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Product Liability Insurance

Do you need Product Liability Insurance (PLI)?

Yes, I do recommend you have it but I’d say you don’t need to have it before you list and launch your first or second product.

You are unlikely to get any insurance anyway if your business is very new, have no track record, never filed an annual return or have no experience working with factories in China.

How does Product Liability Insurance work?

Basically you can cover any product in a group of products or by product only under an insurance. Meaning if there is any issue with your end consumers the insurance will cover the damage. That is if you have done everything by the book. Meaning you have certifications, had an inspection, a letter of guarantee from your supplier of conform goods and everything went well during production. Thankfully I’ve never had to make use of my insurance so far and I pray I will never have to but just in case its good to have it. Especially if you sell in the US.

Who needs it?

I’d say anyone importing to the US needs it at some point. Be it low risk items or high risk items, it just is better to have as you never know what your customers may do with your product or if there’s any fault in manufacturing that you didn’t find out during inspection.

Who can apply for a Product Liability Insurance?

Basically anyone can apply for an insurance. After all the insurance companies want your money. BUT not everyone gets it. It really depends a lot on how long you have been in business, who are your suppliers (are they a 20 man factory or do they produce for Walmart), do they have certifications, do you yourself have experience buying from China etc. There are many factors that go into the insurers consideration to issue you a policy or not. Please note you need a company to apply for Product Liability Insurance. You cannot apply as a private individual.

Where can I get a Product Liability Insurance?

Here are some sites that broker insurances from the big Insurers (AXA, MSIG, BUPA,Generali, Globality etc.)
Send them an email with your introduction about your business and they’ll get back to you if they can help you. Mind you these companies are based in Hong Kong so you need to have a HK Ltd. company to apply.
To find insurers in your country you’ll need to check with your local insuring companies.

http://www.lfsinsurance.com/business-insurance/
http://www.hkpli.com/
http://www.business.hsbc.com.hk/en-gb/protection-and-investment/general-insurance?DCSext.nav=foot-mat

(Note: HSBC does not cover US businesses)

Miscellaneous:

You need to understand while almost every insurance company will receive you with arms wide open for a life or health insurance it is actually NOT easy at all to get a product liability insurance.
You will be audited by either the insurance company or the broker and there will be extensive background research on you, your company, your products before you can actually get the insurance.

Like I say in nearly all of my posts, always work with reliable and experienced factories – always have certification available to meet country specific requirements (CE, ROHS, FDA etc).

When you apply for a PLI It is a minimum requirement that you have avilable certification.
I mean it’s only obvious that a insurer will only insure you if you have a quality product and not a product that falls apart or lights up in flames the moment you use it.

So you need to provide a lot of documents. Here are just some of the main documents needed:

  1. High Quality Product Photo of at least one item on each category
  2. Test report on at least one item on each category
  3. User Manual on at least one item on each category
  4. Warning Labels on at least one item on each category
  5. Completed and signed PLI application.
  6. Quality website with detailed information on your products
  7. Ideally you have a background in sourcing. If not, provide an action plan on how you source sustainable and quality items in China

 

I hope this helps as a general guideline. Please feel free to share or comment if you have any questions 🙂

All the best and happy sourcing,

Manuel

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

exhibitions

Exhibition season starts & Amazon policy changes

It has been a hectic week for me, exhibition season started and I went to the GlobalSources Electronics show this morning to check out some of the newest products.

I’ll give you a recap of the trends at the end of the month as usual but here are some first impressions.

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Arriving at the halls

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Are these camera’s still selling?

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An actual AI at the show

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Virtual Reality (VR) becoming more popular

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GlobalSources will hold a drone racing championship here. Curious to see.

For previous recaps have a look here:
https://importdojo.com/news-and-trends-from-the-exhibition-april-2016/
https://importdojo.com/the-cantonfair-all-you-need-to-know-about-the-biggest-expo-in-asia/

For what you can expect or what you can prepare have a look here:
https://importdojo.com/news-and-trends-from-the-exhibitions-in-asia/

Here is a list of the most important exhibitions coming up:

http://www.globalsources.com/NEWS/TRADE_SHOW_CALENDAR_OCTOBER2016_A.pdf

You probably heard about the two big changes on recent Amazon policy updates (today & last week) so I wanted to give you my two cents and what you can do:

Amazon review policy update

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https://www.amazon.com/p/feature/abpto3jt7fhb5oc

Last week (3rd of October) Amazon made an important announcement on its policy change in terms of reviews.

