an entrepreneur I’m not selling stuff on Amazon, but I am building a business and you have to have that entrepreneur mindset. So, there can always be challenges. I’m like, “How do I reach Scott Voelker, The Amazing Seller?” We had a team of three and I just got creative, thought of some ways to personally connect and that’s what people can do with their Amazon businesses as well for sure.
[00:08:40] Scott: Absolutely. Yeah. I love it. So, all right. So, we got people caught up now. You’re a cool guy. You’ve got some cool things working there. You started with a three-person team and now you’re up over 40 and you’re telling me before we got on here, it’s going to get even larger and that’s just because you guys are doing a great job servicing us sellers. So, what I want to do here today though is I want to give people that roadmap. I want to give people the how to if they choose to do it themselves and then we also will talk about Flexport and how they’ve made it really a lot easier for people to kind of go through that process without having to do it themselves. But if people want to do it themselves, where do we start? Let’s start there.
[00:09:24] Michael: Yeah. Exactly. So, I would say moving your shipments around the world is obviously can be like a complicated process and the first kind of place I’d like to start is like when should I even consider using a freight forwarder? When should I just stick with my supplier? At what point does that make sense? I have some basic rules. This is just my experience and the way that I kind of break it down is just between ocean and air first. So, the real easy one to remember is if you’re shipping ocean, you want to use a freight forwarder. It doesn’t have to be Flexport. It can be someone that you trust, someone that you’ve met or through your searches, has a good reputation but if you’re going ocean, I highly, highly recommend using a freight forwarder just because there are more steps. If you’re going and working on your own, you kind of have to find your own kind of like customs broker and things like that to make sure if things get cleared.
And a lot of times where I have found personally with the thousands of clients that we’ve helped is that when you’re shipping ocean and things like that, your manufacturer could be working with a local freight forwarder and things like that. They’re not really focused on your shipment. They’re more focused on producing goods and just getting things moving and when there are questions, when there's like a port delay or something like that, you don't really have that point of contact that's really looking out for your business and really making sure you have the transparency. And that's what I'm all about at Flexport. It’s like making sure that like you have that.
And the reason why it’s important too is I want to get people that are selling on Amazon and e-commerce to really start thinking a little bit down the road just because when you’re first investing all that time into making your product, learning how Amazon works and things like that, a lot of people don’t consider what happens when your products are like actually successful.
[00:11:22] Michael: So, when your product is successful, if you put in the time and I can walk you through some of the things that top sellers do. Your product can take off and shipping becomes more and more important. And so, if you’re going by ocean and it’s a more complicated process, you want to have those systems in place ahead of time, so you can scale. So, that is really, really important on the ocean side like I know the thing that I always think about is Sam Walton with Walmart. Before he even launched that company, he had all of his estate taxes planned and things like that because he had that vision that his business was going to be big. So, on the ocean side, definitely use a freight forwarder. When it comes to air, I would say stick with your supplier who’s going to use Air Express, DHL, UPS, things like that if your air shipment is 250 kilograms or less.
Now, the reason I say that and that’s 250 kilograms or less is that your suppliers are going to use DHL, UPS. It’s the same thing basically. If you’re using that stateside like in the United States, that service and basically, it’s going to be door-to-door. I have like trust that that system works. The only difference is just that’s international and things like that but using that service on those smaller air shipments is totally fine. When you get to that 250 kg mark, that’s when the prices between your supplier courier service and a freight forwarder is going to kind of converge and that’s like those shipments are more important and that’s when you want to start having the conversation with a freight forwarder to maybe see if the prices are in line, makes sense for your business, and things like that. So, big takeaway, if it’s ocean, in my opinion, always use a freight forwarder. If it’s air, feel comfortable up until 250 kilograms for air. Anything above that, I would definitely start trying to build those systems and have those conversations.
[00:13:26] Scott: Okay. And so, like if you’re at that point and for anyone that’s doing the math, kilograms I kind of did the conversion of what you’re talking, about 550 pounds is about what we’re talking. It’s 551 to be exact if we were to convert that. So, you have to look and see what that is going to be, and it may be even at this point where you might even want to just break that order up if you’re going to do multiple orders so this way here it fell in there.
One quick question on that. I know we’ll be talking a little bit more on that. Because we’ve dealt with this ourselves actually in the early stages that we didn’t know about but it kind of threw a red flag when we had an order that was going by air and it was over a certain amount of money going through customs. I know this is for like our customs. We’ll talk more about that but what’s the deal on that? Do you know anything on that that you could shed some light on? Or is that just a random thing?
[00:14:22] Michael: Yeah. I mean, without more details, I’m going to say that’s probably more on the random side but what I can tell you is that the customs highly depends on having all the information that they need filed ahead of time. So, a lot of that, if I had to break it down to the most important thing is you really want to know your product and its HTS code classification as early as possible. Basically, there are some sites that you can use to kind of look it up yourself, but I do highly recommend having a customs broker like a licensed customs broker have a look at it just to make sure but basically you just need to know like your product what the material is that it’s made out of and the intended use. So, if you get that information, you can give that to customs or your broker, they can classify the product for you.
