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Case Study – How I went from zero to 7,000US$ in 10 days in one of the most competitive Amazon niches

Case Study – How I went from zero to 7,000US$ in 10 days in one of the most competitive Amazon niches

Case Study – How I went from zero to 7,000US$ in 10 days in one of the most competitive Amazon niches

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

This is a case study I did publicly on a product that I sourced in China and launched on Amazon a while ago. I am currently working on a new case study for 2021 so if you are interested in following that case study please subscribe to my newsletter at the bottom of my page to get updates when I get started. 

Onto this case study. I did a 2 hour webinar on this case study on Youtube, you can watch it here to get an in-depth step by step guide. 

Before I get into the results I wanted to share a few photos with you of the exhibitions here in Hong Kong last week and meeting up with a lot of fellow Amazon sellers and ImportDojo members. Just briefly and you’ll read more of it towards the end of this post, around the 5 month mark I became the #1 bestseller in Amazon’s “Coffee Press” for 2-3 days. To reach that was honestly more I could have hoped for. While I was the bestseller I sold about 90 pieces per day. What a result 🙂  

I also had the opportunity to speak at the 3-day Global Sources Sourcing Summit event as the opening speaker where I met a lot of fellow Amazon sellers. The atmosphere and networking there was simply amazing.:

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

Without further ado onto the case study

Ok so first things first. I would have never thought that this product is so competitive. 

When I looked into it in November 2015 the competition seemed big but manageable and with a superior product I thought it wouldn’t be so difficult. 

Well I can tell you it was quite difficult to get the product on the map. Having said that I am quite happy with my initial launch results. 

I have now sold over 200 units and a sales turnover of nearly 7000$ within the first week of the launch

And the best thing, I am now number 7 on the best seller list and on page 1 for my main keyword. 

Here’s how I did it: 

When I started this project there were about 30 something sellers with similar items and I already knew it will be quite competitive but I was in for some real tough competition. 

I am not going to lie, this was a though one. 

When I launched there were about 120+ sellers of similar items and my main key word was VERY VERY competitive (over 3 Million searches per month) and I would need a huge launch to kick it off. 

After my initial boost with my email list, bloggers and Facebook group I realised I needed help to push it. 

Here are some of the numbers: 

Start of the project: 17th of November 2015 (Chinese New Year added nearly two months to my production) 

End of the project (launch): 12th of April

Length of the project: ~5 months. It can be done in less time (2-3months) especially if you don’t forget to place orders before the Chinese New Year :) 

Total order value of product: 4500$ (1000 pieces at 4.5$) 

Total cost of inspection, photography, layout and packaging: 949$

Total cost of shipping: 2650$ (~900KG by Air – thats 2.94$ / per kilogram) 

Total cost: 8099$

I figure if you are on a smaller budget you can do 500 pieces, cheaper photos and white box instead of color box (ike mine) and you can halve the costs of my 8000$. 

BUT to really maximise your profits I suggest a starting budget of minimum 5000$ per item. It is possible with less but a lot harder. 

Milestones, strategies, giveaways and results after 10 days of launching in order of action taken:

Friends and Family: 95% of coupons used

11 sales at 98% off. Helped definitely to put me on the map and ranks of Amazon. 

Facebook groups: 

3 sales at 49% off. Not much but can’t complain either. None of my Facebook groups are Coffee target groups. 

Blogger list: 

About 23 sales (with 20% off) resulting in a profit of 180$. Deducting the advertisement fee for both bloggers @50$ each leaves me with a profit of 80$. Not bad BUT the sales of the product and climbing the ranks trough these sales is MUCH MUCH more important to me at this stage. PLUS my product is embedded on the Blogger’s pages permanently so I am expecting more sales and traffic to come to my listing “for free” from here on. 

My email list: 

8 sales. Not great but my email list are mostly NON Amazon buyers and retail customers mostly. But either way, I just needed to send out 1 email that took me 10 minutes to write and I got 8 sales from that.

Twitter:

0 sales (980 followers) I guess you really need to have targeted followers. 

Instagram: 

1 sales (150 followers) I guess you really need to have targeted followers here as well. Most of my Instagram followers are friends or family and I only have personal photos on there usually. Create a new account that targets your product category. 

My product got buried quite quickly in the “new products” section but you can boost your item to the top every 3 days or so. So far everyone who took the coupon has bought AND left a review. So thats a 100% conversion on reviews. 

I used JumpSend and it also boosted my ranking but difficult to say by how much. I guess you can leave your product on there forever and boost it once in a while to keep your BSR at a good level. Anyway, its free so I recommend you to try it definitely.  

JumpSend result took me by surprise. 98% conversion of coupons and the boost put me on page 1 within 7 days and my BSR from #16,000 to #1320 in Kitchen and Dining. Yes thats right, my product climbed to rank #1320 within a week in one of the biggest categories on Amazon and hovered there for a few days. I’ve never had any climb that fast on previous launches and THAT immensely helped on getting organic sales. 

Some more numbers: 

Reviews so far: 

38 – 5*-reviews 

1 – 4* review (customer received a broken handle but I immediately sent him a replacement without blaming transport or anything so he left me a “stellar 4* review) 

Ranking:

Top so far: 1320 in Kitchen and Dining

Currently: 5400 in Kitchen and Dining

Category: 

Top so far: #7 in french presses

Currently: #25 in french presses

Sales: 

Total Sales so far: 6548$

Toal Units so far: 219 pieces

AND Currently averaging 8-12 ALL ORGANIC sales per day 

Next steps:

Activating PPC:  Start with a automatic campaign and check the report after one week. Use the most searched and effective keywords in your automatic campaign and set up a manual campaign with these keywords.  

Conclusion:

Remember, before you get to this stage you need a superior product and the prerequisite is that you have a great supplier, excellent quality, the right strategy and take your time with the process. Key is to take action but don’t forget important steps when dealing with the supplier such as exclusivity agreements, purchase order contracts, background check and lots more.  

Check out my webinar where I walk you trough my process on how to get a superior and safe product from China. 

I am quite happy with the results of the case study and I could have climbed trough various strategies slowly but above services definitely helped getting the product on the map fast and hence resulting in great organic sales after week 1.  

Matter of fact at this velocity of sales I need to re-order within the next 2-3 weeks. 

Now imagine your product is in a less competitive niche what’s actually possible on Amazon FBA. Take action now :) 

If you are interested in the entire case study looking over my shoulders with each step I took in every detail feel free to check out my course. I have detailed and documented every little thing from the beginning to the end in over 50 video tutorials. 

From the research phase to finding a supplier, evaluating them, placing the order, booking inspections, margin calculations, exclusivity agreements (so you guys don’t try to copy my product :) ) and arranging straight to Amazon shipments until the launch of my product. I am taking out all the fear and worry in the process and show you how it works. 

The point I want to get you to and with this case study is that you can see a complete product launch that starts from finding the right product, the right supplier and shipping it to Amazon, promoting and selling it.

Best thing about this, I’m using my own money and will try a lot of different things so you can see what works and what doesn’t and learn all this without running your own trial and error experiments.

If you don’t sell yet simply watch and see and all your worries and anxiety of placing your first order will be gone because you already know everything step by step.

Apply these methods to your own product idea and become a professional Amazon seller and importer. 

Whats more? This case study is on top of the already existing 50+ video tutorials, templates, private Facebook community and 2 hours of one on one coaching with me personally. 

Check it out here: https://importdojo.com/importdojo-masterclass/

7 weeks case study update – I am out of stock

I have a problem. Well its more of a luxury problem. Don’t get me wrong, I am not complaining 🙂

I have sold 1008 pieces of my French Coffee Press and am out of stock after only 7 weeks.

How did this happen? 

If you re-call above,  I was doing about 8-12 pieces organically after my initial launch.

After about 5 weeks I was doing around 20-25 pieces a day: 

And in the last 2 weeks I was doing between 35 to nearly 50 pieces a day!!!

I contribute this to the following factors:

  • My listing and photos are better than the competition

  • My product is superior to the competition

  • Great copywriting does matter

  • 79 reviews within 5 weeks  

  • Launch tactic and tools used 

So now I’ve been out of stock for nearly a week already and my ranking has obviously dropped significantly. The good news is I have 1 shipment (208 pieces) that will be arriving this Friday. Unfortunately it is only 208 pieces that the supplier had in stock for me. 

As soon as I saw that I am heading towards 30 pieces a day I ordered another 2500 pieces that are being produced right now but I have to send it in via Sea otherwise it gets too expensive. Also I will not do any give-aways or PPC until my 2500 pieces nearly arrive, otherwise I am running out of stock again. Luxury problems like I said 🙂 

Alright, numbers:

Start of the project: 17th of November 2015 (Chinese New Year added nearly two months to my production) 

End of the project (launch): 12th of April

Length of the project: ~5 months. It can be done in less time (2-3months) especially if you don’t forget to place orders before the Chinese New Year  

Total order value of product: 4500$ (1000 pieces at 4.5$) 

Total cost of inspection, photography, layout and packaging: 949$

Total cost of shipping: 2650$ (~900KG by Air – thats 2.94$ / per kilogram) 

Total cost: 8099$

Update numbers after 7 weeks:

Units sold: 1008 pieces

Returns, units broken: 12 pieces (1% return quote) 

Profit made after PPC, give aways & others: ~8400$ 

My estimate profit when I started was around 12,000$. So I am short about 4,000$ but I am not not complaining. 

I’ve taken these 8400$ and re-invested them in my 2nd (208 pieces) & 3rd (2500 pieces) re-order. 

Meaning that the following orders are pure profit because I covered my initial investment (8099$) and nearly covered my 2 & 3rd re-order. 

Conclusion of this case study (6 months update)

As you can see in the picture above around the 5 month mark I became the #1 bestseller in Amazon’s “Coffee Press” for 2-3 days. To reach that was honestly more I could have hoped for. While I was the bestseller I sold about 90 pieces per day. What a result 🙂        

It’s been 6 months since I started this project and I thought its time to give you a recap of what has happened, what went well what didn’t and where I can improve.      

The fact that the Chinese New Year (CNY) was in between and that I have not worked full time on this project has delayed my project. 

If I would have focused on this project from the start and work more than the 1 hour per day I could have shipped out before CNY and would have had a total of 3 months from the start until launch of the product. Since I am aware of most things that need to be done for this project it is easy for me but if you are a beginner I estimate that from finding a product until shipment/launch you can do this in 4 months.

Now onto the things that went well and some that didn’t work well.

One thing that caused a long delay was my mistake in paying the wrong beneficiary for the sample payment. That delayed my project for nearly 2 weeks.

So make sure that you check all banking details when you make a payment. I also lacked the motivation in the beginning because I had so many other things and other products going on. That delayed my product for 2 months. Why? Because I won’t ship out before CNY. So make sure of the timelines when you want to launch a new product and be aware of Chinese holidays.  But I will explain in a little bit why this actually doesn’t bother me so much. Another thing that didn’t go so well was the misunderstanding on the extra filters that I wanted. 

Apparently I didn’t make myself very clear to the supplier on this point. Also the fact that I wasn’t able to get a price reduction bothers me a little bit but I can’t complain too much because every other modification that I wanted was accepted from the supplier even though I have a small order quantity.

One thing that bothers me a bit are the high shipment costs of Air shipment. Reason being that the quantity is low and forwarders charge high premiums for small shipments. With my re-orders I will order a larger quantity and go by SEA and that should bring shipping down to 20% at least. Which will improve my margin in the end.  Also the fact that the supplier messed up on the product dimensions and weights and that I was paying 270$ more than planned is not ideal but it is what it is.

Another thing that I didn’t plan well for was the re-order. I am now out of stock for another week and I have to get my ranking going again. Once that ranking is up again I should receive my large re-order by Sea. I should have projected my sales velocity at an earlier stage and simple send in a large re-order right away after seeing first results.

What went well was definitely the communication with the supplier and the quality of his work and attitude towards working with my small quantity. I attribute that for meeting the supplier in person at the canton fair and my clear instructions when I first made contact with him. Subsequently I also promised him more business in the future ,which definitely makes him more eager to work with me. The initial sourcing results were also pretty good, all suppliers had good prices and decent MOQs. But the fact that my actual supplier had exactly what I needed and the fact that I met him in person made my decision easy.  

I am also happy with the artwork and photos. I admit I paid a premium price for the packaging and photos but I want quality work. So often I read from people in the FB groups that they hire someone on Fiver or Freelancer.com and the results are either bad or mediocre. Or the seller of the service disappears completely or doesn’t keep deadlines which can be crucial for your launch. Think about it, a great listing and photos will set up your product for the long term even if the initial investment is bigger. I could also book a cheaper inspection now but that’s not the way I do it. I want this product to be of high quality and I don’t want unhappy customers or give my competitors the chance to give me a bad review.

