#572 - Avoiding Pitfalls In Sourcing & Importing

Serious Sellers Podcast: Learn How To Sell On Amazon FBA & Walmart

Join us as we explore crucial importing and inventory management strategies with Afolabi Oyerokun, a seasoned Amazon seller with over 20 years of experience. Afolabi takes us through his remarkable journey from Nigeria to the United States, where he transitioned from fashion design to computer animation before making his mark in e-commerce. Discover his insights on avoiding costly pitfalls when importing products from overseas, managing inventory effectively, and ensuring you don't run out or overstock.

In this engaging episode, Afolabi shares essential tips on navigating U.S. customs seizures and maintaining effective communication with overseas factories. Learn about the common reasons for customs stopping a container and the importance of accurate documentation to avoid severe penalties. He also highlights the risks of using email for factory communications and suggests using platforms like WeChat to prevent scams. Plus, get the lowdown on labeling requirements for imported goods to ensure compliance with U.S. and Amazon regulations.

Listen in as we discuss the critical role of third-party logistics (3PLs) in maintaining a diverse and efficient supply chain, despite Amazon's introduction of its AWD. Afolabi outlines the strategic advantages of using 3PLs for fulfilling orders across multiple marketplaces and offers practical tips for optimizing shipping. Additionally, we emphasize the importance of compliance with Customs and Border Protection (CBP) regulations and introduce a new tool to help track and ensure compliance with U.S. government regulations. Finally, get to know Afolabi a little better as we share contact information for his services and enjoy a light-hearted exchange about Nigerian cuisine.

In episode 572 of the Serious Sellers Podcast, Bradley and Afolabi discuss:

• 00:00 - Importing Products From Overseas
• 03:54 - From Fashion to Tech
• 10:17 - Avoiding Customs Seizures in Online Selling
• 11:20 - Customs Seizure, Communication, and Mold Ownership
• 22:45 - Factory Confiscates Mold During Dispute
• 25:27 - Supply Chain Visibility and Customs Compliance
• 28:52 - Importance of Taking CBP Seriously
• 31:06 - Online Contact Information for Tariff Services3

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Transcript

Bradley Sutton:

Today's guest has got tons of strategies to help you avoid potential pitfalls that would be extremely costly when importing products from overseas, but he's also got a wealth of experience since he started selling on Amazon over 20 years ago. How cool is that? Pretty cool, I think. Hello everybody and welcome to another episode of the Serious Sellers Podcast by Helium 10. I'm your host, Bradley Sutton, and this is the show that's completely BS-free, unscripted and unrehearsed. Organic conversation about serious strategies for serious sellers of any level in the e-commerce world. And it's funny for the first time in like 570 episodes, I was recording an episode last week and then noticed that the recording wasn't working, so we're having to start all over again. So thanks to our guests for being accommodating, but at the same time, thanks to my terrible memory, I think I already forgot most of what we had talked about already. So it's going to be still new for me, just as it is for the audience right here. So, Afolabi, welcome to the show. How's it going this morning? Thank you again for coming on for a second time.

Afolabi:

I'm good. Thank you, Bradley, for having me over. Thanks a lot, I'm excited.

Bradley Sutton:

Awesome! Now we were talking about where I'm from right before this call, where I'm at right now. Where are you in the United States right now?

Afolabi:

I'm in Pennsylvania. I'm sitting at a 3PL here in Eastern PA.

Bradley Sutton:

Ah, so this is not your home, this is like where you work, your office.

Afolabi:

Correct. This is our office.

Bradley Sutton:

And where were you born and raised?

Afolabi:

Born in Nigeria, West Africa. I came into the US this January of 97.

Bradley Sutton:

Ah, okay, now hold on. This is something new already we didn't talk about last time, because this weekend I was at a church event and I met somebody from Nigeria and maybe I'll throw a picture up of that. But I asked him I'm a foodie, so I ask him if I find a good Nigerian restaurant here, what should I order? And he said something let's see if this is what you suggest too. He said fish, pepper soup. So is that a great cuisine that I should try for Nigerian food?

