Amazon Business Logistics

Enjoy a new episode of  podcast The Ecommerce Lab By Ecomcy by Vincenzo Toscano, our Amazon expert.

In this podcast, Refael Elbaz, Founder and President of Unicargo.com, shares invaluable insights on optimizing Amazon business logistics. 

He discusses cost-effective and personalized transportation solutions, addressing logistical challenges, and keeping customers satisfied with fast and reliable shipping. From inventory management to shipping methods, Refael's expertise provides practical advice for both new and established Amazon sellers. 

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The Ecommerce Lab By Ecomcy by Vincenzo Toscano

Introduction

Vincenzo Toscano: Hello guys, today we're going to be talking about what's happening in the space when it comes to freight forwarding, some of the tips you should consider when going with a freight forwarder, and much more when it comes to how you can be strategic to be very cost-effective as well. 

Refael, it's a pleasure to have you here on the show. How are you doing, my friend?

Refael Elbaz: Pleasure to be here. Thank you very much, and I'm looking forward to it.

A Journey To Amazon

Vincenzo Toscano: Now, let's get started with your journey. You have a very interesting background. You've been doing this for, as I can see from LinkedIn, over seven years now. 

So I'm pretty sure you've been seeing a lot of things in space. So tell me a little bit about your background in terms of how you got started and what made you get started with Unicargo in the first place.

Refael Elbaz: Yeah, so I'll do a little bit of my background, how I started, and then we can start jumping into talking about Unicargo and what we've built here. So basically, I started my entrepreneurial journey when I was 21 - 22. 

In Israel, it's mandatory to go to the army service when you turn 18. Men go for three years, and it's a common tradition that after you're released from the army for three years, you go overseas, you go traveling for a long time. 

It's very, very common for Israeli guys, girls, everybody does it. I went to Australia and I ended up staying for four years in Australia. I started doing business there. That's where I first encountered importing private labeling. 

Getting Started with China Wholesale

So I was doing private labels. I was doing my own brand from Alibaba. I'm talking about 2009. Wow, 15 years ago. I built a brand of hair straighteners and hair extensions. We actually had shops in the shopping mall. So we imported everything from China.

I got to know Alibaba. They were actually starting out with their global B2B website for suppliers. And that's where I started touching international trade. 

I got back after I still had the business. I got back after a couple of years to Israel, and I was at a junction. I said, "Right, what's your ID?" And I thought, asking myself, "What would I do if I had all the money in the world? If I had money, what would I do tomorrow?" 

Vincenzo Toscano: That's a good question.

Refael Elbaz: Yeah, the first answer that came to my mind is like, "Hey, I really love dealing with international trade, importing, moving stuff around." So I said, "Right, let's go and work for a freight forwarding company to understand the business from within." 

So I spent some years working with freight forwarding companies, became a manager. You know, and being an entrepreneur, you always... 

When you go work for a company, you're progressing very, very fast because entrepreneurs think differently, right? They are pioneers, they are leaders, they are generating, they are creating value.

So, I got into a manager position, and that's where I found out about Amazon, about Amazon sellers, about the whole Amazon space. 

How To Start Amazon Logistics Business

And this was around 2014. I realized that there is a huge, huge, huge hole or gap in how traditional freight forwarding companies looked at e-commerce entrepreneurs. Not only Amazon sellers, but eBay traders, people selling physical products online. 

These were usually younger people, a one-man show. Maybe it's a digital nomad, someone who works from their laptop from all over the world. 

So traditional freight forwarding companies didn't know how to deal with this type of client. They didn't know how to find them, they didn't know how to talk to them. And that's exactly what I decided. I'm going to start a company that focuses mainly on that audience.

I started Unicargo in 2015, almost eight years ago. And I did the right thing. It was the right move because, you know, in the past decade, in the past 10 years, I call it a new market emerged. There is a new type of economy, or there's a new type of businesses that need to move freight. 

Before, again, I'm talking about 15 years ago, 20 years ago, it was mainly traditional importers, exporters, big corporations, when you have a supply chain manager and a logistics manager, people with many years of experience that work with freight forwarding companies. But now, all of a sudden, there are all these e-commerce businesses.

We focused on Amazon sellers, especially. When they were in courses and academies learning how to source products from Alibaba, how to sell products, how PPC worked, and how SEO worked, they had no clue about how to move freight globally, how to ship products worldwide, how to deal with international logistics. 

If you were a UK-based seller seven years ago, it was almost like science fiction to think about how you, as a UK seller, could get your goods to the US. 

Maybe you didn't want to open a company, you were just starting out. So we figured that out and found the solutions these people needed. 

Our company grew rapidly. We were one of the first companies to specialize in Amazon sellers, putting the majority of our focus on Amazon in our early years.

