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Blaine Bolus
00:02:09 - 00:02:24
What's up, Dtcpod? Today we're joined by Kian Golzari, who we all know from Sourcing with Kian. So, Keon, why don't you kick us off, tell us a little bit about your background in Sourcing and supply chain, how you got started, some of the brands you worked with, and just a little bit more about yourself.
Kian Golzari
00:02:24 - 00:02:47
Sure. Well, first of all, thanks so much for having me. It's a pleasure to be here. And, yeah, I've been living and working in China since 2010. So twelve years now. And in that time, I've designed, sourced, developed, and manufactured over two and a half thousand different products. And that's led me to work with different brands, retailers, and licenses such as the NBA, the Olympics, United Nations, Ministry of Defense, a lot of big box retailers in the UK. Europe and the US.
Kian Golzari
00:02:47 - 00:03:26
As well as helping Source and Coach and help Amazon private label sellers and shopify sellers as well. So it's a wide variety of different experience from loads of different retailers and licenses and brands that I've produced for. And a lot of people ask me, like, well, how do you supply the MBA and how do you supply the big Amazon sellers and shopify sellers and stuff like that. And it's really just from the common denominator is being able to really understand how to get the best factories, how to get the best prices, how to get the best quality, how to get the best terms. And that was learned from spending so much time in China with the factories. And not only China like other countries as well, but yeah, so happy to kick it with you guys today and talk about all that sort of stuff and deliver some actionable value that you guys can apply to your business today.
Blaine Bolus
00:03:26 - 00:03:43
No, we're super excited for it. So why don't you take us back? What was your background before? How did you get into the whole sourcing and supply chain game? Before you started sourcing for the NBA Olympics and all these major brands? Where was your start? How did you get to know these factories? How did you get to know the whole processes in and out?
Kian Golzari
00:03:43 - 00:04:07
Yeah, sure. So I was really lucky because growing up, my dad started his passion is like camping and outdoor. So he was going to China about like 30 years ago when they were coming out of a communist rule and he was helping factories. Hey, this is how we make products, this is how we like our products in the west. And then so he was working factories initially. So when I was like five years old, six years old, my dad was going to China. And it was not what it was like today. It was like literally farmland and stuff like that.
Kian Golzari
00:04:07 - 00:04:50
So he would always come back from China every six months and he bring back these weird little gifts and all that. So as a kid, I was always curious, what does my dad do in China? What are these weird things? I can't wait to go one day. And he would also bring over Chinese suppliers to the house because they would visit. I grew up in Scotland, in the UK, chinese suppliers would come over to the house, they would bring gifts, they would stay at the house. And I was just chatting to these suppliers as a kid. So when I graduated university, I went to university in Glasgow and Scotland and also did a year abroad at University of Miami. And when I finished university, my dad was like, hey, do you want to come to China? Do you want to learn the supply chain stuff? Because we had a medium sized business called Highlander, which was just camping and outdoor products. He was like, do you want to come China with me? I was like, yeah, absolutely.
Kian Golzari
00:04:50 - 00:05:13
So I went for the first time in 2010 and working for the family business and what was supposed to be like a two week trip, I ended up staying for three months. And I loved it so much. I went back home, I got my things, and then I'd moved back to China. Set up an office there, and then just stayed there for the long term. Because I was just fascinated. And anyone who's been to a factory before. Like, hopefully you've had the same experience. The first factory I ever went to was a backpack factory.
Kian Golzari
00:05:13 - 00:05:44
And before I went to this factory, I always thought of a backpack as one unit on a shelf in a store. And that was it. But when you see it in a factory, you see it in 30 different pieces. You see the shoulder straps, the foam that goes in, the shoulder straps, the webbing, the zippers, the buckles, the zipper pullers inside, lining, the waterproof coating. And you see it all put together. And my mind was just blown. And then all of a sudden now, let's say you've got a $15 product and you need to make it a $12 product. Well, I've got 30 different calculations I can make in my head in terms of how to reduce the cost of this product or if you want to improve the quality.
Kian Golzari
00:05:44 - 00:06:10
I've got 30 different places I can go where I can improve the quality. And then I was just lucky. That was my first experience. Experience. And I really wanted to learn more. So going to more factories, learning how more products were made, that just led me to become better at what I do. So when it came to supplying the retailers and the NBA and stuff like that, I was able to look at what they were already doing and be able to offer something of better value and then also offer at a better price as well. Just from my experience that I had over in the Far East.
Ramon Berrios
00:06:10 - 00:06:12
You said ten years, then you moved there.
Kian Golzari
00:06:12 - 00:06:30
So I went for the first time in 2010, and I've been back and forth ever since. This is the longest time. I've never been in China because obviously because of COVID But yeah, I moved there in 2011 and I stayed there for several years. And even when I left China, I still went back, like, every three or four months.
Ramon Berrios
00:06:32 - 00:07:07
I find it super interesting that you built these non scalable, one to one relationships with all these suppliers. Manufacturers? I mean, instead of going on like they were literally coming to you, to your house, and you were building the relationships with them. How do you see that as having built your career differently than the access anyone now has today to alibaba? How do you still leverage those relationships? Or do you do a combination of sourcing on alibaba and still do the personal relationship? How did that develop your career differently than the tools that are out there today?
Kian Golzari
00:07:07 - 00:08:04
Yeah, that's a great question. And to your point, doing it in person, face to face, forces you to build relationships. And honestly, if anyone's listened to much of my content before, I always preach the importance of you get the best results in this business from building relationships, right? Because as a result of a better relationship, you get a better price, you get better credit terms, they offer you new products that you're working on, they give you good information about what your competitors are doing, because as we develop products, so do our factories as well. They're like, hey, we're working on this new thing. Do you want to try it out for your market? So loads of benefits come from relationships, and I feel that a lot of businesses today bypass that whole thing because they go to Alibaba.com, they're like, hey, this is what I want, this is my price, this is my delivery date. They're like, cool. And then all those benefits that we just talked about, they didn't receive because they never took time to build that relationship. And you can still build relationships via Alibaba.com because initially, like, ten years ago, twelve years ago, even five years ago, the goods factories were not going there because they were at the Canton Fair.
Kian Golzari
00:08:04 - 00:08:57
And all the big buyers, all the big brands were going to the Canton Fair. And those factories were so good at what they do that their production lines were always full, so they never felt a need to go on Alibaba.com. But now, with COVID happening and the Canton Fair not being open since 2019, now those bigger factories are having to list on Alibaba.com. And also when COVID first hit, well, now we have to buy it online because we can't go and see the factories, like, face to face. So you can still find amazing factories on Alibaba.com, you can still build great relationships there as well. But it's very, very important to know how to utilize it in terms of, like, there's going to be a lot of great suppliers on there, but there's also going to be a lot of bad suppliers. And where people have really made mistakes is if they just go they're looking for a product, let's say blue light blocking glasses, they go to Alibaba.com. And on the website, all the products look the same and they'll see it for like, $3 and $4, $57 and one dollars, 80.
Kian Golzari
00:08:58 - 00:09:25
And they're like, what's the difference here? Because this looks like the exact same product. This is $1.80. That was $7, right? Let me go for the cheaper one. But in actual fact, when you're using Alibaba.com, the purpose of it is to find the best suppliers, not find the lowest price. And once you find the best suppliers, then you can start to negotiate the price down. So anyone who's wanting to use it better. What I would suggest is that when you go on Alibaba.com, you can search by either products or manufacturers. You want to search by manufacturers, not by products.
