The Problem:
It’s a race to the bottom: One of the problems with selling on Amazon is that the pricing is a race to the bottom. Once you have a product line that you launch and it begins to sell well, multiple sellers will jump onto your listing and compete with you. This creates downward pressure on pricing until the spiral ends in whoever is selling that ASIN not making any money. This can be due to your PPC costs or that the price you purchased your product for was too high in comparison to the other players. Many times those players can be large companies. What if you could price your product so low that no one can compete with you but you could still make a profit?
Large company Competition:
Large companies have an advantage. Most 
of the large companies have their own in-house procurement and their own in-house sourcing agents. They are not going through Alibaba and Ali-express looking for new manufacturers. Their people live in China and already know how everything works. They have lists of their own factories that they have already checked out and have worked with. There is very little guesswork. The other thing is that large companies can purchase large quantities. While the little guy is purchasing 500 or 1,000 units, the big companies are purchasing 50,000. This is partly because they own the sales channel and partly in order to get the best price. In China, Walmart is ruthless, and anyone that works with Walmart makes a little profit on huge orders… but they know their money is good and the factories like to be able to say “We sell to Walmart”.. at least once. Believe me, The COG on large orders is so low, that they are almost insurmountable when it comes to competition and the race to the bottom. This is why the big boys are usually the ones that win this game.
Amazon competition:
The other problem is Amazon itself. Amazon has been compiling lists of who purchases what and for what price for a few years now. They have stepped into many different ASINS selling against the very sellers that made them a wealthy company. They can do this because they control both the sales channel, and get a great price through large purchases. At some point, Amazon will become so aggressive in this effort that it will place a HUGE squeeze on anyone that is not able to play the game in a big way. This is all about economies of scale and having other sales channels ready to go. As a member of the Container Club, you can get the volume discounts that allow you to compete.
Amazon’s Corporate Social Responsibility Initiative: Rumor has it that Amazon will soon be doing inspections and approving/disapproving manufacturers that will be allowed to provide product to Amazon sellers. This is not direct selling manufacturer-to-consumer (they already do that). This is mandating the product any seller can purchase from which manufacturer!
They can do this because they request factory invoices from the sellers. Soon, they will be excluding manufacturers from selling on Amazon, even through a third party! How will you know if your manufacturer will pass the test unless you or a trusted adviser has visited them? You won’t.. and could be stuck with thousands of dollars worth of product if Amazon pulls your listing. As a member of the Container Club, we prevent that by visiting every factory. Once Amazon’s requirements are available, we will be able to do the social responsibility inspection for you.
Economies of scale: This is where the rubber meets the road. As a sourcing agent, one of the first things that a factory asks me is “How many do you want to order, and to what country are we shipping to?” The reason they ask the first part of the question is strictly due to price. The second part of the question also has to do with price, but it is based on quality, not quantity. The same shirt being sold to Argentina is much cheaper than the one being sold in the USA. Quality. They know that the USA salesperson will only be able to sell quality. Therefore, the only way to get the best price (along with the quality) is through economies of scale. The more you order, the better the price. Simple math. Container Club members will be able to purchase at the lowest price possible.
Modifying a Product: If you believe that simply Branding and modifying a product is the answer to all these problems, think again. Your “New and improved garlic press” has a lifespan of 6 months or less, depending on who discovers it and who jumps onto the listing. Branding will help you in the short run to overcome some problems (Hi-jackers and such) but it is not the long-term solution that it is being made out to be. The reason is that people will take your product and improve on it, just like you did to another person’s product.
Normal Process to Source Products on Your Own.
1. Jungle scout search– search through with jungle scout/ ccc or other software (up to 6 months) trying to find a good product. First, you have to learn the software (often more than one). This equals time and energy. Then you have to learn to recognize what you are looking for. This also takes time and there are a lot of “tricks of the trade”.
2. Find a factory- Try to find a manufacturer that is honest/trustworthy/reliable- contact that factory only to find out that in order to get the product the MOQ and price are too high for you to make a profit. Go back to step 1 or 2. Could take months to go through this process.
3. Sample made- get the sample made -This alone is quite a task. Oftentimes factory representatives have poor English (I am being kind) and do not understand your requirements. Even the smallest change can make it an impossible task for them. They typically have little to no imagination and their perception of explanations is totally different due to cultural differences. You finally get one made and review the product. It is hardly ever exactly what you want. Many times the factory will want you to pay a new sample fee, open up molds or some such ridiculous thing. Then you have to have more samples made until they get it right.
4. Order product – Factory lead times on product production can be anywhere from 30 to 60 days depending on where you are in the queue. Of course, your position is determined by how much you are ordering and how easy it is for them to make the product. This is always a judgment call on their part. Either they see the opportunity and value as a partner or they don’t. If you have overpromised on the volume, and underdeliver on the order, then you can expect that relationship to go south really fast. I have actually seen where a factory will just refuse to make a product after all the samples and everything is finished. Go back to Steps 1, 2, or 3. 
5. Product inspections- some people don’t even do product inspections, but I think that is crazy. Unless you have product inspections done on EVERY shipment.. you do not know what you are getting. Seriously, there is product quality fade and degradation as factories try to save money on an order they have already been paid for. And often it does not matter how many times you have ordered from them. This WILL happen if you are not on the lookout to catch them at it. If the product is not up to par with the “Golden sample” then you just lost all your down payment. If it gets shipped that way, you lose everything and have poorly made product you need to get rid of. Go back to step 1.
6. Ship product- arrange the shipping either through your own freight forwarder or the manufactures. Logistics is a beast all unto itself. You have to know a lot of things. Are you the IOR? Are you shipping LCL or FCL? What port? From? To? What are the CBM of the freight and the weight? Are you shipping sea? Or by air? Who is filling in the customs forms? Export? Import? Do you have a customs agent? Etc. etc. etc. … you see the problem.. If you do this all yourself, or already can. Great… but if you have to and can’t .. there is a learning curve, as anyone who does it will attest. If you don’t know what you are doing there are many bad things that can happen. Product stranded, lost, whatever.
7. Payment- at this point you need to pay the factory for the product. That means that you are putting out your hard earned money to someone who you only know from Skype calls and email messages. Unless you have actually gone to the factory yourself and had the product inspected, this can be a very bad situation. I can not count the number of horror stories I have heard from people. Everything from a Nigerian guy getting a load of broken concrete instead of car parts, to the American that said he had this great relationship with the manufacturer and trusted he would do what he said.. until the guy shut down his factory after getting one large order. The guy took a huge hit.
8. Pray that what you ordered is what you get! This, of course, is not the last step that is needed in the product procurement and sales cycle. Products need to go out to the proper sales channel and then orders fulfilled to the customer. The pressing problems at this point are these… How many other people have jumped into the game on that product you just spent the last 8 months working on? Since you ordered small quantities, has someone entered the game that you have to compete with on price? Can you?
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