How to Outsource Your Purchasing In Online Arbitrage

In this blog post, I am going to do a follow up to Kev's YouTube video, "How to Outsource Your Purchasing In Online Arbitrage".

If you haven't seen this, please watch below.

And this is specifically answering some of the questions and comments, which came on that video. This video had some great comments and some great questions, which is why I am going to go through them in this post. So, let's get into it.

The first comment was from Erkan, and he said this, "I will be promoting my sourcing VA to purchasing manager as I already trust her. I am just worried she will be overwhelmed with sourcing and then purchasing the deals at the end of the day"

This is a great topic to do with purchasing.

So, when you think of purchasing, this is the make or break of your online arbitrage business, one of the fundamental requirements that we have in terms of confidence and competence, is quality control. This is the quality control on what you are actually purchasing, and what you are not purchasing. One of the things Kev would highly recommend in this case, answering the question, "Who becomes out purchasing manager?". There are pros and cons on how you can do this.

Firstly, you promote someone from a sourcing team member, into a purchasing team member. There are some obvious pros to this, especially if they have been working with you for some time, and you know that they know what a winner is and you have been giving feedback in terms of what a loser is. So, there are some really obvious pros to promoting to a purchasing manager.

However, there are some negatives that come with this as well. If you promote someone to a purchasing manager, who was your sourcing assistant, you have then lost those sourcing leads which that person has been bringing in. So, you have got to answer the question on how you want to structure your business.

For Kev personally in his journey, has always wanted to have a very clear define role that, if you are part of out sourcing team, you are not doing dual roles, you are not going to source products and then purchase those products, and there are some really important reasons for this. One is quality control. A lot of the times, you may not see your own mistake; if you source a product, then you purchase the product, if there is a fundamental mistake within that product, you are not going to see it yourself. 

For example, in the warehouse, when we are shipping the products, we don't have the same person who has prepped products, in terms of labelling, bagging, bubble wrapping etc; we don't have the same person who ends up doing the quality control in the boxing or palletization. We have added a layer of protection, quality control where someone from the outside, can potentially see the mistake. So, from a sourcing point of view, with the goal of you promoting your sourcing manager to a purchasing manager, what Kev would recommend, is that, that person doesn't have a dual role of sourcing themselves. Because if they are sourcing some losers in there, they may think that there are some winners, and that produces the potential to start purchasing losers. 

So, some options would be to promote a sourcing assistant to a purchasing manager that has got some great fundamental skills, but then you lose that sourcing ability and you lose those leads coming in, because you don't want them to do dual roles, or you hire someone from the outside to come in, and there are some pros to that too.

So, when you have got an outside perspective coming in, they may not have the skills that your sourcing assistant has already of the time you have spent working with them. This means that they are going to need to be trained, and they are coming from a fresh view of what's good and not good, because it comes with a clean slate and there are no bad habits that come. You are able to introduce and train the criteria, the best practices, what you are looking for, and what you are not looking for, and you are able to do this  from an outside perspective. 

Of course, it is completely up to you what you do, but they will be overwhelmed, because there are two separate roles there, and you can't do dual roles, because it starts to impact quality, productivity, trying to do dual roles and there are a lot of negatives. 

Moving onto the next question...

The next comment is this, "I have been on and off doing amazon fba but really struggle to do it with my job on the side, my main job is high stress as well."

When you are first starting to get anything off the ground, when you first start to get any type of momentum, it takes a lot of hard work. In the mix, you may have a family, a relationship, your career and working full time; this pushes your capability and your potential to the absolute extreme. This is where Kev personally, being an electrical engineer at the time, Kev remembers it can be very stressful and energy intensive, then you have to build your business on the side too. 

A couple of tips which Kev would advise would be: 

1. Time Management 

Kev highly recommends that you check out and get clear on how optimised your time management actually is. What are you doing through every single hour of the day? Really map out everything and every single hour, every single minute that you are working throughout the day.

What time do you go to sleep? What time do you wake up? What's the routine you have in the morning? Do you have a morning set out for your business? What time do you need to get ready for the kids to go to school or you to go to work? What time do you set off to go to work? What time do you get to work? What are you doing during work? What are you going to be doing on your break times? In the afternoon? Evening? What time do you finish? What time are you going to get home?

Get super intentional with your times, so that you know absolutely everything you are doing during the day, and put it into your calendar. 

2. Be Productive 

There may be some time which you will have to sacrifice, and you need to get really intentional and purposeful of what your goal is and what you are going to achieve at all costs. Cut down Netflix, cut down YouTube, cut down on TV, cut down on social media, cut out on going out and drinking. Be productive. What tasks have you got today? What are your key tasks for the day? Are you involved in your sourcing?

In Kev's early days, Kev had a goal every single day for sourcing. He would have a number one goal. Then, he hired his first sourcing assistant, and the number one priority was then review and give feedback for those products. He wasn't bothered about anything else.

If you are interested in some resources, which will help you if you are struggling with time management and productivity, check out the following below:

Time Management Framework: https://youtu.be/YLw5ekOsNtE

Prevent Overwhelm In Business https://youtu.be/teC9TGnHJ-I

12 Different Sourcing Strategies: https://youtu.be/7-LspVeo4OM

The next comment is from Sean, asking, "How much do you pay for sourcing per VA, and a purchasing manager. My VA sourcing costs me £160 every fortnight. Purchasing manager will want more, but how much more?

From an admin point of view, building a team, a part of that is costs and wages. From a sourcing assistant point of view, there are many different setups, whatever you ultimately decide on. Sean is currently paying £160 per fortnight. When Kev first started, it was 150$ every fortnight, a team out in the Philippines - 300$ in the month. 

Over time, you are going to want to increase wages and give them something to strive for. If they are supplying you with 10 products, and they get 8/10 or above in terms of winners, you may have an incentive bonus in there. For example, every day that happens, you could pay an extra 3-5$, whatever it is to try and incentivise great performance. 

So, you are going to pay, from a sourcing assistant point of view, it is going to be more based on a salary with incentives, whether that is you are paying monthly, fortnightly, there are many different ways you can set up your structure. However, from a purchasing manager point of view, when Kev first started back in 2016, in January, when Kev first hired his first senior assistant, it was at 3.33$ per hour, which was around £2.50 per hour. Over time, that increases. You are going to be looking towards, 5-7$, but it is really subjective based on the skills and what you want to offer them. The more you pay, the more quality and skill set you are going to have. But this is up to what you want to negotiate. 

Further reading:

The Ultimate Online Arbitrage Purchasing Amazon FBA Guide

Online Arbitrage Business Overview Best Tips

The Ultimate Online Arbitrage Shipping Amazon FBA Guide