The dream is to work from anywhere, earn passive income while drinking mojitos on the beach.
The reality is slugging over your computer for 10-12 hours a day, juggling various tasks, coordinating with logistics companies, suppliers, and figuring out how to market in between.
Aww, the life of an e-commerce entrepreneur.
The 4 Hour Work Week
After I read Tim Ferris’s 4-Hour Work Week I, like millions of other aspiring entrepreneurs, were invigorated and excited. To be able to outsource all of your business operations and works few hours a week while making money was the ultimate dream!
But how realistic is it, really?
Once I got into the e-commerce game and started dropshipping, I quickly learned that “passive income” isn’t so “passive” afterall.
I spent several months working 14-15 hours a day just figuring out how everything works—teaching myself all of the necessary skills to build a functioning Shopify store and driving traffic with Facebook ads.
It was a daily grind and exhausting at times, but I wouldn’t have had it any other way. You see, I was learning so much and most importantly, I was working for myself.
After 6 months of learning everything possible and having some success with my store, I was asked by a friend of mine, “why don’t you outsource something?”
I hadn’t really thought about it to be honest. I mean, that was the goal all along but through the process of learning how to do everything myself I had become quite a perfectionist—a trait that I’ve had since I was young. Giving up any part of my work seemed impossible and most of all, just frightening. I didn’t ever want to give up control.
What if they messed something up?
What if they upset a customer?
What if they made me lose money!?!?
But the truth was, I couldn’t afford to outsource and it didn’t make sense at the time. Sure, I was generating a few grand a month but I was also scraping by. Giving someone else the work I was doing on a daily basis would leave me slightly more poor and with less to do everyday.
It seemed like a bad idea.
I didn’t get my chance to live that 4 Hour Work Week quite yet.
Do As The Big Boys Do
When I finally got into Amazon FBA, I realized that people were building legitimate, 7 and 8 figure businesses with this model. This was no small “side hustle” for some of these people, but a full on cash generating machines.
I quickly realized that if I wanted to make this work, I needed to learn from the best.
After a few weeks of research, speaking with everyone I knew who was having success with FBA, I dove in and placed an order for my first product.
I won’t go into too many details here since I’ve already explained how I quickly learned my first mistakes with Amazon FBA.
Luckily for me, that first product was not a dud afterall. It ended up being seasonal and I had just launched at the wrong time.
Since then, I’ve launched 4 more products and noticed something.
It gets incredibly stressful trying to manage multiple aspects of this business.
To give you an idea of what this process looks like I’ll lay it out in steps:
- Find a product
- Track that product to determine demand
- Track competitors to determine market size and competition behavior
- Keyword research to determine search volume and ranking capacity
- Contact dozens of suppliers
- Track all supplier details—MOQ, price, lead times, payment terms, material, sample cost, communication style, etc.
- Determine if profitability and ROI is high enough
- Order samples
- If samples are good, negotiate price with supplier
- Ask for Proforma Invoice
- Draft Sales Agreement
- Both parties sign sales agreement
- Send initial payment
- Production begins
- Get expedited sample sent to photographer, negotiate, and coordinate design, photos, and overall branding for your listing
- Write listing using all of the previous keyword research completed
- Hire freight forwarder and get quotes for various shipping types (i.e. sea vs air)
- Production completed
- Hire product inspection company
- Product inspection passes
- Send final payment to supplier
- Get all carton information and create shipment plan in FBA dashboard
- Send all carton labels to freight forwarder
- Pay forwarder
- Pray that your shit doesn’t get lost or broken in transit
- Upload photos to listing
- Plan launch with PPC, giveaways, etc.
- Make $$$$$$
Okay, I don’t expect you to understand all of these steps but just wanted to show you a rough breakdown of MOST of the steps involved in the FBA process.
The first time it’s overwhelming but now it has become second nature. However, what I realized is that certain steps take up a HUGE amount of my time.
So, why not outsource this?