I may go with a cheaper inspection for re-orders which are less complicated. There are services I work with that charge 100$.

The fact that my shipment was delayed for more than 2 months because of the CNY  actually doesn’t bother me at all because this course should be for beginners on importing from China who are launching their first product. So you actually should take your time for all the different steps. Don’t hurry the process just to ship as fast as possible. I had two months to prepare my launch, perfect my listing and think about different strategies.  Also I think many of you are just starting out or doing this on the side. The one thing I suggest you is that you take you time, do the research and know the process when dealing with factories in China. Don’t just quit your job because you heard of FBA and do this full time. Have a capital on the side, maybe do this besides your full time job and once you have a couple of SKU’s running you can think about quitting your job. If you can’t invest 5-6000$ for your first product try ordering a smaller MOQ.

However I personally think 5000$ is the minimum budget one should have and I am not saying it can’t be done with a budget of 3000$ but you will likely be in a much more competitive field when choosing a product because a lot of people look for the same products because of their limited budget. Save that money you would spend on a weekend out with friends and put it into your budget. 

Now don’t get me wrong, I have spent quite a lot of money on photography, inspection and logistics. It can be done for less, that is for sure. I could get an inspection for 100$ instead of 309$. I could get photos for 100$ instead of 650$. And maybe that would work also ok and in time I can improve photos and other things. But I don’t see it as that. I see the initial investment important because it will set up my listing for good. Now obviously a lot of people will see this case study and might copy me so I will have a lot of competition, but that is not my point.

I normally wouldn’t disclose my product and therefore (if I don’t disclose my product) the steps that I have taken will make sure I have a high quality product, great photos and a money maker for the coming years. If I were to cut costs everywhere maybe because of budget reasons I would have to cut into quality of the product, leave out the inspection, poor product photography and more.

That puts my Amazon account, Best Seller Ranking and everything else in danger. I want to have a reputation of a quality product and satisfied customers, because in the long run that is what you need to grow your business. If I were to try this as a one time thing I might make some money quickly when cutting costs and then what? I have to start all over again with a new product because someone copied me and made a better product.

See the initial investments as a road to success and don’t think about the number too much. I am not saying you should pour money into suppliers and inspection companies or photography, these have to be reasonable and negotiated but don’t be too stingy with investments either.

I think the saying “want cheap? Then you get cheap!” plays a big role when buying in China and selling on Amazon. Do your research on services that you need for your product, don’t pay too much but not too less either just to save 100$ that will hurt your product’s performance in the long run. 

I am a bit off on my initial calculations and profit projections (about 4000$ off) but I’ve added a couple of things and looked for the best so that decreased my profit. However I as I said I nearly covered both of my re-orders only with my profit. And I have no more photography or give away costs and that will certainly improve my margin. Keep in mind that your first product will not make you a lot of profit but the re-orders when launched successfully will.

Ok, so I am wrapping up here. I hope that this case study helps you to figure out the process in China and how you can apply my techniques to your own product. I have also learned that two of my students will launch the same product in Europe’s Amazon markets and in a few weeks I can give you some more results on the European market with this product

Looking back at this project I would call it a success. Here’s why:

  1. I have a product online that has quite some reviews already (mostly 5 star)

  2. No future investment needed (except re-order inventory)

  3. The product makes me 3,000$ a month minimum, possibly more.

Now onto YOU my loyal reader. Let’s assume you are still considering moving into FBA on Amazon. Imagine this was YOUR first project on Amazon and you are still employed. If you would have started this while working a full time job you could possibly quit your job now and have a guaranteed income of 3,000$ per month. If not, here’s a few scenarios what you could do with those 3,000$ extra:

  1. Escape the rat race and quit your job? Maybe not the safest decision but add one or 2 more products and you are good to go.

  2. Want to add additional income and keep your job? You’ve just added 3000$ to your monthly income.

  3. Want to go to tropical beaches on a holiday and not having to stay at budget hotels?  

  4. Want to send your kids to an expensive school? There you go. 

  5. Need more money to support your family? 

What I am trying to get to you today is:

“Focus on building a brand from the beginning. Keep this in the back of your head with everything you do. The majority of you just starting out has limited capital and can therefore not play around. So build better products from the beginning, have A+ photos and listings, great customer service and don’t be afraid to invest your money into higher priced and better quality products, be unique in what you do.

Look at this business not as a get-rich-quick scheme but rather see your investment as an opportunity to build your brand and in turn make more money in the long run (Do this as opposed to release and launching a product every week). Build it slowly and keep quality and focus in the back of your head.”

One last thing. If you are just starting out do not take your first profit and spend it on a Vegas weekend!

I hope that this case study has somehow inspired you to start your own business.

Be it on Amazon or other eCommerce (or offline channels)

If you are interested in the step by step video lessons (over 50+ video tutorials) and the other great parts of my course have a look at my Masterclass:

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

All the best and happy sourcing,

Manuel

https://importdojo.com/importdojo-masterclass

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A beginners guide to importing electronics from China

A beginners guide to importing electronics from China

A beginners guide to importing electronics from China

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

Importing electronics from China is a delicate and tricky venture– I have recently been asked a few times to write about regulations for electronics and why I chose electronics. I choose electronics for myself because I’ve been in this category for nearly 17 years so I feel confident importing/exporting them.

I wanted to give you a basic overview what you need to pay attention to. Many “gurus’ will tell you to shy away from electronics because of the regulations, high returns and what to do with defective items. While I do agree that a beginner should stay away from electronics I do encourage you to import electronics at one point because the margins are higher than your standard household product.

Especially if you have it OEM manufactured products (your own design/software/application). However manufacturing an electronic OEM item requires profound technical knowledge (or at least a knowledgable factory and engineers) and financial pre-investment in most cases.

Most suppliers won’t offer free services to help develop the product unless you commit with a certain order quantity, have yearly agreements or previous (mostly large) business with the factory.

Why is it so difficult to find manufacturers who comply with regulations already?
Most suppliers that develop a new product do not invest in the certifications in the beginning because they don’t know yet if the product actually sells so why invest in certifications that can run into thousands of dollars?

Try to work and find suppliers who mainly work with larger European and US customers or retailers that did the work for you already. Because when retailers look for electronics they will absolutely make sure that they comply with the law.
You will want to buy from factories that are either compliant already or are willing to work together with you to get the product compliant.

Dismiss suppliers who aren’t interested in making the product compliant if the response is something like: “all the other buyers also don’t need it”. Ideally you can convince the supplier to invest his money into certifications and making the product compliant for different markets and regulations because it also benefits him. The more clients he can sell his products to (because they are certified) the better for him too.

At the end of this post you’ll also find a coupon code to my ImportDojo certifications course. But let’s take a look at general regulations first.

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

EUROPE

Europe is generally stricter than the US and has a couple more regulations that are to be met if you wish to import legally to Europe.

CE

The CE marking is a mandatory conformity marking if you want to import into Europe. It basically confirms that your product is manufactured according to certain European standards. It covers most standards and this is the absolute minimum you need to have when importing to Europe, no matter which product actually. https://en.wikipedia.org/wiki/CE_marking
Required by law: YES

GS

GS or “Gepruefte Sicherheit” is a quality seal issued by a third party laboratory and mostly recommended if sold as a retailer or to retailers. It is voluntary and NOT required by law but it has been an established trust and quality seal commonly known by consumers, especially in Germany. The requirements to get a GS certificate is higher than the one for CE. GS is not available or doesn’t make sense on several products such as battery operated items. https://en.wikipedia.org/wiki/Gepr%C3%BCfte_Sicherheit
Required by law: NO, voluntary and used as a seal of quality for consumers. 

R&TTE

This directive covers any radio-transmitting device and is usually already covered within a GS or CE certification.
http://ec.europa.eu/growth/sectors/electrical-engineering/rtte-directive/index_en.htm
Required by law: YES, any of the following products need to comply: WiFi, Bluetooth products and Radio-Emitting devices (Smartphones, tablets, smart devices)

LVD

The Low Voltage Directive does not supply any specific technical standards that must be met, instead relying on IEC technical standards to guide designers to produce safe products. Products that conform to the general principles of the Low Voltage Directive and the relevant particular safety standards are marked with the CE marking to indicate compliance and acceptance throughout the EU.
https://en.wikipedia.org/wiki/Low_Voltage_Directive
Required by law: YES applicable to products or electrical equipment with a voltage at input or output terminals between 50 and 1000 volts for alternating current (AC) or between 75 and 1500 volts for direct current(DC)

EMC

EMC or “Electro Magnetic Compatibility” regulates that the products may not interfere with other electronics products. Meaning that components of a product need to be manufactured according to several CE or GS standards to comply. If your product has a GS certificate EMC will usually be tested. Some CE certification and test reports include EMC testing. Make sure to check this in the report. https://en.wikipedia.org/wiki/Electromagnetic_compatibility
Required by law: YES but different nations can require compliance with different standards. In European law, manufacturers of electronic devices are advised to run EMC tests in order to comply with compulsory CE-labeling. EU directive 2004/108/EC (previously 89/336/EEC) on EMC defines the rules for the distribution of electric devices within the European Union.

ROHS Directive

RoHS or the “Restriction of Hazardous Substances” regulates the allowed content of 6 substances within the product. These are: Lead, Mercury, Cadmium, Chromium, PBB & PBDE. It is closely linked with the Waste Electrical and Electronic Equipment Directive (WEEE) 2002/96/EC which sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of huge amounts of toxic e-waste. Most suppliers have at least a report for the incoming raw-materials that they later use for the final product. So while they do not have a RoHS certificate for the entire product they may have the material tested which is generally accepted by authorities.
Required by law: YES, however raw material report as opposed to full report is widely accepted. https://en.wikipedia.org/wiki/Restriction_of_Hazardous_Substances_Directive

REACH Directive

REACH

Most suppliers have never heard of REACH altough it has been around since 2007. It is essentially the upgrade to RoHS but regulates more chemicals and substances. It has different phases that regulate the chemicals used in manufacturing and once in full force all importers need to comply (within the European Union). https://en.wikipedia.org/wiki/Registration,_Evaluation,_Authorisation_and_Restriction_of_Chemicals
Required by law: YES

WEEE Directive

 

The Waste Electrical and Electronics Equipment Directive is mandatory to be fullfilled by the manufacturer. The marking needs to be on the sales packaging or product.
https://en.wikipedia.org/wiki/Waste_Electrical_and_Electronic_Equipment_Directive
Required by law: YES but different nations can require compliance with different standards.

Sub – Regulations & Directives:

Each of the above have several sub-regulations that have to be met. But generally if you buy a certain product from a supplier and it is say for example CE or FCC certified it should have automatically been certified by the sub-regulation.

Product Requirement Profile

It is best to have a Product Requirement Profile ready to be sent to your supplier. I have prepared a fully comprehensive Profile Requirement Profile for all products (including electronics) that I send to my suppliers. These are available for purchase from me here at the bottom of this page. 

My Product Requirement Profile for electronics

UNITED STATES

The US generally has “loose” regulations compared to the authorities in Europe. Having said that I do recommend that you comply to all regulations as you don’t want to import a product that can cause fire or other hazards. “Loose regulations” also doesn’t mean that they are actually loose because you still are required to comply but again, Europe is stricter when it comes to enforcing and checking at customs or at retailers. A FCC certification is usually obtainable for a couple hundred $ while a GS certificate can go into the thousands. Of course there are products that are highly technical and or pose a risk or hazard and are difficult to certify by FCC for example.

FCC

The FCC basically regulates anything that is electronic including WiFi, Bluetooth, Radio transmission etc. You will want any device that you import that is electrical and remitting radio waves (in any way) certified by the FCC.
There are two regulations within FCC for both Intentional & Un-Intentional radiators. Intentional radiators for example are: Bluetooth speakers, WiFi devices, radios or smartphones. Unintentional radiators are: Headphones, Earphones, power packs, PCB’s etc.
https://en.wikipedia.org/wiki/FCC_Declaration_of_Conformity
Required by law: YES

UL

UL is a certification company that certifies your product according to several different standards. Say if you have a FCC certification you may still need to certify by UL, especially if you are a retailer. It’s a seal of quality that consumers appreciate on certain products https://en.wikipedia.org/wiki/UL_(safety_organization)
Required by law: NO/Voluntary and used as a seal of quality for consumers.

