In this episode, host Josh welcomes back Afolabi Oyerokun, co-founder of Honu Worldwide, for part two of their sourcing and supply chain series. Afolabi shares expert strategies on negotiating with suppliers, including creating bidding wars, managing minimum order quantities, and securing favorable payment terms. He emphasizes the importance of building strong, respectful relationships with suppliers to gain trust and better deals. The conversation provides actionable tips for entrepreneurs and brands sourcing products from Asia and the US, focusing on efficiency, quality, and cash flow management to help scale product-based businesses.

Chapters:

Introduction & Guest Background (00:00:00)
Host introduces Afolabi Oyerokun, his background, and expertise in product sourcing and development.

Sourcing & Bidding War Strategy (00:01:40)
Afolabi explains his process for creating bidding wars among suppliers to get the best price without sacrificing quality.

Negotiation Tactics & Relationship Building (00:04:31)
Detailed negotiation tactics, including silence as leverage, and the importance of building strong personal relationships with suppliers.

Personalizing Supplier Relationships (00:07:21)
Afolabi shares how personal touches and genuine interest in suppliers’ lives can lead to better deals and trust.

Handling Supplier Price Verification (00:09:23)
Discussion on how to respond if suppliers ask for competitor quotes and how to handle lowest price negotiations.

Securing Best Prices for Reorders & Managing MOQs (00:10:18)
Strategies for maintaining good pricing on follow-up orders, managing minimum order quantities, and creative solutions for packaging MOQs.

Summary & Key Takeaways (00:13:22)
Host summarizes main lessons: product development, supplier relationships, and the importance of payment terms for cash flow.

Closing Remarks (00:16:35)
Final thanks and acknowledgments from both host and guest, wrapping up the episode.

Links and Mentions:

Tools and Strategies 
“Sourcing Mastery Course”: “00:01:15”

Key Strategies Discussed 
“Bidding War Strategy”: “00:02:11”

Takeaways 
“Product Development”: “00:13:22”
“Supplier Relationship”: “00:14:27”
“Payment Terms”: “00:15:38”

Transcript:

Josh 00:00:00  Today. I am super excited for our conversation. You guys are going to love and absorb a lot of great information of how you’re going to become more efficient in your product sourcing, product development, three PL storage, all of that good stuff. And we’ve got an expert here to talk about that. I’m excited to introduce you to Afolabi Oyerokun. This is him coming back for a part two series because his first interview went so well. But he is the co-founder of Honu Worldwide in Innovative Product development, sourcing and three PL company based in Pennsylvania, USA. Afolabi has always been passionate about finding things, haggling and negotiating prices. His obsession with finding good quality products at bargain prices led him to help several seven and eight figure brands increase their profits and scale rapidly by buying smart from Asia and the US. He is behind the successful launches of several multimillion dollar products on Amazon and other retail channels. An entrepreneur at Heart Lobby owns and has sold a few seven figure private label brands. He loves helping people design, develop and manufacture innovative products.

Josh 00:01:15  He is also the creator of the Sourcing Mastery course, which teaches people the best practices for product development, sourcing and supply chain management. So with that introduction, welcome back to the podcast.

Afolabi 00:01:30  Thanks, Josh.

Afolabi 00:01:31  I’m happy to be back. I really enjoyed our past episode and I’m really excited and pumped up, you know, to continue on this point.

Josh 00:01:40  Are there any sneak peeks that you could give us of kind of the best tips? You know, if you are working directly in terms of how do you make sure you, you know, you’re not getting you know, there’s not going to be fraud. They take your money and run or what are some tips in terms of, I think, most importantly, getting the best price possible without sacrificing quality. Do you have any tips or sneak peeks that you could give a give us from your course? Because it relates to, you know, working directly with the manufacturer?

Afolabi 00:02:11  Yes, one of the great. One of the funniest and, interesting things I put on the course is to set up a bidding war with, your suppliers.

Afolabi 00:02:23  how I do it is. So when I’m sourcing products, I sourced product from, let’s say, five different suppliers. Sometimes it could be up to ten suppliers, and then they give me the pricing. I don’t negotiate at the first time. I wait till the end before I negotiate my prices. And then when I get all this prices from the suppliers, then I call for a video or, or image samples. I’m like, let me see you samples, do a video or do a photo. I see that, oh, okay. From the ten suppliers I might shortlist only 5 or 6. So from the six I said, okay, can you send me samples? I need physical samples. They say, oh, you got to pay for sample, no problem. Update. So I pay them for sample or pay for the sample shipping. They send me the samples and I take a look at them. And maybe I like only three out of the six people, six suppliers that sent me their samples.

Afolabi 00:03:16  So I cut off three, I keep three, so out of the three I would say something like, hey, without them knowing, see, they don’t know that all these three, all the suppliers don’t know each other and they don’t know I’m getting samples from different suppliers. So let’s say one comes up at $2, another one comes up at $1.50, another one comes up at $1.75. So I know okay $1.75 is the middle range $1.50 I look at the quality of the $1.51. It’s almost the same quality as the $2 one okay. That means this product can actually go with go for $1.50 or less. Then I look at how can I create a bidding war with these three guys and still get what I want in terms of product quality? I want product quality. So I would use two and two things. I’ll use quantity purchases and I’ll use price match. So I’ll say to the one, let’s say the 175 one has the best, quality. I’ll say, hey, well I looked at your product and other suppliers product.

