As the whole world is facing the Perfect Storm of supply chain challenges, ecommerce sellers and supply chain experts are now considering sourcing from places other than China and Asia.
If you’re selling in the US, you know very well how shipping from China today is a struggle – most shipments take up to 73 days before they arrive in the US. With Q4 finally here, having an alternative sourcing outlet in closer countries like in Latin America is a great opportunity to cut down significantly on your shipping costs and delivery times.
Together, let’s discover Mexico sourcing and how it can be a great sourcing alternative for ecommerce sellers.
Trade and Tariffs
Did you know that about 90 percent of products imported from Mexico to the US have ZERO duties and tariffs?
This means that you can immediately save 25% in tariffs and additional duties if you’re currently sourcing from China.
The United States has free trade agreements in force with 20 countries and nine of these countries are from Latin America which is significantly closer to the US. (México, Costa Rica, Colombia, Dominican Republic, El Salvador, Honduras, Guatemala, Nicaragua, and Peru)
Among these countries, Mexico has the biggest opportunity to be an alternative sourcing outlet for business owners considering its manufacturing growth since the North American Free Trade Agreement (NAFTA) was introduced in 1994. Additionally, México is one of the counties with more international trade.
Many big companies such as Ford, Abercrombie & Fitch, Fender, and GMC are manufacturing from Mexico for their cost-effectiveness and quality. Over 160 countries globally are consuming products from Mexico.
Ensuring quality control from the country is easy since it is backed by the government. If you were dissatisfied with products or services from Mexico, you can file a complaint to the Federal Agency of Consumer Affairs (Procuraduría Federal del Consumidor, PROFECO). The government entity is responsible for quality control and consumer affairs, which is highly beneficial on your end.
Logistics: Save Time and Money
All products can be transported by land, so the cost is much cheaper compared to China.
If we look at the map, this is simple geography. If you’re selling in the US, and if you look at China on a map, it is halfway across the world. And as we learned, it’s now taking 73 days to ship something from China to the US by sea – which is very long.
However, if we look back at the map, you can see that there are a number of countries much closer to the US than China. For example Mexico and other Latin American countries.
Costs can depend on your agreement with your supplier, roughly it costs $2000 dollars to transfer a 53’ tractor-trailer from Mexico to the US.
Lead times are also very short. On average, shipments from a manufacturer to the border can only take hours or days to a week, depending on your products.
Manufacturing from México has a huge advantage in Inventory management as suppliers can hold products for you, and relieve you from managing obsolete inventories.
For example, you will procure a thousand units in total, you can have your suppliers send you 200 units weekly to prevent overcrowding your warehouse. Delays are not an issue as lead times can only take hours or days.
Just like any other sourcing country, Mexico also has its fair share of downsides or risks. You might encounter limited product options, language barriers, and slow responses from suppliers. However, these downsides are all part of the process, you don’t get anything so easily without putting the needed effort to make it work.
To mitigate these risks, it is important that you actively communicate with your suppliers and ensure that all your requests are understood on their end.
Keep Calm and Know Your Product
It is important that as a seller, you understand your own products so you can effectively communicate the quality, and specifications to your suppliers. Take responsibility for negotiations and prioritize active communication instead of blaming suppliers for issues faced in the process.
You have a lot of options for products that you can source from Mexico. Typical ones are medical equipment, cotton, clothing, textiles, toys, home decor, supplements, packaging, and more.
Opportunities and challenges in sourcing are not exclusive to a certain country or supplier. In the case of Mexico, language can be the biggest challenge of sourcing, however, many suppliers now are communicating in English, so it isn’t that much of a problem for business owners.
Finding alternatives in sourcing is vital given the perfect storm in the supply chain. Stay on top of the game, by exploring closer countries such as Mexico to ensure a profitable ecommerce business.