RoHS

RoHS is also recognised in the US and widley available at suppliers. RoHS self declarations are generally accepted by authorities.
Required by law: NO

Product Requirement Profile

It is best to have a Product Requirement Profile ready to be sent to your supplier. I have prepared a fully comprehensive Profile Requirement Profile for all products (including electronics) that I send to my suppliers. These are available for purchase from me here at the bottom of this page. 

Product Requirement Profile for electronics US

Further information you should be aware of

Full certification:

Having a full certification on a product is the best and safest way to go. What does that actually mean? Lets look at an example: You want to import a hair trimmer/clipper. The hair clipper itself runs on a integrated rechargeable battery. The battery is charged via a universal external charger/adpater with a plug. In 90% of the cases the supplier will only have a FCC/GS/CE certificate for the charger/adapter. Why?

Because the adapter can be certified with GS/FCC/CE easily and can be used on hundreds of different products that need a universal charger. So it makes sense for the manufacturer to certify the charger because he can sell it with different products and only needs to certify the adapter  once. He can also sell his charger to other suppliers who are in need of universal chargers only for their products. While the hair trimmer is a sperate unit in itself and may not sell well. So why would the factory pay a lot of money to certify an entire product if they may not sell it.

If possible find a manufacturer who has a fully certified product. Those are likely suppliers who work with large western retailers. Having said that if say the charger has a full certification like GS/CE or FCC and the hair trimmer itself only has CE it is also acceptable to authorities. If you want to make sure that you comply or satisfy authorities you may ask the supplier to issue a Letter of Guarantee that the entire product has been manufacturerd according to standard or regulation “X”. But satisfying authorities should not be your eventual goal. Your evenutal goal should be to import a safe and reliable product that lasts and delivers good reviews or sales.

A full certification is quite expensive and therfore not often found. Yet some markets like Germay demand full certification especially from retailers. If you are an online seller and your exposure to the authorities is minimal you could start by meeting only minimum requirements (CE, FCC for example).

Labelling & Marking

The following markings must be on the final packaging or box in which the product is sold to the customer where applicable:

WEEE, FCC, CE, GS, Made in China, Recycle symbol 

I say applicable because as mentioned not every product needs to comply with above regulations.
You will also want to put all labels and markings of the product on the Instruction Manual. Electronic products usually have instruction manuals so you’ll want to show in there what your product complies with.

You are actually required by law to mark all regulations met, either on the box of the product or inside the instruction manual (if there is no space on the sales packaging).

Returns and damaged products

Unfortunately returns of electrical products can be as high as 20% in some cases. That could be due to poor manufacturing, faulty components that didn’t get checked properly, the client mishandling (or misunderstanding) the product and several other reasons. It comes with the territory when selling electronics and the only thing you can do as a seller is to take care of the manufacturing side and handle returns from customers with proper manner. Don’t try to argue with customers and simply refund or exchange the product for a new one.

However you should collect all data collected from returns and defects and claim the lost profit/money from your supplier when or if you re-order. Make sure to communicate the issues to the factory and have them deduct the total amount lost from the next invoice. Send all material that you can gather from your customers to the supplier to have a strong case against the supplier. If you aren’t going to re-order (maybe because of the issues) try to get the defect/returned units replaced by him or even better a cash payment in the amount of your loss. The latter may be more difficult as suppliers will want to have you re-order before they give out any money for returns.

Self-declarations

In some cases it doesn’t make sense to certify a product because your quantities are low or the product is so cheap that the certification cost don’t justify certifying it. In that case you may ask the supplier to issue a self-declaration which is in some cases accepted by authorities. Please note that you cannot issue a self-declaration, it has to be done by the manufacturer.

You would at least need to be compliant with basic requirements like raw material being certified or tested and according to regulations. However most countries in Europe only allow CE or RohS self-declarations for several items, mainly low voltage or battery powered products. Check with your supplier what he can offer you.

Lets take a look at a few examples

Please note that the following are recommendations and there may be additional requirements for each country depending on your sales channel.
I know for a fact that many importers ignore these regulations, hoping not to get caught.
I am not telling you what you should or shouldn’t do but many countries have lax enforcements so importers simply ignore it. I personally like to have everything in order and proper certification to avoid any problems in the future.
It’s best to check with a third-party inspection company but this should get you started when sourcing for electronics:

Bluetooth Speaker (Low Voltage product)
EU: CE, REACH, ROHS, LVD, R&TTE & GS on the adpater recommended if product comes with a external charger (they usually come with USB charging cables)
US: FCC, UL recommended if you are a retailer
Not to forget that you need to pay BIG (Bluetooth Interest Group) a fee of 8000US$ (4000$ if you are a member) if you are planning on private labelling your product. Prior to February 2014 private labelers were able to register their private label under the manufacturers Bluetooth chip license but BIG changed that and made it not possible anymore. I know that there are many small time buyers who don’t care and risk it because its still a grey area but basically they are illegally branding Bluetooth products.

Solar powered garden lamp (Low Voltage product)
This is a very simple product but highly competitive. The good news is that they are battery operated and low voltage powered.
EU: CE self declaration, RoHs self-declaration
US: FCC self declaration

Vaccuum cleaner (High Voltage product)
EU: CE, GS recommended, RoHS, REACH, EMC
US: FCC, UL recommended

Wired-Headset (Non-Bluetooth, no direct Voltage)
EU: CE, RoHS self declaration
US: FCC self declaration

Miscellaneous:

Many small importers in Europe or the US illegally import products hoping not to get caught (or not knowing there are regulations to be met). Basically playing with fire just to save a couple hundred dollars on certifications and compliant products.
Also paying for a certification report doesn’t mean your supplier can comply with the regulation. Before you place an order with the factory make sure to ask him that the material and components will actually pass a FCC or CE testing for example, otherwise you waste money on a certification and the product may not even pass the requirements.

One thing that I recommend beginners with electronics is to have the certifications from the supplier verified by a third-party. If you work with a third party inspection company like Asiainspection, TUV, SGS or others they are usually open to check certificates for you. That is if you already do business with them otherwise they charge a small fee. You can simply ask your contact at the third-party inspection company to look over the documents that the supplier sent you.

Do not engage with a supplier or product that cannot comply to regulations otherwise your products might be seized by customs or even have to be withdrawn from the market if an authority finds out you do not comply with regulations.

If a supplier tells you he doesn’t have the necessary certification and “its ok his other customers also don’t need it” stay away or be prepared to invest a couple hundred US$ for a certification (FCC or CE usually goes from 400-600US$).

Yes, it is sometimes a grey area, especially in the US if you ship things by Air directly to Amazon for example that you do not get caught, but I do not recommend going this way.

If a supplier doesn’t have a certificate or is unwilling to invest in it move on to the next supplier. However if you are willing to invest yourself in the certification (make sure to ask the supplier if the product can pass first) I would recommend to do so. Furthermore if you invest into a certificate you will be the holder of the certificate and the supplier is not allowed to sell the product with certification to anyone else but you. This applies to all certifications.

Inspections

I can’t stress enough how important inspections are, especially with electronics. You will want your goods to be inspected to avoid a high rate of returns, defects or not compliant manufactured products. Pre-Shipment inspections can save you a lot of troubles and are well worth the investment. The inspectors will not only test the product but they will also make sure that all is compliant with laws and regulations.

I’ve written on the subject of inspections previously here. If you want to book an inspection online I always recommend working with QIMA

Product Liability Insurance

I also recommend once you import electronics in larger quantities that you contact your local insurance company and have a product liability insurance on your products. This is to protect yourself from any unforeseeable issues. I recommend that you check out AXA’s commercial insurance
Even you may have manufactured a product to the best of your knowledge something can go wrong or someone mishandled the product but you may not proof it. For example a few years ago I worked for this large German retailer and we had a fan heater manufactured to all possible standards and regulations.

One day a customer hired a lawyer and sent a letter to the retailer explaining his house has burnt down because of the fan heater he bought from them and he is looking for compensation and a full law suit. Since the fan heater was manufactured in China and sourced trough the buying office I worked for I was put in charge of the situation. When I heard of the problem the first step was obviously to speak to the supplier, check the certificates and look at the Inspection. All was in order, the said unit was manufactured at the highest standards and we suspected that the customer covered the fan heater with a towel and thats why the unit started burning.

However we couldn’t proof that and the client won the lawsuit. The retailer had coverage from his product liability insurance and at least the financial damage was settled. The bigger damage was obviously the public problem they had but at least the financial issue was off the table.

Summary

So what do you actually need for sure? Thats difficult to say as it depends on the product and ideally you will want the supplier to provide you all of the above. But realistically that never happens. In most cases suppliers do not even have CE certification which is actually easily obtainable. I can only recommend to have a supplier who has the minimum requirements such as FCC and CE certification.

RoHS is also easily obtainable these days and if a supplier doesn’t even have a self-declaration or certification for incoming raw materials look elsewhere. Unfortunately each product has different regulations however above general guidelines give you an idea what to look for. Also there is no website with an online course other than my ImportDojo certifications course over here.

If you are interested in learning more about certification and other product categories head on over to my Certification course with a 20% discount code. Simply apply TWENTY at the checkout. 

All the best and happy sourcing,

Manuel

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How to verify a supplier in China

How to verify a supplier in China

How to verify a supplier in China

By Manuel Becvar
By Manuel Becvar

Table of Contents

Three proven ways to verify a supplier in China

The number 1 question I get asked when people email me is “How to verify a supplier in China” – without actually going there or hiring a third party to do an audit at the factory?

And it’s a very good question at that. It isn’t easy to verify a supplier 100% over the phone or via email. However there are several approaches that I take before I decide to place an order with a supplier.

I like to divide this into three parts: 

1) “Developing a feeling”
2) Background research you can do for free
3) Background research you can pay for

 

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

1) “Developing a feeling”

 

It all starts with communication. When I reach out to a supplier I keep a professional approach. Meaning I explain who I am, what I do, even attach my company presentation to my initial inquiry. If you don’t have a presentation don’t worry, it’s not necessary. But you should explain in your email with a few sentences what you do and who you are. This gives the supplier an image of you and won’t make him think that you are just some random person who has no idea about importing from China. 

I also look for suppliers who respond to all my questions in detail. Ever emailed a supplier with lots of questions and all you get was partial answers and cryptic replies? You are not alone. I immediately eliminate these suppliers in my selection.

If he can’t reply to a few questions in my initial outreach imagine how it will be like down the road. You usually filter from 10 suppliers down to 3. Once I have these 3 suppliers that have somewhat answered all my questions and are reasonably priced I start digging into their background. For this I use a “vendor profile report” that I created. It looks like this:

In this report I collect a lot of information from the supplier such as:

– Contact name, telephone number, email address, fax number etc

– Bank name, beneficiary etc. – I use this information to make sure the bank account name matches the company name. Often times suppliers have a bank account in Hong Kong due to its ease of financial transactions. For example if the suppliers name is: Shenzhen Toys Import and Export it should match the bank acount name. If a supplier uses a Hong Kong bank account it often differs slightly. It could be: Shenzhen Toys Import & Export Hong Kong Limited. This would be ok; however if I receive a name that is completely different than the original supplier name I will ask questions. This could be a first red flag!

– Year of establishment, turnover, production capacity. This gives me an indication if the supplier has some experience in his industry. E.g. it’s a good sign if I look for a vacuum cleaner and the supplier has 20 years of experience. I may not want to go with a supplier who has only been established 1 year ago. I will want a supplier who has had at least some years of experience in the certain product industry. 

– Customers, main markets. This will tell me if my supplier has experience working in key markets like the US or Europe. If his main customers or markets are in Arabia, South America or Russia for example he may not be the right supplier for me. Reason being that these countries have totally different quality requirements than the US or Germany for example. I will want a supplier who at least has had some experience in my markets. Makes it easier for me to explain my quality and other standards. 

– Does he exhibit at trade shows like the Cantonfair or in Hong Kong? This gives me an indication if he had exposure to international customers and if he is actively looking to branch out into other markets. The more exposure a supplier has to international buyers the better. 

– Factory address, quality management system at the factory, how many workers, in house R&D etc. – This gives me an idea of the capacity and general standard of the factory. Has the factory been audited by a third party before? Can the supplier send me this audit report? These things will tell you how well a factory is equipped with machinery and if they are actively improving their standards. 

Once I collected above information I can get a pretty good feeling with who I am dealing with. If a supplier isn’t willing to share this information with you he either has something to hide or he isn’t really interested in cooperating or working with you.

If you feel this is all a little too much just to find a supplier, think twice. This is someone who you’ll send money to and hopefully be your partner for many years. A supplier who understands this and cooperate with you sending you all this information should be the supplier you choose. 

