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Drop Shipping KK WAY- MUST READ

January 25, 2019

      The reason I wrote the FIRST BLOG yesterday is to first help DS sellers understand that:

 

     The DS shipper /platform/manufacturer DIDN"T DO YOU ANY FAVOR by inviting you to drop ship their product.

 

    They gained much. They are not paying a salary while you work for them.

 

    Because If you felt that you are owing them, mentally you are in a weaker position to negotiate with them. 

 

     Because next, they will say "Bro, as you are not buying stock from us, we had to sell higher mah. I can't give you the same price with the buyer which bought from us in volume. If you buy more I can give a lower price.

 

Sounds reasonable?

 

Says Who!

 

BUY MORE TO GET LOWER PRICE IS WRONG!

 

In fact,

 

BECAUSE I AM NOT BUYING, I SHOULD GET THE LOWEST PRICE.

 

Walao. KK Siao Liao. Mabuk.

 This is what really happens. Let the story begin. 

 

     My audiences are Malaysian Sellers. So I am in everywhere to understand my audience problems and pain points because these are all opportunities.

 

     One of it is packing. Especially due to Volumetric calculation, every inch of space counts. Using boxes which are not optimized increase volume hence the cost of shipping.  So sellers used Flyers to minimize the volume and its fast.

 

    In last MECA Lousang dinner, or in Lazada or Shopee and other eCommerce events, I notice there are always these samples of flyers distributed in a gift pack. I pass this to my clients. Most of them say those flyers are of great quality. My friends in chat group also commented this free gift received at the event are great quality.  If you have received such flyer gifts, most probably you will agree with me.

 

    One of the friends in my chat group approached this seller, which in fact is a Malaysia Manufacturer! As usual, this manufacturer quoted him a tier pricing, with a lower price at higher volume starting at 20k minimum order.  But my friend only sells average 1k order per month. 20k is too much although it helps save 1-2 sen. He tried to initiate group purchase but respond is cold and he gave up.

 

    I guess this has repeated for many Malaysian sellers who got attracted by the samples but back off. It was later confirmed by this manufacturer that after the thousands of samples given, it generates a lot of inquiries, but it didn't generate good sales.

 

     So, after compiling the facts and prepare my negotiation point, I drove to the factory.

 

Again it is back to the volume I am willing to take.

 

    I started with I want 1 MILLION flyers per month. 12 MILLION per year.  Of course, the sales look at me at disbelief, call his boss, the factory owner, thinking he caught a big fish. So I become the VIP customer now. haha.

 

    So to further strengthen my story, I first describe my target customer. eCommerce Sellers which sells average 500 - 2000 per month, let say average 1k sales per month, easily there are few thousand such sellers in Malaysia. If I can sell to 1000 seller 1000 flyers per month, isn't it 1 million flyers per month?

 

        Add more oil. If I only add 5% profit margin over the price you give me and sell directly to the user, how competitive is your product?

     Undeniably very competitive. But he is curious. "How you want to survive with 5% profit margin and how you are going market it, I am very interested"

 

    Because I UNDERSTAND WHAT CUSTOMER WANTS and COMPETITORS SELLING POINT, then I can blow good water. 

 

    I  already know the customers - my friend, is sourcing for good quality flyer but was scared by the volume.

 

    I will never sell at Min quantity of 20k per order by throwing lower price. Because if a seller is having 1000 orders per month, its super silly for them to LOCK THEIR CASH in 19000 unused flyers for the next 20 months. They should use this money to roll more products, make more sales and profit while buying 1k flyer each month when needed.

 

    If you are viewing from your target customer perspective, you will never sell 20k per order.

 

    After analyzing the market, most sellers are selling 100 pcs per order but quality wise is UNCLEAR. Flowery language like high quality, strong adhesive is used to entice a buyer. Thus I guessed their selling point is PRICE ONLY. Getting the lowest price acceptable product.

 

     But first I need to know  High Quality is how high? Give me a MEASURABLE FACTS.

 

      Actually, Flyers are measured in MICRON. Reference here https://www.gauging.com/customer-resources/film-calculators/calculate-film-thicknessgauge-by-weight/. The higher the MICRON, the stronger the plastic, the heavier the plastic. Another measurement is Weight.

