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Zero To Hero: Building a Brand Series – Inventory Storage

Zero To Hero: Building a Brand Series

Inventory Storage, FBA Prep & Fulfillment Centres

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Welcome to another part of our Building a Brand Blog Series. In last week’s blog post we went over a brief introduction on social media and which social networks are best for Ecommerce sellers or importers.

This week’s blog post will be on a completely different, but equally important subject – Inventory Storage & Fulfillment. When it comes to product-based businesses such as ours, it’s important to not only get your logistics right, but also have the best rates and fast shipping.

I have used both FBM(Fulfilled by Merchant) and also FBA so I will also give my point of view on what works and what doesn’t. Although my main focus is on FBA, I normally still leave some units in a storage facility either to reduce my Amazon fees or to fulfill any orders from my own Ecommerce store.

This blog post will be all about how you can manage your inventory effectively and save fees when compared to Amazon. I will also show you how you can use a third-party fulfillment center to take advantage of busy periods such as the Chinese New Year or the December holiday seasons.

So let’s have a look at what options are there for importers or sellers and explore different ways on how you can manage your inventory effectively.

What To Look For In a Fulfillment Center?

If using a third-party fulfillment centre, ideally it should be as similar to Amazon FBA as possible in terms of service and efficiency. However, here are some features I look for when making my decision:

  • The fulfillment centre should be in a strategic location so I reduce shipping costs from the country of origin.
  • The FC should have a backend software system that enables me to track my inventory  and gather other important data(fees, shipping rates, SKUs comparison, etc.).
  • They should have integrations with all major Ecommerce marketplaces(Ebay, Amazon, Shopify, BigCommerce, etc.). This allows me to manage all my marketplaces(in terms of logistics) from one place.
  • Their shipping rates should be as low as possible and they use all major courier services. Never use a fulfillment center that relies on one courier as it limits your options.
  • If I’m using the fulfillment center exclusively for Amazon, I look for ones that have extensive experience dealing with FBM. The requirements are more strict when it comes to FBM and a few late shipments can compromise your Amazon seller account.

The Benefits of Fulfillment Centers

 Fulfillment centers offer a lot of advantages for ecommerce sellers who want to expand towards other sales channels. Some of the benefits are:

  • Cheaper long term storage than Amazon.
  • Backend dashboard allows you to track inventory and shipping status of your products.
  • Some FCs offer great rates for oversize items and storage.
  • Ultimate control over pricing and customer experience(if selling from your own store).
  • Brand-able shipping packages.
  • No restrictions on inserts or marketing materials.
  • Multiple integrations with eCommerce marketplaces.
  • Ability to process returns easily.
  • FC’s can make custom orders for special clients.

 As you can see, choosing the right fulfillment center has a lot of benefits and if you’re planning on launching your own store, a FC outside of FBA is recommended. 

FBA Prep Companies

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Prep centres are storage facilities specifically used for preparing or assembling your products according to your requirements. FBA prep centres will make sure to prepare your shipments according to Amazon’s guidelines. This service might be very useful if you want to make sure that you have everything in order or if your product(s) come in multiple pieces and need assembly.

Nowadays prep centers have evolved and offer multiple services, including:

  • Goods Inspection.
  • Product Photography.
  • Labeling, Knitting and Bundling.
  • Storage.
  • Inventory Updates.
  • & much more.

Please note that prep centers don’t fulfill any customer orders, they should be exclusively used for storage, inspection and prepping.

Location, Location, Location!

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When choosing a fulfillment center or storage facility, location is very important. Since ideally you want to save on shipping costs from your supplier/manufacturer to the destination(if not an FBA warehouse). When it comes to locations, my preference would be coastal states in the US. In particular:

  • New York
  • California

 If your supplier is in China or any other Asian country, Los Angeles would be my choice. LA has both the busiest port and airport in the US in terms of cargo, making it an ideal destination to ship your inventory. Also, a lot of fulfillment centers and storage facilities are situated around LAX airport or close to the port.

Shipping your goods domestically will always be cheaper, so the only way to save time and money with your imports is to pick the closest location in the US from your supplier/manufacturer.

Amazon Multi-Channel Fulfillment

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Image Source: Forbes

Amazon’s multi-channel fulfillment service where you can use FBA to fulfill third-party orders such as Ebay or your own ecommerce store. This is extremely convenient if you want to have all the shipping and fulfillment in one place. However, in my opinion, the

Amazon fees are quite high and you even have to pay extra to have a multi-channel order.

If you don’t have a lot of sales from other channels you can use Amazon’s multi-channel fulfillment, however, if you really want ultimate control over pricing and customer experience on your own website, you should pick a third-party FC.

Conclusion

Fulfillment centers, prep companies and storage facilities allow you to diversify how you manage your inventory. If you sell on your own ecommerce store or have large/oversize items, a fulfillment center will help you reduce your fees substantially.

I would still suggest you to use FBA if most of your sales come from Amazon, however, ideally you would want to expand into other sales channels. By using a FC you would have ultimate control on pricing and customer experience.

In next week’s blog post we will talk about Product Branding. Manuel will guide you on the best practices on how to brand your product effectively and create stunning inserts and marketing materials.

We hope this blog post was helpful and as always, if you have any questions, kindly leave a comment below.

All the best and happy selling,

Duncan

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How-to-steps when prepping and labeling in China

Today I wanted to walk you through the process of placing the order with your factory and which steps you need to take to guarantee safe delivery.

The following is crucial when you start out and are looking to save costs because of a tight budget or wanting to learn the ropes when it comes to working with factories in China.
I actually recommend that you handle your first order with factories in China yourself so that you are aware of all the steps that need to be taken.

As time passes and you enlarge your assortment you should be focusing on developing your business, adding new products, travelling to exhibitions and you will have less and less time to manage your factory orders.
At this point I recommend you to let professionals in China take care of your orders who have been doing this for years, actually sitting in China, easing the communication with suppliers because of the same time zone and local language but many more reasons.

WIthout further ado here are the steps to be taken that I go trough once we I am ready to place an order to a factory:

Step by step guide when shipping directly to Amazon:

Once you have agreed on all terms with the factory (price, MOQ, etc.) you should request the Proforma Invoice and below details.