Pricing really is just a secondary decision maker for me. Say I have narrowed down to 3 suppliers but I am having difficulties communicating with 2 of them. Even tough the 3rd supplier may be more expensive than the others, if he is the one whom I communicate best with I will go for the more expensive supplier. 

Consider also, if you have any problems with your product on Amazon you’ll want a supplier who can help you with refunds or replacing defect items. If you went with a supplier that was just cheap and not really willing to work with you in the first place you’ll have a hard time getting any money or replacements down the road. It’s also wise not to squeeze every cent out of a supplier. If he can’t properly pay his staff and workers what good does that for me when he won’t be around anymore next year. Live and let live. 

2) Background research you can do for free

Apart from the above, as a next step before placing an order I will ask the supplier to provide me with the certificates that he claimed to have. For example if he claimed to have a CE or FDA certificate for a specific product I will want to see a soft copy (PDF). 

Sometimes suppliers won’t be able to send you a full test report/certificate because it was applied and paid for by their customers. Fair enough, but he can blur out some information and send you a screenshot. 

But in many cases the test reports/certificate are in the name of the supplier. Once you’ll receive these soft copies you can then contact the issuing third party. Let’s take a look at below example:

As you can see above this was a FDA report for one of my items. Once I receive the report I can contact the issuing third party (SGS in this case), quote them the test report number and ask for its validity. You’ll also find contact details on most test reports. 

Normally a third party will do this for free (confirming a validity). Once they’ve confirmed the validity I can somewhat safely move forward with the supplier. However, many suppliers fake their certificates and test reports and it’s not uncommon that once you contact the (supposed) third party that they never heard from this test report. Steer clear and eliminate this supplier immediately.  

This also goes for factory audit reports. Again, often times audits are done by other customers and suppliers can’t send you the full report. However a screenshot with blurred out areas will do. If they can send you a full report look for details such as:

  • when was the factory audited?

  • what were the findings or main issues?

  • did the supplier improve these issues since then? 

  • where there any major critical findings? (such as child labour) 

Once you’ve concluded your research of the audit report you should have a pretty good picture of the supplier. Then it really is up to you to move forward with all your findings, place an order or go to the last and final step:

 

3) Background research you can pay for

As a final step if you are still not 100% convinced you can perform a third party audit at a factory. There are many providers who will go to the factory and perform a standard audit. 

These audits are a paid service. During these audits the third party will conduct a thorough research of the factory based on criteria that you can help determine. 

For example once you’ve booked an audit you can tell the third party that you plan on selling in the US and the factory would need to be up to those standards. The third party will also perform a standard audit based on their experience. 

Costs are usually from 500$ upwards for an audit. That includes travelling to the factory, one full day of auditing and sending you a report. I always use QIMA.COM (formerly known as Asiainspection) and they charge 649$. There are cheaper services of course. I suggest to do your own research. Bigger companies like TUV or SGS usually charge 800$ upwards. 

So whether you want to do an audit is really up to you. Often times I’ve developed a pretty good with feeling on a supplier with 1) & 2). It does make sense to perform 3) if you have no other suppliers and want to make 100% sure everything’s ok. 

After I’ve gone trough all of the above I should get a really good feeling about the supplier. Sometimes I look more than 2 months for a supplier if I feel the ones I found aren’t right for the job. 

It really is not a sprint, its a marathon on finding and building a relationship with a supplier. 

Paid services are obviously one of the most fool proof ways however they cost quite some money and if you were to pay for each audit at every factory you want to start working with it will surely cost a lot of money in the long run.

Bear in mind that larger companies (such as the one I used to work for) usually has an office in Asia and they send a team of their own people to investigate every factory before they place an order there. But if you don’t have your own team in Asia you may want to hire the following:

Third Party Audit (SGS, QIMA, TUV, INTERTEK etc.)  

It’s also important to note that I am willing to work with more in-experienced and “new to the market” suppliers. Reason being that these may not have the experience but they are willing to accept smaller order quantities or work with smaller customers.

You can then grow with these suppliers. Imagine you grew a supplier along the way. He’ll always be grateful and he’ll be supportive and helping whenever you need him. 

I have two of these suppliers among my portfolio. We share a lot of information from the market, I get the best prices out of all his customers, the newest items are always reserved for me, they’d help if I have a lot of returns and on top of all I have payment terms that allow me to keep a great cash flow (usually I pay 90 days after the products have been shipped). 

So you see, building a relationship with a supplier is very important and can benefit you in so many ways. Yes, sometimes I see suppliers who may offer cheaper prices but it simply isn’t worth it to switch a supplier just because I save 0.2$ on the product cost. I’d also have to explain the whole workflow to this new supplier. Me and my suppliers are practically a well-oiled-team which helps me immensely. 

So I guess I recommend taking your time when selecting a supplier. Don’t rush things and filter properly. 

I hope the above helped 🙂 If you have any questions simply comment below or reach out to me 🙂

All the best,

Manuel 

PS.: I’ve also written on a similar subject on how to avoid being scammed by a supplier here.

PPS.: You can also check out my case study where I explain in over 50 videos how I found a supplier for my public case study and how I became the number one bestseller on Amazon here: https://importdojo.com/importdojo-masterclass/

Final Thoughts

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The Cantonfair – All you need to know about the biggest expo in Asia

The Cantonfair – All you need to know about the biggest expo in Asia

The Cantonfair – All you need to know about the biggest expo in Asia

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

With the upcoming Cantonfair in April 2021 I thought I’d give you guys an insight on the exhibition, how you can prepare, what you can find there and who it isn’t for.

I first went to the Canton Fair in 2005 and things have certainly changed since then. There were literally not many places to eat, find an ATM or book hotels around the area.

China and the Cantonfair have seen the potential and improved the general experience a great deal since then. I can only imagine how it was 20 years ago.

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

General information first:

The Canton Fair is the holy grail of exhibitions. This event is so large that it is held twice a year and each time runs over a span of 3 weeks in three different phases. Each phase comes with different product categories.

As of 2014 there were over 22,000 exhibitors. This exhibition is a must for me and it should be for you too. You will find a lot of suppliers, big brands, small factories, or the product you have been looking for for so long.

Plan at least 2, or better 3, days for your product category/phase. Sign up once and get a badge that will be valid forever.

Insider tip: Don’t throw away your badge. You can use it for your next visit without paying 100 Yuan for a replacement card.

Pro tip: Remember that China blocks pages like Facebook, Youtube and Gmail (among many others). So I recommend that you get yourself a VPN client so that you can access all these sites while in China. I personally use NORDVPN. I usually get a 1 month subscription but you can also get a yearly subscription which makes sense if you care about privacy on the internet. 

How to register?

Most exhibitions require you to pre-register if you want to get in for free. Registration on-site is also possible but usually there will be a fee of 10-20USD. You will need to provide a name card for your registration.

When you pre-register online, just fill in your company’s details and print out the confirmation. Bring that confirmation and you will be handed a badge for entry.

The Canton Fair has the same procedure, however you can keep your badge for years to come. If you lose your badge you will have to pay a fee of 200RMB for re-issuance.

There is a first time registration fee of 100RMB. If you have a supplier who can invite you, you don’t need to pay any fees. Also remember to bring along a passport photograph for the application (required). You can register here, among many other useful tools for the Canton Fair:

http://invitation.cantonfair.org.cn/Home/Index

Remember to keep the badge for the Canton Fair, as it is valid for years to come.

Know your goals

Remember you don’t have all day. I usually try to finish an exhibition within 1 day (except the Canton Fair). But this is also because I know how to spot the good from the bad ones and know which questions to ask. As a first timer I recommend you take some more time but don’t try to spend more than 20 minutes per booth with each supplier.
If you spot some item that really catches your attention and you would like to discuss further steps with the supplier right away, take your time. It is likely you will have 2-3 meetings that can take an hour.

Price preparation

You will likely be looking for a category of a product so you should prepare yourself with some basic prices that you have received from suppliers beforehand. Knowing your prices is essential before going to an exhibition.
If you are looking at new products and are not aware of prices try my “rule of thumb” calculation of 30%, adding this to your margin and calculating your selling price. You will quickly figure out if the price the supplier gave you at the booth is realistic or not.

Prioritising

The Cantonfair is enormous in size. Grab a map at the entrance or the information counter of the exhibition and take a moment to study the areas of interest. You can also look online prior to going to the exhibitions at which hall or category is where to save some time.
Once it is clear where your suppliers are situated, start there. Go through each hall in an organised way and prioritise the halls by importance.
Once you completed all the halls you wanted to see you could go to the halls that were initially of the least interest to your business. You may find some ideas on other products in less interesting halls too.

Hotels during the exhibition:

If you are looking for hotels to stay during the period, I always book my hotels on AGODA. Many hotels will provide a free shuttle bus to the exhibitions. Check with the hotel staff to see if this service is provided.


Book hotels now if you haven’t booked them yet! Hotels during exhibitions can get very expensive. The sooner you book the better.I usually won’t stay too far from the exhibition area, as I don’t want to waste time. 

Unfortunately that carries a price tag.If your budget doesn’t allow this, find a hotel near a subway station (MTR). Whatever you do, don’t take a taxi TO and FROM the exhibition. Take the subway or free shuttle buses provided by your hotel. At the Canton Fair, for example, it is impossible to get taxis at night. You can take a taxi in the morning TO the fair; that should be ok.

Flights:

personally book my flights via Skyscanner.com because of their transparency.

What to bring?

Here is what I bring to exhibitions:

• Name/Business cards (an absolute MUST)
• Trolley to carry all the catalogues that I collect
• My own (printed) company presentation
• Notebook & pens
• Passport photo (some exhibitions such as the Canton fair require a passport photo)
• Comfortable shoes (you will be walking all day)

At the exhibition:

Once you are at the exhibition, get a map; you should be able to get them anywhere at information counters. Walk the aisles until you find something that interest you is definitely an approach but I prefer to prepare a little and do some research on my main interests.

You will want to work with manufacturers only at the exhibition and not with representatives. There are hundreds of representatives at the fair ground offering translation services, negotiation, insight etc. Do not go with them! They usually charge very high fees and aren’t totally honest with you. They are probably also no experts in every product category and that might end up in a disaster.

Never place orders right away. You should negotiate prices, ask questions and maybe show more than interest and tell the supplier that you may want to order when you are back. But don’t tell them to enthusiastically that you want to order right away. Why?

  • The prices you get at the fairs are usually not the best prices. Negotiate when you are back home.

  • You will want to clarify your terms first via email/phone calls before you place an order. Have him sign a purchase order agreement.

  • You will want to compare prices of more than one supplier for the same product

To determine if the person you are speaking to is a manufacturer or representative make sure to ask a lot of questions:

What kind of questions do you ask the suppliers?

I usually prepare a little speech before I go to the exhibition. It depends on my project or product that I am looking for but I like to introduce myself a little bit and give the supplier a professional image of me.
He is likely more interested in giving me answers, good prices or proper email feedback after the exhibition. Here is how it could look:

Hi, I am Manuel and I am the Managing Director of Mandarin-Gear Limited in Hong Kong.
I manage/own a sourcing and buying office for many large retailers worldwide.
My customers are looking for product “X” and I am interested in discussing more details or receiving a quotation based on my customer’s requirements.

Then I ask my questions and once I am satisfied I will ask him to provide me a quote based on my requirements. I will hand him my business card and I will MAKE SURE that he wrote down everything we discussed.

Could you please send me a quote of this item (from his booth) based on “X” quantity, including certification “XY”?

I will also take his name card and catalogue to study later.
Here are some questions that I ask the suppliers. You can adapt these to your product or requirements as necessary. You can also make yourself a checklist with these questions and print it out for each supplier meeting you have.


Obviously you can also memorise these questions and make notes on your notepad.
Clip the supplier’s name card to your notebook and write down answers to these questions:

• When was his factory established?
This is important as to figure out if he has been doing business for a long time or if he is newly established. If the factory is brand new I will be wary of dealing with them, while if they are older than 5 years I will probably go ahead with further questions.

• What is the total count of staff, workers, engineers and managers?
A well-organized factory has at least 200 employees. That could be 160 workers, 30 sales staff, 10 engineers and 10 managers.

• What certifications can he provide for product “X”?
Know the certifications that you need for your product. If a supplier has no idea about FCC, CE, RoHS, ERP, GS or other certifications of a chemical or other nature, you can probably leave the booth right away. If he is aware of the certifications and requirements but hasn’t applied them to all his products it’s not an eliminating criteria, but make sure to ask if he is willing to apply for the certifications after order-placement.

