Case Study – Amazon

In Amazon Sourcing by Chris0 Comments

We understand for Amazon sellers confidentiality is extremely important, for every customer we have both NDA (Non Disclosure & Non-Compete Agreement)

The Product

Here we will not reveal the product, for this example we will use Jungle Scout to show you the number, If you don’t know Jungle Scout it’s one of the best software available for researching sells numbers on Amazon.

We recently worked with this customer for the number one product shown below, the product is selling around 3000pcs per month, so that’s 36,000 per year.

Product History

It’s a small product and our customer had sourced themselves via Alibaba three years ago

The big problem was when our customer started the sourcing on Alibaba he had picked a supplier, that turned out to be an agent who had realised that this was the first product he had ever sourced from China, the original quote was based on a trial order of 1000pcs only, he was now buying in batches of 10,000pcs, he never asked it to be re-quoted, I’m sure the agent did 🙂

Quality Problems

The customer had been getting batch problems, one batch is good, the next is not good, so he asked us to start product inspections.

We visited the factory and what we found was not good, the machinery was old, the place was dark and dirty, we totally understood why they were having problems….So we asked could we look to benchmark/resource the product for them….they agreed!

Benchmarking Price/Quality

We knew the city that specializes in this type of product, it’s only a couple of hours from our office in Zhuhai and we already had a relationship with a few factories here for another customers products, these factories had already been audited, so we knew they are reliable and can make good quality consistently

We asked them to quote on this product, we sent them a sample, but told them we needed to improve the quality, we gave them an arcuate and revised specification included extra requirements to resolve the issues the customer had been seeing, including improved packaging

We had no idea how much our customer was paying the other supplier, but as it turned our we could save them more than $2 per product, even with the improved specification, total saving more than $74,000 per year!!

Supplier Est. Sales Unit Price Yearly Spend
Customer Supplier 36,000 $4.18 $150,480
New Supplier 36,000 $2.12

$76,320 (Saving $74,160)

Ok so the total saving for this one product was $74,000 after this the customer asked us to benchmark another 100+ products which we are currently working our way through

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