As it gets increasingly difficult to import products from China to other Amazon marketplaces, it’s time for sellers and brand owners to consider alternative sourcing strategies. 

To help, Patricio Tellez, successful seller, co-founder of ALGO+ and Amazon expert, joins Teikametrics to talk about the many benefits of sourcing products from Mexico.

Here’s what we’ll cover

  • Underscoring the logistical benefits to sourcing products from Mexico
  • Highlighting operational efficiencies from switching to a manufacturer in Mexico
  • Detailing typical working relationships Mexican manufacturers
  • How to get started sourcing and manufacturing in Mexico

Show notes

Watch the full webinar to learn how to source products from Mexico

You can watch the full webinar on-demand here, or scroll down to read highlights from the webinar.

How to source from Mexico webinar highlights

What’s the current state of supply and fulfillment? 

We’re hearing loud and clear that sellers and brands are struggling with supply chain blockages, Amazon fulfillment policies, and worrying over whether they’ll have the inventory they need in place for the holiday shopping season.

Everybody knows that it’s getting harder and harder to get your product from overseas, and people are really nervous about Q4. People are really getting nervous about the fact that Amazon has opened up their inventory cap at FBA, and now they can’t get products in on time. And how’s that going to affect their IPI score? And How’s that going to impact their sales for a very stressful time?” -Liz Downing

How can Mexico help with supply chain problems?

Patricio discovered he could find unique products and solve supply chain issues by sourcing products from Mexico.

Like everybody else, when we started doing the private label route, same as everybody else, we started importing from China. And one day we realized, Well, we’re from Mexico, we know a lot of people there, we know how to communicate with them, we know manufacturers. So we started sourcing from Mexico, and that ended up being really the differentiator for us in our businesses, and lead us to finding great products without the competition that you usually would get with Chinese products.” -Patricio Tellez 

What’s the benefit of sourcing from Mexico?

Patricio pointed out that sourcing from Mexico can mean placing smaller volume orders so there’s less warehouse time and more opportunity to pivot with your products.

Think about it from the cash flow standpoint. So, the volume that you’re bringing from China, you need to bring to make it make sense economically. If you’re sourcing from a supplier in Mexico, you might be able to buy or to bring to the US a tiny fraction of the volume, you’re bringing and not stock for four months, and be so much more efficient with your inventory and place orders in of smaller volumes and be more efficient with turning around your inventory, and using that cash instead of having it sit in a container, in a factory, or in a warehouse in the US. You’re able to test more products to do more with that same money.” -Patricio Tellez 

How should we think about sourcing from Mexico?

According to Patricio, you probably won’t find less expensive products in Mexico, becuase they can’t match the scale of manufacturing in China. However, what you can find is high-quality products, and you may be able to use sourcing from China as a route to improve the quality of your products. 

Where do you start? You can either take your current inventory and look for manufacturers of similar products. When you think about Mexico, you have to know that you’re not going after necessarily the exact same products, because if you take a typical product, that you would be sourcing in China and tried to find it in Mexico, the exact same product, in most cases, Mexico is not going to be as competitive in price as China, because of the capacity in China – it’s just a completely different world. What I would suggest is, think of Mexico as a place where you can source great quality products, differentiated products, unique products, You have different materials, you have different characteristics. So, what I would do, and what we are doing in Mexico, is we’re trying to improve on our products.” -Patricio Tellez 

Does Mexico produce its own materials?

While it’s true that Mexico relies on raw materials for manufacturing from China and other countries in Asia, Patricio recommends looking for products that can be made with unique materials that are produced in Mexico. 

Try to find the unique materials in the unique patterns and the unique raw materials that we have naturally in Mexico, like all the south-east of Mexico, the Yucatan Peninsula, that’s a big textile region, and they produce their own their own material, so when you’re going to produce in Mexico, you’re going to source in Mexico, try to play the strengths of the industry and the country you’re going after.” -Patricio Tellez 

What regulations do you need to know to import from Mexico?

According to Patricio tariffs tend to be lower when importing from Mexico than from China. He says patent law in Mexico is very similar to the law in the U.S.

In general, there’s a much lower barrier to exporting our products to the US. And in Mexico, actually, the trademark and patent laws are very similar to the US. So, you would use a law firm in Mexico that will help you register with an authority in Mexico to register your trademarks and your patents and all that. So, it works very similarly to how it is here in the US.” -Patricio Tellez 

What’s the culture of manufacturing in Mexico?

Patricio says Mexico has its own unique culture that you’ll need to get to know to work with Mexican manufacturers. Most are family-owned companies. Many of them won’t know much about Amazon and will need to be educated about what you need to sell the products on Amazon. A lot of manufacturers have their own business selling in Mexico so you can talk with them about white labeling. It’s a culture where manufacturers will say yes to whatever quantity you ask for even if they don’t have the capacity. Patricio says the important thing is to build relationships with the manufacturers so you understand each other and can build trust. 

One important thing to know is that most of the manufactures that we’re focusing on are companies that have been around for years. And they might have their own brand. So, they manufacture their own products. They have a manufacturing plant, so they have excess capacity, but they’re selling their own brand. And we find that a lot that they might not even be interested in selling online because they already have their customers. It’s been the same customers they’ve had for years. So, what we’re doing is, if you’re already manufacturing these products at a great cost because you own the plant, then we can start doing some white labeling, for example, for our products and develop the relationship then talk about private label. Doing your own unique products based off of what they’re doing on their production line.” -Patricio Tellez

How do you source products from Mexico?

There is no Alibaba for Mexico and the trade shows aren’t the same as what you can find in China. You really have to work at finding the manufacturers in Mexico and do your research and build relationships. Patricio says you can research the source of products you’re interested in, or get help from the Mexican embassy. Patricio is also putting together a list of suppliers and a sourcing trip to Mexico for sellers that will be happening in 2022.

People have this belief that it’s so hard to find manufacturers in Mexico. And the reason is because the government that we have right now, the first thing they did when they got into government was, they eliminated the government entity that was in charge of promoting a Mexican business abroad. So they just eliminated that. There’s nobody right now doing any promotion for Mexican industry, which is crazy, but that’s really the reality. So, it’s true, it’s not easy to find manufacturers… And that’s why we’re putting together a sourcing trip to Mexico, where we’re pinning down the dates and the specifics for 2022, but we’re gonna help people go to Mexico and find those locally, because honestly, that’s the best way to do it. We have our own list of suppliers we’ve been working on to help people find suppliers in Mexico.” – Patricio Tellez

Want to learn more about managing your supply chain? Watch our webinar on overcoming supply chain disruptions.