STEP 1: Creation of Product Listing

  1. Supplier must send you all details concerning the product and its packaging in order for you to create a listing on Amazon (if you haven’t done that yet) This includes:
    – Product pictures (if they don’t have good ones you should ask for a final sample to be sent to your photographer of choice)
    – Product measurements and weights
    – Packaging unit measurements and weights
    – Export carton measurements and weights
    – Factory address and contact details (needed to create the shipment plan on Amazon)
    – Die-cut of the packaging (in order for you to create an artwork –if needed)
  2. With these details you then need to go onto Amazon Seller Central and click “add a product”. Ideally your items are unique therefore we recommend you to create a new listing.
  3. Latest at this stage you will need to purchase either an UPC (for the US) or EAN barcode (for Europe).
  4. Create the general product listing with the details that you have from the supplier. Please note that you do not need to enter all bullet points or descriptions at this point. You can do so while the product and order is being placed.
  5. Once you have finished the product listing Seller Central will automatically take you to “send & replenish” meaning that you are now in the process of creating the shipment labels and plans for this product. If it does not take you there automatically please go to: “Manage FBA Inventory” in the tabs on Seller Central. Tick the product listing and select “send/replenish”. If the product is not there yet give it about an hour before the listing shows up.
  6. Now you will have to create the shipment labels for the factory to apply to your cartons.
  7. To do so you will have to follow the instructions of Seller Central and populate the fields accordingly.
  8. Enter the units per case (export carton) and number of cases (export cartons). You can gather this information from the packaging & units per packaging that the supplier sent you under step 1).
    For example:
    If you order 1000 pieces of a garlic press. The supplier will give you the unit per packaging and number of export carton. For example the supplier packs 50 pieces in an export carton meaning there will be a total of 20 export cartons (1000 units in total). Enter this information in the fields.
  9. Under “prepare and label products” choose “Merchant” in both cases. Meaning the supplier will apply the labels for you at the factory.
  10. The next step will be to “complete shipment”.
  11. Once you press complete select: “work on shipment”.
  12. You will now be asked as to how things will be shipped.
  13. Select SPD (Small parcel delivery) if cartons are below 20 pieces and or weight of total shipment is LESS than 150LBS (75KG).
  14. Choose Shipper as “other”.
  15. Select LTL (Less than truckload) if shipment is more than 20 cartons and or total shipment weight is MORE than 150LBS (75KG)
  16. Select “multiple boxes” under shipment option or “more than one SKU per case”.
  17. Select “webform”.
  18. Enter the units per case (per export cartons) and number of cases (export cartons) as well as the weight. Again this is the information that you receive from the supplier under Step 1.
  19. Check all information is correct and confirm shipment.
  20. You will now be able to print shipment labels.
  21. Click on “print labels” and save the PDF on your computer.
  22. Send this PDF together with further documents under Step 2 to the supplier. (send once you have completed all steps to avoid dripping information to the supplier as this irritates them).

STEP 2: Logo’s/barcodes/insert card

  1. If you have your own logo or artwork for the unit packaging send the logo in .AI or .EPS file to the supplier.
  2. Advise the supplier where you would like to have your logo placed onto the packaging. E.g. if you want your logo on top of the packaging and the barcode underneath tell them so.
  3. If you have no logo advise the factory only to print the barcode on the unit packaging. However I recommend you to have at least a written company name on the unit packaging.
  4. If you have UPC or EAN barcodes that you purchased under point 3) above send these barcodes in .AI or .EPS file to the supplier.
  5. If you have your own artwork design of the entire packaging send the entire artwork including barcodes, logos, photos and description. The supplier should be able to send you the die-cut that you need to create an
    artwork under point 1) above.
  6. If you have no artwork designed and only wish to ship the product in a white box with logo and barcode on it advise the supplier of this.
  7. If you wish to include an insert card that for example has your company name and instructions on how to use the product send the insert card to them.

STEP 3: Order placement and order instructions

  1. Before you place the order and get started with production I advise to send all files as described above in one go. Again, this should include:
    – UPC or EAN barcode
    – Export carton shipping labels
    – FNSKU barcode that you can print in the shipment plan under “prepare and label products”. This is only needed if for example you are re-ordering or listing your product under an existing item on Amazon.
    – Artwork design (if any)
    – Your own logo (if any)
    – Insert card (if any)
  2. If any of the above is applicable but missing from your side I recommend to collect/prepare all information first. However in most cases you can send artworks and insert card to the factory at a later stage but should not later than 25 days before production.
  3. An example email of how to instruct a supplier with labels can be found here: http://importdojo.com/how-to-properly-place-an-order-with-factories-in-china/ 

STEP 4: Order placement

  1. If you have not placed the order yet now is the time to place the order together with all your documents as described above and instruct the supplier accordingly.
  2. FNSKU/UPC’s etc. need to go onto the gift box/unit box. Usually at the bottom of the box or a small side
  3. Shipping labels need to be put onto the outer side of the export carton. Seller Central will give you a PDF with a number of all labels (according to your order quantity)
  4. Pallet labels apply when you ship by pallets. This is usually recommended above 20-30 cartons.
  5. The supplier should now arrange the order and production with your above instructions.
  6. Follow up your order and book inspection, shipment and final samples if necessary

Most importantly: Have an inspection!

I know,I know I keep saying it but yet I still hear so many horror stories in Facebook groups that people didn’t have an inspection. When you book an inspection (and those services start at 100$) you can instruct the inspector to check all of the above to make sure the supplier followed them through.

If your supplier forgot labels, barcodes or insert cards for example this can be found during an inspection. You want a hassle free delivery to Amazon’s warehouse and an inspection is therefore a must.

Monitoring your order is very important to keep the supplier engaged with your order and not to miss important deadlines.

Here is an overview of how we at ImportDojo handle order follow up after Step 4:

STEP 5: Follow up
1) We will now keep you updated with the order completion date as well as any inspection date
2) We will keep you informed on the shipment booking and arrangement
3) We will advise you when inspection will be done and when the result is out
4) We will advise you when inspection is pass, shipment picked up and on its way to Amazon. If inspection is not pass we will inform you immediately and work together with you to find solutions. In 90% of all cases if the inspection is not pass it is only because of minor defects like scratches.
5) If inspection is pass we will inform the shipper to pick up the goods.
6) The final payment of the order is now to be made to the supplier (usually the remaining 70%) before shipment is released from the supplier.
7) A shipping company that we recommend will now pick up the goods and arrange the transport as well as appointment booking with the Amazon warehouse. If you wish to have the goods delivered to your own warehouse or other address please tell us once we place the order to the supplier.
8) We will inform you once goods have landed in the US and are to be delivered to Amazon.
9) You should get a notification from Seller Central as soon as goods are being checked-in.