Kian Golzari
00:09:25 - 00:10:23
And then you want to select verified information, meaning a third party has gone to that factory and verified that all that information is correct. So that will tell you the number of years they've been in business, what markets they supply, what certificates they have, what type of machinery they have, how many workers they have, where's their factory located, and how many trade shows they've attended, like, which countries have attended these trade shows. And this gives us a lot of key information about these factories to then understand, all right, how do we want to work with them? And not only that as well, I would look at the number of years they've been in business. Anything like five plus is going to be great. And so we can now utilize information of Get from Alibaba.com to then select the best factories to work with. And then once we find those factories, it's all about writing an opening message that builds leverage, because a lot of people are just like, hey, I want this product. I want 1000 pieces. What's your best price? I would always word my initial message in, I want to let that factory know why I selected to work with them.
Kian Golzari
00:10:23 - 00:10:47
So I would say, hey, I came across your profile. I'm looking at your verified information. I can see you've attended three Canton Fairs, and you've also attended these trade shows in Italy. That's great because I also attend trade shows, and I look forward to seeing you in person in your factory one day. And that's telling the factory that, hey, I'm a serious buyer. I travel to China. I will come to your place of business. And then therefore, they respect you a lot more as a customer because they know you're not just someone buying products online and just trying to flip it for a profit.
Kian Golzari
00:10:47 - 00:11:16
You're actually someone which understands this business model. I can also see that you have these three quality certifications. They're also certifications that we value as well. That means that because one of our core values is high quality, which means we also place a high emphasis on high quality. So I look forward to working with you. And this is telling the factory, wow, this person's actually taken the time to look at our listing, look at all the points, and tell us what they like about us. And then they're not going to bullshit you on price because they know you know about this particular product. Right.
Kian Golzari
00:11:16 - 00:11:27
And then compare that to someone that's like, hey, what's your best price? They can just sort of tell you what you want to hear. Right. So utilizing these platforms and resources to your advantage is so, so important. Yeah.
Blaine Bolus
00:11:27 - 00:12:16
I mean, I think one thing that's really interesting about that Keen, is just like you said, in terms of how you're thinking about it, in terms of picking the right manufacturer, as opposed to just picking it based on product. Right. I think so many people, the first reaction is like, I need to make this product, so let me go find someone who makes this exact product. When factories can make all sorts of things. Maybe they haven't listed that they've made that exact specific product, but you don't want to end up working with someone who gives you really crappy quality. And it's not like the same thing as shopping from an e commerce catalog, right? You're trying to read between the lines to understand the quality of the partner that you're working with less. So, like, let me shop and buy this specific pre made product. And I mean, even Ramon, this is experience that we've had, right, in terms of looking at for different things.
Kian Golzari
00:12:16 - 00:12:17
Sometimes you can just go to a.
Blaine Bolus
00:12:17 - 00:13:15
Website that has the pre done products listed. You go to select it, you get it, and the hat comes and the quality is just like total crap. And you're like, no, this is not what I'm looking for. How could I, as a brand sell this product? Because ultimately, if I'm going to be developing my own product and selling it to customers, we as a brand have certain levels to live up to in terms of quality and other sort of brand values. So I guess the next question I have for you, Kean, along these lines is you just laid out some of the general frameworks that you would think about in terms of approaching one of these. If you were a brand starting out, right, how would you think about sourcing initially? Would you need a consultant? Is this stuff that you can teach yourself online? If you wanted to say, let's just use the example of, say, we want to build an apparel line and we want to make hats, right? What would your initial go to strategy be for doing that at the early stage for a company?
Kian Golzari
00:13:15 - 00:13:54
Yeah, for sure. And you listed some great points there in terms of like, okay, well, first of all, we identified how to find the factories, but now it's like, how do we get that good quality? And for me, it starts with creating something called a specification sheet, which is exactly what you want to order. So let's take, for example, the hats that you mentioned, right? On the spec sheet, I would say, right, our hats are the Circumference is 18 x 18 CM. It's this type of polyester material. We need this type of screen printed logo on the front. Or we need this embroidery on the front. We need that embroidery on the side. We need this brown 472 pantone color on the left panel, and we need this red pantone color on the right panel.
Kian Golzari
00:13:54 - 00:14:44
The packaging is this recycled polyester hang tag or recycled wood or something like that. So I'm giving all the product details, the dimensions, the pantone colors, the certifications, the quality, everything on a one pager PDF, right? But flip that. If we didn't create that and we went on alibaba.com, we typed in baseball cap, right? We're going to get a wide variety of different qualities, different prices, and then we're not comparing apples with apples because we're getting the prices 273 20, but they're quoting us on different things. So there's no chance you can get an accurate price unless you tell that supplier it is what you want. And if you've not made this before and you don't know exactly what you do want, you can still take images from other brands, other websites. You can go into hat stores, you can go to Lids, you can take photos like, right, I want this on the left, I want this on the right. I want the underside to look like this. I want this coating on it.
Kian Golzari
00:14:44 - 00:15:22
I want to add this waterproof coating, this new textured material that Nike are using. So you can literally just take photos of all these things and literally just add comments, add notes, PDF, that it's very, very important to put your name and email on that PDF as well. Because when you send it to the factory, it might get passed around different people and then it gets lost. But then as long as you have your name and email on it, someone will always get back to you. And then that way you're ensuring that what they do price you on and what they are manufacturing for is exactly to your requirements. And the top factories will not make mistakes. They will know exactly what it is, what you want, and they appreciate you giving all the information up front at once. Because the biggest pain in the ass for the factory is when you're like, hey, I want this hat.
Kian Golzari
00:15:22 - 00:15:58
And then they make the sample. And you're like, all right, but no, we actually wanted this material. It's like, okay. And then they make that material. By the way, we wanted the brim a little bit longer, okay? And they're just like they get fed up really quickly. So you will get the best services, you'll get the best prices, you'll get the best results if you provide all that information upfront at once and also allows you to compare pricing. Now, the other thing was that let's say, for example, the sample is not right first time. The sample process is so, so important as well because I see a lot of sellers who just go to Alibaba.com, they place an order, they buy it from Alibaba.com, they sell it on Amazon or Shopify, and they learn about the defects in the product when they get those negative reviews and returns.
Kian Golzari
00:15:58 - 00:16:31
Whereas in actual fact, you have to have an absolutely solid sample process. Meaning we did the specification sheet. Then we get a sample from the factory. We're going to call that our pre production sample. And if there's any changes to that sample, if it didn't arrive 100% correct, then we need to get another sample. I would never, ever place a deposit to a factory unless I've got a sample in my hand that I'm 100% happy with to be like, right, this is what I want you to go into production with. And once you have that, then you can place your purchase order, then you can place your 30% deposit, then the production commences. And then all right, production is finished, ready for shipment.
Kian Golzari
00:16:31 - 00:16:48
Go for it's. Like, no. Well, now I need a pre shipment sample. So you gave me a pre production sample of what I confirmed you to go into production. Now I need you to send me a pre shipment sample of what you've actually produced. We get that pre shipment sample, we compare them side by side. They should be 100% correct or similar. And if they're not, then you have a chance, while the goods are still at the factory, to fix something.
