[0:00]Hey everybody, this is Tim Jordan, welcome to another Amazon Armory video where we're teaching you how to sell better on Amazon. In this video, we're talking about Mexico. In this video, I'm going to be talking about kind of my dream for sourcing in Latin America. I'm going to be talking about my experience a little bit sourcing in Latin America. I'm going to talk about some of the things that are contributing to the interest and that at the end of this video, I'm going to roll all of that together into my actual opinion for whether or not you should be focusing in there. So make sure to watch to the end. Here we go.
[0:33]So several years ago, when I was sourcing a lot in China, you were never going to convince me that you are able to replace China as the sourcing, you know, kind of hot spot of the world. China just makes a lot of stuff. There are things that you can get there that you can't get anywhere else, but I always had an interest in sourcing for Latin America, largely because I felt emotionally connected to the, to the region. Right? I had spent a lot of time in Honduras and Guatemala and Nicaragua, and I really wanted to help this under-developed economy and under-developed region, especially as politically, it was kind of a hot topic for, you know, the Guatemalan and Honduran migrant caravans and the border walls and all this stuff going on. And I wanted to help our neighbors to the south, and I firmly believe and I still believe that one of the best ways to do that is actually empower the manufacturers and empower the creators and the artisans there to boost the local economy and help businesses grow. Right? Foster growth that would help create income for families. But I also knew there was a big opportunity to sell products from those areas, and I knew a lot of that was going to have to do with like the stories of the products. Look at a brand like Tom shoes. Tom shoes is just a canvas pair of shoes. It's not a real special pair of shoes, but it has the story to buy a pair, give a pair where they give a pair to somebody in a different country that's less developed, right? And it's a great story, it's great branding and people love Tom shoes now. And I thought to myself, how can I make this work? How can I take some of the products that I want to sell or maybe find new products, source them from an area like this? There will be some advantages like shorter lead times, maybe and shorter shipping times and I can run down there and meet my manufacturers in like a four-hour flight instead of a 24-hour flight sometimes to China. So I started a mission to actually source down there. Now, you can read some of my other content or watch some of the content and learn a lot about what I was doing in Guatemala, actually had a company down there sourcing products. But that mission still has not changed, that mission of utilizing our neighbors to the south for manufacturing to create unique products, unique stories and that add to the brand value and kind of create another opportunity to continue doing business. Now, one thing that's interesting is that my, I don't know, desire to work with manufacturers in that region came maybe one or two years before a large global discussion about sourcing in Latin America. Now, I've learned that Central America and the countries down there in Nicaragua, and Honduras, and Guatemala, and some of those countries are a little bit harder to source from because the, I don't know, maybe the infrastructure is not as developed. There are still some great opportunities down there. But one of the hot topics that's come up in the past year has been Mexico. Now, Mexico is a much more developed country than some of the Central American countries. And they have a lot more infrastructure, they have a more robust power system, they have a little bit more secure banking situations, they have more money invested. It's just a bigger country with a lot more capabilities. So when the first of Trump trade tariff wars and and trade wars started going on, and then the global shortfalls of the logistic system, right? We think about what's happening in China with COVID with not being able to ship things out of China or Asia, and raw materials coming up short in China or Asia, it gave us an opportunity to start thinking about sourcing from somewhere different. Right? Where else can we source products that we can get quickly, that are not going to cost an arm and a leg to manufacture like some other countries in the world would would charge us like Japan or even in the US. But how do we actually find these products? So all of these changes to the economy, to the importing process, to the cost of import and the cost of manufacturing, have led a lot of people to talk about Mexico. Can we source from Mexico? Do online sellers and e-commerce brands and Amazon sellers need to be sourcing from Mexico and everybody's asked this question, it's a huge question right now. I have come up with some things that need to be considered, right? I can tell you some of the pros and cons, I can tell you some of the things that we need to be considering, some of the things that I've learned, and then towards the end of this video, I'll actually give you my opinion. Now, the first thing you need to recognize is that not everything can be produced in Mexico. Where China has some really, really great capabilities for producing things like synthetic materials, rubbers, latex, silicones. They can do electronics, they can do heavily machined items very inexpensively. Mexico is