Afolabi:

Fish pepper soup is good, beef pepper soup is good and then you can. If you like rice, you can eat jollof rice. I love rice. It's spelled j-o-l-l-o-f. It's a traditional, uh, very nice, uh tasting rice. But I have to caution you on the fish pepper soup. If you don't like hot, spicy food, don't.

Bradley Sutton:

That's no problem. All right, the rest of the audience, you guys, beware. Me, I don't have to worry about that I love hot spicy food. So that makes it even more. That makes it even more exciting for me to taste it.

Afolabi:

Good.

Bradley Sutton:

All right, excellent. Anyways, we're not here to uh to talk about food. Otherwise, yeah, my diet is day one today and I'm already going to lose out on that if I get too hungry here. But let's talk about, let's go back more to your origin story. So did you attend university in the United States or back in Nigeria?

Afolabi:

Yes, so I had some university in Nigeria and then I transferred and came here to New York at the Fashion Institute of Technology, F.I.T. as everybody knew it, and I majored in fashion design for my first two years and then the final two years was in computer animation and interactive media. Weird right?

Bradley Sutton:

Yeah, that's a big contrast. Some people say oh, what's your major? Oh, I'm majoring in business and I minor in management or something like that or maybe a language, but your double major was IT and also fashion. So how did you end up like, what was your first dabble in e-commerce and what year, and what did you do?

Afolabi:

I did some little freelance work here and there, and then I came up with the shoe designs while I was doing freelance for a company in New York.

Bradley Sutton:

And there's your fashion design coming in already. I like it.

Afolabi:

Now, bear in mind, I did not do shoe designs, I didn't do footwear designs when I was doing fashion, but I just liked all these Nike shoes and all these really cool shoes. I was just inspired. So, I started designing my own shoes. And now, when I had a computer full of shoe designs, now the next stage is how do I make these shoes? So, I was looking all over. I couldn't find any shoe manufacturer, and then I sent inquiries out. Those were the days Alibaba was just coming up. It wasn't very popular at all. Anyway, I found some Mr. Johnson somewhere in Taiwan that replied to my email and it's like no, you have to come here. We can make your shoes, but you got to come here. I'm like okay, whatever.

Afolabi:

So I went to Taiwan with the last dollar in my hands. I didn't even have money for the hotel. My host had to pay for my hotel. So I went to and they didn't know I didn't have the hotel. They were just being, you know good host. So I went to Taiwan, met with Mr. Johnston and that was the beginning of me making my shoes. And after I made the shoes, I you know my wife reached out one way or the other. She reached out to Amazon that you know Amazon was just getting out of selling books, only to start it. They just opened up the platform for.

Bradley Sutton:

When was this? Early 2000s?

Afolabi:

2002.

Bradley Sutton:

2002.

Afolabi:

Yes, so that was 2002. And Amazon. You know, some rep in Amazon said oh wow, we like these shoes. You want, would you like, to come on board our platform? Like, yeah, I don't have any other choice. You know how come? You know? So I, uh, I started selling those shoes there and they were doing really good until we realized that they were made too small, they were like a size smaller and uh, by the way, these are some of the things, things I shared in the model, you know, in the Freedom Ticket. For people that are listening, you know, I would say for them to go get that and listen to my full story there.

Bradley Sutton:

Okay, interesting, all right, so now was that? So then Amazon kind of became your main income in the early two thousands? Or were you also selling online, or how? How did you end up, you know? Cause you're down to your last dollar when, when you got started here. So what happened?

Afolabi:

So, I was selling on Amazon but it wasn’t, there was no FBA right, so we were fulfilling it by ourselves. It was so hard and I had a side gig which I was doing, you know, graphics and web for people on the side, and I went to a footwear show in New York. It’s called Fanny, F-F-A-N-Y. And I met some people and they were like “How did you make these shoes?” And I told them and they said, oh, can you make us shoes too? So I started doing consulting for other individuals that want to make their own shoes. So that's how I kept on keeping the body and soul together while I was building the brand on Amazon and when the shoes were made small, so we started getting a lot of returns, people saying, oh, I have to return this and buy a higher size. So people were returning it, they'll buy a size eight, They'll return it and buy a size nine. And it was just a nightmare and I couldn't take it. So I found a liquidator or some guy out of Florida and he bought all my inventory and that's how I ended that part to sell off all my inventory.