And you also want to have things like your business information, your IRS notice, and things like that, all your kind of business paperwork in line as well. And I know that can kind of sound like a lot in the beginning, but this is kind of like a one-time kind of set up thing if like you work with a freight forwarder, they’re going to ask you for this, they’re going to store it, have it in their system so that they can just use it going forward. It kind of depends. Customs is a separate government entity. They don’t fully show all the things that factor in so when something gets inspected or not. Sometimes if you import a new product or things like that, it can put up a red flag or wherever they can hold it. Sometimes it’s just truly random, things like that. So, I can’t say specifically for your case and like the price, but the price changes can trigger it for sure. So, if something just to be like ready for and cognizant of as you start building your supply chain for sure.
[00:16:17] Scott: Yeah. No, absolutely. And I think you bring up a good point there too and that's what your special code. You definitely want to know what that is because that will shed some light on as far as like what that will potentially be. They’ll never tell you exactly what it’s going to be at least in my experience, but it will at least give you like you said it will give you an idea. Now, so a customs broker for someone that's listening, would that just be someone that they would find through their supplier or would they find that person just by doing a Google search or something like that? If they’re not going through a company that’s doing everything for you like Flexport but if they were to get that on their own, would they just go and look for a customs broker?
[00:16:57] Michael: Yeah. You could just search online for a customs broker. I would try to get one in my area just so I could like potentially meet them and things like that but I’m a former accountant so I’m a little bit on the conservative side so that’s not like you have to follow that but, yeah, you can search online and try and find one. There are people online that can help classify and stuff like that if you're deciding to go on your own.
[00:17:21] Scott: Okay. Cool. All right. So, what’s next? Okay. So, we kind of figured out like air versus by sea and I think also like you said you’re giving like the idea like 250 kilograms is probably okay up to that point. After that, you might want to go think about going sea. My only thing is on that, we just recently did this where we broke up an order because we were out of inventory and wanted to get in a hurry, so we broke it up, we sent like 750 units and we’ve got another 3,000 that are going to be coming by sea. So, that can happen. But when other than that is the time to go or is that the time that you say you should start thinking about sea? Because there is quite a bit of difference in costs as well for us going by sea. It’s crazy actually. Air has been just going nuts recently and I think after the fourth quarter, it’s kind of settling down but it was pretty nuts actually.
[00:18:15] Michael: Yeah. So, like that something’s to really keep in mind as well too is that the air market right now, in general, is highly volatile. It’s one of the most volatile seasons that we’ve seen in the shipping industry and basically like the complete history of it and the reason being long story short is there’s that Hanjin collapse the last year and a lot of like air shipments or sea shipments getting pushed to the air side and just the general growth of e-commerce is creating. It’s like anything else. It’s like supply and demand. The demand is really, really high and there’s a lot of really big shippers out there that are kind of taking all of the demand or taking all the supply and so the prices are going up. So, if you’re just starting and you’re doing on the small side and the small amounts like you can go by air, but I would also, once you get to that threshold, like really be looking at ocean too because the price can be like at a minimum four times less expensive, sometimes like eight times depending on of course the weight and volume of your product and things like that.
[00:19:26] Scott: Okay. All right. So, at this point again we’re still trying to decide if the time is right. Let’s say that the time is right and we’re ready and we’ve got a couple of thousand units that are going to be shipping by sea. What’s the first thing that we need to do? Do we tell our supplier that we are going to be handling that or do we ask them? I think you already said you kind of want to have our own freight forwarder so would that be it? Do we want to find our own freight forwarder that can handle some of these steps for us?
[00:19:59] Michael: Yeah. Exactly. So, if you’re really at that point where you’re considering a freight forwarder, you definitely want to reach out. There’s going to be information that they need ahead of time like your business information, the type of product that you’re importing before you can even get that process going just so they have it already. And you want to get that done as early as possible.
And the way that it works kind of very big picture is that when your product is ready, your freight forwarder will have a team in China or in India or wherever the supplier is based where they can do all the coordination with your supplier. So, they’re going to help that shipment and coordinate everything from your supplier to the seaport or the airport and then from there to the seaport or airport in the United States, getting it to a warehouse if needed in the United States before having one of Amazon’s partner carriers like UPS or an LTL truck come pick your shipment up. So, they’re really going to handle the entire coordination of your shipment and that’s like very high level how it works when you’re working with a freight forwarder.
[00:21:05] Scott: Okay. So, then I guess the other question that I’m sure a lot of people are asking is, “Okay, you get a freight forwarder and stuff. What do we generally expect to pay on top of our regular cost of the item?” Because where our supplier is going to say, “Okay, it’s going to be $4 for your unit for us to create it and basically have it ready to be picked up for your shipper or your freight forwarder.” What would be a good rule of thumb to say that not the shipping cost but the fee that we are potentially going to be paying to have a service take it from end-to-end?