 

    If a competitor is competing on price and unclear on quality, then this product positioning should be a clear description of the factual quality measurement.

 

    So I selected 50 MICRON which is above average quality plastic for small and medium flyer and 60 MICRON for the large flyer to support the weight. This transparency on the flyer quality will be my main FIRST SELLING POINT.

 

     If a seller is not using a thermal printer which prints stickers, the seller have to find a way to attach the Airwaybill on the flier, and it takes time and inconvenient. After checking the flyer with pocket and without pocket, and making a simple comparison on the labor cost needed, I selected FLYER WITH POCKET which is more cost and time savings for the seller. That is my  main SECOND SELLING POINT. 

 

     Should I sell per 100 pcs as most competitors to make the selling price lowest possible. I did not do it.  If the Flyer is selling price is 0.10 per piece, 100 piece is RM10. However, the best shipping rate thru marketplace is around  RM5. Customer will have to pay RM15 at the end to receive the goods. Just the shipping is 50% of the product cost. 

 

     Additionally, it misses the first 5 kg same shipping charge condition plus free shipping above RM40 for some marketplace. Additionally to pack 100 pcs per order is time-consuming, when my target audience need more than 100 per order as they are selling more than 500 per month. We can pack it in a nice carton. So I selected 500 pcs per order. Always think on customer shoes.

 

 

   So the Boss is impressed by the homework done up to this stage. Don't rush to ask for lower price directly. Seek to impress first.

 

    Boss, since I buy 1 million per month and only 5% profit margin, can I get 180 days credit terms.

 

    His face quickly change..... "No No No.... Max I only I can give you 90 days credit terms". I can help you with other matters also. Just name it.

 

    Ooooh.. How about I give you cash 21 days after you send the goods at the same price.

 

    He also looks at me like I am Siao Liao... Quiet.....

 

     Ok Let me share with you the CATCH now.

 

    The reason I only need 5% is that I remove all the layers in your value chain. It is direct from the manufacturer to users. Each layer incurs cost on warehouse, trucks, sales guy so they add on profit to it. If the product has more layers before it reaches the consumer, it becomes noncompetitive!

 

     So all the cartons need to be ship to the customer directly from your warehouse.

 

     Wah then he says, I need to manage the workload of managing documentation, people and the logistics to send to 1000 customers. Then I need to hire a lot of staff.

 

    There is where marketplaces like Lazada comes in. I show them the process of how to process orders for 3 SKU. If you have only a few SKUs, a person can actually process more than 100 orders per day, and then wait for the courier company to come. plus the great shipping rates and free shipping promotion!

 

    By now, I solve all stakeholders’ issue. The manufacturer needs volume, good credit terms, and marketing strategy and efficient processes. Consumers need good quality, great price, and no MOQ burden while enjoying the full benefits.

 

      But what is the 3rd Main Selling Point. At the end it is still PRICE ! By going direct to manufacturer, I can really offer great competitive price for great quality product!

 

     So I combine all the 3 MAIN SELLING POINTS into one simple to understand IMAGE for 3 SKU only. 

 

 

     I promise you I share with you the real Listing. Below is the listing link. But don't buy it first!

 

     Because on 29th Jan to 2nd Feb, We are thanking our readers and supporters by rolling out unbelievable promotions as above pic for Chinese New Year! Go to these links then to support and buy it.

 

Lazada:

180 mm X 256 mm = LINK HERE

 

Shopee

180 mm X 256 mm = LINK HERE

 

     Additionally, do you think since I know the boss of the factory and now are friends, will I face the common drop shipping issues of no quality, late delivery, no stocks? I don't know. But I know my chance is much much better from a seller which drop ship from an agent which buy from god knows where after how many layers, plus the agent doesn't have control on the production. 

 

   So this is the story of my drop shipping adventure. If you like it, buy some of the flyers.

 

   If you look deeper, I am now doing content marketing, combining social media marketing with marketplace - Lazada & Shopee advantages for this product marketing strategy. But this story is for another day.

 

Lastly. GONG XI FATT CHAI!!!!

 

PS: I know the cover not professional, but it is rush job lah,

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