Amazon International Shipping

Today, our company has about 100 employees in Israel, where our headquarters is located, and between 20 to 30 employees in our offices in China, known as Unicargo China. We also have offices in the United States. 

We have become a growing logistics group of companies. We started acquiring trucking companies in the US and expanded our services. We ventured into everything related to logistics, including trucking, ocean freight, customs, and more. 

For e-commerce businesses, logistics isn't just about moving products from factories to marketplaces; it encompasses warehousing, distribution, handling returns, and various other services.

I was trucking obviously doing the Ocean Freight, the customers, and everything. It's just a very huge sector. 

Why is it important to choose the right International Freight Forwarder for your business?

There is so much to do. Logistics was for an e-commerce business. It's not only moving the products from A to Z, from Factory to Marketplace; there are warehousing and distribution and reverse logistics, handling all of these returns, and other services.

Right, you want to open up new marketplaces. Let's say you want to ship to Japan, right? You want to try Amazon Japan or Amazon in Dubai or Singapore or Australia, whatever. Most of the sellers don't want to start with too much expenses, right? 

They don't open a company and get an accountant in the new market. They want to start shipping something. They want to see that it sells, it picks up, and then they'll do the rest. 

And that's where more and more logistics services are needed. You need someone to access the import of the record. You need someone to guide you on your import compliance. 

What do you need in order to import this or that product into Japan or into Australia or into the UK or Canada or whatever. So there is so much that this market demands.

And we were just doing what they needed, right? As an entrepreneur, you just fulfill the need. You do it properly. You make sure you give the best customer service out there. 

I think one of our core values is that I'm an extremist about customer service, and that's the DNA. How my managers work, and that's how the employees underneath them work. 

And that's what I made sure that we got to keep, no matter how fast we grow or how big we grow. This personal attention is, this taking the seller's hand in hand. If we keep that right, if we do that, the best out of everyone, we would succeed, and that actually worked. So that's, you know, in a nutshell, the process, the journey, or how we are.

Vincenzo Toscano: So, I love it, yeah. Something that I love about Unicargo and your journey is that actually when you found Unicargo, it was around the corner where Amazon FBA was really becoming a thing, if you remember, 2014, around that area. 

And I think the advantage I bet you had with that is, first of all, you deal with the market, so you saw the whole explosion of FBA. You saw the mistakes, you saw the things that people were struggling with, and that, of course, was part of the DNA of your company. 

But, on top of that, I totally agree during that period and still now, people still don't have a clue about how to deal with logistics or international shipping.

What are the steps in international shipping?

Refael Elbaz: The funny part is that freight forwarding is a significant part of it. It's the backbone, I would say, and it plays a pivotal role in shipping from A to Z. 

But logistics encompasses more than just international shipping; it involves distribution, warehousing, reverse logistics, and various other aspects for e-commerce businesses.

Vincenzo Toscano: On top of that. We need to continue international expansion. As we know, nowadays it's not only sold in one country. If you're selling in Europe, how many countries? 

Don’t choose freight forwarding companies based on price.

Refael Elbaz: We've learned that. I was very frustrated with it at the beginning. The sellers usually meet Unicargo when they grow bigger. When you're just starting out, you look for the cheapest possible option. 

You will try to ship with your supplier, with whatever Chinese freight or you'll take, I don't know, 10-15 different logistics vendors. You'll request a quote from everyone, and you'll choose the cheapest price.

And at the end of the day, when you grow a bit and your business becomes bigger and your supply chain needs, you understand how important it is. 

Only then, the sellers would go and look for a more established logistics provider, more than just a transactional relationship or just, 'Here's my shipment, give me a quote, and I'll choose the cheapest one for this shipment.' 

When a seller grows or matures within the business, they understand they need to change the way. 

Vincenzo Toscano: And I think something that you bring to the table, which is something that I like about Unicargo as well, it's not only the service itself, but you also bring technology. 

You have your own platform and basically a way of enhancing this experience. Maybe you can tell us a little bit more about what are some of the perks of having technology like this, because you know, I still know people who still keep doing everything on spreadsheets manually by email. 

Embracing Technological Advancements in Freight Forwarding

Refael Elbaz: Basically, we spent a lot of time and money on developing that platform. It's out there. It took us about a year and a half and a significant investment, but it's a work in progress. It will never be finished. 

I always tell my CFO and managers that this digital system, platform, or the systems, is an ongoing project because there are always things to add, more modules, improvements to stay at the forefront of technology.

The platform offers full transparency on all your shipments. We've organized it with various modules. We have a quoting module where you can submit quotes online, and you can see all your quotes, organized by status (approved, pending, denied). 

There's a track and trace module where you can monitor your shipments, their locations, and details. You can easily name your shipments and use your own references, making it convenient to keep track. You can export data to Excel or CSV files for further analysis.

The finance module allows you to view all your invoices, sorted by shipments or containers, and you can make payments and manage your financial statements online. Additionally, there's a communication module that enables you to interact with our team.