Kian Golzari
00:16:48 - 00:17:22
Maybe it's missing a label, or maybe they didn't put a coating on it that you required. Or maybe they missed stitching a logo or something like that. Maybe they've forgot to put a barcode on it. You can fix that while it's there at their expense, at their labor cost, right? So then we get that pre shipment sample we're happy with, we sign that off. And then I sent in what's called a preshipment inspection company. This is a third party company that you hire. It costs about $200. And they'll go in, and for a full day, they'll check your production, they'll test the products, and they'll write you a 50 page report with loads of pictures to be like, you ordered 1500 pieces, 500 blue, 500 red, 500 yellow.
Kian Golzari
00:17:22 - 00:17:40
Here they are. They have made that color, that quantity. Here's all the packaging. Here's the cartons, here's the barcodes. We scanned the barcodes, everything's correct. The hats are the right size. We measured that some of them had, like, dust marks on them. And then you can use that report to be like, hey, well, we still approved this shipment, but we needed to wipe off all the dust marks and things like that.
Kian Golzari
00:17:41 - 00:18:11
So that's like your eyes and ears inside the factory, which is a third party, which is telling you right, these goods were made to your standard. But if they're not, then because a factory can always give you an amazing sample, but the production is something different. And these are the guys which go in and check, and there's loads of pre shipment inspection companies you can use. And then that way, we've confirmed a pre production sample, we've confirmed a pre shipment sample, and a third party has verified that the goods are there to our standard of what we ordered. Now we can arrange a shipment and that's going to basically prevent any quality issues from happening.
Ramon Berrios
00:18:12 - 00:18:23
What is the time lapse between that entire process? Of course, that highly depends on whether you do the process right and you do it the way you mentioned it.
Kian Golzari
00:18:24 - 00:19:00
From A to Z. Yeah, it's a great question. So it will always depend based on the product. But normally, as a rule of thumb, like, okay, it will take around ten to 14 days to find those factories online, communicate with them, send your spec sheets, get information, get the pricing, and then it will take another ten to 14 days for them to arrange a sample and send it to you. So it'll take about one month for you to receive a sample that you're happy with. And then once you're like, okay, cool. This is a sample that I want to go into production with. Normally, I say as a general rule of thumb, it's 60 days production because it's 30 days for them to order the raw materials, and it's 30 days for them to do the mass production.
Kian Golzari
00:19:00 - 00:19:35
It might be 45, it might be 65. But normally 60 days, give or take, is the time. And then allow for a month for shipment as well. If you're shipping it from China to the east coast, it's going to take about 35 days. But if it's China to the west coast, it's going to take maybe like twelve days. So if we allow one month for the supplier selection sample process, two months for the production, and then one month for shipping, you're kind of like from when your initial outreach to when you receive your goods, you're looking at about four months, between 100 to 120 days. But then that time comes way down once that first order goes smooth. And now you just need to place a reorder.
Ramon Berrios
00:19:35 - 00:20:19
Yeah. I assume that when you work with factories directly, they're like, this guy knows more than us about this. And so your impression, you come in completely different. It's like when you go into a car dealership, you know nothing about a car, and then you're like, Wait, I want the sunroof. And they're like, oh, you already lost a negotiation at that point. The salesman know he's going to get you the leather seats, the sunroof, et cetera, et cetera. And even with the hat example that you just gave, there are so many details within a hat, right? Like, most people don't even know that a hat could have five panels or six panels or whatever. So do you focus in a specific vertical of products? Because I assume there could be consultants even for specific verticals.
Ramon Berrios
00:20:19 - 00:20:26
Like, car parts are probably so complex, so many details. Do you focus in a specific vertical?
Kian Golzari
00:20:26 - 00:21:08
No. And I love this question, right? Because a lot of people think that they're like, well, I want to source this outdoor furniture chair, this camping chair. But I don't know about camping chairs, so how do I know what features I should be adding there? And one, you can do your research in terms of like, all right, buy the top sellers on Amazon. Use it, feel it, make sure you're happy with it. Go into a retail store. Ask the guy who works there like, hey, what are the main issues with this product? What do people like about it? Build up knowledge about the product. But my favorite thing I like to do is that we talked about that process in terms of finding the top five suppliers on alibaba, right? Let's say I would like to find ten suppliers, and I've got five that I don't want to work with for whatever reason. Maybe they're a new factory or they're not established yet, or they don't supply the US market or something like that.
Kian Golzari
00:21:08 - 00:21:29
This is factories that I don't want to work with. I'm going to ask all my stupid questions to those factories that I don't want to work with. Right? So I'm going to say, hey, interested in ordinary outdoor camping chairs? But I see you do, like, 40 x 80 CM. You also do 30 x 60. What's your most popular size that you sell? They're like, well, you know what 80% of exports are as 40 x 80. All right, cool. And I see you do nylon fabric. You also do polyester.
Kian Golzari
00:21:29 - 00:21:58
What's the price difference between those two fabrics? They're like, oh, well, you know what, polyester is like, just as good as nylon, but it's like half the price. We definitely recommend you do polyester. All right, cool. And I see you do like aluminium tubing, but also steel tubing. What's the difference? Well, aluminium is actually a lot lighter, but steel is much cheaper. So if weight isn't an issue, like, if you're using it for your card, then definitely go for steel. All right, cool. And then I'm going to take that information, I'm going to make my spec sheet, and I'm going to go to factors I do want to work with and be like, hey, you know what? I need these steel aluminium chairs.
Kian Golzari
00:21:58 - 00:22:21
It needs to be 40 x 80, and I need this 600 D polyester material. And they're going to be like, oh, wow, this guy really knows about his products. Like, we better give him the best price because we can't bullshit this guy. But I just learned that from talking to other factories. So even if you don't know about a product, just find factories that you don't want to work with and ask them all your questions, plus buy the samples, plus go into retail stores, and you'll quickly become an expert on these products.
Blaine Bolus
00:22:22 - 00:22:45
So keen. Once you've done that, I think we have generally a pretty decent framework and just to recap for our listeners. So step one is you're going to get your initial product sample. Step two is you want to get your product sample that comes off the line, your preshipment sample. And then you also want to have a third party come in and vet and give you a breakdown of everything that's been produced before it leaves the factory.
Kian Golzari
00:22:45 - 00:22:46
Right?
Blaine Bolus
00:22:46 - 00:23:20
Because once it's left the factory and I'm sure you see this all the time, and I know we've heard brands have dealt with this sort of stuff as well. Brands could end up with an. Entire shipment of product that they never wanted in the first place, or that it takes the product being shipped all the way from overseas to their warehouse and they open it up and they're like, oh, my god, this is not what we wanted. Which is a massive problem, right? So these are kind of the frameworks to work with to make sure you catch all those errors. Are there any other tips that you have to make sure that whole process goes smoothly to make sure you don't end up with any really expensive lessons?
Kian Golzari
00:23:20 - 00:24:05
Yeah, for sure. And the bigger brand you are, the more leverage you have, right? So let's say, for example, you're doing over a million dollars with this particular product, or you're a retailer or just a normal shopify brand, but your volumes are pretty big and you've done consistent orders with this factory. You should definitely start to negotiate credit terms with your factory. So you still put down that 30% deposit, but you'll pay that remaining 70% balance, let's say, after 90 days or 100 days or something like that. And their factory are happy to do that because they know that your orders are very consistent. Your orders have growing. You've always been paying your factory on time, but that gives you that little bit of protection in terms of, well, if my goods arrive and they're defective, I haven't actually paid for them yet, so I'm not going to pay the factory because I received something that wasn't sufficient to my needs. And in that way, you're ultimately protected.