Afolabi 00:04:31  I like your product, but your price is way more than other suppliers. and it’s going to come back to me and say, what are they quoting you? Okay. I’m trying to get to $1.25 for this. And if you can do a $1.25, I’ll give you a 5000 piece order right away. I’ll choose you if you can beat the prices. So it’s going to come back and say, Well, let me talk to my boss and said, okay, no problem. And then he says, well, we can only do $1.45 or a dollar, whatever. Okay, that’s a good one. I know I can actually buy it at $1.50. Right. Because the lower range of my price is $1.50. I’m like okay. All right. Dollar 45 is fine, I say. But so when it gives me a price of $1.45, I keep quiet. I don’t reply him anymore and it’s going to keep blowing up my phone, my email, because he can’t wait. He knows he’s at the tipping point.

Afolabi 00:05:33  It’s at the at the point is about I’m about to hand him money because I already showed him money. I’m like, I’m going to order 5000 unit, but I want it at $1.25 and it comes, it comes back with $1.45. I’m like, okay, I keep quiet, okay. And it’s going to start saying, hello, how are you? How are you there? I’m are you there? I’m like, I want people ask me, how long do I keep quiet? Sometimes a week or more. I just don’t see anything. Okay. And then it gets to a point is getting agitated and it’s like, okay, okay, my boss says $100.35. Then I jump back in, I’m like, oh, I’m so sorry I didn’t reply you earlier to your quote. do you think we can do $1.30? Because he’s already at the dollar 35. You think we can do $1.30? It’s like an hour. And so you have to always dangle the carrot. You have to always stand with the carrot.

Afolabi 00:06:27  Can you do $1.30? Can you do $1.30? And I please order tomorrow. They want to know that you’re about to pull the trigger. You’re about to push the money button. You do $1.30 and we order tomorrow you can come back and say, okay, dollar 32 or whatever it is, because I want him to make money as well. I also want to know his breaking point. If he’s breaking points to give me the best quality, it’s $1.35. I’ll actually settle for that. I don’t mind because I know it’s gotta pay bills. I know it’s wanted. He wants to make money as well. So. And I want to develop a relationship with him. That’s the most important thing. It’s a relationship. You’re about to build a beautiful relationship with your supplier. If you build a great relationship with your supplier, they will move mountains for you. I have suppliers that would give me that would send products to me to the tune of half $1 million, and they won’t charge me anything.

Josh 00:07:20  Wow.

Afolabi 00:07:21  It’s all relationship, relationship, relationship. Know that there are people there, wonderful people, wherever they are, whether they’re in China, India or wherever. Look at them that these are wonderful business people. These are wonderful people. These are great partners that I want to have on my team. Right. Another thing, another hack I use is if I’m talking to a sales rep and maybe she’s a lady and she has like a baby. You know, I look at her WeChat profile, right? I said, oh my God, you were traveling. Where did you go? She said, oh, I went to see my family somewhere. I’m like, oh my God, this place is beautiful. Wow. That’s nice. Or if she has a baby, I’m like, wow, how old is your baby? Oh, she’s four months old. And I’m like, oh, she’s so cute. Wow. How is Parenthood, you know? How are you parenting now? They want to know that somebody cares about them, especially in the Chinese culture is not so like worker boss to worker relationship is not so great.

Afolabi 00:08:22  You know, some of these guys are kind of being pressed down all the time. Like they don’t they nobody. But to find somebody, you know, from our side of the world actually complimenting them and just being friendly with them and just treating them very nicely. They can do they can move mountains for you like they know the breaking point of that. They know the low ceiling of the of the product. You don’t know, but they know because they’re sales rep. Right. So and then they can go they can they can talk to them, but they know how to talk to their bosses. They know how to get to a point where they will get you to the price you want, because they just like you. They just like you. I do it all the time and it works.

Josh 00:09:04  I love that awful lobby. That is a fantastic strategy for negotiating prices. So everybody hit the rewind button, pause and take notes. Because what the lobby just shared is very powerful. One follow up question on that off lobby.

Josh 00:09:23  Do they ever require you to send over, like the quote from the other competitors, right. That you’re claiming you’re getting other quotes from, or have you been able to just kind of state a number and then they work with it?

Afolabi 00:09:38  Let’s just I just did a number. If they require a quote, I just copy the area of the quote and send it to them. And I don’t let them see the name of the supplier, but most of them just say some. Sometimes they say oh. Oh, no, it’s. That’s too low. We can’t do it. We’re so sorry. We really want your business. But we can only go as low as $1.40. That I have to respect it because I don’t want them to make me crappy products. Right. So I’ll be like, I’ll take $1.40. That’s fine. If this is their lowest, I just want to find out what that lowest point is, right? Yeah, I can accept and I’ll accept it. And I’ll be like, okay, that’s fine, no problem.

