The E-commerce Leader

[00:00:00] Kyle: reduce your waste, cut your cost efficiencies and you have better cashflow management. I think that’s going to be challenged over the next few years
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[00:01:08] Michael: Has China sourcing finished for e-commerce. Is it on the way out? This is the question we’re dealing with today and the e-commerce leader calling show. So China has become the go-to place. Indeed. The dominant place for sourcing products for all retail and the many other non retail products, including of course.
[00:01:25] Trouble first started in paradise in 2016 when the UK us government impose tariffs, quite substantial tariffs on imports from China, which have not, changed since then, or I don’t mean they’ve not changed, but they have not gone away. The pandemic created massive supply chain issues all around the globe, but now in 2022, as at the time of recording in, May, 2022, there has been a giant zero tolerance.
[00:01:49] COVID lockdowns in China. And the question. Whether this is the beginning of the end, or if it’s a temporary thing, at least that’s one of the several questions where they talk about today. We’re talking with our expert panel, Kyle here, Matt and Chris green. I’m Michael visa in London, England walking through the show.
[00:02:03] Gents, let’s get into this exciting topic. Who wants to go first, Kyle, if you’ve got lots to say on this one Sherman plan with, in the firing line with products coming from China right now and
[00:02:11] Kyle: then man. Yes. Yeah, I, yeah. I mean it is really, for me, a exercise in risk managers. I think that ultimately when you start to think about wherever you’re sourcing from, there’s always risk involved.
[00:02:28] It doesn’t matter unless you’re making it. Even if you’re making it in your backyard, there’s still some level of risk associated in business. I think what is continuing to happen is that the, probability of sourcing issues. Are going to, it looks like it’s continuing to go, right?
[00:02:48] Like it’s continuing to increase. So I think for me, it really comes down to what is, where are we at from a temperature? I looked, I think it has a bit of a spectrum. Where, you haven’t started in 2016, you start to feel the rumblings. And you’re like, okay, something’s going on here? Is this going to be super transitory?
[00:03:11] It’s just like a big geopolitical, whatever and or will it be persistent? And what was began to see, and even probably increase, from a rhetoric standpoint is that this is becoming more of a persistent sort of, Positioning between the U S and China. And so I think that it’s not going to go away.
[00:03:29] I think Chinese sentiment, just in general from the U S is at an all time low. And I think that’s also true on the Chinese side as well. I think when they talk about the U S because there’s just so much. Essential media, both sides that are talking on them down. And so it really is going to be, I don’t want to say that it’s over definitive.
[00:03:53] What I would argue is that you better have a backup plan and you better have your backup plan in motion as of a year ago. Most likely, depending on like the supply chain stuff that’s going on, in order for you to have business continuity. So again, it goes back to risk management. It’s all about business continuity.
[00:04:09] If something happened in China or in the south China sea, what’s the impact, could it be to your business? Is that mean that you are bringing over like importing more inventory and sitting on it for longer periods of time, which is tying up cash flow. Does that mean that you are looking for alternative, sourcing, alternative sourcing for your manufacturing?
[00:04:32] Maybe you’re looking in different countries. Maybe you’re looking to vertically align. You can just actually own your manufacturing outright. I know that’s a bit a play for much larger companies. They’re looking to try basically vertically aligned as much as they possibly can. And I think you’re going to probably see that trend continue to occur.
[00:04:47] And then you’re going to be seeing a push to continue to onshore, your manufacturing, some, bring it back to domestically as much as possible. Those are the big trends. I, it’s something that I’m definitely watching, I’m looking at it and I’m actually in the process of pivoting some of our Chinese manufacturing to, to Malaysia actually.
[00:05:04] And then, exploring the opportunity to try and move some that to Mexico as well though. That’s probably going to be a little bit longer of a play because that’s going to be much heavier lift.
[00:05:12] Michael: Yeah, that’s a lot going on there. So you’re basically, you’re talking about, I guess the problem or the question that we’re dealing with, is it over?