Kian Golzari
00:24:05 - 00:24:34
But if you have like, a $50,000 order and you pay for it before it arrives and it's defective, well, good luck trying to get that 50K back. So credit terms is a great way. The other thing I like to do as well is that sometimes your goods can actually get damaged in transit as well. And then it could be a freight forwarder, and in the factory, blames a freight forwarder. Freight forwarder blames the factory. And you're like, well, between you guys, someone needs to pay me. So what I normally do is that I always get a photo. So you have photos of the production from that pre shipment inspection report, which shows the goods are fine.
Kian Golzari
00:24:34 - 00:25:08
I always ask the factory, can you send me a photo of all the cartons when they're loaded into the container? So before you seal those container doors, send me a photo of all the boxes in the container. Like, cool. So I have that photo, the doors close, and when the goods arrive at my warehouse, let's say the boxes are wet or they're damaged or they're crushed or anything like that. And I say to the freight forwarder, hey, by the way, these boxes arrive completely damaged. 25% of my stock is defective. They're like, oh, yeah, it was like that when we picked up from the factory. It's like, well, actually, no, here's my pre shipment inspection report shows the goods are fine. And here's a photo of the container door before it was closed, where the goods are also fine.
Kian Golzari
00:25:08 - 00:25:42
So it must have happened on your watch. And they're like, okay, cool. And then they arrange compensation. So that kind of helps your goods in transit as well. But also just going back to what we talked about, about relationships and stuff like that as well, mistakes do happen. And I've had products arrive at my warehouse which have been defective and it's because it's not factory didn't do it deliberately, they just forgot. Like, I'll give you one example. I did 18,000 military backpacks and they were for the UK, for Scotland, where it rains a lot, rains every day, right? The factory forgot to put the waterproof coating on the material.
Kian Golzari
00:25:42 - 00:26:38
So I got 18,000 backpacks which were not waterproof yet. People have to put goods which needs to stay dry in there and we got it and we're like, I can't sell this, it will just get returned. So we explained to the factory and everything in the process past appreciatement inspection report and all this sort of stuff, samples were fine, but when we explained it to the factory, we're like, we can't sell this. And then the factory, at their own expense, remade 18,000 bags and sent it to us free of charge. Took a massive loss on that order, but they understood the long term business that we had because we'd been buying from them for several years and they could see, well, okay, let's say, for example, I'm going to take a 50K loss on this order. I make more than 50K supplying this customer every year. So let me just take a loss this time and at least I've still got them and we've been working for them for the last ten years, but if they washed their hands of it and they said, sorry, we made a mistake, but we're not going to refund you anything, they would have lost us. But they had the long term vision and that comes from the relationship.
Kian Golzari
00:26:39 - 00:26:42
So ensuring you have a good relationship always helps as well.
Blaine Bolus
00:26:42 - 00:27:35
Yeah, that stuff is really important. And I think my one takeaway there is just like at the end of the day, you are your own backstop for this sort of stuff. So you need to be thinking ahead and planning for not just like, oh, expecting everything, expect things will go wrong. And try to prepare yourself to have the ammo so at least you're doing your diligence every step of the way so that if something gets messed up, you can at least point to, oh, I did this, I had this check. And you have your process in place to make sure that you're not just like leaving it up to chance. And even the fact I love you're, like, take a picture of it before it gets in the shipping container. That's something that a lot of people wouldn't even think about. And then you won't have to end up dealing with the back and forth between the freight forwarder and the manufacturer.
Blaine Bolus
00:27:35 - 00:27:40
You're like, no, I know exactly where this kind of stuff went wrong. So being proactive about this stuff is so, so important.
Ramon Berrios
00:27:41 - 00:27:53
It's funny because you can have a checklist of all these things, but no lesson is better taught than losing 25, 5100 grand. That's when you really ensure to ask.
Kian Golzari
00:27:53 - 00:28:34
For the pictures were totally and all these lessons that you learn, you just add it into your processes. So if something happens, like, let's say, for example, some goods were shipped to you and they never had the barcode on it, well, you just add it into your Asana tasks or however you start your processes to be like, check the barcodes. And it's like, as soon as a mistake happens, add it into your systems and processes to make sure that that's always checked for and that never happens again. But it's interesting. Like, in this episode, I've talked quite a bit about building relationships with your factory, and I get asked quite a lot, well, how do I build a relationship with my factory if I'm dealing with them on Alibaba, right? I've never met them before. They're online. I don't have any plans to go to China, so how do I build that relationship? And I always say that you should definitely utilize an app called WeChat. WeChat is like the Chinese messenger app.
Kian Golzari
00:28:35 - 00:29:16
That's what they use for their communication and stuff like that. And I always keep my important conversations to email in terms of price, delivery, date, sample approval, all that sort of stuff. But on WeChat, I would just message them on the weekends. Hey, how's it going? How's your weekend? Where are you up? Did you go for dinner? Can you send me some photos? I'm just at the game with my budies, having some beers. If you can come to the States next time, I'd love to take you out. And we're just now having that conversation, so I can now text, voice, note, call them on WeChat whenever I like because we've built that informal relationship. And where it really helps you is that let's say, for example, your goods are ready to ship on the 1 April. I can call them at the end of March and be like, on a video chat on WeChat to be like, hey, the goods are almost ready for shipment.
Kian Golzari
00:29:16 - 00:30:09
Do you mind just taking me down to the production floor just to show me all the goods are there? Are the inspectors there? Can you show me how they're checking the products? And now you've got eyes and ears inside the factory because you built that relationship up through WeChat. And Chinese New Year's coming up, it's going to be the end of January, and that's always a good time to solidify your relationship, to be like, hey, where are you up to for the holidays. You got, like, a couple of weeks off. Are you going in anywhere nice? What's your tradition over Chinese New Year? What type of food do you normally eat? Like, how do you celebrate? Fireworks? All cool. Can you send me some videos? I want to send a gift for you and your boss. Where can I send it? And I would suggest sending something that represents your hometown. If you're from Chicago, send, like, a Chicago Bulls, like, T shirt or something like that, because they have international customers from all over the world, and if you can just sort of send them something of your hometown, then it means a lot to them, right? And then you can pull in favors later on. So for me, I'm from Scotland, right? Whenever I went to a factory, I would always take the factory boss a bottle of whiskey.
Kian Golzari
00:30:09 - 00:30:37
And they love that because they're like, well, I can't really get this good quality whiskey like in China, and it's like a proper Scottish whiskey. And I'd always get a photo with the boss, right? Because I know somewhere down the line later in the year, I'm going to have to ask for a favor. Let's say I need my goods put to the front of the production schedule. I must get goods to ship out in the next 30 days. And I'm talking to the sales assistant. I'm like, hey, I know that you've said these goods can only ship out on the 1 April, but I really need it to ship out on the 1 March. Is there anything you can do? And then they were like, all right, let me check for the boss. And then they're like, hey, we've got this order.
Kian Golzari
00:30:38 - 00:30:46
It needs to go 1 March a month earlier. Boss would be like, who's asking? They're like it's. Kean. Oh, kean's. A guy's coming up, bottle of whiskey. Oh, yeah. I got up there like, yeah, I had it with my friends. Oh, yeah, he's a great guy.
Ramon Berrios
00:30:46 - 00:30:46
Cool.