All done!

Please note that you should advise your supplier before hand that he has to print labels and stickers to be put on your packagings export cartons BEFORE receiving the Proforma Invoice.
If you tell the supplier at a later stage that there will be labels and stickers to be applied they might charge you more.

 

More information and email templates on how to properly place orders in China also here:
http://importdojo.com/how-to-properly-place-an-order-with-factories-in-china/

Hope this helps you guys in determining what you need in terms of labels, insert cards etc.
Please feel free to share this post :)

All the best and happy sourcing,
Manuel

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NDA’s, agreements and having your own tooling in China

A lot of people are concerned when they produce their own design in China that the supplier will copy it and sell to other sellers.

First I would like to point out that in my nearly 12 years in China I have had almost only good experiences with suppliers even with my own designs and exclusivity agreements.
Today we are looking at your options and what it actually means to have NDA’s or Exclusivity Agreements in China and how likely it is to enforce it or hold up in a court.

Lets look at the terminology first and what they mean:

NDA’s

Whats an NDA and when do you use it?
An NDA or Non-Disclosure Agreement is used when you have your own product design and want that developed by a factory in China. You basically agree with the factory that they are not allowed to disclose, share or produce your design (or even ideas) with any other customer or supplier. Neither local or overseas. In most cases if you have your own design a tooling is likely need to be made. The first step you take before you send any designs to a factory is to ask them to sign the NDA.

Tooling

To produce your design it is very likely that the factory needs to make a mould or tooling for you. With this tooling – parts of your product will be manufactured and eventually assembled into the final product.
(Categories like Textile or Food do not need tooling). Toolings are often included in the price quoted to you when you hand over your design. However you can also opt to pay for the tooling if you want to own the tooling as well.
Toolings can go anywhere from 1,000-30,000+USD depending on the size of the product. Yes, things can get pretty expensive.

Can I move my own tooling to a secure location?

Toolings are usually very large and heavy as they are made out of die-cast in most cases. Moving them requires quite some logistics.
So if you are unsure that your supplier is going to use them for other customers you should move them to a secure location (e.g. a rented warehouse). This can easily cost a few hundred US$.
And every time you would place an order this tooling needs to be moved to the factory and after production back to the warehouse. An expensive enterprise.
So having said all that if you feel you need to have your tooling secure somewhere else you should not work with this factory in the first place.

So whats the best way to go about having your own designs & tooling?

Two scenarios:

  1. You are just starting out and have no factory contacts whatsoever.
    My tip is to work with a sourcing agent  that can help you find reliable and trustworthy factories.
    Don’t go onto Alibaba and randomly look for factories that could make your product. You don’t know them, they don’t know you and are unlikely to help you anyway.
    Even if they tell you: “no problem, we can make it for you” they are likely to copy your product or sell the idea to other sellers the minute you place an order.
    Just the other day a reader of mine told me he found a trading company on Alibaba for his design and placed an order of 300 pieces.
    When he got contacted by the actual factory about labels and other things they needed from him he found out that the trading company placed a total of 500 pieces with that factory.
    They ordered an additional 200 pieces (without the knowledge of the client & even with the clients logo) for themselves probably to sell it on Aliexpress or even Amazon themselves.
  2.  You’ve been placing orders in China for a while.
    Work with the factory of your trust. Even if the product you are now looking to manufacture doesn’t fit into their assortment. Factories have a large network and contacts with other factories.
    Ask them to help you source a factory that can make your product whom they trust. I’d he happy to pay a few cents more for this type of help if it means I get connected to someone trustworthy.
    Ideally your existing factory can help you manufacture your new design.

Mutual Exclusivity Agreement

Let say you find a product on Alibaba or at the shows and you want to buy this product exclusively to sell on Amazon. Suppliers are likely not to give you a Exclusivity Agreement if you don’t purchase high quantities from them or if you haven’t had any previous business with them. FBA sellers are in general very small customers for factories. The 1000 pieces (if even) you & I are going to want to place as a trial order cause more trouble to the factory than you could imagine. Setting up production and purchasing raw material for only a 1000 pieces is an expensive endeavour for factories. Most raw material suppliers have MOQ’s of 5000 pieces (per raw material) and up. So getting the material for 1000 pieces can be quite expensive. While some factories may have stock left of material or might agree to purchase the larger quantity from the raw material supplier in order to produce your order it is unlikely to happen in reality. Having said that you could approach things a little different to get your exclusivity:

You could ask the supplier to sign exclusivity agreements for 6 months. Meaning you could agree on a quantity that you will place within those 6 months and if you don’t reach the quantity the contract will be voided.
Which will give you the time to figure out if the product is selling and the supplier on the other hand isn’t forced to sign a deal for a long time.
After this period of 6 months the contract/agreement can be reviewed and extended for a longer period. Even if the supplier does not agree to an extension you have at least a head start of 6 months on other sellers.

Validity of agreements & contracts:

In the FB groups I often see question like: “How are those agreements going to hold up and what are your chances of winning an NDA dispute in China if you find out your supplier has betrayed you?”
Well to be honest the chances are slim. Does it help to have an agreement in Chinese? No. Even if you hire an expensive lawyer in China and win the case by the time you resolve the issue your expenses will have ballooned into thousands of $.
So unless you have a patent it isn’t even worth it pursuing a law suit.

You will also have difficulties finding out if your supplier actually used your tooling for another client. An un-trustworthy supplier will find many ways to wiggle himself out of the situation.
For example he could claim a disgruntled engineer of the company left the factory and took the designs to the next factory he started to work for. You won’t be able to proof him differently.

So whats the point of having an agreement at all and whats best approach?

To ask a supplier to sign an agreement or NDA shows that you mean serious business and they will take you and your project more seriously. If he doesn’t agree to it in the first place move on to the next supplier.
Work with a supplier whom you trust and have worked with for many months/years already. You will still need to have agreements in place with that supplier but the understanding is entirely different.
If you work with a supplier and you let him know he can grow his business with you over the years he will honour your agreement. The contract is more or less a formality.
Either place orders with a factory for ODM (products off the rack) in the beginning and eventually propose your ideas and designs after you worked with them for a while or hire a Sourcing Agent who can help you get you in touch with trustworthy factories.