[00:05:18] And then the other one is the implication is what are we going to do about it? What do you do about it? Yeah. Yeah. Chris, I guess either question, what is it that you think it’s really happening in the longer term? Is it persistent, is an ongoing trend? Is it a blip and or what are we going to do about it?
[00:05:31] Chris: There’s things you can and can’t do about certain things and. It’s what I mean, it’s cliche, right? The only thing that is constant is change kind of thing. Everything’s going to change. Can we continue to change? It’ll probably change at a faster rate simply because of the internet and technology and innovation and all of those things.
[00:05:51] But I don’t see things changing so quickly that people can. See it coming and react to it. So like I was saying, he’s you have to manage your risk. Can I still get these parts, these products, these supplies, if I can what’s the price is going up. Is it going down? What’s the lead time?
[00:06:07] Like what are the potential risks? If everything’s humming along and you’re like, this is. Do you think is going to be like this forever? No, it’s not. Depend them. It clearly showed that no things can be helped me along and things can get disrupted by things. You really probably weren’t on your radar.
[00:06:20] None of us have lived through a pandemic before. So it wasn’t really on a lot of people’s radar. Oh, if a pandemic hits, what’s going to happen to supply chain. And I think that if sellers and this, anybody in e-commerce keeps serving their customers at the forefront of their minds to say, okay, we need to serve our customers.
[00:06:37] This has changed our lead time. As extended, the costs have gone up over here, how’s that going to affect our ability to serve our customers instead of thinking inwardly and being like, how is this going to affect, how much cash money we’re going to make on every single order and thinking every order is about them instead of every order be.
[00:06:53] What is the value proposition to the customer? How can we serve them? And I think a lot of customers are very open to communication. Their understanding of price changes, or shortages. They understand these things. If there’s some communication, I don’t frequently say communication solves practically every single problem people get upset when they don’t have information, they don’t have that communication coming.
[00:07:13] Like things surprise them, oh, you didn’t tell me the price of. If you told them ahead of time, Hey, like people understand that things happen. We communicate with them. I think it almost can create more context with the customer to where they’re going to be more loyal to you in the future. But I think a lot of people don’t like to deliver bad news, so they try to avoid things like that.
[00:07:30] But I don’t know, like people were saying. The truth. The truth is undefeated, and I guess just tell the truth. The customers are going to understand. And I think a lot of customers, historically, haven’t had a good view or an understanding view of what it takes to get a product to your door at an affordable price.
[00:07:47] No, there’s a lot that goes on behind it. And a lot more common citizens are understanding, wait, there’s a supply chain. And they didn’t understand before they didn’t have. Yeah, but bouncing the news all the time. Now they see it and they’re like, you know what? That makes sense. Why the price of the products I normally buy have gone up.
[00:08:03] And I understand it. I’m not just going to blame a politician for, like they’re flipping switches and making prices go up. And so ultimately I think longterm, things will be good with more access to information, more communication, more understanding of what goes into getting a quality product to somebody’s dorm.
[00:08:19] I don’t think any negative to any of that, people don’t like this. And they don’t like the price is going up and they don’t take you longer to get my stuff, which is all the stuff that Amazon works on.
[00:08:28] Michael: Yeah. That’s a very good point. I guess one, the question. That I pose is very much an obsession of e-commerce operators.
[00:08:35] And what you’re doing is refocusing on who we’re there to serve in the first place and how they feel about it. And you’re absolutely right. Nobody wants to deliver bad news, but it’s incredibly bad idea to just hide your prices or just send a text to your workforce, firing them. And, oh, the terrible practice we see that get into the news.
[00:08:50] But it, as you say, it’s a much bigger disaster than it need be. And to your point about helping people see. How products are made. I think actually that’s pretty smart marketing that most of us underused most of the time. This might be a necessity being the mother of invention here, where actually, I think it makes sense to give people a sense of what effort goes into their products.
[00:09:09] And this is a good opportunity to do that. So that’s a great point. For me, I would, I think differentiator between the short mid-term and long-term is really important. I think the very immediate term at the time were in this, in, in may. There is, just monster problems in China, the manufacturing export hubs on the verge of halting everything.
