10K Collective e-Commerce Podcast

10K Collective e-Commerce Podcast

Custom manufacturing for Amazon with Ryan Shaffett of XQ manufacturing – part 1

June 13, 2019

Custom manufacturing for Amazon

Ryan Shaffett's Custom manufacturing Background
Ryan been living in China for 18 years - running biz there for 12 years.
Started as a traditional manufacturer.
XQ has a handful of clients - medium sized US companies, sporting goods industries.
They’ve seen the trend towards FBA.

Is Custom Manufacturing something that FBA Businesses are doing more of?
XQ have one key client fully FBA based business.
But they are increasingly tweak services to meet FBA clients
Most clients go from Private Label to custom manufacturing.

What brings clients to you?
The best clients have good people who communicate well.
It can be very complicated to work with a Chinese factory to develop own products.
Ryan tries to save a lot of hassle.
They can reduce own staff in own country.

What are the key distinctions between Custom Manufacturing for Amazon and Private Label?
Advantages of Custom Manufacturing for Amazon

Truly unique
As opposed to Private Label -which can be an exercise in “who can push the most product?”
Higher profit
Know niche read clients feedback
How it needs tweaking
Dealing with PL manufacturers
You are the mould owner -
If you develop a product - I’m going to charge the client for development costs.
Different price structure

Summaries of Pros and cons of Custom Manufacturing
The advantages to a privately developed product are:
1 - It is very hard to hijack/copycat
2- Often margins are much higher with privately developed products.
3 - You can tweak it with all the features you know the market wants.

What are the main downsides?
1- Minimums tend to be higher, like investing at least $2,000 or more on an order. Large plastic molds can cost up to $10,000 and more.
2 - You have to wait between 1-4 months to get your product in hand.

Downsides of custom manufacturing for Amazon

Mold development is time consuming (could take a month)
Typical turnaround 1-2 weeks china
Every project different
1-4 months or longer if multiple prototypes

Plast ic inc molding costs $1K-10K
No top end
It's a Barrier for small FBA sellers
How many units
Small key shared objects can be tricky.
You Can’t try out the market

It’s an upfront commitment
You might try a single cavity mould
Then develop a twenty piece mould
If product bigger than a breadbox everything is a one cavity mould
Manufacture costs

Different manufacturing techniques
Some clients are already very expert - detailed CAD drawings etc.
Also work with clients who have hand sketched drawings and a concept
XQ manufacturing will have a conversation

Multi material products
These are great but A bit more complex
Basic types of multi material products include some basic electronics sometimes
That's where the initial investment goes into developing the printed circuit board design.
Wood based products - fairly easy