[00:21:44] Michael: Yeah. So, I would say like that depends too on the types of goods that like you’re moving, how quickly you want to move. Like, a fast air shipment is going to cost more than a deferred air shipment. Ocean’s going to be less than all that. What a lot of freight forwarders can do is provide you the quote and the breakdown of how much that shipment is going to cost.
So, like before you even have the freight forwarder move it, like you can engage with a freight forwarder, speak with them, make sure it’s someone that you trust and then see what the price is to move it and your freight forwarder should be very transparent about the different line items and things like that to expect when it’s going through. So, when you’re kind of taking a big step that back, the reason why it's good to have your HTS code classification, in the beginning, is you can know the custom duties are going to be and then when you get your quote, you can kind of look at, “Okay, they’re going to show me the price to get it to the port and then like the transit and then the coordination in the United States as well.” It’s hard to give…
[00:22:57] Scott: I get it. I get it.
[00:22:57] Michael: Yeah. You’ll know it before you actually move it is the point.
[00:23:02] Scott: I guess that was my question because a lot of times it’s hard especially when you’re first launching your products or even a new product for that matter because your supplier will give you the cost to produce the goods but then it’s always, “Okay, now I got to figure my shipping. Is that going to be $1 a unit more? Is it going to be $4 a unit more?” So, we always kind of want to have that and I just found that depending on the size and the weight, generally our products are falling within under the 2 pounds. They’re not oversized.
So, for us, we kind of know that if they quoted us, we always get a quote from our supplier for air just because and now what we can do is we can say, “Well, if it’s going to be that for air, we can like you said, probably step that down three to four times because we know by sea it’s going to be less.” So, this way here we kind of reverse it and say, “This is what it would be for air. Okay. It’s going to be $4. We know if we do it by sea it’s going to be $1.” Close. You know what I mean? We can kind of guesstimate.
Because I think that’s always the deciding factor and in order to give someone all of the information to get that, we kind of want to know that. So, what you’re saying though is what we would need to do is we would have to know the size, the weight, and the weight really on how many come in a package and how much the weight is for that box, 150 in a box or whatever it weighs, whatever 25, 50 kilograms, whatever it is. And then from there, we would give that information over to our freight forwarder and say, “This is everything. This is the HTS code. This is all of our information. This is where it’s going, and this is our shipment that we want. What’s the price going to be?” Is that what you’re saying?
[00:24:46] Michael: Yeah. Exactly. And you unpacked a lot of great things there. So, one thing I do want to point out is a really good place to start with the HTS code is just asking your supplier. So, if you ask your supplier, they’ll give you the code that they think is correct. The thing to know there is that the first six digits work globally but it’s really the last like few digits that are specific to the country.
So, if you give that code to your freight forwarder, they’ll be able to look at it and be, “Okay, these are the first six,” it’ll help them quickly or more quickly identify the product. But the one point I think you really touched on that I want to spend a little bit time on is the fact that you said that you ask your supplier for the air, you kind of divide it by four to get like a really rough estimate. And the important thing to know with these estimates, obviously, they can change but more importantly is what I do like a mistake I do see some people make is that their margins are too small.
So, freight forwarding and in general you can do the work, find a great partner and things like that but there are some things that just marketwise like say Hanjin collapses or something random like that or it’s a volatile air market, prices can go up, and things like that. You want to be padded and protected. So, you really want to feel like when you’re moving forward with a product that you have healthy margins to really like cover some of those things that can change. And there’s a lot of reasons for that. If you ship by ocean and you’re like, “Wow, my product’s a home run and now I want to consider air but now the shipping is four times, five times more expensive,” and you have to take a huge loss, you can mitigate a lot of that by having healthy margins. You don’t have to look for a unicorn product and have really huge margins, but it needs to be healthy and you got to assume there’s going to be a cost and expenses and kind of unforeseen things.
[00:26:40] Michael: Even if your product is a success, that comes up that you can set up yourself for success by making sure your margins are really healthy. Because I do see some clients that kind of have that first learning point where some little change happens and it’s kind of “making or breaking the product” if you’re in that position that it wasn’t really set up well in the beginning and something that you really should be thinking about when you’re doing your product selection.
[00:27:08] Scott: Yeah. I want to definitely highlight that because that’s a great point. What we always do, and this is kind of what I even talk about here in the podcast and I teach is really you should be profitable even if you go with the air price. So, if the air price is like we just recently had an order and it was like $3 a unit to get it shipped by air and the cost of the goods were $3 so it’s $6 but we’re selling it for $22. So, we’re like, “Okay. We’re close.” It’s pretty good but we know when we go by sea it’s going to be less. So, our margins will even get better, but we could still make it work with air.