Bradley Sutton:

So then, but now you kind of found out that, hey, I've got a thing for this, you know design, I've got a thing for importing. This is maybe something I can help out with.

Afolabi:

Correct.

Bradley Sutton:

And then, was that the kind of start of your consulting company?

Afolabi:

Yes.

Bradley Sutton:

That you've been doing ever since.

Afolabi:

Yes, so that's how sourcing and logistics started for me. I started sourcing for a lot of companies providing logistical support and then somehow, in 2014, my friend you know came to me and said, hey, let's sell on Amazon. I'm like I've done that before. You know, it was too hard. He's like no, no, no, it's different now. You know they have something called FBA. I said what's that? He's like no, they'll fulfill the order for you. You just ship it to their warehouse. They'll do the pick and pack and ship them. Oh, that's easy. So we came up. He came up with some cool designs and signs and banners and school supplies. So that's how we went back into Amazon. We were selling craft vinyl, we were selling anything we could lay our hands on. It was so easy to rank, it was so easy to launch. Those were the days that viral launch was also, you know, getting started and stuff. And so we were. We were growing really fast because, you know there was there were no competition. You know people hadn't woken up to Amazon. So selling on Amazon became our main income at that time.

Bradley Sutton:

OK, all right, interesting. Now you reference that you're in in Freedom Ticket. So, yes, anybody who has a Helium 10 and has a Starter plan, Platinum plan or above has full access to our full Freedom Ticket course, which is more than 20 hour course with every aspect of selling online that you would need and Afolabi 's module is under compliance and risk management. It's called mistakes to avoid when importing products. We're not going to do the whole thing today, but I want to give some highlights from here, just so that people can understand some of your expertise and you can go ahead and help people out with some things. But my first question is one of the things that you mentioned in your module was about custom seizures and how people can avoid that. So, first of all, what is a custom seizure? Sounds very dramatic. And then how can people avoid? Or, you know, nobody can 100% fully make themselves foolproof, but what are the things that people can do to make that less likely of happening?

Afolabi:

Yes, correct, thanks. So custom seizure is when the US customs just flags your container or flags a container containing your product for examination because they're suspecting something. It could be randomly done, or it might be that your freight forwarder or your broker has been under their watch list and they want to start looking deeper into all the imports that this cheaper or freight forwarder has been doing. So they would stop your container for examination, so they'll bring it to a yard and they will open it up and see what's in it. Now you cannot really protect yourself from being, you know, spotted or from your container being stopped, but when it gets stopped, that's what you can protect. What happens after it gets stopped is what you can protect. You can, you know, can help yourself out. Some of the things that make customs stop a container could be you're importing from a factory that has a forced child laborer. You are importing products under the anti-dumping laws or countervailing laws, whereby it's almost like you're smuggling those products because the quota for those products is already filled out and you're still bringing in those products. They don't want you coming to flood the US market with those products. Above all, the most annoying one is the False Claims Act, which is you're not paying the right duty. You are falsifying your duty classification of your product so that you can pay the lower duty. You are bringing in a pencil and then you're lying in your. It may not be you. Actually it would be your shipper. Unknowingly to you, your shipper may be falsifying your customs form to declare a lower value, or you're declaring a lower value than the amount you ordered the product for. So these are all the things.

Afolabi:

For me one time that my container was stopped and it was actually destroyed. The problem was that I had been ordering this giant industrial product for a long time and one time it was stopped at the port of Jacksonville and they looked at it. They said there was the power cable. Can you imagine the power cable that has the UL logo on it. They wanted me to prove that the cable came out of a UL certified factory. And then there's another capacitor in that product that has the logo CMA on it, which is a big association. And I went to my factory. I said, hey, you know my container was stopped. Can you send me certification and proof that your factory is a member or is approved by UL and you are also authorized to use the CMA logo and they ran away. They disappeared.