Afolabi 00:10:17  Let’s do it.

Josh 00:10:18  How do you ensure that you also get the best price for your follow up orders? Right. So let’s assume you you’re placing a 5000 unit order now. But what happens if you you know, you only need to place a 2500 unit order next time. What happens to that price? And how do you ensure that you’ve kind of locked in good pricing for the future reorders.

Afolabi 00:10:41  So when I’m doing reorders and I want to drop my order, I would just say something like, well, our next order, we’re dividing it into two. We want to do 2,501st and then we do 2500. Later I. Sometimes I can give them like a year commitment and say, hey look, we want to do. Our first one went really well, but it took us a while to do it in order to maintain the same price you guys are giving us. We will just divide our orders into quarters instead of ordering 5000 in 1 shot. We want to divide it in 2500 or, you know, 1000, 1000, 1000.

Afolabi 00:11:17  Now, I found out that the reason why most of these suppliers have high mocks, you know, for people that don’t know what that means, minimum order quantity. The reason why is because they are also they also have Hemel queues from the material suppliers like for the box maker the the person that is going to supply them, the fabric for your product, the guy that is supplying the PVC board that they’re going to use in making your product. They also have more queues, so they’re just transferring these mocks to you. So in some cases I can actually combat and I say I save this in my, Sourcing Mastery course as well. You can just even tell your supplier and say, look, I’m going to order 3000 packaging if packaging has mock. Don’t worry, let me pay for the packaging. You guys keep it for me. And as I’m making my products, you can just use the packaging that I already order. This way we will fulfill the packaging suppliers mock and you guys wouldn’t get any into any problem and we just keep our prices that way.

Afolabi 00:12:22  They usually would say, okay, all right, we can do that.

Josh 00:12:24  That makes a lot of sense. At the end of the day, what I’m hearing off lobby is that as you work with a supplier, you need to create a relationship with them. You need to form a partnership with them. This is not just a transaction. This is one of your just as you see Amazon as a big partner in your business, even though there’s not a, you know, direct person you’re working with at Amazon? it’s fundamental to your business. Well. Likewise, you need to see, you know, sourcing your product as the lifeblood of your business. And if you don’t have that relationship, you’re going to be in trouble because you’re going to get run over by sellers like off lobby that are working with their manufacturers, their suppliers on a personal relationship basis. They can order lower mocks because they’re having those conversations like, yeah, this costs $0.10 for that packaging. I’ll buy all of that upfront for you.

Josh 00:13:22  That’s fine. I just don’t want to buy all 10,000 units in one shot, because now I’m out laying a lot of capital, right? I love that awful lobby, awful lobby. This has been amazing. Here are kind of the three takeaways that I’ve noted from today’s episode. There are probably a hundred takeaways, to be honest with you. but these are going to be my three. Let me know if you think I’m missing something or if there’s something we need to add here a full lobby. So number one is your product development is actually a very crucial step in your product. And if you haven’t actually, you know, gone back and maybe taken a second look at your product development, now may be the time to do that. Is there a is there a way for you to reduce the weight of the product. Right, without reducing the quality? Can you reduce the weight? Is there a way that you could better package the product for a multitude of reasons? Can you reduce the product packaging so it fits in one of Amazon’s lesser FBA fulfillment tiers? That would be step number one.

Josh 00:14:27  Yep. And then secondly, on top of that, would you be able to find a better packaging solution so that when it is being shipped right, it actually stays intact. It doesn’t get damaged because it’s got a long journey to end up in that customer’s hands. So that would be action item number one. Action item number two is creating a solid relationship and partnership with your supplier and off. Willoughby shared an amazing hack. amazing, not amazing knowledge bomb as it relates to the bidding war strategy with suppliers. So hit the rewind button. I’m not going to walk through that strategy right now, but go back and listen to the bidding war strategy of how you can find that bottom price and get the best possible price for a quality product, while also creating a good partnership with your supplier. And then last but not least, is importing your products. I would kind of say two things. My my final takeaway here is pay more attention to those payment terms. and that’s probably where I’ll leave it on.

Josh 00:15:38  This one is because your cash flow is one of your most important things in a physical products business. You will live and die by your cash flow. Cash flow also allows you to invest in new products and to be able to continue to release new products quicker. So if you can get payment terms like Afolabi talked about, somebody is willing to send you half $1 million worth of of products and not charge you for it until it hits Amazon. That can be a game changing situation for you and your business, but that is the type of payment terms that are created. If you have a good partnership first with your supplier, and you’ve created that over a period of time and have built up that trust. Afolabi, you are definitely an expert in this supply chain space, and I encourage our followers to go pay attention to everything that you put out because you’ve dropped a lot of knowledge on us today. So thank you so much for your time.

Afolabi 00:16:35  Thank you so much.

Afolabi 00:16:37  It’s always I’m always happy to join the show and have a great time.

Afolabi 00:16:40  Thank you so much for having me here. It’s an honor to be here.

Josh 00:16:44  Thank you.