For example in my case study I actually got exclusivity for my product (for an initial 1000 pieces order).
And the supplier honoured it. How do I know that? As you know my case study is public and people who join the course can see contacts of my supplier within the course.
After I launched my product and case study only a few days went by and my supplier contacted me to tell me that he had received quotation requests from 2 different US sellers already. Those 2 people wanted to copy my process (they even used my email templates and quotation forms that I offer in my course). The supplier refused to offer my product to those 2 guys. Thats not to say that they can’t go anywhere else but at least I know I have a reliable and trustworthy supplier.
So its all about finding the right supplier and develop a relationship with him. You will want to have agreements in place even after a long relationship but again, thats just really formality and if you found a trustworthy supplier they will honour agreements and in 95% of the cases help you if you have to claim money for example (defect or returned goods).

It also has to do with your professionalism and how you or your sourcing agent approaches the factory.
Imagine you are a factory based in China and someone with a Gmail address contacts you like this:

“Hi, we are looking to get products manufactured with you. Please see attached drawing and design. Please give us a price”.

The above is an actual email I received from a “potential” client in the US. I simply ignored it. But some suppliers will take this opportunity and steal your design or show it to their customers.
It’s entirely different if I would have received an email with an introduction, detailed business proposal and more background information from the buyer.

The point I want to get across to you today is not to worry too much about getting copied in China if you approach things professionally.

Getting copied will happen eventually because either:

  • Another factory copies/modifies the designs because they have seen it on Amazon.
  • Your competitor copies your product or modifies it.
  • Your approach was unprofessional.

Take the head-start that you have with your product and move on. Thats how this business is.

And remember the above goes only for your own designs. It is a different story if you are buying products off the rack maybe with small modifications from a supplier that you found on Alibaba for example. In these cases it doesn’t make much sense to have NDA’s or Exclusivity Agreements because it is not your design in the first place. It belongs to the supplier. However if you make significant modifications and are able to place larger orders it makes sense to have agreements.

Update Case Study:

A lot of people have asked me about my case study project and asked me about an update.
As you know I’ve posted about being out of stock end of May: http://importdojo.com/7-weeks-case-study-update-i-am-out-of-stock/
My second small reorder of 208 pieces came into stock around 6th of June. However my BSR had dropped significantly to nearly 100,000 by that time.

In the last 4 weeks if seen a couple of sales a day but not much (hovering around 1-2 pieces) sometimes even none. The reason is mainly because I didn’t do anything in terms of promotions, PPC or give aways. But that doesn’t really bother me, the listing and the reviews are there anyway and I sold close to a 100 pieces within this month (doing nothing for it).
I didn’t want to run out of stock again before Prime Day (today) before my large shipment of 2500 pieces arrives around 15th of July. As of today my BSR is at around 20,000 and inventory is around 100 pieces and I’ve just lowered the price and started with PPC again to get back in the ranks. I should have enough stock to last me trough Prime Day until this second large shipment arrives. Then i will again go full steam on PPC, some give aways and promotions to get my ranking back to where it was. Stay tuned for more updates.

Hope this helps guys!
Happy sourcing,
Manuel

 

http://importdojo.com/importdojo-masterclass/

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News and trends from the exhibitions in Asia (October 2015)

It’s been a while since my last post and it’s time to give you guys an update. 

October is the busiest time of the year for me. In October there are usually somewhere between 10-15 exhibitions that I need to attend or that my buyers attend. 

This month I had a total of 26 buyers from 14 countries visiting me and the exhibitions. Here are some of the major exhibitions that were going on in and around Hong Kong: 

  • Global Sources Electronics (11-14th of October) 
  • Global Sources Consumer Electronics (18-21st of October) 
  • Global Sources Gifts and Premium (18-21st of October) 
  • Global Sources Fashion, Accessories & Textiles (27-30th of October)
  • HKTDC Electronics Fair (13-16th of October) 
  • HKTDC Lighting Fair (27-30th of October) 
  • Megashow Toys, Kitchen & Dining  Phase 1 (20-23rd of October) 
  • Megashow Gifts, Houseware &  Premium Phase 2 (27-29th of October) 
  • Canton Fair Phase 1 (15-19th of October) 
  • Canton Fair Phase 2 (23-27th of October) 
  • Canton Fair Phase 3 (31 Oct – 4th of November) 

These were some of the exhibitions that I usually attend but there are a couple more. Feel free to check out schedules for next year here: 

http://m.cantonfair.org.cn/m/en/index.aspx

http://www.globalsources.com/TRADESHOW/TRADESHOW.HTM?source=GSOLHP_TopNav_TS

http://www.mega-show.com/

http://www.hktdc.com/en-buyer/

The biggest of them all is obviously the Canton Fair in Guangzhou spanning over 3 1/2 weeks and 3 phases attracting over 200,000 buyers within this time frame. For me these exhibitions are essential in finding new suppliers and products and meeting up with clients and buyers. It is also a great time to network with fellow Amazon sellers and importers. 

I was lucky to meet with a fellow ImportDojo member, a couple Million$ Amazon sellers (Will Tjernlund & Reed Thompson) as well as attending a meet-up organised by Junglescout’s creator Greg Mercer in Guangzhou.

Without further ado, here are some highlights and moments from my last 4 weeks:

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Beautiful day in Hong Kong, heading to the Gloabl Sources Electronics at the Asia World Expo. 

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Making my way to the expo hall at the Asia World Expo building at the Airport. GlobalSources offers a free Airport Express train ticket to and from the city (12$ value) on each day you attend so make sure to get your free ticket at the entrance of the Airport express.  

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Two different expos were held that day. Gifts & Home / Mobile Electronics.  Notice the “Free sourcing service for buyers”? If you feel lost and need a little help with finding products drop in and ask for help. 

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Making my way to the mobile electronics hall. All I see are smartphones and smartwatches in the first few booths. 

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Tablets and smartphones everywhere. 

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Smartwatches. Not sure these still sell well. I have first seen them in 2013 and sales has significantly decreased I reckon. My suppliers have sent updated offers for these watches every three weeks. From the highest price in 2013 of approx .49$, they now cost somewhere between 11$ – 15$. 

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These “hooverboards” were the most seen product at any exhibition. It seemed that every supplier offered them even if they sold completely unrelated products in their booth. My advice, stay away. Many of them have issues with the batteries and lifetime after a few weeks. 