[00:09:27] Manufacturers are beginning to not be able to get hold of all materials. You can’t shift between the trucking between different regions. As I understand it is really difficult. I’ve certainly got clients who source sourcing from places like Shanghai, and trans-gender the big east coast cities that deliver a big percentage of the products to the west that are basically doing nothing.
[00:09:46] The goods are not moving at all. So that’s scary. Now the question is for me, whether that can be. I have to say my view of this in 2022 is that China’s going to keep locking down because they probably don’t want mass deaths, which we lead into their political studies. And whether they, what the thinking and the Chinese leadership is about, how that’s perceived.
[00:10:08] That’s a new ask complex question. I can’t answer, but I do think that we may well see more of that. So that’s the short term and the longer term. There’s an assumption. I think that it’s all about the DOP, the political relationship between the American leadership and that, and the Chinese leadership.
[00:10:20] And I agree with you, Kyle, that the mood music on both sides is less good. I think that’s going to get worse. Which puts a big question mark over China sourcing. But I do think that actually there are bigger forces at play as well. I think the, even the, in the longer term as Peter design will tell you as car that I’m a disciple of Peter Zion’s thinking there is a question mark, potentially over Chinese, China survival as a centralized country.
[00:10:42] If there is, a continuation of oil price shocks and food shortages globally. So they may have bigger fish to fry than giving us. They may be just trying to survive. So I do feel that in the longer term, there is even bigger reasons to consider sourcing other countries. As you say, Carla also agrees.
[00:11:00] There is risk in every situation. Mexico is not famous for its efficiency and lack of corruption. India is not famous for its good infrastructure to name, but two obvious places, Vietnam, and other places like that may have some of the best of both worlds, but their capacity is going to be more limited so that there is no easy solution to this stuff.
[00:11:16] Which brings me to the final. I’m going to make at this point, which is, I think as both consumers and sellers, we’re going to have to get used to less good. So we can’t compare year on year or decade on decade. It’s going to be more about relative to having no stuff, getting stuff three weeks late and double the price of wanted is better than none.
[00:11:35] And equally as a seller, having a 5% profit margin is better than. It’s not the same as the 40% margin you used to have maybe basic a very black fixer here, help me out. I’m being too black about this stuff. Kyle takes us back up. W what are your second round forces?
[00:11:50] Kyle: One of the things that you sparked, thinking for me was, and this is not just true of China, except it’s just at a much larger scale in China.
[00:11:58] Is the aging population, all, Western. First world sort of big economies, strong economic, economies, around the world are struggling with sort of birth rate, and population growth, right? Like in many cases it’s on the decline and the way you counter that.
[00:12:16] I guess from a systematic political perspective is through immigration, right? And so you can allow immigrant. The question will be, will people trying to be able to allow immigrants in to the country at a big enough rate to basically offset the loss of the workforce as it ages out, and will their economy yield to support that aging population over the long haul?
[00:12:40] I do think that’s also an interesting sort of component that gives you mentioned the other dynamics are involved. I’ll say one other thing too. I think in the, over the last. 20 years, 30 years, the concept of just-in-time inventory just in time, a supply chain was the big push, right?
[00:13:01] You just wanted to have a just in time. And so reduce your waste, cut your cost efficiencies and you have better cashflow management. I think that’s going to be challenged over the next few years. And I think smart companies who have the cash are actually looking at, we’re not going to be just in time.
[00:13:20] We’re going to be get as much of our raw materials get as much of our products produced as we possibly can, even if we have to sit on them because we are uncertain of what those supply chains are going to look like and absolutely looking to pick up and. Just, I guess not hoard, but be very, be very cautious of being too thin at any one, certain, Lincoln, their supply chain.
[00:13:51] And I think that’s one of my takeaways from this is if you have extra cash, do you just invest in your raw material and Rama goods? To have that, available to you? Almost as like a bank account, sometimes we think, oh, you have money cash in the bank, but it might be raw materials or inventory that you were actually trying to bank with.
[00:14:09] With any access capital that you’ve made.