Now we are working on building this and making sure it's like an operating system. What we're currently developing is a partner module where you can set up your suppliers, products, SKUs, costs, and more. 

The ultimate goal is that you can log in, select your shipment from a dropdown menu, choose a supplier, pick the related SKU, and we'll already have the product configuration details like box size, weight, and unit measurements because you've previously configured them. So, with just three clicks—supplier, SKU, and the number of units—you will have all the information needed for a quote.

We're working on automating this process. Additionally, we're focusing on the business intelligence side of things. We can provide insights like the total landed cost per product, including customs and all other expenses. 

We gather data regarding the supply chain, including warehousing. With warehousing, it's not just shipping and customs; you might have additional costs such as warehousing fees or additional trucking costs, and it can get complex. 

We understand that smaller e-commerce businesses, or one-person operations, can struggle with managing these various data points and determining exact landed costs.

Our platform aims to give you visibility into your business, letting you manage your supply chain effectively. We've also added an inventory module that allows you to see all your inventory in our warehouses worldwide. We operate six facilities in the US and have facilities in India, China, the UK, Germany, and Japan.

So basically, no matter where you have products, you'll be able to see them on the platform. You can track what came in and what went out, the actual inventory you have in every single warehouse within one system. 

You'll see many different locations and the costs, which will give the seller an idea of how much that SKU at a skill level costs until it reaches its final destination, whether it's Amazon, a brick-and-mortar shop, or a distributor.

That's an ongoing project; it's already running, and other clients are using it. 

Vincenzo Toscano: I wanted to bring this to the table a question I get all the time: how to find the right freight forwarder. Over the last couple of years, we've seen more and more service providers entering the space. Sometimes they are declared leaders in the field, but people still feel confused about how to find the best one for them. 

What factors should they consider? Maybe you can provide some advice. I know you've been in the industry for a long time, so perhaps you can share some insights on how to find the right freight forwarder for your specific needs. 

How To Choose Freight Forwarder

Refael Elbaz: This is a great question, and I'll start by saying that I think there are good providers out there. As you said, the space has pretty much been filled up. When we started, we were almost the only ones. 

Vincenzo Toscano: I remember.

Refael Elbaz: And we began before Chinese companies even knew what Amazon was. We were in a blue ocean six, seven, eight years ago, and now there are many different providers. I've heard very good things about other providers as well. 

So I respect my competition, and I think competition is good. Companies need to become better and better, and better. Exactly, not fall asleep, right?

Vincenzo Toscano: Yeah. 

Improve your forwarder business through partnerships

Refael Elbaz: So, how to choose a freight forwarder? This is a very good question. I think sellers should look at freight forwarders just as they look at a lawyer when they go to court for a lawsuit. Your lawyer is an integral part of your interests; they represent your interests. 

You need to find a partner you feel comfortable with, one who represents your interests. Your interests are about growth and ensuring that supply chain, shipping, or logistics are not issues that will stop you from growing.

I talk to a lot of different businesses, and some of them say that logistics is one of the bottlenecks that hinder their growth. It should be the exact opposite. 

A good freight forwarder or logistics partner should be the one who ensures that logistics is not an obstacle to your growth. Your growth should have nothing to do with logistics; you should be able to sell as much as you want, without logistics being a hindrance. The next question is: how do you find that partner?

I think that you should look at the freight forwarder not on a transactional level. A transactional level means that you only communicate with them when you have an RFQ, when you need to quote a new shipment. 

You run a bid, you work with 10 different vendors in your pipeline, and you send the quote to every one of them. You choose the cheapest one. Many sellers do that.

What this means is you are not able to build a relationship with any of these providers because you work one time with this guy, one time with that. 

Vincenzo Toscano: You're jumping around. 

Why is it important to choose the right International Freight Forwarder for your business?

Refael Elbaz: You don't have volume within one house. What happens when you have a relationship based on a partnership? When you build a relationship, you are now able to talk about payment terms. 

You'll be granted credit terms. Some of our clients pay net 90, net 120. They get a credit line of 300K, 500K from us because we know they're valuable. We support them.

It's not only about the credit line. We have our account manager who will run the account for the client. They become friends. They meet face to face, attend meetings, discuss, raise challenges together, and provide counsel. 

Now, your freight forwarder is your consultant. You are not a logistics person. You have to remember that you are an entrepreneur building a business, not a logistics person.

Would be someone out there who knows much better than you, and you pay this guy. Go on a meeting, go on a call, discuss, let them learn your business. 

The more we, as freight forwarders, learn about your business, the more we can help you. It's just like when you do marketing for a company, right? 

You need to learn the ins and outs of the company. You can't work with someone who just says, "Hey, what's your price?" You give a price, all right, and that's it, do it. You can do it, all right? 

