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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: https://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:
https://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

conclusion

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: https://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

 

https://importdojo.com/importdojo-masterclass/