• Who are his main customers?
Do you know the customers he is talking about? Do they have a certain reputation in your country that would make you feel comfortable working with him? If he is working with customers that you know, it should be a good sign of his competence.

• Mention a few of your competitors or bigger clients
Drop a few names of the bigger competitors or clients of yours. If he knows them it’s a good sign. If not, it is very unlikely that they are doing overseas business and perhaps aren’t even interested in your business, knowing that your requirements are too high or “too much work” for him.

• What is his main market?
If he operates already within or near your country it is also likely that he can fulfilll your requirements. It’s usually a good sign if he works for countries like the UK, Germany, Switzerland, Sweden, the United States, Canada and other first world countries. It means that his factory is able to pass audits, tests and certifications needed for these countries.

• What is the factory quality management standard?
Remember that good factories are also easy to spot if they have a certain quality management System (QMS) such as ISO 9001, BSCI and so on.

• What is the MOQ?
Can he actually provide the low or high MOQ that you need? Is he willing to produce a first order based on a very small quantity or does he have the capacity for large volumes?

• What is the rough price of this item based on X quantity?
Most suppliers will give you a very rough figure for the product they are exhibiting. These can be vague as often these are “blank” prices that do not include any certification, licenses, etc. But it is necessary to ask for prices (and write them down in your notebook) for your follow up. You can also use my “rule of thumb” to add on 20-30% on top of the supplier’s price to calculate if the price is competitive.

• What certification is included in his price?
Does the product currently fulfil your minimum requirements for certifications or standards? If not, is he willing to apply for certifications after order placement? Is he aware of the different certifications that you need or do you get the feeling he doesn’t know what you are talking about?

• Ask if he can provide samples after the exhibition
If you would like to have a sample after you come back home ask him if he is willing to send samples. Most likely he will agree but make sure you remind him once you are back home to send you the sample. Some suppliers will actually sell or give you a sample right on the booth if you ask for it. It is actually not allowed but if there is a sample I would need right away because it’s that good and I want to show it to customers back home, I will ask anyway.

• Ask for payment terms
Are his payment terms a K.O. criteria? Make sure he agrees to your payment terms and doesn’t insist on 100% payment upfront.

• Ask for his top-selling items and who his customers are
Sometimes you may not have time to look at all products so you might miss the best selling items. Ask him either to show you his best selling items or send you a quote later for his top-sellers. Make a note that you are expecting his prices and offers later.

If I get the feeling after 1 or 2 questions that a supplier has no idea what I am talking or asking about, I politely end the conversation and leave the booth. There is no use in screening a supplier with all questions when I already know he is not interested or can’t fulfilll my requirements.
After all, I need to scan the entire exhibition and I can’t waste my time with suppliers that are ignorant or need a basic education on my market’s/customer’s requirements. You will develop a gut feeling pretty soon if it is worth it to speak to a supplier longer or if you should leave the booth right away.

Hall arrangement:

Once you arrive you need to pass trough the registration area which is pointed out through signs. Don’t forget to pre-register trough the link I gave you and bring 2 passport photos. At the registration area you will have to line up for “pre-registered buyers”. You will be guided trough the process by the staff there and then get your entry badge. You can then move to the main halls.
There are 3 main areas on each phase:
http://www.cantonfair.org.cn/hall/en/index.aspx?start=bn

Once you choose your phase you can hover over the hall and see what products you will find in these halls. Within the 3 main areas (A,B,C) you have numbered halls as for example 6.1. (ceramics). Within this hall you have over 200 suppliers!

Depending on your priority products I recommend you start with the most important halls first.
During the registration you will also get a printed guide with all hall details that helps you to navigate. But you can already write down the main halls now when you look at the link above.

At the Entrance of each hall:

Look at the main halls you want to see and prepare to walk them trough in order. It is your first time to visit the fair so I am guessing you have no appointments with suppliers. Therefore I recommend you just start walking until you see something of interest. That could either be a product that you have on your agenda or an item that really pops out.

In the halls/at the booth:

Suppliers will either be eager to give out brochures of their products or you simply walk into the booth of this supplier if there is anything of interest for you. Unlike in the US or at European exhibitions, the suppliers are very open and welcoming in receiving you in their booths. No appointments are required. Just walk in and introduce yourself and what you do or what you are looking for. You don’t need to hand out any business cards at this point since you don’t want to be spammed later from suppliers that do not interest you anyway.
If you see anything of interest within the booth point to these products and start asking the questions I mentioned above:

If you are happy with the discussed (make sure they also take notes) hand over your business card and tell them to email you all the details. Nice touch with the “thank you in Chinese” on the back by the way
Take a catalogue or a brochure from the supplier as well, have him staple his business card on it and note down what is important to you. Try to get catalogues from each supplier that you visit. They will be happy to give you a catalogue in exchange of your business card.
You will quickly see which booths you should walk in. The goal is to find manufactures or good trading companies.
For example avoid booths that have only a few products in the shelves (A) or booths that have too many different kind of product categories (B). Go for booths that have maybe 3-4 product categories but seem to be specialised on each category (C).

A: Few products only indicate a small trading company with high margins and no real expertise and little value

B: Say you see a booth that has all these products inside: towels, pet supplies, electronics, ceramics etc. It’s a clear sign that this supplier trades everything and anything. They may have expertise in certain areas but their prices are high.

C: A booth that has 3-4 product categories. For example a booth that has: bathroom accessories, shower cabinets & faucets. They all relate to each other and thats a good sign for a real manufacturer. Try to focus on these.

Miscellaneous:

Food: There are a few western restaurants and coffee shops on every corner

Money: There are a lot of ATM’s everywhere in case you need to withdraw money.

Printing services: Printers and business centres everywhere available.

WiFI: Is available for free. Just ask for the log-in at the info centres.

Hotels & ticketing: Travel agents are available on several main levels to book flights, train tickets or hotels. For booking hotels prior to arriving I recommend AGODA.

Bus: There are buses leaving to major hotels during peak hours (9am 5pm) for free. Major hotels also arrange buses TO the exhibition. Check with your hotel.

Taxis: Taxis are a nightmare to get. You can take a taxi to the exhibition in the morning from your hotel but in the late afternoon you can sometimes wait up to 2 hours to get a taxi. There are illegal taxis everywhere but they charge 10 times the price. I recommend to take the hotel bus or the Subway.

Subway/Metro: There are 2 subway stations at the exhibition grounds. One at the beginning & one at the end. I usually take the Subway as it is the most convenient way to get back to the hotel. When booking your hotel see to book one close by a subway station.

Pro tip: Remember that China blocks pages like Facebook, Youtube and Gmail (among many others). So I recommend that you get yourself a VPN client so that you can access all these sites while in China.

I personally use NORDVPN. I usually get a 1 month subscription but you can also get a yearly subscription which makes sense if you care about privacy on the internet. 

I hope this gave you a bit of an overview and I wish you all the success at your trip during the Cantonfair 🙂

Happy sourcing guys!

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how to deal with price increased from chinese

How to deal with price increases from Chinese suppliers

How to deal with price increases from Chinese suppliers

How to deal with price increases from Chinese suppliers (and what you can do about it)

By Manuel Becvar
By Manuel Becvar

Table of Contents

Today I wanted to share a blog post to hopefully help you and teach you how to deal with price increases from Chinese suppliers.

So you received an email from your supplier that prices have to be increased because the Chinese Yuan (RMB) is being appreciated, his labor costs have risen or some other reason.

  • Never accept any price increase blindly. Let’s first analyze the situation:

  • Has he increased the price within the last year? If yes, how often?

  • Has he stated on his last quotation the validity of the price?

  • What are the reasons he wants to increase prices?

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

Here are common reasons for price increases:

  • Labor costs need to be increased

  • Raw material costs have increased

  • Chinese Renminbi (YUAN) has appreciated against the USD

  • Purchase of machinery to upgrade the factory

Let’s go through them one by one and see how you could avoid the increase or find an acceptable solution between the both of you. I also want to give you background on each so that you can understand these reasons.

Labor costs need to be increased:

When I moved to Hong Kong in 2005 the average salary of a worker was around 250USD per month. Yes, that’s right, per month!! Nowadays a worker in the production line can get up to 1000USD or sometimes more. Some of the workers earn more than the staff in the office. Factories need to pay a high salary to workers because it’s so difficult to find them.

Yes, China has over 1.3 billion people but not everyone wants to stand in a workshop or production line doing rudimentary work. Education has improved a great deal since the early 2000’s and people want to work in offices rather than on production lines. So factories have to reach out to far provinces to hire workers. Costs automatically rise in that process. I have been told that some factories rent a bus and drive to far away provinces actively hiring workers to bring them back to the factory that same day on the bus.

What can you do in that case? Honestly not much. But if a supplier keeps increasing prices because of labor costs you might want to look for another supplier who has more machinery or automated processes that require less workmanship. This can actually be more expensive (because of the investment for machinery) but you should have more stability on prices in the future.

Raw material costs have increased:

This requires a little research but if a supplier uses this reason for price increases you can quickly find out if he is lying.

Go onto websites like the following and research the price index on your product’s main material:

http://www.indexmundi.com/

Unfortunately, there is not much free information on the Internet; you have to pay for most services if you want real accurate data. You can also check out your local stock or commodity market online and see if you can get free data. Once you find your product’s raw material price check the development over the last few months or even years.

Compare it with the orders that you made to your supplier at the specific price drops or increases. If for example you ordered your item before at a lower raw material price than now, you can use this information to negotiate with your supplier.

I often find that suppliers use this excuse of raw material price to increase their profit margin. When you have data that backs that the raw material price has perhaps even decreased since your last purchase, let the supplier know and share the link or information that you found. Demand the same or an even lower price than what you are paying now.

If raw material really has increased then you might want to check by how much. If the supplier’s price increase does not match the actual raw material price increase, let him know and demand a lower price increase.

Chinese Renminbi (YUAN /RMB) has appreciated against the USD

The Chinese Yuan has risen over 60% since its revaluation in 2005 (when it was pegged against the USD). It has been undervalued for a long time but that has changed since the economic reforms under Deng Xiaoping. Since China opened to the rest of the world and became the world’s factory the Yuan has risen a great deal.

Many factories increase prices once the Yuan gets appreciated against the USD.

If the Yuan gets appreciated against the USD it is usually in the news and you should hear about it. You can also check official USD/RMB exchange rates to verify this claim.

Not much you can do here either, except perhaps asking for one more order with the last price before you accept the new price.

Purchase of machinery to upgrade the factory

This usually doesn’t happen very often, but when the factory claims there is machinery to buy to upgrade the factory it’s actually a good thing for you. It will lower the labor costs over time and you should have a stable price for a while. Ask your supplier to explain the type of machinery he is buying and how you can benefit from it in the future. Let him give you a guarantee or confirmation that this will benefit your price in the future.

 

What can you actually do to avoid price increases or battle them?

Validity of prices

Always ask your supplier to give you a validity of the quoted price. A common time frame should be 90 days, sometimes more sometimes less. In any case, ask your supplier for a validity of 180 days (6 months). It might take you a long time to decide to order this product for various reasons.

If you get back to the supplier after a while and you haven’t confirmed validity he might increase the price. That can put you in a difficult spot if you gave the quoted price to your customer. You might have to re-offer to your customer and that’s never good.

Big retailers usually have 1 year or even longer terms with suppliers. They can do that because the suppliers know that the quantities will be large and retailers often take a long time to decide because of their decision chain/process.

How to avoid or battle a price increase:

Short term:

  • Insist on the last order price for this order. Tell him you are about to give him a re-order.

  • Look into raw material price sheets. There are free sources on the Internet. You don’t even need to be updated all the time, but simply look at a price curve of the main material of your product for the last few months.

  • Has the price dropped or risen significantly? Did the supplier claim that the “xxxy” material has sharply risen? Check it out before you trust him.

  • Please use international currency transfer companies. DO NOT use your bank! See more below.

Long term:

  • Put measurements in place such as contracts or buying terms to which the supplier has to agree before you do business. Set up your own buying terms with, for example, a minimum validity of prices in all offers.

  • Ask for bonus payments or agreements. If you know that you will be reordering from this factory, make a written agreement that you will receive a discount of a certain percentage from the next order based on your previous year.

  • Bonus payments:

It is getting more common to agree on bonus payments these days. It works the same way as back home with your local supplier. You agree on certain delivery terms, merchandising payment, back-payments and bonuses if a certain turnover is reached per year.

This usually only works with suppliers that you already work with. But you can certainly try it on any supplier. Even if you get a few hundred USD discount or bonus payment it’s definitely worth it!