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IP cameras & smartwatches again. Every booth had them. 

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Remember this Kickstarter that raised over 800,000US$? This is the supplier and they offered me a price 72-80$ depending on the quantity (Kickstarter price was 85-119$). The MOQ (1000) was pretty high but they are trying to find distributors for exclusive deals. I am pretty sure that they will soon be copied by suppliers who can offer half the price. The helmet itself is pretty cool, you can listen to music, flash left/right on the helmet and a lot more all via remote control/bluetooth and an app. 


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Built in speakers in the helmet. 

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Different functions displayed. 

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Remote control mounted on the bike. 

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IP cameras again.

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Remember I mentioned in April that I only saw one supplier for Virtual Reality headset and you should watch out for this category? I saw at least 10 suppliers this time and this category is getting really big. 

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Here we go again, “Hooverboards”.

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Drones were still a big topic but only the professional suppliers have survived. 

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Remember the Indiegogo crowdfunding project for levitating bluetooth speakers? This is a poor copy. 

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Lucky to meet up with Reed Thompson & Will Tjernlund, the Multi Million Dollar FBA sellers. I had to listen to what they were up to that same night over a beer. 

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There were all kind of “segways and hooverboards” and they even had a “little park” to try them out. 

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I then went to the Gifts part and I found these neat Gentlemens sets. 

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Considering to private label this item. Thoughts?

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A bit of walking around in Central Hong Kong. 

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I was invited to a wedding which was pretty cool because it was hosted on one of Hong Kong’s famous Star Ferries that cruises trough Hong Kong harbour.

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It was time to head to China for the Canton Fair Phase 2 and I booked myself into the Landmark Canton. Prices are reasonable (120$/night) but the hotel has degraded over the years. 

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There are several ways to go the to the Canton Fair from HK, I prefer the trough train from HK to Guangzhou for around 30$. 

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Be sure to check if your hotel has free shuttle busses from the hotel to the exhibition grounds. I didn’t use them as I was a little late and would have to wait. These buses are usually in front of the hotel and they run every 30 mins or so (free of charge). 

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Arriving at the Canton Fair Phase 2. This phase featured several categories: Kitchen & Tableware, Gardening, Pet products, Food, Furnitures, Ceramics, Gifts & Premium, Decorative items, Toys, Personal Care, Toiletries, Household items and more. 

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Making my way into the first hall (furnitures) 

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In the back of the halls the booth’s get smaller and usually host small factories BUT they often have better prices than the big name companies. Make sure to ask around for prices. 

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Toiletries bags disguised as small suitcases as you would get them on some airlines in business class. Neat idea as a gift. 

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Car charging pods for smartphones and tablets. 

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Your car audio system doesn’t have Bluetooth? Never-mind, get these 12V cigarette plug bluetooth speakers. 

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Tablet and smartphone charging station.

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Home automation was a big thing again and many suppliers had well working systems this time including a ready to download application. 

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Seen these on your friends smartphone? Starting from 1.5$. 

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These were not new but are a great gift idea. Watch out for suppliers that have at least FDA certification (as in this case) 

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Decorative items at extremely low prices. 

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A variety of pet items at this supplier. A great category for starters. 

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Travel cases and gift boxes with very nice designs. 

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Tumblers and PET bottles. 

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Christmas/Festivity lighting and Halloween products. 

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Jewellery 

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Handicraft items

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A view at the halls. 

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The view from hall C to hall A. Hall A was built in 2005 and there are now 3 halls with the same size. They are all full with exhibitiors.

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Storage containers

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A view towards the city from the exhibition grounds. The pollution is clearly visible. 

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Time for Chinese seafood dinner 

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I teamed up with fellow ImportDojo member Omar on the second day of the exhibition. 

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Registering the Canton Fair badge for Omar. A pretty fast and simple process if you pre-register online. Be reminded to keep the badge. It is valid for all future Canton Fair shows. 

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Interesting travel pillow that keeps your neck straight when you sleep.

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This BBQ apron had all sorts of pockets and even a beer opener included. 

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“Dog-clothes”

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Pottery and garden fountains

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Artificial plants and garden decoration

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Omar keen on trying the “hooverboard” that was again at nearly every  booth here. 

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Tumblers and bottles

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When sourcing household & kitchen products look out for suppliers that have proper certification (FDA, CE or others) 

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Interesting coffee maker. Nothing new but a very nice design in copper. 

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Another Chinese dinner in Guangzhou with fellow German Amazon sellers. 

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I needed a day off after all the hectic weeks and decided to go for a stream hike in the jungles of Hong Kong. 

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Can you believe this is in Hong Kong?


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I couldn’t make it to the lighting fair in Hong Kong but a friend took a few impressions

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Contemporary lighting

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Modern lighting

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Time to head to the Canton Fair Phase 3. This phase hosts the following products: Sports and casual wear, mens & women’s clothing, kids wear, underwear, office supplies, sports/travel and recreation products, shoes, bags, health products, home textiles and much more. 

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Amazing Junglescout meetup in Guangzhou with fellow FBA/Amazon sellers!

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Ready for Phase 3, I opted for uncomfortable leather shoes as usual :)

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No matter which hall, nearly every booth had function/active wear in the trendiest designs. MOQ’s ranged from 300-3000 pieces. 

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Swimwear

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Kids, diving and bicycle gear

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These knitting shoes look very familiar (ahem Nike?) 

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Gym time anyone? 

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The sports/travel & recreation products hall was the most interesting in my point of view. 

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 Foosball kickers

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Titanium camping gear

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This e-bike was not comfortable to sit on

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Blow-up whirlpool

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A view of the city

There were a lot more pictures and expos that I went to but it would be too much to post here.

If you are selling or planning on selling on Amazon within the next year I highly recommend that you make your way to China. ImportDojo offers you training and expertise preparing you for these exhibitions here: http://importdojo.com/importdojo-masterclass/

Also feel free to join Importdojo’s Facebook group and keep updated for next year’s exhibitions and meet ups. I am organising a buying trip in 3 groups during April 2016 with a maximum of 4 people per group and if you are interested to learn more feel free to message me.

I hope you got a bit of insight into the exhibitions in and around Hong Kong and I look forward to your comments :)

Happy sourcing everyone!

