In this post, Mayan makes the argument that switching your product sourcing to Mexico is the way to sustainable business growth.
From high storage costs, shipping delays, and countless other logistics issues to boot - do you think it's time to re-think your sourcing strategy for your Amazon FBA business?
All of those unexpected costs and issues come with that inevitable extra stress, and FBA sellers have experienced all of it over the past few years. If you're running a business that's always sourced its products from China, you've most certainly hit major roadblocks during the supply chain chaos that was 2020. Taking that into consideration, maybe sourcing your products sold on Amazon from the other side of the world might not be the best business decision going forward.
This post will get into the main reasons why FBA sellers should be moving their inventory sourcing from China to countries closer to home - and more specifically, to Mexico.
From advertising and optimization opportunities to strong business connections, we'll lay out why moving your sourcing from China to Mexico is the best business practice for your Amazon FBA ventures to maintain sustainable growth.
For starters, moving your product sourcing from China to Mexico will mean that your goods will be within reach of what is now the fastest growing ecommerce market in the world.
That’s right. According to some of the latest data, Amazon is just getting started in Latin America. From Brazil and beyond, Latin America is now the fastest growing ecommerce market in the world.
Numbers and predictions from eMarketer have revealed that Latin America was actually the leader in the ecommerce boom in 2020, with a 36.8% growth in the region for retail ecommerce sales. Surprised? Runners up were North America and Central & Eastern Europe, with a 31.8% and a 29.1% growth. For context, worldwide growth for ecommerce retail was 27.6% in 2020.
So if you are sourcing your Amazon products from Mexico, you’ll already be at an advantage if you ever want to expand your business across borders and start selling in Mexico and the rest of Latin America.
This is why, along with our partners GETIDA and NocNoc, our experts at Mayan made the bold statement that Amazon is just getting started in Latin America. But when you look at these numbers, it's not really a bold statement. The LATAM wave is here, so it's time for successful Amazon FBA sellers to get on board.
If you really want to set up your FBA business for sustainable success, we recommend capitalizing on this Latin American expansion. And one of the best ways to do that is to move your Amazon product sourcing to Mexico.
There's lots of issues that sellers will encounter when sourcing your Amazon products in Mexico, many of which we touch upon in our webinar. While there are very real challenges involved in the evolution of your business, moving your product sourcing to Mexico will come with a lot of advantages.
Mexican factories are not a one-stop shop the way they are in China. As it stands right now, one factory in Mexico won't take care of all the parts of manufacturing like they do in China (they will be able to produce all of the pieces of a backpack, for instance). If you work with an assembly center in Mexico, you'll have to find a way to reach out to other factories around to get all of the parts to make your product.
With professional agencies to help you source and cultivate your own one-stop shop for manufacturing in Mexico…will this be the way of manufacturing in the future?
If you want to successfully expand and evolve your FBA business by moving your Amazon product sourcing to Mexico, you won't be alone in your endeavors. Let's start with EvoLatam, or the Evolution of Latin America Conference.
Held in Mexico City this past summer, EvoLatam brought together ecommerce sellers from around the world, including Latin America. A number of manufacturers based in Mexico were also in attendance. The conference grouped them all together so ecommerce businesses could start realizing how to source their products from factories across Mexico.
This conference basically planted the seeds for five or ten years from now, so that FBA sellers and manufacturers can work together to create the infrastructure for Mexico to be able to really produce on a massive scale.
Given all of this, after all the costs are added, the pricing to handle your product manufacturing is still competitive. Prices could still be lower or the same as in China, depending on how you choose to manage all of the moving parts of your Amazon FBA business.
Let's look at this expansion even further by going over just some of the initial benefits of moving your product sourcing from China.
From advertising optimization, Amazon marketing budgets, and setting up for sustainable growth….what's right for your FBA business in 2023 and beyond? Our answer is to switch up where you do your product sourcing.
To help you make your decisions, the following list highlights the major benefits to moving your product sourcing from across the world to just south of the border to Mexico, including:
Let’s go through all of these advantages in more detail.
Yoni Mazor, CGO and co-founder of GETIDA, made a great point on moving your supply chain to Mexico:
"Looking 5 years or 10 years into the future, this can be very impactful. Think about it: If you are mainly selling your products in LATAM and the United States, you put it on a truck, and within a few short days (the inventory) is in your fulfillment center or Amazon's fulfillment center. It's a game center because all of the cost structures in China are inflating. Global logistics is just a nightmare and we are already going into the second year of it."
Moving your product sourcing from China to Mexico means no more major delays in shipping or just having to deal with your inventory stuck at sea ports. All of these roadblocks typically result in major negative impacts for your business.
If your inventory is coming from Mexico, you just need to truck it up and it is driven across the land border in a matter of hours, rather than weeks or sometimes months. Plus, you'll avoid having to deal with seaports and all of the customs involved along the way.
Having your inventory produced much closer to your customer base means that you'll be able to lower your shipping costs from all angles. The transportation time will be quicker which means fewer costs all around, and if there's any other issues, Mexico is only a quick flight away.
Not only is land transportation quicker and cheaper than marine transportation, you'll also cut costs for your FBA business if any rush shipping needs to happen. And if you need to send out a product with a quick turnaround for instance, the cost of air shipping your product will be much cheaper if it's coming from Mexico versus coming from China.
Another advantage of moving your sourcing from China to Mexico is that your business travel costs will be significantly lower. This means you can use your FBA budget much more effectively.
As an active Amazon FBA seller, it's easier and cheaper to visit your manufacturing center(s) in Mexico than in China. This is true assuming that you are operating your business out of somewhere in the United States or Mexico. Not only will you have a geographical advantage, but the logistics on that end are also much simpler than heading over to China and have to deal with visa issues, major language barriers, and so much more.
This means the opportunity for more frequent visits to your manufacturing centers out of Mexico. As an FBA seller, visits to these factories also gives you the advantage to develop good relationships with your manufacturing partners.
Another benefit to moving your manufacturing from China to Mexico is that you won't have to store such large inventory for so long. Why? Because your product will be much closer to your customers, so you won't have to work with longer shipping times. This means storing your products every 30 days rather than every 90 days, which will drastically reduce your inventory storage costs.
How soon will it be for more Amazon FBA sellers to catch on and shift their network south? Only time will tell, but from the looks of it, the future is LATAM as China continues to focus on its domestic market rather than its international clients.
As Yoni puts it in the webinar:
"Think long term. Five years, ten years from now. Where are you going to be after you put yourself out there with all the relationships, all of the factories and creating the infrastructure, you are probably going to be first to market to get them all these advantages compared to other ones. I do see strategically how the United States and the world needs to develop LATAM and Central America into a manufacturing hub. The intelligence is definitely there. China is creating its own market domestically and they care less and less over time about exporting to serve outside markets. So, that creates a space for other companies and brands around the world to find a new manufacturing hub. Hopefully, LATAM will have that opportunity."
Don’t know where to start looking for a new and reliable sourcing manufacturer in Mexico? We highly recommend Gembah! Every manufacturer in Gembah’s global network has been vetted through a series of rigorous quality control checks. When you sign up with Gembah, you can rest assured that your manufacturer is the real deal.