You could set the following simple bonus payments with your supplier:

Turnover Goal 2017: xxxxx USD

If reached, bonus payment of 5% (for example) to be discounted from the next order.

For every xxxx USD above this amount a further 1% (for example) to a maximum of X% applies.

Send this agreement to your supplier. You can obviously work out a more detailed agreement but this is a simple illustration on how it could look. In any case I am sure there is some bonus or discount that can be arranged on future orders. 

The best option would be a direct bank transfer of the bonus at the year’s end but most suppliers will only agree on a discount deducted from any future order.

Other ways:

International currency transfer companies

While this has nothing to do with negotiating with the supplier and as I’ve said already above, PLEASE use international currency transfer companies. such as Wise (formerly known as Transferwise)! In some cases you can save hundreds of $ on transfer fees compared to your average local bank. In addition they are much faster. 

As an example, last week I transferred 450US$ for a large sample order to one of my suppliers. The Wise fee was exactly 7.5$ and the supplier received it INSTANTLY. In comparison if I would have used a wire transfer with my local bank in Hong Kong it would have cost 75$ just to send it!

That way you could make up with price increases easily. Not only that but I use these service providers for all kinds of money transfers. Seriously, try them out. 

How to negotiate a good price with a low order quantity:

It is quite common that the supplier will send you a price based on a certain order quantity. Say 10USD for a quantity of 1,000 pieces. Sometimes suppliers will give you 2-3 different prices for different quantities. If you are planning to order an item, you should have a general idea of how to negotiate when you ask your supplier for a quote. 

DOUBLE (2,000) or even TRIPLE (3,000) this expected order quantity when asking for a price. It’s a tactic I use to see what the price range can be. If I actually order this item later at the quoted price but I am below the requested MOQ of the supplier I will pledge with the supplier to keep the price so that we can get started.

I will also mention that it will be a trial order and if everything goes well I will order the initial MOQ that the price was based on.

Perhaps the supplier will not give you the price based on your 1,000 pieces but he will give you the price based on 2,000 pieces to show his support.

This works in most cases. A supplier always will want to support you because they need to feed their factories with orders, even if they t make less profit, just to keep production running and to be cost effective.

Ask for a mixed calculation:

Say you buy 4 items from the same supplier and there is one item out of your assortment that is really price sensitive but the other 3 items are not.

Ask your supplier to keep the price on the price sensitive item the same (or decreased) and allow him to increase the other items at the same time (up to the maximum of the original price increase).

This way you can still offer the price sensitive item at the same price to your customers and lose only a little bit of profit on your higher margin items.

Advanced raw material purchase:

Many suppliers like to increase the price on your re-order. Let him know that you have an order coming up and that he should purchase raw material now at the lowest prices and that you want to have a better price than the previous order. He may want a written order confirmation for that so that he can purchase raw material on your behalf. Other suppliers offer on hand (or not)

If you have other suppliers’ offers on hand that are cheaper than the same item from your current supplier then tell your supplier and demand at least the same price. If you don’t have another offer on hand you could also pretend that you have an offer that is (say 10%) cheaper. Some suppliers may ask who it is from or if they can see it, but you don’t necessarily have to send it to him.

If you do have an offer from another supplier I would actually send it to my current supplier and ask him to lower the price.

How I got 7 suppliers to pay my buyer 100,000USD in bonus payments 

I had a buyer for Christmas items flying in from Austria pre-order season. We arranged to meet up with 9 suppliers over 2 days in our office in Hong Kong. I asked the suppliers to come in and meet with us to discuss the upcoming orders and next season items. The suppliers were happy to come and meet us because we usually would place orders in excess of 100,000USD to each of them per year.

We started off each meeting the same way. We told them we would be selecting new items and then we would tell the supplier how happy we were with the previous season and that we wanted to enlarge business this year. This got them in a happy mood. We selected a few new items to add to the assortment with each supplier. Eventually my buyer sat back and I started to talk about newly introduced bonus payments to each supplier. 

We wanted 10% of the last year’s order amount in bonus payments to be deducted from the next order. I also prepared an agreement to fix the payments right there and then with the supplier’s signature. We sat a long time with each supplier explaining the difficult economic situation, the EUR/USD exchange rate and how this all made it difficult for the buyer to succeed in his business. 

We needed the supplier’s support, there and then or else there might not be any increased orders. (You can always use other reasons, such as economic situations in your country, etc.) Two suppliers wouldn’t pay anything but we ended the 2 days of negotiation with over 100,000USD in bonus payments (some suppliers had orders of over 300,000USD from us). This was a lot more than we expected. 

How did I do that?

Initially the suppliers were reluctant. Since I wasn’t the actual buyer but the product manager it sure was a good thing the buyer was there. This way the supplier saw the buyer and had no way of wriggling himself out easily. Chinese do not want to lose face in front of their customers. They often promise the “best prices / best services,” etc., and it was time to prove they meant what they said. If you continually insist on a bonus and financial support they will eventually give in, because they want your future business and they don’t want to upset you.

In your case, since you will be the buyer, you see the importance of coming to China to negotiate your deals. A negotiation like this is highly unlikely to succeed via a phone call or an email. You don’t need to have an office here. You can hold meetings and negotiations in your hotel or at the factory. 

Even if your quantities or order value are not as big as the example above you still have an edge. Even the smallest discounts on your next orders could cover the airfare ticket you bought to get to China. Not to mention the suppliers you met on other days to source for new ideas. It will definitely be worth it.

Before you go into a negotiation with a supplier, plan ahead with a clear strategy similar to the one described above.

I do hope that this blog post helped you in some ways to get leverage when negotiating with your suppliers.

Happy sourcing!

Manuel 

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When and how to work with a sourcing company in China

When and how to work with a sourcing company in China

When and how to work with a sourcing company in China

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

Today’s post is all about how sourcing companies work and when it makes sense to use a sourcing company instead of doing the entire job yourself.

Back in the days when I worked for a Buying Office/Sourcing Company in Hong Kong I was travelling 10 days of the month scouting new products for customers in factories in China.

As a Sourcing Company we provided every service the customer needed to import so he didn’t need to handle everything himself. We earned a small commission (non-profit wholly owned buying office) on our orders and made life for our buyers a lot easier.

That was back in 2013. Today (2021) things are a little different and sourcing companies have adapted. Here’s how most sourcing companies work and how they charge. At the end of this post you’ll also find a list of sourcing companies in China/Hong Kong. 

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

1) Up-Front Flat Fee:

Basically you pay a fixed up-front fee that is agreed on at the start of the project. The company starts sourcing and you’ll get a report after a couple of days. Usually complete with 1-3 supplier recommendations and which one would work best for you; an Excel file containing supplier contact details, product weight, measurements, description etc. At this point you could possibly hire the sourcing company for further steps (what that entails explained below) such as a full sourcing package or take it from here. No further costs are involved.

2) Up-Front Fee & Commission:

Some companies charge you an up front fee (usually fixed) and if you decide to order that product from the choosen supplier the sourcing company also gets a commission. This is a rather unpopular model as the sourcing company even gets money even if they don’t do anything further anymore.

3) Commission only (with contracts, usually big sourcing offices with monetary commitment every year)

This might be a bit of the older model but not many sourcing companies offer that to a new customers. The sourcing company does all the work in finding a suitable supplier and once the buyer is ready to place an order a commission is agreed upon and paid to the sourcing company once the goods are shipped. Since the sourcing company doesn’t have any guarantee that the buyer places an order this is usually only available for existing clients or buyers who have their own sourcing office in Asia. A good example for this would be the company I worked for many years in Hong Kong (Eurogroup.com.hk).

Eurogroup acted as the sole buying office for 3 big companies (Rewe Germany, bauMax Austria and Coop Switzerland). Every order had a fixed commission (agreed upon every year during a yearly meeting between buyers and sourcing company) and paid out at the end of the year to the sourcing company. Usually these percentages range somewhere in between 4-8%. This might be the best solution for you if you have the need of a contact person any day of the year and have a lot of orders every month (possibly more than 5 containers per month).

4) Making money on the backend

This is a practice used by MANY chinese sourcing agents or companies without Western management. It was very common in the 90’s and 2000’s but more and more oversears buyers have gotten wind about this (rather unfair) practice.

What basically happens is that the buyer pays an agreed commission or fixed up-front fee to the sourcing company and the sourcing company collected extra commission from the factory itself without the knowledge of the buyer.

Many Chinese sourcing agents have this agreement with factories. If they introduce a buyer to the factory the factory pays a commission to the sourcing agent after the order.

Obviously the sourcing agent doesn’t tell the factory what kind of money they already got from the buyer. It is difficult to figure out if there is money involved in the backend. Usually it is when a sourcing agent offers to work for a very low fee or does not allow you to contact with the factory itself. Beware of these types of sourcing companies.

When to use a sourcing company?

I find that there are different types of buyers and depending on what type of buyer you are you may want to use a sourcing company or not.

1) Experienced buyers who want to focus on other parts of the business

These type of buyers usually have imported from China for at least 1-2 years and have experience in dealing with Chinese factories and companies. If you are one of these buyers you are very likely stable on your profits and you may want to outsource this task to sourcing companies. Mostly because sourcing in China is a tedious process and can be very time consuming. Especially if you are in a growth phase and you need to focus on non-China activities in your business such as marketing, developing new products or diversifying your business.

2) Tight budget buyers who want to try themselves at the process first

You are very likely at the beginning of your eCommerce or general commerce business and have limited amount to spend on sourcing companies. If you are in this phase I actually do recommend that you do not use sourcing companies as you might want to learn the process first and experience working with Chinese factories first hand. There are a lot of tutorials available on the internet to learn about importing from China (including my blog posts and Import Bible).

Sign up here if you haven’t yet and get my Import Bible (The beginners guide to importing from China) for free: https://importdojo.com/free-ebook/.

Also make sure to read trough my blog posts: https://importdojo.com/blog/

So what do sourcing companies do?

Keep in mind sourcing companies do the entire job for you. Just to give you a brief overview of what this entitles and how long this process usually takes:

  1. Establishing your needs (1-2 days of communication)

  2. Sourcing compliant suppliers/factories in China based on your requirements (7-10 days for off the rack items)

  3. Preparing quotation and findings in a summary for you (1 day)

  4. Order samples and evaluate them for you (5-10 days)

  5. Negotiate final conditions/pricing (1-2 days)

  6. Issuing contracts and agreements (1-2 days)

  7. Placing the order in your name, making sure all terms are met and everything is fixed (2-3 days)

  8. Arranging production, packaging, labelling, shipment (7-10 days)

  9. Monitor production period (30-45 days  – obviously it doesn’t take 45 days to produce but when you place an order with a factory you need to wait a certain amount of time for all materials to arrive, arrangement of production etc.)

  10. Arranging inspection (1 day)

  11. Release production and arrange shipment (1 day)

So we are looking at 87-90 days (roughly always 3 months) from beginning of the project until shipment.

So if you do not have to monitor the entire process but rather want to focus on developing and growing your business it makes a lot of sense to hire a sourcing company.

When does it not make sense to hire a sourcing company?

I always recommend first timers to go trough the process at least once. That way you learn a lot about the trade and obstacles a sourcing company has to go trough. Also it will make you simply understand the process better – and appreciate the work a sourcing company is doing for you 🙂

What do sourcing companies not do?

Some sourcing companies may offer these services, some may not:

Inspections – make sure you use a third party inspection company. There are sourcing companies who offer this as an integrated service but I recommend hiring a company (such as QIMA/TUV, SGS etc.) who have many years of experience.

Logistics – some sourcing companies offer this – also here make sure you use a third party inspection company.

Reason why I say use a third party for inspections and logistics is that your sourcing partner is probably not the strongest in that field. Meaning their prices are higher and they are less experienced. You might argue that you want an all-in solution with one company and don’t mind but I’ve seen my fair share of problems with these all-in one companies.

Just think of it this way: if you want to have a great pizza you aren’t going to the Greek around the corner because they also serve Pizza. You’ll want to go to the best Italian in town (if they are affordable). And if the Italian serves a Greek dish it’s probably not the best Greek dish you can get…. I think you get my point 🙂

What can you expect from a sourcing company?

China is not a department store. What I mean by that is that you simply don’t walk into a store (even with experience) and everything goes smooth. There are a lot of obstacles that can come along the way. Governmental Inspections, Chinese New Year holidays, unexpected delays on raw materials, unclear communication from the buyers side delaying things and so much more.

Obviously most sourcing companies work in YOUR interest, not in the factories interest. However if the buyer is in-experienced with doing business in China some situations can become difficult in the buyers eye. Therefore it is important to understand all facets of doing business with Chinese companies. Again, I recommend to have gone trough the process at least once and ready up on my blog posts.