So, that’s kind of what we do is we try to look at that is like that’s the worst-case scenario and that still could fluctuate. That could even go up a little bit more. We get it. But we want to keep ourselves in that area so this way here we’ve got that room. You definitely do not want to say, “I’m going to be losing money if I go by air but if I go by sea, I'm going to be making a profit.” You do not want to do that.
[00:28:12] Michael: Nice. That’s a really good rule of thumb. I love the kind of tactics that you have to kind of ensure success and I guess my question there is how long did it kind of take you to kind of learn things like this, these little rules of thumb? Because I think a lot of people could get like overwhelmed with the information when it comes to shipping and things like that, but I think it goes to your testament to always taking action. I mean, did it take a year or so or how long would you say?
[00:28:37] Scott: Yeah. Well, I think in the beginning I think like everyone sea shipping kind of scares you so you're like, “Can I make this work by just going by air? And I don’t want to wait as long for sea to get started. I mean I’m impatient. I’m an entrepreneur. I want to get stuff done.” So, it’s like I want to order something, get it here, get it launched and I just want to see if it’s going to work and then I can figure everything else out but again, I have that little bit of padding that I say if I can make it work on the front-end. So, I was doing right off the bat I would say, I mean, it didn’t take me that long to figure that out because I didn’t want to go sea right off the bat because it scared me in a sense and also it seemed very complicated and I didn’t want to wait that long. So, now we’re able to obviously do that especially in the new brand we’re doing sea shipping but again we’re out of inventory right now on like four SKUs. It’s killing me. I mean, we look at the inventory report of the money lost that we could have had if we had inventory. It’s over $40,000, $50,000.
So, it’s like it’s not small change but in the same breath, we thought we had ordered enough. We ran out. It’s not a big deal but it’s one of those things that if you can get it here quicker, you want to. But I would say, to be honest with you, it’s just one of those things that in the beginning I wanted to think the worst and then I knew that it could get better. And I even tell people that even when you’re ordering the first quantity like you might say, “All right, I’m going to order 500 units as a test and it’s going to cost me $5 a unit.” Your next question needs to be, “Okay, Mr. Supplier or Mrs. Supplier, what is it going to be when I order1,000? What’s it going to be when I order 3,000? What’s it going to be when I order 5,000?” So, you can get the breakdown. So, you know the 500-unit order is the worst case and you’re still going to make good money at that and that’s just only going to get better. Make sense?
[00:30:25] Michael: Yeah. That makes a ton of sense. But my counter to the ocean shipping taking too long and this is just my opinion but I’m…
[00:30:33] Scott: No. Go ahead. Go ahead. Go ahead.
[00:30:33] Michael: …a big advocate of this shipping is that extra time on the water and while it’s moving is the perfect time to say build your email list, build your launch list, build your listing, do the research to make sure you’re optimized with your keywords and things like that. I think it kind of gives you that time especially if it’s like your first or second product to kind of time things and not be too much in a rush and so that’s what I’ll advocate for it. You can do air. I’m not against it but I’m just a big fan of ocean myself.
[00:31:05] Scott: And I agree with you. I think for me it’s just, in the beginning, I want to get it there. I want to get it quick. I want to test. I want to validate and just to see that I can get some momentum here and then like you said, like right now we run out of inventory on one of our SKUs for about three weeks, four weeks and it's killing me but it’s coming by sea. I think actually what my partner we agreed on I think we’re actually doing a small order that should be here Wednesday by air that we did I think 500 units because we’ve been out of inventory way too long. So, we’re paying a little bit more. We’re getting it, but we are on ocean shipment on the rest but you’re 100% right. You totally have time and I always tell that.
I actually did another episode the other day where I was talking about like there are things that you can’t control and that you can’t be worrying about and if you run out of inventory, you could say, “Well, could have I controlled it?” Well, maybe but not really because you don’t want to slow the momentum. So, what do you do? You don’t worry about it. You keep your head down, you focus, you take action. What can I take action on? You can build your email list, you can optimize, all the stuff you just mentioned you can do. So, you’re absolutely right and I agree with you. It’s just when you’re first starting you’re like, “I don’t want to wait like 45 to 60 days to get my product here to test it.” So, if you could do a hybrid, I’d be all for it.
[00:32:24] Michael: Yeah. Definitely. And the one thing you kind of hit there too, I will recommend a book called The ONE Thing.
[00:32:31] Scott: Oh yeah. I love it.
[00:32:33] Michael: Have you read that one yet? That’s like that’s the best way if you’re an Amazon seller or you’re starting and you’re just like, “This is a lot of information. I’m feeling a little bit overwhelmed.” It's totally fine. Those are normal feelings but what that book basically breaks down is that you pick the one thing that you can really focus on that's going to make the biggest difference, in this case, would be your business and you just focus on that and to make sure to execute and take action like Scott always says. Know there’s probably going to be some chaos in this whole learning experience which is totally fine but really making sure to pick like what stage am I in now? What should I be focusing on? And making sure to execute on that as best you can with the information that you know at the time for sure.