Afolabi:

So I told the customs can I come and just stick all these things out and I can cut out the cable. I can do this. They're like nope, it's going in the trash. So the whole container about who knows 50,000 worth of product was trashed. On top of all the penalties, examination, demurrage, all manner of fees climbed on top of it. So if I had falsified the document and say, oh, I'm bringing something else that is duty-free, the penalty would have been a lot severe. So those are some of the things you should watch out for as an importer. Make sure that you're using the right HTS code, the right tariff code, to correctly declare your goods, so that they will not penalize you under the False Claims Act.

Bradley Sutton:

Now, another thing you mentioned was that you do not suggest that anybody communicate with their factories using email and instead another means. So why is that? And then what? How do you think people should be doing 100% of their communication with their factories?

Afolabi:

Great, well, I learned that from experience. So I was using my Gmail account to talk to my factory. I didn't know that there was a scammer that intercepted my factory's email as acting to my factory's email, as acting to my factory's email address and hijacked our conversation. So all the while I was talking to the scammer, I didn't realize it was the scammer, because he was impersonating my factory through email and I was able to send money to the scammer. The scammer changed the bank account on the invoice and everything and I sent the money to him, not realizing that it was a scam. If I had been communicating with my factory through WeChat, I wouldn't have fallen for that, because from the very beginning of my conversation now when I'm talking to factories, I take it out of Alibaba, I take it out of every platform and I put it in my WeChat. That way, before I even start talking about sending money or whatever, I already have a communication directly with the factory from my WeChat. So if anybody hijacks that, I would know I will double check through WeChat. I can double check through both emails and WeChat and I also secure the transaction with the Alibaba trade assurance.

Bradley Sutton:

All right. Yeah, that's crazy. Your email might have been secure but not the uh. You know not the uh, not the suppliers there, okay. So, yeah, we chat is the way, uh, to go. Now, another thing that sometimes I struggle with and then you talk about in your module, is knowing which labels is a requirement of the country and then also what's requirement of Amazon. So, for example, united states at what? What kind of bags need that? No suffocation like, is it only a bag that has an opening, but if it's fully vacuum sealed bag, it doesn't. Or explain when I need to have that, that, those child warnings on my bagged products coming from China.

Afolabi:

Well, uh, for safety, I just put it in, uh, all kinds of anything. Anytime I'm bringing a product that has bags in general. Uh, I know for Amazon it has to have an opening that you put the product in. It's not like those uh uh bubble bags, but it is a bag you open and put a product in. But me, just for the sake of sanity and safety, I just put it on anytime. Anytime I'm bringing the product.

Bradley Sutton:

What does it say? What exactly does the label say that you're putting on these bags?

Afolabi:

Yeah the suffocation. It's a generic suffocation warning which you can find the text anywhere online.

Bradley Sutton:

All right, so that's important too. Another thing that was new to me that you talked about was mold ownership. Now, me, I don't have any molds, or actually I do for a couple of accounts. But obviously, project X, we know, we're doing egg trays, we're doing, we're doing, you know, coffin shelves and things like that Wooden products. It didn't require a mold like for plastic product. But a lot of people, when they're making original designs or you know, brand new product, that requires tooling and molds. Hey, this is a kind of a big investment at the beginning. What are some things that that sellers should avoid? Because one thing that you know some people might think is logical is well, maybe we can split costs or with the supplier on this mold, but you actually said that's not a good idea, right?