In short you are not allowed to ask for reviews in exchange for a discount or free product (anymore). This has been coming for a while.
First Amazon requested that reviewers spent a total of 5$ before they can leave a review, then in September this year this threshold was risen to 50$ and now only regular purchased products may be reviewed (or trough Amazon’s Vine Program).

I personally think this is super positive for sellers who try to build a brand and pay attention to quality and customer service. Will it be harder to get reviews and boost rankings? Yes for sure but it will also mean that those that are trying to make a quick buck will fail which means more room and profits for us hard working peeps 🙂

This will hopefully remove a lot of pushy Chinese factories and get rid of poor quality items. The many months you spent on perfecting a product sitting in front of your computer trying to come up with an additional value for your customer or how you can deliver better quality products are finally appreciated.

I’ve always said that building a brand together with social media and outside traffic is important right from the beginning.

My two cents:

  • PRO:
    less giveaways – more profits for me
    better quality products
    less Chinese sellers pushing the price down
    reviews that you get now are a reflection of your dedication to your products
    Having built an audience (social media) pays off
  • CONS:
    it will take longer to gain traction & sales launching a product
    And thats really the only con I see here….

Do it “right” from the beginning, build a brand and and audience on social media following and quality products
The point I am trying to make is not to worry too much about getting your product on the map if you have either:

  1. A superior product and listing
  2. A product that is highly in demand (just follow trendy websites and you will find those niches)
  3. Social media to drive traffic to your listings.

Reviews will eventually come. And those reviews will be a reflection of the hard work you’ve put into your product.

The best thing about this change is I don’t have to set away a ridiculous amount of units for reviews – saving me a lot of money.
The downside? Yes, it simply takes longer to gain traction but who said this is a get-rich-quick scheme?
Every business takes time and unlike a lot of people out there tell you, be patient, put in the work and you’ll get rewarded eventually.

Now, if you haven’t yet its time to set up services like Salesbacker (Salesbacker). The only way you can ask for reviews is with programs and autoresponders like SALESBACKER because this is integrated in your Amazon account and the people who are asked to leave reviews have bought at a full price (or discounted price that you list public). Salesbacker works very well for my products. Usually every 2nd-3rd buyer leaves a review.

So if you are worried about your intial launch I recommend that you launch your product at a discounted price for a few hours/maybe a day and see how sales come in and you MUST have Salesbacker installed before that and wait until reviews come in. Then you jack up the price again to normal. It’s perfectly within TOS and has worked well for me on a few products.

It has become very important now to build outside traffic trough social media or advertising. Even more important is to have the right supplier and add value to your product. Check out my case study on how I did it:
https://importdojo.com/importdojo-masterclass/

The second big change came in this morning:

https://www.bloomberg.com/news/articles/2016-10-11/amazon-said-to-limit-warehouse-access-to-new-merchants
Amazon now restricts new sellers that you cannot ship anything to their warehouses if you have not yet shipped any products to Amazon by 10th of October. You can still sign up for FBA but your first shipment will have to wait until 19th of December.

I believe that their warehouses are bursting and they are trying to avoid overcrowding and “clogging” of products that are new and have no sales record/history. Same thing happened last year during Q4 but only affected a few categories like toys. Now it affects all categories. This will certainly upset a few people who’s first shipment may be on the way or is being produced right now. Not only will those sellers miss out Q4 sales but also might be stuck with their inventory at some warehouse at additional costs. If you can wait it out good, if not I recommend to do the following:

Switch your incoming inventory to FBM (Fulfilled by Merchant) and ship your product to a fullfilment warehouse in the US. Here is a list of warehouses from reddit: https://www.reddit.com/r/FulfillmentByAmazon/comments/3eq4m0/updated_list_of_fba_prep_and_ship_companies/

It is perfectly OK to sell in Q4 BUT ship from your own (or third party) warehouse. There’s no offiicial statement from Amazon yet but I think below screenshot says it all

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I hope the recent changes didn’t put you off or de-motivate you. I’ve seen some of my products or friends product hit page 1/2 after a few days without doing much.I believe if you put in the work and add value to your product you can succeed.

All the best & happy sourcing,
Manuel

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