[00:14:12] Michael: Yeah, very interesting point. So I want a couple of thoughts on that. First of all, the demographics thing is really critical and I’m glad you put your finger on that. One of the clues to the fact that China’s aging, even if you just took the one data point of the average wage, which directly impacts our.
[00:14:26] Costs as e-commerce operators and buyers of goods while I’m consumers, is that there’s been 11 X or 1100% increase in the cost of wages over the last couple of decades in China, which is a symptom of having an, decreasing number of, young people that he can work in factories. And that is because there is China has a real economic, problem based on demographics.
[00:14:46] Now you could argue, if you look at us demographics, integration of supply chains, the cheap oil that is coming from fracking and that very cheap gas, which by the way, has been burned off as a sort of waste product, even a couple of years ago, which is crazy. When you think about the cost of a text in your hurt, our gospels shot through the roof.
[00:15:03] As many people listening will have. In that situation, it doesn’t take a rocket scientist to look at the demographics of the USA and all those things to say that China could become more expensive to produce in the USA and in a given period of time, which is a crazy thought. But I believe that could be part of the demographic, the sort of longer term trends we’re looking at here, which is great news for anyone who’s based in the U S and sells in the U S That’s my thought anyway, I think actually we could be looking at radical stuff that was really helpful to us and pretty bad news for a lot of the rest of the
[00:15:30] world.
[00:15:30] Kyle: The only thing I would say about like power is the way that China’s, I think hoping to offset some of the, power and energy costs is their investment in new killer. Like they’re all in like to the tune of billions and billions of dollars in, I think spinning up. 300, don’t call me.
[00:15:51] I might be wrong on this, but it was a large number of new nuclear plants that they were trying to bring online over the next, like 10 to 20 year, ramp up. So one of the ways that they could try and offset any of their energy costs by heavily investing in that, will they pull it off? That’s a long arc of time and depending on where they are economically, we’ll see, but definitely is interesting to see their investment.
[00:16:14] Michael: Yeah, it’s a very good point in which I wasn’t aware of. Chris, another alternative, obviously one with you’re very expert in is shifting business models in response to the global situation, getting very difficult everywhere. And I know you’re the expert in having run multiples seven figure businesses in the Amazon sort of space.
[00:16:30] What’s your thought with that kind of hat on, in response to.
[00:16:34] Chris: It all comes together. Let’s look, you guys are talking about just in time inventory systems and, raw materials, which a lot of people, in like the arbitrage world, like the kind of flipping products world, we don’t really think about those things like raw materials, like where does this plastic even come from?
[00:16:48] We don’t think about it. And of course I’m definitely heavy in the print on demand, whether it’s, merchandising. Apparel products or my favorite KDP Kindle direct publishing with print on demand books. And it’s easy to say I’m print on demand. I don’t have to worry about inventory.
[00:17:01] Those books still need like raw paper. They need the raw paper wrong for using whatever. It comes from, that still comes from somewhere now. I don’t know where the paper comes from. It’s all us sourced or if it comes from China or whatever it is, but even if I’m all print on demand and I don’t have to worry, I can sit here and be like, I don’t worry about China at all.
[00:17:20] It might be that I need to worry about it because it might actually be part of a supply chain that I’m just not aware of. So there’s beauty in having different businesses. But I think people need to be aware of some of these things. I think people need to look at it from a positive point of view as well.
[00:17:32] It might be where, do do you want us to doom and gloom when all the bad potential things that could happen? And it’s not, there’s always an opposite. But if you want to think of some good things, I would say that demand for products is not going away, right? So if you’re a seller and you’re like, what am I going to do?
[00:17:45] What I had to raise my prices? The demand is not going away. So it’s not going to be, oh, I’m not buying from cattle anymore. I’m buying from this guy over here. The guy over here doesn’t have a better price or a better product. He has all of the same, restrictions, limitations. And he has to work with all of the, just things in life the college has to work with.