List of sourcing companies:

If you are looking for sourcing companies, Niechedropshipping has included a list of great sourcing companies here.

Conclusion:

I think it generally makes sense in any business to outsource those tasks that you aren’t good with (or have no time for). Just as I outsource certain tasks in my business. Do your research on sourcing companies and determine based on the following factors of the sourcing company:

  1. Experience

  2. Reputation

  3. Pricing

Pricing is usually my last priority in all tasks I outsource because I rather pay a little more but have less headache afterwards. 

I hope this gave you a bit of an overview of what sourcing companies do and how they can help you.

Let me know if you have any questions 🙂

All the best and happy sourcing,

Manuel

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Read More »

Subscribe to our newsletter!

Sign up for ImporDojo and get our free eBook “The Import Bible” – the complete starter guide to importing from China. As well as updates on blog posts and news around the eCommerce world. We’ll never spam and you can unsubscribe any time – its FREE to subscribe! 

certification importing china

How NOT to get suspended on Amazon (Regulation & Compliance)

How NOT to get suspended on Amazon (Regulation & Compliance)

How NOT to get suspended on Amazon (Regulation & Compliance)

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

In the last few months I’ve seen more and more posts in groups as well as emails from my subscribers about getting suspended on Amazon or even getting products seized at customs because of non-compliance with regulations and certifications.

In this post I wanted to educate you in more details about the recent suspensions or headaches Amazon is giving new and existing sellers. More and more people email me about Amazon suspending their listing or not letting them list a certain product (sometimes super simple items). Most of the times it is too late if they are already suspended. Especially new sellers.

I’ve been warning people since last January 2017 when Amazon cracked down on sellers who don’t comply with legislations & regulations. No matter in the US or Europe, being compliant is getting more and more important to Amazon as governments try to crack down on in-compliant eCommerce companies.

I’ve taken a screenshot from Amazon Seller Central to show you what I mean:

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

So what does that mean essentially for you as an importer? And how can you comply with these regulations?

I am sure you’ve done your research when looking at a product how you can comply but most of the times its pages and pages of text on government websites that are very difficult to understand.

So I wanted to give you a breakdown and brief overview of how you can can understand regulations. Be warned this is quite the long post but please remember this is a super important topic!

The following is an excerpt from my certificate course. This is such a comprehensive topic that it took me 10 months to finish the course. Here we go:

1) Country specific requirements

This can be a nightmare. Each country has different requirements and regulations. On top of that they change all the time or are being updated every few months. Making it also very difficult for suppliers to keep up with it. So it doesn’t always mean that when your supplier hasn’t heard of a new regulation that he is incapable of working with you but because these change all the time. See chapter 10 on capability of suppliers. Even though for example the European Union has general guidelines that are valid for many countries in the EU some countries have even sub-requirements.

There are norms & regulations that count for all countries. As for example D2001/95/EC or General Product Safety Directive (in short GPSD which regulates the CE directive) is valid for most countries within Europe.

Then again take Switzerland for example, since they don’t officially are a member of the European Union they have their own regulations. E.g. a GS certificate is not valid there, you have to have the equivalent on your product (S+ certification).
However in general it is safe to say if your supplier has a high standard of a specific country already (GS certification for example) that you are unlikely to be in trouble.

Make sure to check country specific requirements in your local countries websites and do not assume
that if GS is necessary in Germany the same goes for France for example.

2) What type of certifications are there?

First things first. You need to understand that certifications are based on directives and legislations. So for example the GPSD in Europe (General Product Safety Directive Legislation) or the CPSA (Consumer Products Safety Act) in the US says that a product needs to meet certain standards and need to be safe in general to import or bring to the market.

Simple right? Unfortunately not. The GPSD has tons of directives under its belt such as the CE, RoHS, REACH directive). Which means that for each product or category there are further sub-categories that have directives which tell you exactly what your product needs to meet. Wait a minute, what exactly are you saying? I can’t read all this technical jargon….

There are several types of certification. Before I explain which ones are available please note that most countries have different certification requirements. There are also directives and legislations issued by Government Agencies or councils which can be met when having the right certification. A Third Party Testing Institute for example issues a certification after having tested the product according to directives and legislations.

Simple please? For example if the RoHS directive (which is under the GPSD legislation) says that a product has to be tested on how many percent of a chemical compound is in the raw material (e.g. Cadmium or Lead) of the final product, the certificate will only be issued once the testing is completed and the percentage of chemical is not above the allowed directive/legislation of RoHS. With that being said, there are:

A) Certifications/Marks required by law
B) Certifications/Marks good to have
C) Certifications/Marks recommended

3) Who and how are certificates issued?

1) Certificates are not issued by factories themselves (except SELF certifications declarations of conformity). If they are issued by the factory as a declaration of conformity – this is not evidence as such that the product complies.

2)Certificates are issued by Third Party Laboratories (TPL) or Government Agencies (GA). These certificates are actually evidence of conformity, give you peace of mind as well as support you when someone claims that your product is not conform to regulation.

Whats the workflow? The supplier or you needs to send in the sample of the product to a TPL or GA. The TPL or GA will then conduct testing according to requirements issued by the governing country or body. If the requirements are met, the TPL/GA can then issue a certificate that is in some cases valid for a short period or in some cases does not expire. The TPL/GA will then forward the original and copy (PDF) of the certificate to the party who paid for the testing costs.

4) What does my product have to meet legally?

In general your product has to meet country specific legislations & directives. Those can be as simple as a document of conformity (DOC) which can be self-declared or a Third Party issued certificate (or Evidence of Conformity) which will cost a certain amount specified by the Third Party. What your product has to meet legally can be researched on government’s websites such as the CPSC in the US or the European Commission in Europe.

5) Do I really have to have all certificates?

Yes and No
The good news first. No you do not have to have all tests and certificates done by third party laboratories (both the US and Europe). What would suffice in (almost) all cases would be a declaration of conformity. Wow really? Yes, and here is the “however”. 

If you trust your suppliers blindly that all raw materials are free of hazardous chemicals, comply with electromagnetic compatibility (electronics for example) or meet certain other standards then that would be very foolish. If your supplier can’t provide any certification and claims that he complies with everything you ask for thats a huge red flag. 

I also understand that you don’t want to invest in any certification not knowing if it will sell. And this is the most important part where you as an entrepreneur and business person need to come to a decision. A) Is my product potentially dangerous (can it explode??). B) Is my product relatively simple
and can’t harm anyone (e.g. leather wallet)? Once you’ve figured out what you need for your product you need to evaluate what should be invested. Let’s take an example. For the sake of it let’s look at a simple and a complicated product.

Simple product:
Solar powered garden light for 1.2$. Comes with nothing but a few cables, some plastic and a solar cell. Simple right? Technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe. Now if I were to test all of these, the costs would amount to roughly 2000USD with a very cheap Chinese laboratory.

If it was TUV or SGS the costs would be triple that. Now what if I am going to order 1,000 pieces and my testing costs would already cost more? That doesn’t make sense. In this case I suggest to get self declaration of the above regulations and save yourself these costs. 

Obviously you’d still want your supplier to declare that he can fulfil those requirements so look for suppliers who already deal with customers in the country you want to import to and have a good
reputation or can back up their claim that the item is compliant with raw material certificates for example (from the raw material supplier).

Complicated product:
Small Electric fan heater 5.9$. Comes also with a few cables, some plastic, a plug and a PCB. Simple right? No. You see, I need to plug this product into the socket (230Volts plus) and the potential dangers are very high. If the unit tips over or a child puts a cover on top, the entire unit can burn up (and the house with it).

Also here technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe.
Ideally I will also want a GS mark for Germany because this is a product consumers want to have with GS. On top of that I want abnormal testing from TUV for example. Abnormal testing means they would test what happens if you cover the unit with a blanket or if it tips over that the unit switches off automatically. A good supplier knows that there needs to be a tip over switch installed and overheating fuse included. This abnormal test alone costs 4-5,000USD.

A GS mark costs somewhere in the same vicinity (2-4000US$). The other tests (LVD, RoHS, REACH & CE) are roughly 2,000USD. Now we are looking at 10-12,000USD investment costs. Would I do all these testings before purchasing? Yes, 1000%. I do not want to risk my business or anyone else’s life because I wanted cheap. You may say ok but I don’t have that kind of money. Then you need to find a supplier who either has these certificates already or is willing to invest the money for you. If you can’t find one than its simple – the product is not for you and your budget. 

You can still go for it without all the testing and certifications but I think we are on the same page here that that would be a very foolish decision in case anything happens.

Now I can’t go into hundreds of products or case studies here, that just isn’t possible. But I think you see my point. First I need to evaluate if the trouble is worth it and if I even want to deal with complicated products.

If the answer is yes then the strategy is pretty clear I think – test and get certificates. If you don’t dare to sell these risky (but profitable) products go the easy way and pick simple products or walk away.

You don’t have to have recommended certification like GS or UL on an electronic product. These
are recommended certifications that improve your chance of selling and create more trust for your
customers. We call these “Quality Seals”. But remember, a self declaration is not evidence of compliance. It is merely a statement by you or the supplier that all regulations are met.

So if you want to be on the safe side you do testing with a third party laboratory and get actual
evidence certificates). This is for your own protection.

Imagine you are a consumer and you see an advertisement somewhere (online/offline) and the advertiser has a certain quality seal like GS/UL. Would you rather buy the quality approved product (even if more expensive) or that of another seller who does not have these quality seals? I think it’s needless to say you go for the quality seal product. 

Most big retailers only purchase a product when it even meets all quality seals. For example
Walmart or Sears will probably not import a baby product that hasn’t got FDA approval and BPA free certification. They just can’t afford to be in the news when the product gets tested by a watchdog and the test fails.

6) How does everyone else do it without certificates?

Many importers, especially small ones, eCommerce sellers or importers who send via Air Express (DHL etc.) avoid getting caught by customs and authorities because these carriers (DHL etc.) have special clearance at customs. Why? Because they clear millions of shipments every day around the globe. If every shipment would be inspected by customs, logistics and delivery times would be a nightmare. So yes basically everyone else is breaking the law.

Importers who go the regular way (regular Air or Sea freight) have to clear each shipment with customs. Since clearance takes a lot longer and there is no “waving trough” of your goods like with DHL they do look at most shipments in detail. If your product does not have necessary certification/documentation your products can get seized and you’ll never get them back (unless you miraculously acquire the certification in a few days).

So yes, you may save a few hundred or thousand $ if you don’t get caught. But if you do get caught, fines or seized goods that can be much more expensive aren’t worth it. So go the correct way from the beginning. Not only do you have an edge over your competitors (you have a quality seal, they don’t) but you also have a safe product that your customers will appreciate (in turn even mention during a review).

7) General costs

As a general guideline here are some costs from a local Chinese testing laboratory (CTS):

1) CE/EMC (800RMB) calculators, clocks etc.
2) CE/LVD (luminaires 2800RMB)
3) RoHS (950RMB)
4) REACH (590RMB)
5) FCC (800RMB up)
6) FDA/BPA(4000RMB)
7) LFGB (6500RMB)
8) GS (7500RMB)
9) Colorfastness (80RMB)
10) PAHS (390RMB)
11) AZO DYE Test (210RMB)
12) California Prop65 (800RMB)

8) Who pays those certificate costs?

If the product does not have certification and your market requires it the costs lie with you. However if you can convince the supplier to pay for it you may save those costs. Why would the supplier pay for it?

For one, it increases his chance on selling more of his product because he can advertise the certification to other customers and second it helps to improve the quality of the product (if he needs to make adjustments to the product in order to meet the testing requirements). 

One may argue and say “but I don’t want other customers buy this product, especially not in those countries that I am selling from” – well then it is pretty clear that you have to evaluate if the testing cost is worth it so you can have the certificate exclusively and in your name. Because if you pay for it the supplier cannot advertise or lend the certificate to other customers.

9) Where can I save money?

In general simple products that have very low requirements such as a knife sharpener, salad bowl, decorative items etc. are ok to have only a Letter of Conformity

  1. examples  of European templates here: http://ec.europa.eu/DocsRoom/documents/5830/attachments/1/translations

  2. examples of US templates here: https://www.cpsc.gov/Business–Manufacturing/Testing-Certification/General-Certificate-of-Conformity-GCC

  3. or a Letter of Guarantee issued by you or the supplier stating that all items are conform with regulations and standards. Best to check with your supplier or a third party test laboratory.

10) Are EU certificates valid in the US & vice versa?