Kian Golzari
00:30:46 - 00:31:29
Yeah, let's do it. So I just spent a gift, but I've actually pulled a favor for somewhere later on down the line, and then that also stems from relationships, which helps you get the best results. But Blaine, to your point earlier, you were saying that things are going wrong. Why is this happening to me? And all this sort of stuff, like, something happened to my order. And that's a typical sort of thought that when something goes wrong with sourcing from China or any part of the world, they're like, why is this happening to me? But just think about in the last couple of years, what's happened. Like, shipping prices have skyrocketed, factories have closed down, raw material costs and labor costs have increased, and everyone's like, why is this happening to me? A container price was $4,000. Now it's $20,000. But if it's happening to you, it's also happening to your competition.
Kian Golzari
00:31:29 - 00:32:20
So it's actually an opportunity if you can solve this quicker than anyone else, like, if your shipping prices have gone up, we'll just say to your factory, can you hold goods in storage in your factory for me free of charge until the shipping costs come down? Or if the container price was $4,000 and now it's $20,000, the increase is $16,000. Can we split that increase 50 50? Because now the products are too expensive for me to ship that there's no margin for me, and if I don't ship them, I don't sell them. If I don't sell them, you don't get any orders. So let's split it 50 50, and then I can continue ordering this product and you can continue to manufacture it. They're like, yeah, cool. And they're happy with that because we built the relationship and they believe in the long term provision, but we just saved half of our shipping costs. So it's like, you have to get creative. You have to think of ways of, like, where can you get that advantage? Where can you make those one or 2% savings that other people are not thinking about? Because normally when things go wrong in production and supply chain, it happens to everyone.
Ramon Berrios
00:32:20 - 00:33:01
And so this is probably why you're involved in such big and great deals that you know you're going to be a long term customer rather than just one off drop shipping for one. You know, I was doing some research. You seem to have worked with Steph Curry, the NBA, tons of mean. This knowledge, you've leveraged it to be able to do these partnerships. I would love to switch gears and dive into those partnerships and just learn more about how you built those relationships and how you were able to deliver on these partnerships.
Kian Golzari
00:33:02 - 00:33:41
Yes. It's funny, man, because they were all different in terms of the Olympics. I did that for the London 2012 Olympics, so 2010, the first time I went to China was when they were awarding the contracts for that. And like I said, I grew up in a family business, so my brother actually applied to be an Olympic licensee through, like, a tender process, this. And it went from like 200 companies, narrowed it down to 1050 25, and we're like, oh, shit, I had no idea that we're even in the running for this. And then eventually it got awarded because we were able to give good production at great prices and great samples and stuff like that. So that was like an official tender Olympic process. But with the NBA, I just sent a DM on Instagram to a former player because I went to University of Miami.
Kian Golzari
00:33:41 - 00:34:04
When I was in Miami, I was on the practice squad, so I knew some of the players won. The player first got drafted into the league and then just went to Europe and all that. But he got drafted in 2009, which is the same year as Steph. So when I reached out to him. DM I was like, hey, man, I've been doing all this work in production and factories. I work for all these retailers. If you can get the NBA license, then I can make the best product at the best price, and I have those connections with the retailers. Anyway, so he was like, cool.
Kian Golzari
00:34:04 - 00:34:44
So he contacted some players. Steph was one of them. And then when we had these samples and we had these products, created this website out, and we got the NBA license, steph started posting the product on his IG. And then Steph started posting the product, created massive demand, sent it to a shopify store. And then, because Steph's friends with Neymar the football player, I call it Football Stalker, neymar saw the product, had a young kids like, hey, these products look great. We went to Brazil, got a license with him, lewis Hamilton, same thing. So we just kind of used that as leverage. And then the relationship with the retailers, we went to trade shows and things like that, had meetings with them, showed them who we worked with.
Kian Golzari
00:34:44 - 00:35:39
Once we supplied the Olympics and that was an exclusive license, we could approach all the retailers to be like, hey, we have the exclusive license for the Olympics, for these nine categories of product. Do you want to purchase these products? And they were like, cool. And everything went well in terms of price was good, delivery was on time, quality was great, sales were good. And we're like, hey, we also do these other products, these camping and outdoor products, and they were like, do you want to order these as well? And it started off as two products that they ordered, and then we filled like, 19 pages in their catalog with brands that we created for them. So it just kind of like, you have to show your worth, show what you're good at and things like that. And I think now the next step is working with big content creators as well, because you see what MrBeast is doing, you see what Logan Paul's doing, the amount of traffic they can drive. And if you can give them a very good product at a very good price, something that they're passionate about, that's something that they want to develop and make it happen, it can be phenomenal. So I just, like, working on passion projects and working with different brands, retailers, companies.
Kian Golzari
00:35:39 - 00:36:01
And that's what's so exciting about this e commerce Amazon shopify industry, because you meet a lot of really cool people who are just like, hustling, developing cool products, cool brands, and they're doing so well for themselves. And they could be very young or they could be middle aged with, like, three kids. It doesn't matter. There's just so many people are winning. So it's nice to be amongst that type of energy. So, yeah, I just like, helping out wherever I can.
Ramon Berrios
00:36:01 - 00:36:24
That's amazing. And I mean, talk about name dropping. What were those products specifically? So, Olympics, I assume it was like products for the fans to buy. What were some of those products? And then for Neymar or I mean, are these Nike products? Are these their own branded products?
Kian Golzari
00:36:25 - 00:37:11
So with the Olympics, we had nine different categories. So we had like, backpacks, we had blankets, we had outdoor furniture, we had wallets and a few other things as well. And then those were just sold in retail stores and then on the Olympic Park as well. And the funny thing about the Olympic Games was that, you know, there's like, no sales data, right? Because the previous Olympics before London was four years before and it was in Beijing. So it's not like, oh, how many did they sell in Beijing? Because we think we can sell that in London as well. There's no previous sales data to go for. But when you're ordering these goods a year in advance and you have a two week window because the Olympics is only on for two weeks in the summer, there's no reordering. So it's like if you order like 100,000 units of something and only sell 10,000, you're like, well, now we're stuck with 90,000 units that we can't do anything with because after the Olympics, it's dead stock.
Kian Golzari
00:37:11 - 00:37:25
Or if you order 50,000, but you sold 50,000 in the first day, you're like, oh, man, we could have sold 500,000 if we just ordered more. So that was really interesting to try and get that balance right without taking too much risk. How'd you guys do it?
Blaine Bolus
00:37:26 - 00:37:28
What did you guys end up on?
Kian Golzari
00:37:28 - 00:38:19
So we actually did pretty well because what we did is we went to all the retailers in the UK and we took forward orders from them to say that, hey, we're doing these outdoor blankets, we're doing these outdoor chairs, we're doing these bags. Do you want to take a commitment right now to ensure that you have stock? And then they would order like 50,000 pieces and something like that. So we would order on top of that, knowing that we've already sold 50,000 before we actually produced them. So that sort of hedged our risk a little bit. But for the NBA, we had the license for the home bedding categories, so we were doing blankets, towels, bedsheets, all that sort of stuff. But the way we would do it is not just like a blanket with a Lakers logo on it. We would have like, every product has to tell a story. So we would actually have like a blanket or a bedsheet with, let's say, LeBron's body on it and his face on the pillow so a child can go to sleep dreaming they are their favorite player.
Kian Golzari
00:38:19 - 00:38:27
And then we did that with blankets and towels and bedsheets and pillows and stuff like that, and then it went pretty well on social and things like that.
Ramon Berrios
00:38:29 - 00:39:16
What I love is that we dove into this part of your career on the second half of the podcast. So people in the beginning are like, who is this guy? Why should I be listening to him on supply chain? And then we dive into that midway. But that's amazing. I'm curious on the Neymar and I mean, I recently watched the Neymar documentary on Netflix. It's unbelievable. Just like the brand deals, he had his fandom not only in Brazil, but all over the world, but he's like a god in Brazil. Yeah. What were some of those products that you guys work together and do you partner with the brands or is this just like individual products? I'm trying to understand if because, for example, he had a deal with right? So how does that mix into the play?