Manuel

FotorCreated

Chinese Sellers on Amazon? Don’t worry (for now)

So I am pretty sure everyone read the news that Amazon is helping Chinese factories to get their brands listed on Amazon. It’s actually old news as the Amazon team has been on the grounds in China for a few years now.
Everyone is worried now which is understandable. One thing they definitely have advantage in is the price, but let me explain why that doesn’t matter.
Let me take off some of your worries right now and explain why this will not impact your Amazon business in a short time period and how you can prepare to be ahead of the Chinese sellers.

Minimum Order Quantities (MOQ’s)
Most factories have high MOQ’s and thats often because they need to purchase a certain amount of raw material from their sub-supplier. To do so they need orders. Bringing me to the next and most important topic, taking risks.

Taking Risks
Many factories won’t take the risk of producing for their own stock and try to sell it trough some sort of sales-channel. They do in some cases, but these items are mostly found on Chinese websites and Aliexpress or DHGate.com
When they sell on these sites, the packaging you get is probably in Chinese, as is the instruction manual.
A factory does not produce on their own risk and try to sell it somewhere. They always need a customer behind an order. Be it a large retailer, a small time buyer from the Philippines or the occasional Amazon buyer.
They don’t have stock of the necessary raw material or packaging because the longer they store it, it will get smudged, dirty and might not be possible to sell it anymore. I know this because I have been to 100’s of factories in my time in China here.
When you go to a factory you won’t find their own packaging or raw material on stock. They ALWAYS purchase the material once they have an order incoming.

It’s just not economical for the factory to purchase raw material on their own behalf. Margins are so low these days, they need to maintain cash flow for their customers. Sometimes they have some stock but that’s probably from a over-production or from a client who didn’t take the entire quantity. Sure some factories have good cash flow, design & marketing departments and they will sell on Amazon. Those are the ones that you can see now already. But they do not posses the knowledge on how to SUCCESSFULLY sell on Amazon (yet). I don’t know anyone in China who has taken a course on Amazon selling or listening to podcasts on how to be successful on Amazon. And most factories in China just won’t take the risk of investing money into their own product to sell it online overseas.

It is not within the Chinese culture that you take a risk for something that you don’t know is going to pay off. Chinese won’t create a listing on AMZ without knowing that their product will sell.
They always go after the sure thing (there are exceptions of course).

Quality standards
When a factory develops a new item and they get their first order for it it is likely a “naked” item with no standard whatsoever. The factory needs to rely on each customer’s input on what the customers needs in terms of quality.
A small importer in Thailand has completely different quality requirements than a large German retailer. The importer in Thailand may require nothing, while the retailer in Germany has all sorts of requirements that involves large investments on the suppliers side. Who do you think the supplier will rather want to work with? Exacly, the Thai importer. Because his quality requirements are low and not much effort is needed to sell the product. So many factories do not have the necessary quality standard on new products. Amazon is heavily investigating into products that do not meet current American quality standards and if your product does not comply it gets removed. There are of course established factories who have meet all necessary quality standards but they are likely comfortable selling to their existing customers.

Certification & Requirements
I often hear from suppliers when I ask for a certification of a certain product: “you don’t need that, other customers don’t ask and we don’t have it”.
Well excuse me but I will decide what my market and selling channel needs in terms of quality & certification. Amazon is cracking down on many sellers who don’t have proper certification for their product or in most cases they won’t even allow sellers to list products without certain certifications or test reports. After all Amazon cannot afford to be sued by a customer who for example bought a plastic product that comes in touch with the skin and now the clients has a rash because the plastic is made out of waste material and has high toxins and chemicals in it.

Innovative and trendy
I have yet to walk into a showroom of a factory and see something new apart from the occasional exception at an established factory with retailers or customers in the West. That is after living and working here for over 10 years. There are of course suppliers that develop their own products but in many cases they miss the product to market fit. They always rely on the input of a customer on how a design of a product or the functionality has to be. I read a report a few weeks ago that quoted Former Hewlett-Packard CEO Carly Fiorina:

“I have been doing business in China for decades, and I will tell you that yeah, the Chinese can take a test, but what they can’t do is innovate,” she said. “They are not terribly imaginative. They’re not entrepreneurial, they don’t innovate, that is why they are stealing our intellectual property.”She added teaching innovation, risk-taking, and imagination “are things that are distinctly American and we can’t lose them.”

The quote caused some outrage around China but the majority of Chinese people actually agreed with Carly Florina and posted on Chinese forums like Weibo (largest forum in China). Saying they need to be more innovative and take more risks sometimes. They weren’t offended and I think she didn’t want to offend them, but she did point out the weakness where they have to improve. And that cements my earlier statement “ taking risks” is simply not in their nature.

Customer Service
I doubt that Chinese sellers can manage the customer service from China. They would need to hire perfect English speakers and dispatch them completely to their Amazon business.
I can tell you that if I ask my suppliers to do so they will probably ignore me. It is considered an investment “not worth it”. At least as of today.

Marketing Strategies
It is very unlikely that a factory knows much about launching and promoting a product trough blogs, landing pages, Facebook promotions (Facebook is banned in China), review groups and so on that many of you have paid good $ amounts to learn.
But these are the channels that a new product needs when it launches or when it needs to grow. Otherwise your product just drowns amongst the competition and never lifts off to be in the top sellers.

Price Point
Yes, they do have advantage over the price. But that is not the key issue when you sell on Amazon. When a supplier quotes you a price of 5$ his own profit will probably be less than a $. And that doesn’t really give him an edge, because YOU (the experienced AMZ seller) has years of experience, PPC knowledge, Facebook followers, mailing lists, existing products with reviews & social proof etc. that the customer is willing to pay for when making a buying decision.

Legal Issues & Company Setup
It is not very easy to set up a company in the States for a Chinese company. To be really successful on Amazon you need a private label, have a trademark registered and a company set up.
Not many sellers from overseas will go trough this process.

Facebook pages
Facebook is banned in China. Sure they can get a VPN connection and go on Facebook but who are they going to promote to?
Build a Facebook audience with zero friends and followers? That is going to take a long time. Are they going to post on Facebook groups like The Amazing Seller or ImporDojo to post their products?
No. The last time a chinese seller promoted his product in my group I banned him. Not because his product wasn’t interesting or I don’t allow it but the way he did was pure spamming. Joined the group, no interaction at all, no feedback to other group members, simply wanting to promote his product to the group members without providing any real value to the group. So you can take one of the most important promotional tools for your new product (Facebook) already out of the equation.