[00:33:18] Scott: Yeah. Absolutely. Great, great book by the way. That goes hand-in-hand with my other recommendation, The Compound Effect. Love that one too.
[00:33:24] Michael: Yeah.
[00:33:24] Scott: It's all about small little things you do every day that compound but, yeah, I'm a big fan of that. It's funny. It's a lot people talk about the 80-20. I heard a guy the other day say, “No, it’s more like the 98-2.” You know what I mean? There’s really 2% that you really should be and could be working on, but we choose to dabble in all these other things because we think it’s going to work. Like you kind of know what you can do right now like what can you do? Ask yourself the question and then just do that but, yeah, I agree. We’re just impatient as entrepreneurs.
[00:33:54] Michael: I know. I’m the same way. I’m the same way.
[00:33:57] Scott: I want it done yesterday.
[00:33:58] Michael: Exactly. When we launched, things really took off and when we had our team of three and there’s a time we don’t have the waitlist anymore, but we had to do the right thing and put a waitlist.
[00:34:10] Scott: Yeah. You did. You did. I remember that.
[00:34:11] Michael: Yeah. And that’s hard. Yeah. It’s hard but things change all the time. It’s hard to plan for everything so you kind of just got to jump in the deep end, get going and learn and really plan it out for the long-term but, yeah, there’s always like the 98-2. I totally agree with that 100%.
[00:34:31] Scott: Totally. All right. Cool. We pretty much covered a lot of things to think about and what to do. And again, I’m kind of skimming this kind of report you put together or this checklist really is what it is. I’m just going to read through these really quickly. You just tell me if there’s something we should bring up before we say goodbye and we could talk a little bit about Flexport as well, but you put together this, your team put together this really good guide. It’s really knowing your products. I think that’s important. Actually, you know what, on that right now, is there anything that you would say for people that are just starting to stay away from? Is there anything that might be like, “You know what, yeah, don’t go at that because that HTS code is going to throw a flag or whatever.” Is there anything or you say everything is open?
[00:35:22] Michael: No. There’s definitely some stuff that I would stay away from. It’s kind of like the first products. Just because there’s a little bit more to them and as a first-time seller, it may add some complexity that maybe it should be better saved for later. So, maybe anything that where you’re basically like a wood product has additional things you need to do. Any products where basically you’re claiming that there’s some kind of health benefit to it is regulated by the FDA. We see that a lot. Something to be aware of. Not that you can’t do it but like children’s toys have certificates that you need as well.
We provided a link in this guide as well where you can kind of search your product and see if it’s regulated by anything to make sure but anything with just things to be aware of like I wouldn’t say you can’t foresee but just know that there are complexities and you should be speaking with a freight forwarder at least like don’t go into these products by yourself without some help. It’s anything that has batteries or like lithium-ion batteries or any kind of like hazardous materials or things like that, you want to definitely be reaching out to a freight forwarder but those are the main ones. A lot of people don’t realize that if you’re claiming a health benefit so it’s like a massager or something like that does have additional regulations a lot of people don’t foresee and so you really need to be bringing that to the attention of your freight forwarder, make sure that there’s nothing that you should really be looking out for.
[00:37:00] Scott: And would that freight forward, or even you guys for that matter, would that be something that you would help through that process or would you just say, “I wouldn’t go there,” like…
[00:37:09] Michael: Oh, we can definitely help. So, there’s like as far as just to use as an example, the wood products, it’s called the Lacey Act and there are additional forms. So, a freight forwarder, if they're like us, is going to have an in-house customs team that is specialized in knowing like exactly what’s needed so like all your Ts are crossed and your Is are dotted. So, what we do is take that product information, give it to our in-house brokers and they go through and let us know if there’s anything that we should be aware of.
[00:37:40] Scott: Okay. Good. So, we don’t have to discard them totally. It’s just like you’re saying, if it was your first products, you might want to stay with them because it’s going to be a couple of extra hoops you got to jump through but right now you’re saying though if you were to go through those other ones, you guys could still help or a freight forwarder could help in that or a good one should be able to help in that.
[00:37:58] Michael: Yeah. Absolutely. And if there’s anything done, things like that, then that’s probably a red flag.
[00:38:03] Scott: Okay. Cool. All right. So, knowing your products you’ve got that in this guide which I think is awesome and you’ve got a little link there and you guys can use to kind of search your product or what you’re going to be selling. Selecting air, LCL, FCL. What is LCL and FCL for people that don’t know?