Kian Golzari
00:39:16 - 00:39:48
Sure, yeah. Great question. You can't conflict with any of the deals that he's already got. So with Nike, right? And he switched to Puma now, but at a time he was with, you know, with Nike, he had a deal like he was doing clothing and football boots and selling footballs and stuff like that. So we could never do any products that Nike also do, even like a random product like sunglasses. Even though Nike don't make Neymar sunglasses in this contract, it says you cannot do this with another brand. They take all that clothing and all those sort of accessories and things like that. But with Neymar, we did this similar products that we did for the NBA.
Kian Golzari
00:39:48 - 00:40:34
But what was such a cool experience about that is we got to go to Brazil. We went to Sao Paulo and went to Santos, which is where his institute is. And not a lot of people know what he actually does for charity and for his community and for his people and stuff like that. And going to we went to the favelas in the area where he grew up and he's built this whole institute, which is like it's got all these football pitches, netball, basketball courts, it's got hairdressers for kids, it's got education, it's got media stuff, swimming pools, all this sort of stuff. And it's all free and it's all for the kids. And if you you can get in there every day for free as long as you've gone to school that day. But if you don't go to school, you can't get into his institute. So he's encouraging kids to go to school, to then come and play and learn skills.
Kian Golzari
00:40:34 - 00:40:52
And there's top coaches. There like helping the kids. And in that area there's a lot of crime and every wall has got graffiti on it. Right. But at Neymar's institute, it's maybe like 100 meters by 100 meters square or maybe more than that, actually. And it's all white walls. It's all white. It's all been painted white.
Kian Golzari
00:40:52 - 00:41:30
And there's not a single drop of graffiti. And that's the hometown telling Neymar like, we're going to leave your walls blank because we respect what you do for the kids. And it's like seeing that was like it just gave me goosebumps. And then when you watch him on TV playing football and commentators being like, oh yeah, this guy's like childish and he's just hitting the floor, he's trying to get fouls. And it's like these guys have no idea what he does for his community and what actual nicer guy he is. So it's really cool to get to experience that and meet his team and all that sort of stuff. So it was really, really cool experiences. Honestly, the way I develop products is that, what do I want to do? I love basketball, so I want to work for players and I got to go to the games.
Kian Golzari
00:41:30 - 00:41:49
I was in game four of the NBA Finals when the warriors beat the Cavs and a partied with the team afterwards. And I was like, I wouldn't get to do this if I wasn't making products and wasn't being friends with the guys. So I always try and position myself to make products for whoever I want to hang out with. So big fan of Neymar as well. So glad that got to happen as well.
Blaine Bolus
00:41:49 - 00:41:51
Kean and then I think my next.
Ramon Berrios
00:41:51 - 00:41:53
Question hit side of the story on the podcast.
Kian Golzari
00:41:54 - 00:41:55
Yeah.
Blaine Bolus
00:41:56 - 00:43:02
Hey, Kean, the next question that have so, like, we went through in the beginning, how you think about building it out for an early stage, brand some of the things. And then we got into some of the great work that you've done with big creators, big influential athletes, as well as leagues and all this sort of stuff. My next question would be to thinking now as brands start to scale up and how you'd approach this sort of process for a later stage brand. Right? Like, let's imagine we've got a shopify store, an Amazon instance. Maybe we're selling into retail. We're pushing several million dollars worth of apparel or whatever product it is that we're making every year. How do you come in and how do you start working with these brands to help them start optimizing or reengineering supply chain? Right? Like, what are some of the considerations brands need to think about as things start to reach more of scale? They're introducing more product SKUs, their catalogs are more complex, this sort of stuff. How do you get involved with their sourcing and supply chain at that scale?
Kian Golzari
00:43:02 - 00:43:25
Yeah, that's a great question. And one of the biggest barriers to scale that I see is that a lot of sellers outgrow their supplier. Meaning the first time they wanted to do this product, they just had a small order. They wanted to trial it. It was 500 pieces. And they only worked with factories that were willing to do their order. And everything went smooth to start to scale the business. And now that 500 units is 5000 units every two months.
Kian Golzari
00:43:25 - 00:44:23
But they never went back to see like, am I getting the best factory, am I getting the best price? And because of their volume now, they should be getting better prices, they should be getting better quality from higher factories. They should be getting lesser production times from factories which have better infrastructure, but they've never shopped that around. And I don't want to say that, hey, by the way, as you get bigger, you should just leave your existing factory. But it's important for you to know, are you getting the best price, best quality, best terms from the top factories in relation to the size of business that you have? And we talked earlier about the specification sheet. And what I would do is that once you feel like your business has hit a certain size or scale, get that specification sheet, redo that exercise, go and reach out to top five manufacturers on Alibaba.com, and then say, like, hey, this is my product. This is a volume that I'm doing. What's my best price? And if you're paying like $11 and now people are offering you nine, you're like, well, wow, I can save like a good amount here. And I've been overpaying and I wouldn't now just leave my existing factory.
Kian Golzari
00:44:23 - 00:45:02
I would go to my factory and be like, hey, by the way, other suppliers have got in contact with me. Because if you do good business, like if your number one seller on Amazon factories will find you, they'll contact you and they'll write to you, they'll buy your product, they'll make a sample of your product, they'll send it to you and they'll say, like, hey, by the way, we inspire us to you at $4.76. So I would say, hey, by the way, just so you know, other factories have been in touch with me and they're offering me they've made me a sample and they're offering me $9. But I'm currently paying eleven to you. Now, I really love working with you and everything's going smooth. Your communication has been fantastic, and I really enjoy building this business with you. But to continue, I need you to be able to match the price. And they will greatly, greatly appreciate that you didn't just leave them and that you offered them, hey, I'm going to give you the first chance to see if you can do this.
Kian Golzari
00:45:02 - 00:45:51
And if you can't, then we'll stay friends. And I have to switch because maybe you're not capable of doing these types of prizes. So I think those types of exercises to understand. And, you know, the other thing is as well, that let's say you're starting from day one and you're an absolute beginner. And a lot of people ask me, how should I source as a beginner? And I no longer like to think of it as like, beginner, intermediate and advanced sourcing. It's now, like we saw with all the challenges that happened in the last couple of years in supply chain, you either do it right or you don't do it at all. If you're paying extra for your product or you're getting later delivery times or your shipping cost is really high, you're already out the game. So how are you supposed to scale that business if you're paying 25% more than what someone else is able to get? So you really have to be doing high level sourcing from day one, and you can't really take any shortcuts.
Kian Golzari
00:45:51 - 00:46:03
So it's very, very important, the stuff that we talked about on this episode up till now, that you apply all those principles and don't just think, oh, yeah, I'll fix that as I get bigger. It's like you have to start from day one with the right principles in place. Yeah.
Blaine Bolus
00:46:03 - 00:46:51
And I think the other really interesting thing there is different factories might be different, prepared better for different sorts of scale. And then as you're scaling your product catalog, as you're not only scaling the amount of specific products you're doing runs on, but as you're introducing more SKUs, you're working with different materials. You have to constantly be reevaluating your supply chain because there's so many opportunities to save real, meaningful money and margin in a business where so much of your costs are being eaten up by shipping costs, by returns, by defective products, by all these different things. So the very least that you can be doing to remain competitive in a market is by constantly questioning and optimizing your entire sourcing and supply chain.