Branding & Packaging
When I set up my own company (www.mandarin-gear.com) in late 2013 I had one goal. Affordable products at a great quality with excellent packaging.
What Chinese lack at this moment is an eye for design and western preferences when it comes to packaging. They also do not have properly translated instruction manuals on their own.
Sometimes they use their customers proof-read instruction manual when they sell to other customers but for new items they don’t have anything. Imagine what Amazon customers think when they open the box and can’t understand half of what’s written in there? How do you think that will affect the review? That’s why, whenever you buy a product in China always try to have a proper instruction manual. Check out my other post on this: http://importdojo.com/private-labels-packaging-differences/

English language barrier
Have you ever been on a Chinese website with English version? Yes? So you have seen the horrible grammar mistakes. This won’t change when Chinese sellers list on Amazon. Yes, they can now list their products trough a Chinese Seller Central account and it’s all in Chinese but that doesn’t change the fact that you need proper keywords and wording with excellent grammar when you want to list & sell your product successfully.
Suppliers simply wont be investing their money into proper English translation because they don’t believe in going the extra mile without knowing they will make a profit; so their listings will look horrible.
Would you buy a product when you don’t understand half of the text or description?

But they already sell successfully on Ebay and provide free shipping?
Yes, the Chinese sellers have taken on Ebay a few years ago and some are very successful. But only successful in terms of their sales and because the Chinese Government heavily subsizdes freight costs from China (China Mail).
I would say 20-30% of the items sold on Ebay from Chinese sellers are returned or the customers are unhappy with their purchase because of the quality of the product.

You can’t refund the item to the seller, you won’t send the item back to China, will you?
And even if you can, are you going to leave a positive review?
Amazon doesn’t work like that and everyone has to pay the local shpping costs in the US. So while the Chinese seller can send in his product at a cheap rate he still has to pay the local freight costs. And what stops you from getting good shipping rates from China? Most suppliers will offer you the same rates they get when sending goods overseas.
Also you can’t just list everything you want (there are restricted categories and legal compliances to be met) and whenever there are returns the clients will leave a negative review.

Amazon won’t hesitate to ban the sellers account immediately if the return rates are as high as 20-30%. Amazon has a strict policy when it comes to customers satisfaction and the way I see it not many Chinese factories can comply with their “basic” product on Amazon without having input from overseas buyers on how to improve the product.

Now having said all that, there are suppliers out there who already sell on Amazon and there will very likely be more in the near future who are capable of all the above especially with the help that Amazon is doing in China now.

But those are are only a few and “we” all have a headstart, the understanding of the marketing, promotional strategy and how the Amazon machine works best.

Eventually Chinese factories will figure all these things out but I am giving this at least 5 years. Essentially what is happening now (or has been happening in the last 2 years) is that a retail giant (Amazon) is trying to teach an entire army of manufacturers why they should sell on Amazon. This is a tremendous project and will take some time. In 5 years, survival of the fittest will have set in so now is the time to step up your game and be among those survivors. One of the most important tasks ahead of you now is to master the import trade so you can compete not only in marketing & sales on Amazon but also price wise.

So here are some important steps for you to remember:

  • Improve your product quality based on reviews
  • Pay a little more for better quality and regulations-compliant products
  • Develop your own products and packagings and make them exclusive for you on Amazon
  • Build or grow your brand with cross product selling and larger assortments
  • Build or grow your audience (Facebook, mailing lists etc.) and be ahead of the Chinese competition
  • Build relationships with suppliers for the long term and become one of their largest customers so that they don’t have to sell on Amazon themselves

And most importantly: Learn the import/export trade from the inside out
What else can you do? Step up your import knowledge and learn the entire import/export business from the inside out so that you not only have advantage over the Amazon marketing & sales process but also know as much about importing/exporting as the Chinese do.
Check out ImportDojo’s Masterclass, teaching you the in’s and out’s of sourcing from China here:
http://importdojo.com/importdojo-masterclass/

Happy sourcing :)

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4 ways to avoid being scammed by a supplier

The most asked questions I get are “how to avoid being scammed by a supplier” or “how do I make sure this supplier is legit?

To be honest with you the easiest way to make 100% sure is to go visit the factory but I realise that most of you won’t be able to do so.

The goods news is there are ways to figure out if a supplier is legit or not without going to China. The bad news is that some of these options will cost you some money.

Here are my four proven ways of researching a supplier. I will go into detail for each one of them.

1) Factory audits

2) Alibaba research

3) Certificates & reports

4) Skype call

 

1) Factory audits

A factory audit is where you hire a Third-Party Inspection Company to conduct an audit at the factory’s facilities.

This way you can make 100% sure your supplier is legit.

Be aware that not all factories allow you to perform an audit at the location which is in turn already a huge red flag.

If they are willing to undergo an audit straight away it is a good sign already. You don’t necessarily need to perform an audit but announcing to a supplier before you order that you will conduct an audit already gives you some idea on what your supplier is up to.

Lets take a look at the procedure when booking a factory audit. There are many Third-Party Inspection companies out there and I mention them in a few posts (TUV, SGS, Bureau Veritas etc.) but I always use Asiainspection because they are efficient, cost effective and reliable. There are companies out there who charge half the price but you don’t have a convenient interface/dashboard online that lets you do the booking trough their system. Most of the cheaper Inspection Companies have only email/phone conversation bookings available.

Lets take a look at how you can book an audit with a factory online trough Asiainspection.

Login into your account and click on “BOOK NOW” and then click on “Factory Audit”. This is how it looks like:

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Next thing is you need to start inputing general information such as your reference, the requested audit date etc.

You also need to let them know if this is a first audit or re-audit. Then they will take extra care for issues that you can input later.

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In the next mask you input the factory’s detail, contacts and addresses where you want the Inspector to go. The system also stores this information and makes it easier for you next time you want to audit or book some inspection at this factory.

Read more

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A day trip to the factory

I like to do day trips to China these days as I have a lot to follow up from the exhibitions and its quite convenient to go to my factories (around Shenzhen) from Hong Kong.

So I met this factory at the Global Sources exhibition here in Hong Kong and I decided to look at their factory as I have never seen the production of drones.

Hong Kong is super convenient in terms of transport. I usually take the MTR (subway) to China. Yes, you can go all the way from Hong Kong island to Shenzhen by subway.