[00:18:00] So the demand is not going away. You just have to find a way to serve. That’s it. So get innovative. And there’s innovation on the seller side, in the U S or the UK or wherever you’re selling and innovation in China as well. Like shippers want to ship manufacturers want to manufacture. And I think people forget that sometimes oh, it’s taking so long.
[00:18:19] Everybody in China is doing their best to get the products shipped that they want it shipped probably more than we want it shipped. And I think some of them to lose sight of that. And under the, so you got to understand, you have. They want to ship just as well. So I mean there’s opportunities everywhere and I think what’s getting interrupted, is selection is price and is, delivery speed, lead time, whatever you want to call it.
[00:18:41] And those are three things that Amazon is absolutely 100% invested in and they have been for decades. Amazon knows that’s what customers want. It’s not a mystery, right? So don’t reinvent the wheel. They want low prices. They want, incredible selection and they want to get this stuff fast. So if Amazon’s in on that and you’re in on that, and the manufacturers and shippers and China right on that, then you know, this will pass, but things will change.
[00:19:03] Does manufacturing come back to the U S is it cheaper? Is it faster? Maybe? Yeah. For some things that probably will be for some things that will probably be, in China and Malaysia and India and Mexico, there’s opportunities like there’s gaps. There’s like vacuums, like things are gonna come in and fill that there’s opportunity here guys.
[00:19:19] Let’s do something here. So it’s all gonna work out, so just pay attention to it and you’ll make some moves when it makes sense that make some moves. But I hope nobody’s listening to this, like with a super doom and gloom, oh my gosh, I can’t order from China anymore. What am I going to do?
[00:19:31] Do you want to start testing? Then serve customers like big gear it out. Cause if you don’t someone else will like that’s capitalism, like one-on-one if you can provide the best service, the best product, the best price, whatever it is, if you have a sustainable competitive advantage. You’re going to be just fine.
[00:19:46] And I think people lose sight of that. The sustainable competitive advantage, depending on how they got into Amazon and they’re flipping other people’s stuff, doing arbitrage. They’re just like another wholesaler in a sea of wholesalers. If their private label product doesn’t provide some kind of, distinct particular, specific and advanced.
[00:20:03] Then yes, you will be at more risk than someone else who says, yeah, I have a customer base. I know what they like. And I’m gonna find a way to get them products that they like at prices that, that they can afford. You may have to pivot and adjust in some ups and downs, but the opportunity is not going where the demand for products is only going up.
[00:20:22] I promise it’s ever, it’s never gone down. If it goes down, I’ll be surprised to be, let me know what it is.
[00:20:30] Michael: Yeah, it’s so great. Good point. I so sorry. A few things that strike me on that. You’re not wrong to say that it doesn’t matter what business model you, and there’s always some raw materials from somewhere that we need to be aware of where that comes from.
[00:20:39] And a lot of the world is waking up. Surprisingly very extended supply chains that they don’t know where they end. So it’s a good point. I imagine that print on demand is probably less of a risk than plastic widgets from China, but it’s not zero, but as you say, yeah, and sell information,
[00:20:53] Chris: you want to go straight, no risk, no supply chain, sell information, right?
[00:20:57] Sell digital products. You can certainly do that if you want. It’s a different game, but it’s not like it’s a game that doesn’t have rules. You can’t learn.
[00:21:04] Michael: Yeah, I’d talk at which I’ve got to say that the, the way to play the game of course, is the author preneur blueprint. A great tone that I’ve been working my way through.
[00:21:12] Just a bit of product placement now, because it’s the obvious thing to consider, I would say. And, Jason, I had a conversation the other day where we were talking about, how to deal with this whole e-commerce, In the geopolitical sort of crazy times we live in and, he did bang the jump pretty heavily for digital products because of course that’s his entire business.
[00:21:28] And he in cinnamon every money for a long time. And, yeah, I think it’s underutilized by physical product sellers myself, because it is a different risk profile. It’s different skillset, but it’s not a different market. So if I’m going to sell a book on how to garden and how to buy plot, how to make your pot plants beautiful to people I’m selling pots to.