Kian Golzari
00:46:51 - 00:47:39
Yeah. And one quick sort of strategy I would give sort of going into 2023 is to have a focus on sustainability because I was at an outdoor trade show, because I still love the camping and outdoor business because that's what I grew up in. So I went to Munich in June, and all the biggest outdoor brands like your North Face, Patagonia Burghaus, Jack Wilson, Osprey all those guys were there. And what was wild was to see that every single one of them had a massive focus on sustainability, but not just, oh, hey, this product is made from recycled material. This product was made with 27% recycled material, which came from rope, which was found from the bottom of the ocean, which was then shredded down and turned into these swimming shorts. And then it's like, oh, cool. They're going into that level of detail now. And it's like regardless, even today you can ask your factory.
Kian Golzari
00:47:39 - 00:48:12
Even if you just do like, a normal backpack, you can say to your factory, hey, I know we use this like 600 d polyester, but do you have any of this 600 D polyester which is made from recycled materials, and then they can go to their material factory and ask for recycled materials. And the quality of the recycled materials is the exact same as the normal one. It just looks a little bit different. And let's say, for example, they say, okay, but this polyester is 10% more expensive than the normal polyester. That does not mean that your cost of goods will be 10% more expensive. It's just the material that's 10% more expensive. But the cost of goods actually comes from the labor cost. And the labor is the most important cost in the product.
Kian Golzari
00:48:12 - 00:48:54
So if it's 10% more expensive for polyester, it might just actually only be like four or 5% more expensive on your actual unit cost. And now you can say that. Hey, our products are made from sustainable materials. Or even your factory. I would ask your factory, do you use any solar energy or any wind power energy? So you can say our products are made from factories which use renewable energy sources. Or when it comes to delivery of your goods, you can use eco friendly couriers, which use electronic vehicles and stuff like that. So there's so many different things you can do. And if you're fully transparent and you have a communication with your customer in terms of and even Amazon is rewarding brands which are eco friendly, So you can apply for any level of certification of sustainability from what materials you're using in your products.
Kian Golzari
00:48:54 - 00:49:27
And then Amazon gives you this badge called Amazon Climate Pledge Friendly. And it's this little green icon that if your products are the exact same as the competitor but you have that green icon, it shows that it came from a sustainable source. That's who's automatically putting you ahead? And people can also shop by Amazon climate pledge. Friendly. So this is something to really start to focus on, to put you ahead of your competition. If you feel like I don't know where else I can innovate. Focus on sustainability, because I've read a lot of articles about like two out of three customers are willing to pay more for a product that comes from an eco friendly environmental, organic or sustainable source.
Ramon Berrios
00:49:27 - 00:50:12
Yeah, I love that. Because it's your job to build the brand and you build the brand with storytelling. And it's your job to find out, what do your customers care about and what do they value? Rather than you looking at it from a one sided negotiation of what's the best price I can get? You're missing the entire picture that you're building a brand and your customers might value things you might not even be thinking about. I read the book from Let My People Go Surfing from the Founder of Patagonia. And that's their whole thing, right? It's like the one jacket that you can keep forever. And they even had babies and clothes for babies on their marketing campaigns. I mean, their marketing campaigns were crazy, and they're still going at it.
Kian Golzari
00:50:12 - 00:50:14
Yeah, that's a great story. I love Patagonia.
Blaine Bolus
00:50:14 - 00:50:49
Two questions before we wrap up. Kian. The first is obviously a bunch of the business that you've done has been in China, in Asia through all these different factories. As we've seen the political climate evolve in the US. And from other markets. How have you seen that trickle down through to your business? Is it something that you're thinking is just going to pass over? Is it something that you're preparing for and you guys are building out relationships with other factories? How do you bring that into your calculus?
Kian Golzari
00:50:49 - 00:51:36
Yeah, for sure. Great question. And I know that this whole last couple of years has kind of taught us that we can't just rely on China, right? So I always say that you should have a China plus one strategy, meaning purchase your goods from the place where you can get the best quality and the best price, which 90% of the time just happens to be China. But it's also very important to have a backup. Can your goods be purchased also from Turkey, Myanmar, Bangladesh, Sri Lanka, USA, Mexico? And then if so, get those samples, get those prices. And it doesn't mean you have to switch immediately, but it means that you should actually start the communication, because China production shut down at random times just because of lockdowns. They had power outage situations, they had closures of the port. And it's like if you get told all of a sudden, by the way, you can't get your goods for four months, the last thing you want to do is now start to find a factory in another country.
Kian Golzari
00:51:36 - 00:52:40
You want to already have those conversations in place. And a lot of people ask, well, hey, I do this backpack. How do I know where else to get backpacks from? Which country do I go to? And I always say that you have to go to the country which specializes in the main raw material of that product. So, for example, India is very strong for wood, cotton, canvas, handcraft leather. So if you're doing leather bags, well, yeah, like India or Pakistan would be a great source for and like a quick hack is that you can go to Alibaba.com. And I know I've said search by manufacturers, but if you search by products rather than by manufacturers and type what your product is and hit search on the left side of the page, it will tell you the number of the countries which have results for that product. So you might see like, Thailand, Russia, Turkey, Bangladesh, and you're like, oh, cool, click on those countries, and then now engage with those companies and start to have those conversations. There's also a great website called Importyeti.com which shows you the import records of because your goods go into a container and the container is sealed, you get given a bill of lading.
Kian Golzari
00:52:40 - 00:52:58
Bill of lading is what tells customs what's in that container. And only for the US. That bill of lading is public information. Now, Import yeti has scraped all of that information. So you can now type in a brand and it will bring up their shipping records. You can click on their Bill of lading document and you can see who their factory is. And that's free. It's a great resource.
Kian Golzari
00:52:58 - 00:53:43
So let's say, for example, we're doing these outdoor camping chairs. I would look at all the top brands which are selling in the USA, look up those brand names on import, yeti look at their shipping documents and see what country they're coming from and what factories are coming from, and then communicate directly with them as well. So it's very, very important to have a strategy for talking to a factory outside of China. Because while China is still the dominant place to manufacture your goods, the cost of goods, I think, from China is only going to go up because I've seen the labor cost from when I first went to China in 2010. The labor cost for a normal factory worker was about $150 a month. Now it's over like 1100. So they've had a massive increase in their cost of labor. And it's only going up because China have had a massive growth in their middle class.
Kian Golzari
00:53:43 - 00:54:30
And as you have a growth in your middle class, you start to desire a lot of Western goods. So now there's like nightclubs and Pizza Huts and coffee shops and Starbucks and all that sort of stuff. And as those things pop up, well, they need staff to go and work in those places. So someone's like, well, why should I work in a factory when I can work in a Starbucks and work half the hours and play on my phone all day? So now the factories are like, we can't get those younger workers coming to the factory because we're going to work in coffee shops. So now we need to pay those workers more, and we need to go more rural, more inlands, more into the countryside. So China's got a labor issue and it's only going to get worse. But on the flip side, because I talked to a lot of factories about this to be know, what are you guys doing about it? And they're investing a lot into AI, so they're going to be a lot less labor dependent. The costs will increase in the short term, but in the long term, they should come down.
Kian Golzari
00:54:30 - 00:54:42
And China at the forefront of that. So I think we're going to see a short term increase and a long term decrease in product costs. But anyway, I say all that to say you should have another country lined up just in case there's any challenges with China.