[00:38:20] Michael: Yeah. That’s a great question. So, LCL is less than a container load and then FCL is a full container. So, I would say a lot of people don’t know this too but basically, you want to start considering a full container when you get right around 22 CBMs. So, anything under that it’s going to be best to be moved as an LCL just from a cost perspective but once you get to that 22 CBM that first container size which is a 20-foot container can hold up to 28 but once you get to 22, the prices can kind of converge around that and you should be asking your freight forwarder if it makes sense to maybe consider a full container. There are things to consider like the transit times between those two things and stuff like that so you definitely want to be in contact with your freight forwarder and having that conversation. It's kind of another reason why kind of getting these systems in place and kind of learning this stuff is really important as a seller.
[00:39:18] Scott: Okay. Yeah. I know that. That’s good. Okay. And then moving through the list here quickly before we wrap up. Creating a shipment plan. Again, that has to be done on our end really and then we supply it to our freight forwarder I’m assuming, right?
[00:39:32] Michael: Yeah. So, a couple of things on the shipment plan to really know is to know that the ship from address, again, that’s the ship from address is not your supplier’s address like it should be the warehouse address and the country that you import to so in the United States. That’s one thing that people get really confused on like what I put as the ship from? You’re basically letting Amazon know what’s the last point that their trucks are going to pick it up from so it’s going to be that warehouse address in the country that you’re importing to. And another thing with the shipment plan I think is really important is that you can put all your SKUs in one shipment plan so there’s no limit to the amount of SKUs that you can put in your shipment plan and that’s important for a lot of reasons.
One, say you want to have the LTL truck like the big truck pick up the shipment and take it to the warehouse. If you do multiple shipment plans like you break it up, you’re going to have to dispatch a separate truck to each shipment plan. So, instead of just having one truck pick everything up, you’re going to have four or five and it really adds to your cost. And then, two, if you’re creating multiple shipment plans instead of just one, there’s a chance that Amazon might split your shipment out to different warehouses across the country instead of just say one in Morena Valley which is the big one in that area. So, putting all your SKUs in one shipment plan is a big one that people miss from my experience. Yeah. So, those are like really good things to know.
Also, on the shipment plan just like really covers some of like the high-level stuff that I think is important is really knowing the transit times and kind of the differences between SPD which a small parcel delivery and LTL. Small parcel like FedEx is really for 30 cartons or less. It’s really fast but it’s more expensive and LTL, although cheaper, it takes a lot longer time, two to three weeks.
[00:41:36] Michael: So, really, I don’t want to just throw a bunch of numbers out there. Just know that that final trucking has differences in prices and transit times and it’s a great conversation to have with your freight forwarder as well. But those are the main things I would be looking at when thinking about a shipment plan.
[00:41:51] Scott: Okay. And then the other thing you cover in this guide is labeling your shipment. So, what do we need to know on that?
[00:41:58] Michael: Oh, yes. That’s a great one. So, labeling your shipment, what a lot of people don’t realize is that something you can do to really cut down on the complexity is to have your supplier label the shipment at what we call origin which is basically where their factory is. So, you can create a shipment plan at any time for your shipment in Amazon. It can be two months early. There’s no rule that you don’t get dinged, things like that. You can have that shipment. It can be in working status for as long as you want. You can go and put in the carton information, the dimensions and the weight and things like that and get your label so you’ll have like let’s say you’re using FedEx to do the final trucking to their warehouse. You’ll have your FBA label and the FedEx label. You can provide that to your supplier and they can put it on the cartons before it’s picked up by the shipping company and that makes it a lot less complex.
Because what’s going to happen is that’s going to show up in the warehouse in the United States, whoever is handling that, your freight forwarder or another warehouse. They can just see, “Oh FedEx is picking it up,” a lot of times or they should just have a FedEx truck coming every day. They can just hand it over to FedEx and they can take it on and you really cut down on the transit time. Because if you’re having the warehouse, having to apply the labels, it just creates a whole another process. And then especially if it’s during say Chinese New Year or peak season at the end of the year, those warehouses can get really congested, a lot going on. It can create a lot bigger delays than you think so having your supplier put those labels on ahead of time is a really big key to success in my opinion as well.
[00:43:38] Scott: Yeah. Those are some great points. Okay. The last one is getting through customs and we talked a little bit about that but what else did you want to mention on that if we haven’t covered it already?
[00:43:50] Michael: Yeah. No, that’s a great one. I mean I get a lot of questions like how often does customs exams happen and things like that. Like a very high level like it is random. There are things that maybe like they’re looking at that they could do it but there’s like three types of customs exams. You have your X-ray exam where they’re just going to put the container through the X-ray and take a look; the tailgate exam where they’re actually going to take a peek inside the container; and then the intensive exam is where they’re actually going to unload it and look at everything. So, the thing to know there is that these things can happen and that they do happen. More often than not, they don’t but it’s something to be prepared that these things can happen. Sometimes it can add like a week or so to your shipment.