Afolabi:

Yes, correct. So when your, when your product involves or requires a mold and the supplier says, well, you know, we can share the mold cost with you, you know, so that we can make it easy and cheaper for you to get into production, it's a no-no, because the moment they share the mold cost with you, they jointly own that mold and you're bind and married to that factory forever. If you try to move that mold, they'll say no, it's our mold too. We paid for it together. Another thing is to always have a mold ownership agreement when mold comes into play, have it in writing, both in Mandarin and English or Cantonese and English, and say I own this mold and I can take it anytime I want. I can move it to any factory. Okay, what if this factory gets into trouble? Or what if they run out of capacity and they can't even? They don't even have the capacity to fulfill your production anymore. What are you going to do your stuck? So it's better to always have that clause in your mold that you own your mold 100% and you can take it anywhere you want.

Afolabi:

Another thing I tell importers or product innovators is that when you're doing mold, make sure you don't ask your factory for their input on your design, you say, hey, what do you think? This is the way I want to make this product. What do you think? The moment your factory contributes to your designs, then by Chinese law they are co-inventors with you. If they're co-inventors, they have legal claims on your idea and they can sell it to whoever they want. They can make that product for anybody they want because you jointly developed it together with them. So you got to be very careful on contribution or collaboration. You don't collaborate with your factory. Hire your own industrial engineering or structural engineer or whoever, and you guys talk about it, come up with your product and then you give it to the mold maker. Sometimes people use their factory to negotiate the mold. I don't do that, honestly. I take my molds to the mold maker. I go to a mold maker to make my mold and then I bring it from the mold maker and I bring it to the factory. Many factory will want to say, oh, this is our mold. It's $2,000 for the mold. You don't know where they made the mold from. And if you don't have the connection to the mold, how would you retrieve the mold. If something falls apart between you and the factory, right, they would tell you where the mold came from.

Afolabi:

I actually had a situation and this is one out of a million whereby we made a mold and we stopped production of that product and the factory thought we were going to move the production to another factory, but that was not the case. But he's like no, I'm not going to release this mold. We were like but we paid for it, it's ours. He says I know, but I'm not giving it back. Why? Because this mold was made from a mold maker that we don't even have a contact of, so we don't even know how to reach this mold maker. Only the factory knows how to get to them. And they said nope, we're not telling you nothing, we're not releasing the mold. We went back and forth. They said okay, we can pay you for the fraction of the mold. I'm like why would you want to pay us for the mold? We don't want you making it for anybody else. They said nope, we will pay you $600 and we'll take the mold. We're not making it for anybody, but we need to safeguard it, we need to make sure it doesn't go. I'm like that doesn't even make any sense. Yeah, we, we, unfortunately, we had to abandon the factory, abandon the mold and just get out. But the, the, the confiscated the mold. They did not release it.

Bradley Sutton:

Wow. Okay, so that's definitely something to keep in mind as well. Let's switch gears and talk about stuff that's not in your Freedom Ticket module. For the rest of what you're talking about there, the Freedom Ticket students definitely can and should go check it out, but I didn't even know until today, for some reason, that you also did the 3PL services. Now, since you said that you're in a 3PL right now you know, in 2024, obviously the biggest change you know you've been selling on Amazon for 20 years, but, uh, probably you'd agree that one of the bigger changes that Amazon sellers are worried about this year is the new um fees. You know, like, of course, we've got a high return product rate fee and there's also uh, but now there's inventory fee, low inventory fee, and then the big, the big one that affects literally everybody using FBA is the inbound cost when you are inbound placement fee. So, as a 3PL, what you know more than just one seller who only has their situation, you're dealing with many, many sellers and who are all navigating these things differently. Yes, what's the consensus Like? What are your clients doing? What are you suggesting to them to do in order to help alleviate the cost of these new fees? What are they doing differently than they did before these fees?

