There’s a giant elephant in the room that few in the e-commerce sector dare to talk about.
Those who do, don’t have a clear solution to the increasingly hard-to-ignore problem.
I’m talking about the industry’s complicated reliance on China as its main sourcing location.
Whether you’re selling on Amazon FBA, Shopify, or WooCommerce, odds are very high
that you’ve sourced some, if not all of your inventory from China.
The reason is simple. It’s cheap, which means higher returns on your investment.
But for various reasons, some folks are a bit uneasy about purchasing items from the Middle Kingdom in 2023, and are looking for alternative countries to do business in.
Large corporations share their mindset.
Apple, Samsung, Google, Nike, and Amazon (just to name a few) have all decreased production investments in China over the past couple of years.
And for e-commerce businesses that rely on Chinese suppliers and labor, this could be a colossal problem.
But I’ve said it before…business is just problem-solving.
But before I get started, here’s a fair warning. Global supply chains and geopolitics are extremely complicated and constantly changing.
That being said, I’m no expert, so take this with a grain of salt.
However, there are some interesting trends that we can follow to best predict where the next Amazon FBA sourcing hotspots will be.
Vietnam
Vietnam has a few clear advantages in terms of increasing its manufacturing output.
First, Its relatively young average population means a large labor pool of workers to supply the sector for decades to come; As of 2023, 70% of Vietnamese are under 35 years old.
This is in stark contrast to China, which is one of the world’s most rapidly aging countries, with a shrinking percentage of eligible workers to fulfill jobs. This may have been a result of the country’s 35-year one-child policy.
Second, Vietnam’s recent tax-friendly trade agreements with over 80 countries, in addition to its recent spike in industrial land prices, hint to me that they are ready to do business, and are preparing for the increase in foreign investments.
Furthermore, Apple, Adidas, Samsung, and Nike have all moved portions of production outside of China and into Vietnam in recent years.
In fact, recent Airpod models have indicated they were “Assembled in Vietnam.”
I predict the trend to persist. And as Vietnam continues to welcome industry making the exile from China, and as the country sees more domestic growth, there are sure to be loads of promising sourcing opportunities.
I’ve also personally visited the country, and highly recommend experiencing it sometime!
India
Just like Vietnam, India is absorbing some of the fleeing business from China.
Even tech giant Apple has recently discussed increasing iPhone production in the country.
With a highly educated, technologically literate labor force, it makes perfect sense for businesses to consider India as a cost-effective alternative to China.
However, India’s infrastructure is decades behind where it should be to support an increase in manufacturing output, which currently only accounts for 14% of the country’s GDP.
Luckily, there’s already a handful of Alibaba-ish websites to buy wholesale from India to hold us over.
Mexico
There’s a slight distance barrier between Amazon FBA warehouses and China.
And because there’s no shortcut to getting around the Pacific Ocean, goods purchased from overseas are subject to often high shipping costs, and typically take around a month to reach the U.S. (if you’re lucky).
But the events of 2020 disrupted global supply chains enough for the U.S. Walmart outlets to realize that it was cheaper and quicker to order employee uniforms from Mexico than it was to purchase from their regular supplier in China.
Fast forward to 2023, and Walmart (as well as other companies) have all invested heavily in Mexico, with a company spokesperson claiming a portion of recent investments were to “make its supply chains less vulnerable.”
The term “near-shoring” has popped up online to explain the move.
Here’s what it means; companies in the U.S. are scared of what’s happening across the Pacific, so they’re moving facilities closer to home.
But what does this mean for sourcing products for Amazon FBA?
Hopefully increased sourcing opportunities for more high-tech, high-quality products without the insane shipping fees.
Truth be told, Mexico has always been a manufacturing hotspot; and is one of the world’s top producers of automobiles, for example.
On top of that, they also have a thriving domestic electronics sector and have been producing electronics for American companies for decades.
But up until recently, Chinese labor was always cheaper than Mexican labor. But as Chinese labor costs have increased, and geopolitical tensions are on the rise, it’s safe to in assume more industries will be relocating south of the border.
But How Can We Actually Source from These Places?
So now to the other elephant in the room.
How do you actually source products from these locations without an Alibaba alternative?
In short, you’ve got to network.
Whether you do that organically, or through a paid resource is up to you, but here are a few pointers to get you going.
#1 – Begin looking for English-speaking Facebook groups/forums in and around major cities, manufacturing hubs, and ports.
For example, if you’re looking for business opportunities in Ho Chi Minh City, Vietnam, search Facebook groups for “Entrepreneurs in Ho Chi Minh,” or “Whole Sale Suppliers Ho Chi Minh City.”
You’ll have to get creative with the search parameters, but you get the gist.
Start sending messages, emails, DMs, etc.
Odds are there’s some kind of English-speaking network that already exists, and it’s just a matter of diving deep to find the inside information.
Feel free to do the same with Google, Instagram, or any other search engine, but I’d start a bit less broad.
#2 – Find a sourcing agent
Sourcing agents are usually paid resources that connect you with a supplier.
I’ve used them in the past with varying degrees of luck.
I tend to avoid them because it’s effectively just paying a middleman, which I hate. And I’m not going to lie, finding a trustworthy agent is like looking for a needle in a haystack.
A quick Google search will show up some options, and you can also find sourcing agents on Freelance websites like Upwork.com (Make sure to read reviews!).
Just be sure to read reviews, and proceed with caution.
#3 – Boots on the Ground.
Don’t underestimate the power of an in-person relationship.
Booking a flight to an exotic land to source Amazon products might sound like a low-budget movie plot, but it could yield profitable results.
It’s a tax write-off anyways.
Successfully selling on Amazon takes much time, patience, and money.
So you want to make sure your valuable resources are going to good use.
Learn how my Amazon Wealth Accelerator can streamline your Amazon FBA journey without all the costly and time-consuming mistakes.