But my takeaway from that is really two things. Like, one, okay, a customs exam can add some additional cost to the shipment because it is the shipper that is responsible for those costs. Another reason is exactly why you should have good margins so when things like this happen, it doesn’t make or break you. And then, two, transit times can fluctuate with things like this. So, you also want to be trying to really look ahead at your inventory and put in what you feel comfortable with. I’m interested, Scott, on what you used to say, “I’m trying to stock up or X amount of months and make sure that there are some delays like this. It doesn’t break the bank.”
[00:45:27] Scott: Yeah. Well, that is a challenge for all of us and it’s like you can try to predict but you can’t predict 100%. I mean sometimes you’re going to have some sales that take off and then they’ll back off. It could be seasonal stuff. It might not be. It might just because your products are getting displayed by an influencer in the marketplace, who knows?
But what we generally do is now especially that once a product has kind of been validated that it's going to sell and what we see that we’re going to be selling through, we’ll generally place our order immediately from the time we receive a new one. So, if we received one today, we're putting in our next order. You know what I mean? So, that way there we know that the production is going to be let's say 25 to 30 days and we know that the shipping, if we’re going by sea, will be 45 to 60 days depending but then also we have the option before it’s in that if we wanted to split the order and send some air, we can because it hasn’t been shipped yet. We can make that decision until it’s been actually kind of loaded and prepared for that sea shipping.
But that’s our general rule right now. But it’s never an easy task, I got to be honest. It’s never easy. You try to plan the best that you can but, again, you don’t want to turn down sales to try to spread out your inventory because you want to be able to sell as much as you can as rapidly as you can because that’s what Amazon likes. That’s what we like as a business owner. So, that would be my advice for anyone is like if you know that your product is selling through and you can look at your reporting and all that stuff to help you, but we generally find that we just received one, we’re going to go ahead and place that next order because really to place that next order for us, we’re not paying the shipping yet. All we’re paying is the 30% down on the goods. So, it’s really not even an outlay of money necessarily. It’s not all of that much compared to what it’ll bring later. So that was my long-winded answer on that.
[00:47:25] Michael: No, I love that. That’s really good. And I would say too like when I’m hearing things like this, the big thing for me too is nothing, and you say it all the time, like nothing replaces action like I can just gave a great example of basically where we started with a team of three and now I’m leading the team of 40 in Atlanta, getting started and doing the best I could with the information that I had at the time, the things that I learned and the challenges that I faced in this time period was the greatest learning lesson of all like I did my homework. I looked. I try to find all the information I could but at the end of the day, I had to start speaking with people and telling people about our company.
And as you grow, the challenges they get more complex and bigger and that’s not to scare you. It’s more to say that developing that mindset in the beginning that, “Hey, I’m in it for the long-term,” like one of our values is playing the long game like we’re thinking down the road like we’re really in this. We’re going to take as long as it takes. We’re not looking at right now, the quick shiny objects and things like that. We’re really playing the long game and investing in this the right way. And if you have that mindset that, “That’s how I’m approaching my business like I want to build a business on Amazon. I want to scale it beyond that into e-commerce. I really want to use this for everything in my life,” like you got to know challenges are coming so developing that mindset to like I want to take on challenges, find the solutions, and earn as much as possible, how fast you can learn is actually the biggest discerning factor of success in my opinion.
[00:49:10] Scott: Yeah. I love it. I love it. I mean, it’s mindset and everything that we do. And I think like you said going into this thing as it’s a long-term thing for you, the long game, I think that you’re already ahead of the game if you can kind of put yourself in that mindset and also that you’re going to be learning so much through this process. Like, think about this, once you learn this process of importing items, it doesn’t matter if Amazon went away or not. You still have that skill set that now you could still do that whether it’s for you or another company, so you have the skill set there and you can launch a new business if you wanted to just selling on your own ecommerce site or another platform or whatever. So, you have that skill which is something that a lot of people don’t look at as you’re building the skill set as you’re building your business, so I love it.
All right. So, to wrap up, let’s talk a little bit about Flexport. What does Flexport do and if I wanted to use them, what do they do for me, the person that is like just pretend I’m getting into the game for the first time, I’ve never done this, I’ve done air only through my supplier and I want to use Flexport? What do I need to do in order to get started using like what would you require? And kind of what does Flexport do that makes it easy?
[00:50:22] Michael: Yeah. That’s a great question. So, Flexport like we’re a partner, man, for all the guys and girls out there that are going from that situation where you’ve been working with your supplier, you’re considering bigger shipments and things like that. We’re like first and foremost going to really empower you with information, education to really help you be successful. Our goal on our team is actually to help grow and scale your business to really get to that next step where you’re basically moving on to teams that can provide a lot of consulting and really think of supply-chain strategy and things like that.
We’re actually going to have an event, a local event in Atlanta where we have an Amazon seller that went from their own storage unit making $500 a month or something like that like a really small storage unit to like a 16,000-foot warehouse. We’re like they’re having other goods brought in and things like that, having them speak on how they’re successful and how we’ve empowered them to do that.