[00:21:47] It’s not a different person. It’s a different skillset, but you can hire skillsets. Most of us don’t manufacture plastic pots in our back garden either. So that’s my
[00:21:54] Kyle: thoughts. Let me just say this. As we talk about digital a little bit, I would say 95% of whatever target market you were in.
[00:22:06] Aren’t going to be looking to buy, at any given second, only about 500. If, and that’s being generous of anybody, no matter what product you’re selling are actually interested in buying your product or an alternative product from you in that very second. So what do you do with those other 95% of people that aren’t ready to buy?
[00:22:28] You essentially serve them with content. You serve them digitally, giving them information. Information to help them make a decision around buying. It’s the top of the funnel. People are looking in the end. If you think about a buying journey, right? People make, make choices along that, that arc until they’re actually ready to make a decision.
[00:22:47] And they found your product, hopefully that they’ve selected out of many other options and they buy. But before then there’s a lot of opportunity to educate, to entertain. To inform an audience where I think digital products absolutely fit in an amazing slot and that we just don’t really put a lot of our effort, energy there.
[00:23:09] And I think that’s to our detriment as e-commerce sellers, as physical product sellers.
[00:23:14] Michael: It’s a great point. And I think thinking about the wider. The broader customer journey that people go on to buy. And to your point, Chris, of having a sustainable, competitive advantage, having a real brand that’s distinct that connects with people.
[00:23:26] And as you were saying, communicating, where you’re at and why you really trying to serve them and how you’re overcoming the challenges that are in between you serving them and getting the goods. All of that feels comes together into being a more sophisticated brand because we have to be.
[00:23:42] And actually I feel like this is going to be a very valuable sorting exercise for the e-commerce community because apart from the 2000 8, 9, 10, great recession. When e-commerce was still powering through and growing very quickly. We not really, as a sort of community, experienced a full on a recession, I think in the lifetime of Amazon and even e-commerce as a whole, really.
[00:24:03] So I would say that this is going to be a great sourcing where a lot of people with mediocre brands or no brands are going to be. Pushed out, but the rest of us will be forced to, as you said, Chris, think really hard to innovate really hard on behalf of our customers. And actually I think a lot of better brands will result from the end of it.
[00:24:18] That’s my feeling. So to try and end on a, more of an up note, let’s just do a sort of 30 seconds, last thoughts each, Christmas come to you.
[00:24:26] Chris: I like the sustainable competitive advantage. I think people, I think a lot of people in this space, especially my side of the space, don’t think about it this way.
[00:24:33] They flip products. They think they’re amazing which they are for actually taking some action and doing something. But if they don’t stop and stand back and be like, wait a minute, what value am I providing? I am connecting a low price product with a higher price on a marketplace for a seller who they get the convenience of not having to find it.
[00:24:52] Like I found it like that’s replaceable. Someone else can do that. Someone else can learn how to do that. If you connect with the customer and solve their problem with your face present, they’re gonna be like, I remember Chris green. He helped me solve my problem. He answered a question for me and you know what, when I’m ready to buy him, gonna buy something from him.
[00:25:06] And I think a lot of myself included, I went through this where not realizing where the actual value. And when you learn it the hard way, then you’re like, oh, now that I’ve learned that I can do this for myself better. So I think there’s going to be massive opportunities for everybody in this space.
[00:25:21] Is everybody going to win? No, some people are gonna lose. You can try your best and still lose, but you keep playing the game because as the rules change, the game is still there. This is an infinite game that doesn’t end. So if the rules shake you up and you got to sit on the sidelines for awhile, As a rule change, read the rules, figure out what you want to do and get back in the game and the best players win and how you win by providing the most value to the customer.
[00:25:45] It’s not by beating Michael VZ. It’s not by, oh, I beat you, Kyle. No, we’re not in that kind of competition. Our competition is to whoever can provide the most value to the customer at the best price. That’s the game. We all play. That’s the game you should want to play. If you’re playing a different game, going to beat your competitors, you’re ultimately gonna lose because okay, you beat one, that one, there’s another competitor there.