just not quite there yet. See, Mexico is behind maybe by a few decades on small businesses capabilities to produce very technical products. Now, are there large manufacturers that produce very, very high-end, high-tech, very refined products? Sure. Most of the engines for Ford cars in the US are actually made in Mexico. Like that's a very technologically advanced and heavily machined item, but the smaller businesses that want to work with us, we're also small businesses, the smaller, the more customization. Right? The kind of one-off type purchases. They are just not as developed right now, right? They don't have the machinery, they haven't built the infrastructure, so we're limited on the types of products that we can be sourcing out of Mexico in smaller quantities like e-commerce sellers would. Some of those product categories include things like agriculture, right, which might not be great for Amazon sellers. But agricultural products, um they are doing a lot of supplements, they're doing a lot of things like food and they're doing a lot of things like beverages. That's coming out of there, not great for Amazon, but the things that are great for Amazon are things made of leather, of wood, of textiles, specifically cotton but a lot of uh other products too, a lot of nylons, a lot of polyester, a lot of synthetic materials. There are a lot of products coming out of Mexico right now that are cotton and even organic cotton, which are really, really cool. You can get metal products. They're just not going to be like highly refined items usually, they're going to be like more rustic or maybe more home decor related. So if you think about all those different products, the wood, the leathers, the ceramics, the textiles, there are so many different products that can be made down there that fall underneath those kind of product categories based on material type, there are huge opportunities. Now, I have not had any success sourcing electronics or a lot of the silicones, a lot of the, you know, highly refined synthetic materials. You can get some rubbers, you can get some injection molded plastics, but typically what I've found is the manufacturers that have those capabilities are in such high demand right now, I can't get in and I can't get an order into them and I can't get them excited about my order, even if it's 3, 4, 5,000 pieces. So that being said, there are huge opportunities with the types of products that we can source from Mexico to actually go down and source from Mexico. Now, one of the problems that we have, or I guess second problem is, how do you find those folks? Finding the manufacturers in Mexico has been extremely difficult and the only way that I've found so far is to actually use sourcing agents. Right? These are people that have personal relationships, these are people that have networks and roller decks is full of people. They have a network because there's not a big, I don't know, manufacturers platform like an Alibaba or a global sources or even like a Thomas Net here in the US. It's just not there. So you have to build up personal relationships. The other thing that I've noticed is you have to be very, very careful about culture. I do not speak to a Latin manufacturer the same way I would speak to a Chinese manufacturer. I need to be more personal, I need to be more friendly, and I need to be more sensitive to the manufacturers in Latin America, largely because they are, and I say they kind of generically, I'm I'm using some stereotypes here, but they're based on the largest sampling of experience I've had. But they are less likely to trust somebody because they have more likely to have been taken advantage of. And what I mean by that is North Americans or or people in the US, gringos, have historically used Latin America as inexpensive labor without seeing it as a true partnership. See, a lot of manufacturers in China understand a relationship with their buyers like in the US or Europe. It's a partnership. They need each other as much as they need the other one, right? I need my manufacturer, my manufacturer needs me. But for a lot of different reasons, and I won't get into politics and socio-economic situations and things like that on this video, but for a lot of reasons, gringos or companies or business owners in the US have frequently used I guess the willingness to find new business or the need to find new business with Latin American manufacturers as a way to negotiate prices down very, very low, to take advantage of their willingness to customize without maybe a higher ROI.
[9:05]And then a lot of times what will happen is the companies that are sourcing these products will make these manufacturers go through a ton of, you know, work and testing and validating and prototyping to just not get the order, right? Because maybe they're reaching out to lots of people or they just decide, hey, I don't want to end up sourcing this product. So for a lot of different reasons, these manufacturers are having a hard time trusting, especially companies that want a smaller MQ that are e-commerce style, largely because there is this kind of idea of being to take advantage of, but also there's not familiar enough with the e-commerce businesses model. Right? If I'm starting a product to launch, I might only order 1,000 units and I'll tell them, hey, if we can get this 1,000 units in and the price is good and I can sell them for a profit, then my next order might be 3,000, 5,000, 10,000.
[9:47]That's hard for them to swallow because it's something new to them.