Ramon Berrios
00:54:42 - 00:54:45
Should people be looking a lot in America?
Kian Golzari
00:54:46 - 00:55:29
Yes, yes, I would say so. Especially if your main market is the know, similar time zone. It reduces your transport costs as well. But there's also a lot of challenges because I've looked into Latin America as well, and the thing that I really like about ordering from Alibaba.com and China and stuff like that is that we have like, payment protection, right? We can pay a 30% deposit, we can place our final balance. We've had all that communication in Alibaba. If something goes wrong, we have trade assurance, so Alibaba can refund us or we can hold payment, we can get credit terms and stuff like that. My fear is that if you buy from Latin America, you have to have people on the ground, because I can't just go online, contact a factory in Latin America, wire $50,000 without having seen them before. I could do that in China, but if I do that in Latin America, I think I've got a lot more risk.
Kian Golzari
00:55:29 - 00:55:38
So I would need someone on the ground. So I would look for Latin American sourcing agencies and sourcing companies to sort of help you with that. I wouldn't recommend it something you should.
Ramon Berrios
00:55:38 - 00:55:43
Do by yourself, paying Bitcoin and try and claim it.
Kian Golzari
00:55:43 - 00:55:44
Absolutely. Got it.
Blaine Bolus
00:55:44 - 00:56:17
And the last question I have before we wrap up here, well, this and then one more about you and where we can find you. But at the level of SLAs, how should brands be thinking about that? Are there any really important things that you see getting missed in SLAs or that they should really be including and just giving brands, I guess, a bit more leverage? I know we covered some of the topics earlier in the conversation, but are there any last tips or last hints that you've seen at the level of SLAs to really give brands some insight into that?
Kian Golzari
00:56:17 - 00:56:20
By SLA, do you mean like a service level?
Blaine Bolus
00:56:20 - 00:56:34
Yeah, like just the agreement that the brands will have set up with their manufacturing partner. So if in the instance, something goes wrong, everyone knows who's accountable, and a lot of times having the right agreements in place are important to brands.
Kian Golzari
00:56:35 - 00:57:13
For sure, yes, it's a great point. And I always send the terms and conditions document with every order that I send. And in those terms and conditions, it's basically all the errors or mistakes that have happened in the past, and I sort of list that out. So, for example, it might say that we agree a shipment date. I'll say, like, what date will the goods ready be for shipment? They'll say 1 November. And in that document, I'll say if a delay of 14 days or more happens on the shipment of our goods, then the supplier is hereby responsible to air freight at their own expense, 30% of the goods. And they see that and they sign that to be like, well, now I'm accountable to ship on time. Whereas before, if we didn't have a contract, we're like, oh, by the way, your goods are late.
Kian Golzari
00:57:13 - 00:57:45
How long? One month. All right, when are you going to get them to me? As soon as I can. But now they're accountable because they've signed the terms and conditions, and those terms and conditions are written in both English and Chinese, and you've both stamped it with your company details as well. Now, that's not something that you can legally enforce, but it's something telling your supplier that, hey, I'm serious. About this. I've got my own agreements and terms and conditions and stuff like that. And it's telling the supplier, we better not mess around with this type of customer. Now, there are also official contracts that you can do in terms of protection of your products, NDAs, NNS and stuff like that.
Kian Golzari
00:57:45 - 00:58:24
And people always ask me, should I have contracts with my suppliers and stuff like that. I would say, honestly, it's not worth the paper that it's written on because are you really going to go to China, hire a Chinese lawyer, sue your factory for this little amount, but you're going to pay a lot more legal costs and now you can no longer work with that factory. I much more like to prioritize the relationship side of things and just tell my factory, like, let's say I'm developing a very innovative product. I'll tell my factory because I trust you and because I want to build this business with you in partnership for the long term. I don't need to work with any contracts but with you. But I need to have your words that you're going to keep this information confidential between us. And they're like, yeah, I got it. So I've made it very clear to them that I'm trusting them.
Kian Golzari
00:58:24 - 00:59:02
They're my partner. It's win win, we're working together. But if I didn't say that, if I just said, hey, sign this contract, it becomes like a very transactional. It's kind of like, hey, I trust you enough to manufacture my goods, but I don't trust you enough that you're not going to copy me, so I need you to sign this. And that's not setting your relationship off in the right foot. So I would always just say have terms and conditions so you're both on the same page. And another example I put in that terms and conditions is something like, hey, I will pay for the first pre shipment inspection, but if the factory fails the inspection, it's the factory's responsibility to rework the goods and pay for the second inspection. So it's like, I'll pay for it, it's fine, but if you mess it up, that's your cost.
Kian Golzari
00:59:02 - 00:59:23
And they're like, got it. And again, if that was not written in the terms and conditions and the factory fails the preshipment inspection, they're like, when are you going to arrange the next one? I'm not paying for the next one, I'm paying for the first one. They're like, yeah, but it wasn't written down. So it's very important to have some sort of terms and conditions written down with your factory so you're both on the same page of what the standards are for this order, and it will minimize a lot of mistakes.
Ramon Berrios
00:59:23 - 00:59:45
This is probably why you would want to stay in platform if you're early rather than going off platform, because those sellers care a lot about their reputation within Alibaba, within those platforms. If you go off platform trying to be smarter and it's your first orders, you can't go to those platforms and try to report their behaviors or whatever.
Kian Golzari
00:59:45 - 01:00:08
Yeah, absolutely. And I would also say go off platform once you've built enough trust because you'll do your payments online via Alibaba, but there's like fees associated with that and the supplier doesn't like it, and it's a little bit more expensive for you. But I would start doing bank transfers directly to your supplier. Once you've done a couple of orders. Everything's gone smooth. There wasn't any issues, and now it's like, right, we're building this together. Cool. Let's just go off platform now.
Kian Golzari
01:00:08 - 01:00:09
Sweet.
Blaine Bolus
01:00:09 - 01:00:30
Well, Keon, we just wanted to thank you for coming on the Pod and dropping some serious knowledge about sourcing as we wrap up here. Where can our listeners connect with you? Where can they find you? Where can they email you? Are you on LinkedIn? Are you on email? What's the best place?
Kian Golzari
01:00:30 - 01:00:59
Yeah, for sure. So first of all, I've got a YouTube channel called Sourcing with Kean, which kind of the stuff that we talked about today. I've got a video on every topic. So if you just want to improve your knowledge on supply chain and stuff like that, definitely check out the Sourcing with Kian YouTube channel. I've also got a Facebook group of the same name, which if anyone's got any sourcing supply chain questions, just pop it in the chat and either myself or someone else will reply. We all help each other out and I just jump in there and do updates. I'm also on Instagram, where I'm Keanundjg also on LinkedIn. Just under Kean.
Kian Golzari
01:00:59 - 01:01:16
Gozari. And my email is just K@sourcingwithkeyan.com. So if anyone's got any sourcing supply chain needs, feel free. I do have a sourcing agency and a sourcing platform as well called Titan Sourcing. So just drop me an email, drop me a line, and if you need any help, happy to connect you guys. Sweet.
Blaine Bolus
01:01:16 - 01:01:26
Well, thanks so much for joining us today. Super informative, and we can't wait to see all the next exciting companies and products that you end up sourcing.
Kian Golzari
01:01:26 - 01:01:29
Thanks for having me, guys. Absolute pleasure and wishing you guys an amazing day.
Ramon Berrios
01:01:29 - 01:01:30
Thank you.