[00:26:05] They’re never going to end. So you’ll never actually win. And yeah, you can probably guess that there’s a book called the infinite game. You can find on Amazon. It’ll.
[00:26:14] Michael: Yeah, that sounds great. I like that. Thank you a lot. I think that, my rapid is going to be really to reflect on your excellent thoughts, Chris.
[00:26:20] Cause I love those. First of all, sustainable competitive advantage is the absolute key. You’re so right and obsessing about that is the right way to obsess because that will build something. If you get it right, as you say of value and if you get it wrong, then there’s another game to play. So I love this idea of infinite game.
[00:26:35] It reminds you of. I think a Churchill said something like, success is never final failure is never total. So in other words, just because you feel like a genius today doesn’t mean it can’t all go wrong next year. And just because you feel like a fool and it’s gone wrong this year, doesn’t mean that’s, you might not.
[00:26:49] Infinitely better. So I love that thinking. And the final thing that really mirrors what the, the genius that Jeff Bezos said, which is that Amazon should be aware of its competitors, but it should not fear its competitors. It fear its consumers. This is a strange. Slightly creepy, slightly big.
[00:27:04] Brother-ish very typical Jeff Bezos phrase, which I think he’s at engineered as a third party seller. I’m always worried about my competition, but I’m terrified that the consumers were going to take down my products by complaining about them. So that’s the rather scary version of the same thing, which is, think about the consumers, not the competitors and you’ll be on the right track.
[00:27:21] There’s great. Great. Corrective to a lot of thinking out there. Kyle, take us home. Final thoughts is
[00:27:27] Kyle: sourcing in China over. I would say the answer is no, but I think that if you have a business continuity plan in place, meaning if you are a physical product manufacturer and you have one single manufacturer and that manufacturer has to be in China, you should be thinking about, should I be looking at.
[00:27:54] My material, my, my widget sourced somewhere else manufactured somewhere else. And if that happened to be outside of China and a different place, geopolitically, that’s probably going to be in your overall benefit. I have, when I think about even risk, I’m like, what if the factory that I order my products from burns?
[00:28:13] It’s. It’s going to have the same net effect on my business. It won’t be as big as like big geopolitical, war or anything like that, but it still has the same net effect. So I think when you’re thinking about your business continuity, how much inventory what’s your run rate?
[00:28:29] If you couldn’t manufacturer order anything else right now, inventory wise, how much of a run rate? And then I also think about looking at having, making sure you have alternatives in place, right? Like you were constantly thinking, okay, what if this happens? And not that I expect any of those things to happen.
[00:28:48] Like I fully expect that if I want to source from China for the next, 10 years, I probably could. But you can’t hope is not a business. And so you want to make sure that you’re just not focused on the hopeful wistfulness of it going forward? Perfectly. Yes. I think from my standpoint, you have to have alternatives and you have to have backups.
[00:29:10] If you want to stay in the game for the long haul and that backup might include switching business models. I think that’s a totally, absolutely, and a valid choice.
[00:29:21] Michael: Absolutely. If you’re talking about single source dependency, you’re always talking about a big risk wherever that is. And it’s sourcing selling doesn’t matter if one is the loneliest number in businesses, what they say.
[00:29:31] And if you’re talking about single source dependency, I guess the German government right now is really seriously aware of that. That’s the most striking example in the world. I can think of where you do not want to be an optimist and just have a single source of anything in your business. So great stuff, guys.
[00:29:45] Thank you so much for thoughtful response to it, of our, the provocative question. If you’ve enjoyed today’s show, if you want to. Please do join us on call-in where we, go live on Tuesdays 8:00 AM Pacific, 11:00 AM Eastern. 4:00 PM UK time. And we are obviously available on all good podcast near you as well, including apple podcasts and a Stripe.
[00:30:07] What’d you call it Spotify. I’m losing my different bathrooms here. We’re available on Spotify. So we’re not available on strike. That’s not a podcast platform. So it just reminds me to say many thanks to you for listening and to Kyle Hemer. Chris green, Michael Veazey. Thank you so much for listening to the e-commerce leader podcast on Callin.
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