You need to understand the business, you need to understand what hurts, what their goal is, what you need, better pricing, faster arrivals.

So, the key, and again going back to your original question, the key to finding the right freight forwarder is the one who fits your business the most, the one who is most available to you. 

You want to move on from email, schedule a phone call, schedule a Zoom meeting, right? See what questions they ask you, see where their interests are. If they ask you about your business, your pain points, what's hurting today, or where you want to be, or what's your plan for next year, they're asking these questions because they want to help you get there.

Right. I don't want to focus on all right, let's talk about this quote, why is this. You've got to look at it from a relationship standpoint, and not from a transactional standpoint.

I'm not saying you didn't benchmark, right? I always tell my clients, you should benchmark your current provider. Every once in a while, get that quote that you work with him and send it over to other freight forwarders to make sure you're paying the market price, the fair amount. 

There are no surprises here. There is no way I will give you a quote for a thousand bucks, and someone else will give you a quote for the same service for 300 bucks. It doesn't work this way. Freight forwarders work on a steady margin. We are a service provider, and the margin in freight usually hovers around 10% from the actual buying cost to what is the difference. That would be the range, 10%.

So if you see a difference of 50% between different quotes, it's either you're not comparing apples to apples. For example, one freight forwarder gave you a direct route, a direct flight, a much faster route, and one freight forwarder gave you a much slower route. In freight forwarding, the slower the service is, the cheaper the price will be. The faster you need your product to arrive, the more expensive the price will be. That's the rule of thumb. So if you see a very big difference, it's either you're not comparing the same service, or there is something fishy, either one.

You've got to, as a business owner, I would do that as well. I would benchmark my providers. I would want to make sure I'm paying the right market price, the fair value of what I need. But you want to build a relationship. You want to rebuild reality; it will help your business. It will help you get better prices.

Vincenzo Toscano: Sure. Now, another thing I want to take from you so we can start concluding to this episode is, what are some of the mistakes or maybe tips that you could provide for people to be more cost-effective with their shipping, right?

Refael Elbaz: Well, it really relates to the previous tip, you know, of having an expert logistics expert look at your numbers, look at your business goals, and look at your... or what you want to achieve and give you the right advice. Because they'll be able to build it better, place your 3PL in a more strategic location or a closer entry port, which is cheaper to ship to and faster.

But there are a lot of things to be discussed as far as you can... 

You can take, I've seen people take industrial designers to redesign their packages, right, to be more compact and to be less volumetric, so you can fit more in a box or more in a shipping container. 

I want to talk about a mistake that we see a lot lately, and we've always seen it, but it comes back, where there are a lot of new sellers coming in, and avoiding that mistake will help you not only save a lot of money but save your business. A lot of people are commonly mistaken between marketplace compliance and import compliance.

And I'll explain.

Marketplace compliance is when you are trying to choose a product to develop or select a product you want to sell, and you go to Amazon or a specific marketplace to research what you need in order to sell that product on that platform. For example, if you're selling toys for children, Amazon may ask for a test report and a CPC, probably that's it. And a lot of sellers take that and think, "I have this, I'm good to go." They go to the manufacturer, produce the item, and then ship the product.

But, in fact, marketplace compliance, which is what you need to sell on a specific platform, is very different from import compliance, which is what customs need from you in order to clear your goods. 

And a lot of sellers overlook that. They focus on marketplace compliance because they are primarily focused on selling, and they are not logistics experts. In this context, we see issues with supplements, medical devices, cosmetics, and children's products.

They do everything they need to meet the requirements for selling on Amazon or another marketplace. They get approved, get gated, and everything seems ready for sale. But in the end, when they ship the product, it may get held by customs, sometimes confiscated, or even destroyed. In some cases, they have to take it to a bonded warehouse and re-label everything because they forgot labels or didn't properly document ingredients or meet FDA requirements.

The best tip I can give for sellers, even for beginners, is that marketplace compliance is very different from import compliance. You need to work with your freight forwarder to ensure that the product you're trying to launch or manufacture complies with the import requirements. 

Your freight forwarder plays a crucial role in this, as it's all about building a partnership.

When you have a partnership with your freight forwarder, you can set up a Zoom call or meet with them to discuss your product. You can say, "This is the product, here are my intentions, and this is what I have. What am I missing? What do I need?" They often provide this service for free. In contrast, compliance agencies may charge you three, four, or even five thousand dollars just to generate a report.

Regular clients who have established partnerships with their freight forwarders often receive extra assistance and advice for free. This tip is something I wanted to share because I've encountered it myself, and it's a valuable insight. 

Sometimes we make assumptions about having full approval to sell on a specific Amazon marketplace in a particular country and overlook the import requirements. But, it's crucial to be diligent to avoid unpleasant surprises.

Vincenzo Toscano: Thank you so much for having me, Refael, and for all these valuable insights.