Afolabi:

Well, we have different customers that have unique situations. Many people think that when Amazon came out with the AWD, which is the warehouse distribution, that they go ahead and fire their 3PL. We don't need 3PLs anymore and stuff like that. But they're learning more and more that I think it's Amazon's way of controlling and maintaining visibility and shutting you out of visibility, where they kind of control your whole entire supply chain. So if you're selling in other marketplaces, I still feel that you need your 3PL for you to be able to diversify, sell at Walmart, Ebay, whatever anywhere else, Shopify your own store to be able to fulfill from all those places. I know Amazon wants to fulfill those places so that you can get access to your customer data, but I want to maintain visibility. But in terms of fees placement fees I know even the AWD is not for all products, it's only for a certain small number of you know product catalog I still believe that if you can be sending your product, if you time it really well and you're watching all your inventory very well, I think you can be. If you're on top of it, you send, you know, maybe case basis or pilot basis or using freight like here we use a lot of freight for our customers and it saves them a lot of money and the products get there on time, because we have UPS freight truck come here every time and when they come here they take it straight to the depot. When they take it straight to depot, it ends up in Amazon within a day or two, so they're able to save.

Afolabi:

Also, if you want to use Amazon Freight from your 3PL, that's also advisable. What do I mean by that? So if you're shipping sometimes more than 10 or 12 pallets of goods, it may be better to just request for Amazon to send you an empty truck from their freight service. So you go to freightAmazoncom, they will send you an empty truck and you pay for everything you fill that truck with. So the truck rate could be 750 bucks or 600 bucks, depending on where it's going to, but they send you that truck. You could fill it with either 15 pallets or up to maybe up to 26 pallets or something. It's the same 750 bucks, which saves you a lot of money when you're, you know, shipping your products to all the fulfillment warehouses. So that's what, uh, that's my number one way. I would, you know, number one thing that I'll tell uh uh sellers to make sure they're able to consolidate and sell box shipments in chunks like that. If you're not that big, you can just be sending. SPD is still okay, whereby you send a few boxes today, keep watching your inventory and then send another few boxes next week or two weeks time, based on your velocity.

Bradley Sutton:

What's your 30 or 60 second tip? We call this that 60 second tip of the day that you can give. You know you've been giving strategies throughout this whole episode, but if you were to have a quick hitting one that you think people should be following, what is it?

Afolabi:

What I would think would be good now is it's not sexy, but it's very important and is to start taking the CBP, which is Customs and Border Protection, to start taking them seriously, because they have started to check all these cargos, especially coming from China. They already know that people are rerouting their products. They already know that people are falsifying their documents and stuff like that. They're clamping on forced child labor a lot. I was just talking to somebody last week and his product had been stopped since December because one component in his product was made out of a region in China that was known for forced child labor and for that they sent his container back to China after detaining it for many months. They had to send it back and I see that popping up in Mexico as well.

Afolabi:

So start taking CBP seriously in terms of check with your broker. Check that your products are compliant to US government regulations. We're actually rolling out a product this end of this month that can actually help you track all your products and cross check it across all governmental agencies. If your supplier or if your product has something that the US government doesn't like, it will flag it so that can be found on a tariff terminator website. Very soon, like end of this month, you will start being able to track and monitor your ASINs to make sure that your risk of being stopped or your product being destroyed or being prohibited from coming into the US. You would be better prepared and know ahead of time to know all the watch lists, to be aware of the watch lists of all the people and factories and things that the government doesn't like, because it's not pretty for them to stop your goods and don't let it come in.

Bradley Sutton:

All right, Good to know. Good to know. Now, if people want to get more information from you or reach out to find out more about your services. How can people find you on the interwebs out there?

Afolabi:

So they can find us at honuworldwide.com or tariftaminator.com Tariff as in T-A-R-I-F-F-T-E-R-M-I-A-N-A-T-O-R. Tarifterminator.com, or Honu Worldwide as H-O-N-U Worldwide.com, or you can send us an email at savings at HonuWorldwide.com.

Bradley Sutton:

All right, Afolabi, thank you so much for coming on the show. I'll let you know what I think of the fish pepper soup and maybe we'll reach out to you next year to see what's new in your world. Knowing you, you'll probably be on five different things already in this short year. So thank you so much for sharing your knowledge with us.

Afolabi:

You're welcome. Let me know how the fish pepper soup tastes. I always want to. I'm curious.

Bradley Sutton:

All right, All right, I'll let you know. I'll let you know.