[9:54]So as people are continuing to educate, especially the smaller manufacturers in Latin America, and as other brands are starting to source and create kind of a, I don't know, a case study and give some information and give some data and some trial bases for, you know, the way these types of relationships can work. Until that finishes happening, it's still very hard to find a manufacturer, get a manufacturer to take you seriously unless you've got personal connections. So sourcing agents, personal connections, or potentially going to some trade shows if you can find them in Latin America, which right now has been pretty tough. All right, so those are two really big challenges is we're limited on the type of products that we can get. We're limited on finding a manufacturer, finding a supplier just because there's not a great deal of information or directories or platforms that you can find those. Now, some of the advantages are massive though. One is shipping times. I can get something produced almost anywhere in Mexico, put it on a truck and have it in the states within just a few days, which is a lot better than the, you know, 25 days all the way up to three months that's happening out of Asia right now. We also have very, very low tariffs and duties for products coming from Mexico specifically right now. So a product that may have been hit by very large tariff or duty coming from China, could be nearly free, if not free, coming out of Mexico or Latin America, which is huge, it can save you a lot of money. The other advantage is you can keep a relationship with your supplier kind of easier because you can jump down on a quick flight to Mexico, much easier than going all the way over to Asia if you're from Europe or from the US. If you're in the US, most places, you can be to Mexico from large cities in three or four hours, which is great. You're also in the same time zone, so communication is very, very simple. And as manufacturers continue to develop and evolve and grow in Latin America, they're going to be very, very used to supplying largely to the US, right? So the banking system, the payment system, accepting US dollars, all those things are becoming second nature. Whereas a Chinese manufacturer is still trying to juggle being used to serving buyers and brands all over the world, right? So, Mexico, I think it's a great partner for US brands. Another advantage that we have is lower cost. I'm not saying we should be taking advantage of very inexpensive labor, but in these developing countries, especially in Central America, and also to an extent in Mexico, labor is much less expensive in the US. There's less regulation from organizations like the EPA. There are less regulations from uh unions and all sorts of different, you know, labor laws and things like that. So I'm not saying it's good or bad, I'm just telling you, it does reduce the cost significantly to be sourcing from our neighbors down south. So now let me give you my honest opinion based on all of these things. I think that China and Asia cannot be replaced, okay? They cannot be completely replaced. However, some of your products and some of your manufacturing may be able to be replaced. If it is based in one of the materials that I mentioned or one of the materials that's readily available in Mexico or Latin America, Central America, you should absolutely start building a network, start building some relationships and start trying to find some potential suppliers for those products. I also believe that because it's easier to build a relationship, that it's actually more worth your time to invest in those relationships, in those networks, in those different co-cohorts of manufacturers, especially in some of these specific cities in Mexico, in Central America that work well together, right? Start building relationships with one and it could open you up to a network of others. I also believe that while it's difficult to source in Mexico and Central America and now, all right, it is, it's difficult. I believe that it's worth the time and investment because there is a lot of development going on in that part of the world. Small businesses are getting funding, manufacturers are teking up and scaling up and they're creating larger abilities to produce products. So as we continue to learn and grow, and sometimes it takes years to learn and understand a region and a manufacturing style and uh build a network. As we continue to learn and grow ourselves and that area of the world is learning and growing as well, we're going to be matched to have the best relationships, the best manufacturers and the best capabilities, going in the next maybe 10 and 20 years. And I firmly believe that if we invest the time to figure it out now, we place ourselves well ahead of our potential competitors who may in two or three years from now decide to start going there. So, again, my opinion, Mexico, it's hot. Mexico is coming. Mexico for a lot of people is already there. I'm already sourcing products in Mexico and Central America and I have been for a few years, but I do believe that it's worth your time trying to invest in starting that process of understanding it and maybe sourcing some products there, because as we continue to see development in that region, it will become a bigger, bigger hot spot for manufacturing. There's going to be a lot more competition and we want to be in the first. So I hope this video is helpful. I know that this isn't like a step-by-step walk-through of something, but I think that it's very, very valuable based on the questions that we hear. A lot of people ask us about this, and I have a lot of experience in Latin America. I've been sourcing there now for around five years. I had a company there, I had staff there, and it's a place that's near and dear to my heart because I think there is a lot of potential there for the manufacturers and for the economy to grow as well as opportunity for us as brands to be able to create unique products, maybe with good stories, with shorter lead times and based on tighter relationship to manufacturers than we may be used to having in Asia. So I hope this video is helpful. Make sure to hit the thumbs up if you like it. Make sure to subscribe to the channel if you're not subscribed, and make sure to check out the Private Label Legion Facebook group. It's a free community. Ask any questions that you have about potentially sourcing from Mexico or Latin America in general in that group of the Private Label Legion. Thank y'all. See you on the next one.