So, that’s what we are first and foremost is a partner to help you learn about this crazy, I think, sexy world of logistics. I know some articles that say it’s unsexy, but I disagree highly. But to help you with that and then on top of that icing on the cake, we have best-in-class software and technology to really give you the transparency to really know where your shipment is and things like that. Once you say book a shipment, you can look, you can look at the schedule every single stop along the way. You have like a really great messaging feature to speak with your team. We have a robust help center where you can go, you can just click on help. There’s a bunch of great articles and help like that. So, that’s kind of what I call the one-two punch of Flexport.
[00:52:14] Michael: What you really need to get started, I know we’re listed on The Amazing Seller resource page. You can find us there. We do have a promotion there, help get Scott as much coffee as possible and you can sign up there. What will happen is you'll go with our team. We'll get you set up on the educational webinar to kind of help you learn about kind of initial first steps and things like that. I do say you do need to be a registered business, so you would need to have like an LLC or an Inc set up. It's good for you and it's good from a compliance perspective. Other than that, that’s kind of the first step, just getting signed up, attending the webinar to learn and then from there we’ll get you on the platform, we’ll get the rest of your information like your products and things like that and that’s how it works.
[00:53:04] Scott: Yeah. Cool. And I’m going to make a shorter URL here, so you guys can get there quicker. It’s TheAmazingSeller.com/Flexport. If you go there, it’ll direct you to the resources and that guide and all of that stuff. Is it cool to mention the discount that you guys were saying that you guys were going to give? It’s on the guide. Is it okay to…
[00:53:24] Michael: Oh yeah. 100%.
[00:53:26] Scott: Yeah. So, guys, you put it right in here in the guide so if you guys download the guide or if you just go to that link I gave you, you guys are eligible for $150 off your first shipment using Flexport. So that’s pretty awesome. Again, I think you guys are doing that more or less to say, “Hey, let us do this for you. Let us prove to you that it’s going to be really easy,” and we’re going to like you said, partner with you in a sense. So, I love that. I love all the information that you provided today, Michael. You’re always awesome to talk to and hang out with in person. So, if you guys ever do get the chance to hang out with Michael at an event or maybe even a Flexport event, who knows? Definitely, do that. A wealth of knowledge, and I think it’s awesome that you’re constantly learning as I am and that’s what it’s all about like just continuing to learn through this process.
So, I want to thank you, Michael. Guys, if you are interested in checking out Flexport or if you want more information or even just download the guide that we just kind of covered here in rapid fire but everything is laid out for you. There are some helpful links there for you as well inside the guide that will help you determine some of those things that we discussed. One of them being your HTS code and customs and that type of stuff, packaging, creating your shipment plan. Everything is kind of outlined in this guide. You can find that that TheAmazingSeller.com/Flexport and there will also be that discount there if you guys do decide to use Flexport for your shipping.
So, Michael, I want to thank you once again, brother. It’s been fun. I’ll have you back on again because I know we can dig into a lot of different topics. I also just want to keep my pulse on the freight forwarding world. So, I’ll definitely want to get you back on and we can kind of touch base and see how things are moving along on your end as well.
[00:55:11] Michael: Appreciate that, Scott. It’s been an absolute pleasure. That was a lot of fun, man.
[00:55:16] Scott: All right. So, there you go. Hopefully, now you feel a little bit better about this whole freight forwarding, this shipping whether it’s by air, whether it’s by sea. You feel a little better. It feels like there’s a lot there that we covered. There kind of was and that’s why he created this free guide for you guys and again, I’ll remind you of the link, so you guys can go download that. And you don’t even have to enter your email or nothing. It’s TheAmazingSeller.com/Flexport. That will give you immediate access to that guide and it will walk you through those six steps that we talked about.
There will also be a link on there that if you did want to use Flexport that you would get $150 off your first shipment. So that’s pretty cool. All you have to do is go through that link. Yes, that will buy me a cup of coffee as I’ve talked before and actually Michael talks about that on there. He actually had a cup of coffee as we’re doing this interview. He told me before we got on and I did too, so we were actually having coffee together which was pretty awesome.
So anyway, that’s what I want you to do right now. Download that guide because that guide will definitely give you a good overview of what it will take whether you want to do it on your own or not that’s fine, but it will at least give you the step-by-step in what you need to do when going through those steps. All right. Now the show notes can be found at TheAmazingSeller.com/479. Transcripts, show notes, I’ll even include a link to that guide there as well and you could also again go directly to TheAmazingSeller.com/Flexport.
All right. So, guys, that’s it. That’s going to wrap it up. Remember, as always, I’m here for you, I believe in you, and I am rooting for you, but you have to, you have to, come on, say it with me, say it loud, say it proud, take action! Have an awesome amazing day and I’ll see you right back here on the next episode.
LINKS MENTIONED IN THIS EPISODE
- $150 OFF First Order with FlexPort
- The One Thing
- The Compound Effect
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