Can you guess what part this is?
Yes, you guessed it.
The most time consuming thing for me was locating suppliers, negotiating and communicating prices, sales agreements, and shipping.
I figured if I could free up this one thing then I could move at 4x the speed!
So, I reached out to my friend who runs his own sourcing company and asked how he hires his employees. Because he has a full Chinese staff, they post to the Chinese job boards and often hire college students who are studying Business English.
Luckily for me, they were hiring at the moment and he forwarded a few of his applicants my way.
I was a bit nervous at first as I have never had to interview someone for something and didn’t know what to expect.
I sat down and thought of a list of things that a potential candidate should be competent in.
The main ones I came up with were:
- communication skills
- relevant experience
- willingness to learn
- positive attitude
- enthusiasm about the work
It’s funny being on the other side of this as I remember preparing months for some of my interviews in New York City. Being older now, I see how it would be so easy to crush an interview when you know the position well.
Anyway, I ended up interviewing 10 people but two stuck out. Both had relevant experience and seemed professional.
I gave them both a two week trial and in the end one excelled.
My decision was made based on the fact that the girl was super responsive and eager to excel at all cost. This enthusiasm overpowered any lack of experience. She was willing to learn and happy to do so.
I bet you’re thinking, “that’s great and all, but what does she actually do?”
Glad you asked.
At the moment, my part time sourcing agent handles everything supplier related. I’m still bringing her up to speed with how everything works but when she’s fully immersed in the business she will take over on all aspects “China.”
They way we currently have it setup is a single Google folder that holds everything related to my Amazon business. It’s organized by brand and within each folder is a spreadsheet for supplier information, inventory costs, keyword research, and listing information.
When I find a product I ask her to source it via Alibaba.com and 1688.com. I give her the specifications and she goes to work, getting prices, photos, supplier information, and how they communicate.
After I narrow down the suppliers, I then get samples and the process continues. The best part about this is that I don’t have to spend hours on end waiting for messages or updating spreadsheets. I can focus on other tasks like research and listing optimization while she handles the grunt work.
Furthermore, having a Chinese speaking agent helps tremendously with negotiating better prices as well as avoiding miscommunications. It also ensures finding an actual factory. It seems as if Alibaba.com is almost entirely trading companies now.
Since I’ve hired her, she has been able to source around 5 new products that I’m looking at with all of the relevant data and pricing. It’s not like I couldn’t have done it but it would have been a hell of a headache.
Is It Worthwhile?
As most of you know, the cost of living in China is cheaper, and therefore salaries are as well. She is currently working 10 hours per week on a fixed salary of 1,000 RMB per month.
This sounds cheap but after discussing with my friend who owns his sourcing company, this is the going rate for entry level sourcing jobs that college students are getting.
I truly believe that this is one of the better decisions I’ve made in my business, not only to free up my time but also to teach me how to manage people and systematize my business.
If you look down the road and want to sell. You have to think from a buyer’s perspective. Surely they want to buy something that runs itself, and if it does, you can ensure you will get a higher multiple.
Should You Outsource?
I wanted to write this article because I see questions posted all the time like:
“What do you outsource?”
“What does your Virtual Assistant (VA) do?”
“How much do you pay your VA?
I think a lot of people want to outsource but they don’t really know where to start. To that, I would say find the thing that you do everyday that takes up the most time. Is this something that you have to do everyday, perhaps some mundane task that doesn’t take an extraordinary amount of skill?
Can it be done by someone else?
If the answer is yes, then you know what to do.
I realize not everyone reading this will have the ability to hire college students directly from China. In that case, I would recommend a few common outsourcing websites used by lots of Private Labelers:
If you’re at the point where you’re making enough profit to pay an employee, then start outsourcing now. Once your business grows it will only become more complicated so it’s better to start when you can give all your attention to getting the proper training and systems in place.
I hope this article was useful or valuable in anyway. If it was, I’d love to hear your questions, thoughts, or comments!