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It takes about 45 minutes from my office to the border by train. Fortunately I have a APEC card, so I don’t need a visa for China. Actually with this card you don’t need a visa for 13 countries in South East Asia. I can just simply fill in arrival cards in most countries and don’t even need to pay for a visa.

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If you don’t have a visa for China you can go trough the LoWu border station and get a visa on arrival. But you are only allowed for 3 days within Shenzhen. I went trough the 2nd border which is called Lok Ma Chau station as its more convenient for me to go from there. Be aware, there are NO visa’s on arrival at this border crossing.

 

Most of my factories are within an hour drive after I have crossed the border but I decided to take the subway today. After crossing the border I just head down to the subway. Everything is in English these days so I am not worried on getting lost.

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I agreed to meet with the supplier after a few stations as the traffic to their factory is really bad. Sometimes they pick you up in a Mercedes and sometimes in a delivery van that has no proper seats. As in today’s case.

 

Read more

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Global Sources Expo Part 2

The Global Sources Expo at the Airport in Hong Kong is a wrap.

I didn’t have a lot of time for sourcing but I did see some new ideas & suppliers. I will elaborate more on that in the next post.

All in all from a exhibitors view I am satisfied with the results. The feedback on my brand & packaging was good and I am now following up on quotations to buyers.

The majority of buyers came from China (60%). There were also a lot of buyers from India, the Middle East & South America & few from Europe. What surprised me the most was that there were not many buyers from the United States, given that the USD exchange rate is very attractive for imports right now.

Most buyers were out looking for the newest gadgets & trends in consumer electronics. What I was missing most was products in the VR (Virtual Reality) sector. There was literally nothing at all booths despite the recent developments in the media.

Will update more on sourcing in the next post.

all the best,

Manuel

returns

Claims and compensation

Ok, so your received goods are damaged, the wrong plug is attached, or the goods are returned from your customer for not functioning or other reasons. This is a bit tricky.

I use this following tactic only when it’s absolutely the manufacturer’s fault. If I also made a mistake perhaps on the order sheet or not having stated something clearly I will go mild on him and try to settle for compensation rather than a claim.

Collect all information on returned or damaged items. Document with photos, emails, and reports from your customers.

Start by calculating your loss incurred due to broken/damaged items and incurred loss due to loss of sales. Take this desired figure and add 20%.

Why 20%? Because the supplier will probably only offer you 50% of your total claim in his first response. Hopefully you can settle on the 100% (without your fictitious 20%)

Send a combined and detailed report to the supplier and state your claim with the desired amount.

If it is a new supplier he will probably try to wriggle himself out.
But if you have actual proof there is nothing he can do – but he will try to pay as little of the claim as possible.

In many cases the supplier will offer a discount on your next order. This may be acceptable if you plan on reordering and the supplier is usually reliable with your other orders/shipments.

If you do not plan on reordering from this factory you may as well demand compensation right away. I would not go as far as to threaten the supplier, but daily calls and emails will definitely help if he is stubborn on compensation.

You may also contact me and I can help communicate with the supplier (manuel@mandarin-gear.com)

Eventually, you will hopefully settle for the actual desired amount.

Another option is, if you have actually done an inspection by a third party and the report of this inspection shows no problems on the production or that particular problem you can actually claim money from the third-party. But you will need substantial proof, same as with the supplier. This can be done in addition to the claim to the factory to get the maximum compensation for your occurred loss.

There are also a few legal options if you are within your rights. You might want to get in touch with an expat lawyer within China or a lawyer based in your home country.

Some suppliers have product liability insurance (http://en.wikipedia.org/wiki/Product_liability), which covers the loss due to a a problem with their products.

If you are importing large quantities regularly I also recommend you look into this with your trusted insurance company. There are a few within China/Hong Kong that provide this service if you don’t find anything within your home country. For example, HSBC ,which is the largest bank within Asia that most suppliers use.

 

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Contact a third-party inspection company to inspect your goods

There are several third-party inspection companies in Asia.

Some of the big names are: Buereau Veritas, TUV-SUD, TUV-RHEINLAND & AsiaInspection to name a few. The first three are usually expensive but also very thorough. AsiaInspection is a simple and cost efficient service that should work in the beginning for you.

Lets take a look at AsiaInspection:

AsiaInspection has an easy to use Dashboard and Interface. As soon as you register someone will call you to ask if you are in need of any service. They are very helpful and efficient.

Here is what the Dashboard looks like:

 

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You can book several types of product inspection, send them a sample that you would like to have tested, or have them conduct research and an audit at your supplier.

Types of Product Inspection

  • Pre-Shipment Inspection / PSI (Inspect the products after they are fully produced)
  • During Production Inspection / DUPRO (Inspect your products during production making sure everything goes well)
  • Initial Production Check / IPC (Inspecting your products at a stage when ~20% of the products are finished)
  • Container Loading Check / CLC (Checking proper loading and quantity count during container loading)
  • Production Monitoring / PM (Simple monitoring of your products during the production)
  • Lab Testing:You can send AsiaInspection your sample, or even better, ask the supplier to send a sample for testing.
    What needs to be tested depends on your market and requirements. But they will give you an idea what they can do and what you should have tested.
  • Factory and Social Audit:While I recommend that you have the factory audited, many factories are already audited by either Alibaba or some other third-party for other customers.Simply ask your supplier to send you his latest factory audit report or look on

Alibaba. If your supplier is on Alibaba it is likely he has a factory audit that was performed previously. Therefore, you can skip this step if the factory has a valid and positive report.

If you are unsure and your order is large have the factory audited.

Their prices go from 309USD negotiable (full inspection) to 649USD for auditing and more.

If you are purchasing from China for the first time AND the amount is over say 2,000USD it makes sense to have at least a pre-shipment inspection.

This covers basics such as function test, checking the production, and making sure the products are made according to your order-requirements.

You can choose either one or all at the same time, it really depends on how much you trust your supplier and how sensible your product is.

Either way, you can simply do this entire process through the online-booking system. They can also give you a call to discuss details.

Once you have your test or inspection booked and performed they will send you a report on their findings. Depending on the findings you can now decide if you want to place an order to your factory or if the product needs improvements.

As for the other big names such as Bureau Veritas, TUV, SGS, and others I only recommend them if you have business in China in excess of 500,000USD. They are usually more thorough, with more detailed reports and so on. But they also come with a high price tag.

 

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