In general NO. Even though some certifications have a stricter testing procedure (such as LFGB in Europe) they are not acknowledged in other countries. So if your supplier has no FDA certification for the US but he has LFGB for Europe (the equivalent to FDA) it is a good sign that his products can meet regulations but it won’t help if you need certification for the US. If you have a good product and feel the investment is worth it then go for the certification and pay it (or convince your supplier)

11) Getting the supplier to test for you

As mentioned before you can also have the supplier apply and pay for the certification. Especially if you are selling solely in one marketplace and “allow him” to sell to other countries or markets than you are selling. E.g. Imagine you are based in Germany and for now you only plan on selling on Amazon Germany. You could tell him that he is allowed to sell to any other customer within Germany (online or offline) if he pays for the certification.

German importers or bigger clients are more likely to buy from a factory if they have a certain certification for example. Same goes for the North American market. Walmart for example is more likely to buy from a factory if he has proper certification.

12) Why do some suppliers have no certificates at all?

Sometimes suppliers have no certification at all because either:

  • The product is new and they want to see if the market needs this product before paying for any certification. Basically they want to test the waters before investing themselves.

  • The supplier only sells to countries where no certification is required at all (imagine regulations in Africa)

  • No one has told him yet what is needed and he waits for customers input

  • He simply doesn’t care and wants to make a quick buck (stay away)

  • He doesn’t have experience in your market but is otherwise capable.

The above is only a brief overview of thousands of regulations and I hope this gave you a bit of an overview. If you want to learn about this topic with in-depth material to make sure you are compliant, check out my Certifications course in my Importdojo Masterclass or post your question in our Facebook group here.

All the best and happy sourcing,

Manuel

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Why you ALWAYS need inspections in China and Europe trip report

Why you ALWAYS need inspections in China

Why you ALWAYS need inspections in China

By Manuel Becvar
By Manuel Becvar

Table of Contents

China Quality Inspection

A little more than 2 weeks ago I came back from my Europe “vacation” which was not really a vacation but more work because I was constantly on some calls or working on other stuff.

It was quiet around me but I was not sleeping but rather working on many projects. Some of them I wanted to share today. Before that I also wanted to share why you always need inspections in China. Regardless what suppliers or other people tell you. Trust me, I’ve been in this business for nearly 17 years (as of 2021) and I’ve had my fair share of problems even WITH inspections. 

 

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

So when I got home to Asia I had an inspection on my 7th re-order of the French Press case study product I did a year ago. 

I’ve always preached how important inspections are and I do them every time. Even with suppliers I work with for a long time.

It really doesn’t matter how well you know your supplier and how often they plead not to do inspections. You hear something along this line: “don’t worry my friend – always good quality, no need to inspect”. Have you heard that phrase? I’ve heard it a million times and I ALWAYS do inspections anyway.

So this was an inspection with my “famous” French Press and before I received the report the supplier told me many times that we don’t need an inspection… Even on the day before I received the report the supplier messaged me (because he was obviously in the factory during the inspection) that I should release the shipment, there are just a few scratches, nothing to worry about and I should go ahead and send him the payment….

Never trust your supplier. I am not talking about the sales representative of the factory and I also don’t mean this in a negative way. I am talking about the factory workers, the QA manager on duty and down the hierarchy. They might have a bad day or the factory manager decides to rush an order (remember many factories are being closed right now so I attribute these issues to that).

Have an inspection, evaluate the problems and release shipments if these are minor mistakes. I often release shipments even if the inspection is “fail” when there are minor issues. However in critical cases, demand re-work & re-inspections until its fixed. Otherwise the supplier doesn’t see his money. Another good point to never pay more than 30% downpayment.

To see what I mean when I say critical issues here are some images from the inspection:

The supplier just switched screws that were cheaper without my approval!
Always view inspections from a customers point of view. Would you accept these type of issues?

Protect yourself!

And there were many other issues. So what do you do in these kind of situations? First of all you need to have an agreement in place when you place the order. I usually have three terms that I include in my contract and 95% of suppliers will agree to that:

  1. Re-inspection and re-work at suppliers cost if the inspection has major and critical issues

  2. Replace returned units from customers higher than 6-8% (depends on product). This usually means those 6-8% are free units on my next order.

  3. Penalty fees for late delivery. Say 10 days after agreed delivery date 0.5% of total order value. 15 days – 0.75% and so on.

Most suppliers will agree to these terms. The point is you negotiate this when you place the order and before you transfer any money. These things happen can happen to all of us and you always need to have a safety net (inspection).

So what happened in my case? The supplier asked me if it would be ok to send pictures only without a re-inspection… no way. How would I know if he just takes photos of items that were in perfect condition anyway and not re-work?

So I asked them to acknowledge our agreement of paying for re-work and re-inspection in case of serious issues. And that’s what happened. The supplier has since re-worked everything and the re-inspection was a few days ago, this time with very minor issues and I released the shipment.

The moral of the story here is really to have a safety net and don’t let the supplier talk you into easy solutions (for him). Because your business will suffer in the end. Granted this was the first time the supplier screwed up but that just makes my point. You never know what is going on on the day of production and it might not even be your sales representative fault. HAVE INSPECTIONS they start from 300$. Personally I recommend QIMA. I’ve been with them since 2014 and I am very happy with their online booking system and the quality of their reports. I’ve also had an issue once with an inspection and without any questions asked they helped to solve the issue. 

Europe trip report

So having that out of the way and without further ado I also wanted to share some moments of my 7800 kilometer trip (4800 miles) in Europe 🙂

We left to Europe on 29th of July. Most people who know from my previous posts about my fear of flying. Also explained here. So I treated myself to lying flat again
We landed in Vienna (Austria) pretty late that night and had a long breakfast the next morning with an amazing view
We then headed to my Mum’s place near Salzburg and would you know there was a village festival. Which was pretty empty for what it was?
Stayed for a few days there and then headed for a hike in the Tyrolean mountains near my friends place. I took the opportunity to snap a few pictures with my newest product
We then made our way to Sweden and stopped in Hamburg in between to meet up with Gil from Privatelabeljourney.de and his lovely wife.
We finally arrived after a 16 hour drive to my private sanctuary. Had to chill for a few minutes to let it all sink in.
On the very next day we went looking for mushrooms in the forest.
Enjoying a sunset
Preparing for my speech in Innsbruck (Austria) 2 weeks from now
Our first catch!
And more mushrooms!
A few days later we were in Venice, Italy. Another 18 hour drive.
From there we headed to Budapest, Hungary (another 8 hour drive) for one of my best friends wedding.
Including a bachelor night. No details here 🙂
The wedding was set in a beautiful castle outside of Budapest
Eventually bringing me to the last leg of my trip. I was speaking to becoming and existing Amazon sellers about niche selection and why innovation in product development matters
Including a bachelor night. No details here 🙂
And Vienna again on the last night before flying home.

So that was that, my 6 weeks in Europe. A lot more moments that I wanted to share but I don’t want to bore you 🙂

I hope you’ve enjoyed this post!

Happy sourcing,

Manuel 

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Read More »

Subscribe to our newsletter!

Sign up for ImporDojo and get our free eBook “The Import Bible” – the complete starter guide to importing from China. As well as updates on blog posts and news around the eCommerce world. We’ll never spam and you can unsubscribe any time – its FREE to subscribe! 

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How to increase traffic to your Amazon listings

How to increase traffic to your Amazon listings

How to increase traffic to your Amazon listings

By Manuel Becvar
By Manuel Becvar

Table of Contents

Introduction

How to increase traffic to your Amazon listings – This is a guest post written by Dave Barry, which outlines a number of ways you can get more traffic to your listings on Amazon. Dave is an Amazon Seller and also a co-founder of AMZEurope.com. AMZ Europe specializes in listing optimization for Amazon UK & US and Amazon EU (Germany, France, Italy & Spain).

Poorly performing products on Amazon arise due to:

  1. A lack of traffic – not enough people are clicking on your listing; and / or

  2. Low conversion – not enough visitors are buying your product.

In this post, we’ll focus on issue #1.

A lot of effort goes into listing a product on Amazon, including product research, negotiating with suppliers, logistics, photography, keyword research and copywriting. As such, when your product is not being seen by enough potential customers, it can be enormously frustrating.

Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.

Does your product have low or declining traffic?

To answer this, you need to determine the number of people that are visiting your listing.

You can find the number of views a particular listing is receiving in seller central:

  • Under the “Reports” menu, click, “Business Reports”

  • On the left side of this page, under subheading “By ASIN”, click on “Detail Page Sales and Traffic”

  • You will then be presented with a table of data for each of your ASINs

  • Find the relevant ASIN (you may need to scroll down) – column “Page View” will display the traffic or number of views your product listing has received

  • In the top right of the screen, you can adjust the period for which you want to see the data

If it’s a product that you have been selling for a while, check the traffic over the past 6-12 months.

A significant drop off in traffic or a steady decline indicates a problem and your focus should be on addressing this, using the tactics we’ll discuss in this article.

However, beware of the seasonality of some products when performing your analysis. Seasonal products are in higher demand at a certain time of the year and thus, will receive more traffic during this period.

For example, if you’re selling board shorts, you can expect a reduction in traffic in the months following the summer. You can check the seasonality of a product by inserting its main keyword into Google Trends.

Launched a new product that’s getting very little traffic?

This is common at the start and likely due to limited sales history and low number of product reviews (people tend to buy products that have a larger number of positive reviews) relative to your competition. Follow the tips in this post to increase the number of visitors to your new product.

Is your listing being suppressed by Amazon?

Before we discuss the methods that will help increase the traffic to your listings on Amazon, we must quickly check if your listing is being suppressed

What does this mean?

In simple terms, it refers to when Amazon lowers the ranking / limits the visibility of your listing – leading to a reduction in traffic and sales. It arises when some part(s) of your listing is not compliant with Amazon’s rules.

Is my listing being suppressed?

Here’s how to check in seller central.

  • Under the “Inventory” menu, click, “Manage Inventory”:

  • If you have suppressed listings, you will see “Suppressed” in the top navigation pane

  • To solve this and restore your listings to normality, you’ll usually need to provide some additional information or make an adjustment to your listing e.g. reduce the number of characters to your title.

  • If you do not have any suppressed listings, you will not see the “Suppressed” option in your navigation pane.

Here is a more detailed overview of listing suppression from Amazon – https://www.amazon.com/gp/help/customer/display.html?nodeId=200898450

BOOSTING YOUR TRAFFIC

1 – Improve Your Main Image

When a customer searches for a product like yours on Amazon, what is one of the first things they see?

Your main image.

To get more clicks and increase your traffic, you’ll need to have a top quality main image that stands out amongst your competitors.

Amazon has specific rules for your main image, which you should abide by to avoid potential suppression of your listing. In summary, your main image should be on a pure white background and your product should fill 85% or more of the image – while these are rules, following them will also better showcase your product.

Here are some other ways to improve your main image:

    • Hire a professional product photographer – in a competitive niche, this can help you get more clicks

    • Ensure it is high resolution – 1,000 px minimum in height or width

    • Present your product at a different angle than your competitors

    • Feature any extras or bonuses provided with your offering e.g. a carry bag or user guide

  • If you have high quality packaging, include this in your main image

Torn between two potential main images? Perform a split test to confirm which one will generate more traffic.

Split Testing (also referred to as “A/B Testing”) is done to find out what works best in your listings, and will ultimately generate more profit over the long term. In simple terms, it involves deriving two options / variants (main images in this case) and determining which one provides better results.

Use option 1 as your main image for 7 days. Then, change to option 2 for the following 7 days.

You can then compare the traffic and performance of your listing with these 2 main images. The image which provides more traffic and sales is the one to use for your listing going forward.

The 2 week time period above is used as a guideline – you can do longer if you wish, although I would not recommend a shorter test period. The more data and clicks you compile, the more confident you can be in the results provided.

Software like CashCowPro and Splitly can help you automate the split testing processing.

2 – Evaluate Your Pricing Strategy

Pricing is another key variable in determining whether a potential customer clicks on your listing or those of your competitors.

Finding the sweet spot can be difficult. Price too high and you’ll prevent customers from clicking on your listing. Even pricing too low can reduce traffic, as it may suggest you’re selling a low quality product and turn off some buyers.

However, if you’re not getting enough traffic, here is my advice on pricing.

To start, review the pricing of the top sellers in your niche – it’s fair to assume they have tested and determined an optimal price that attracts customers and sales.

Go to Amazon and check the price range of the top 3 to 5 sellers in your niche.

If you’re significantly above this range, you might well be pricing your offering too high.

If your product is new (with very few reviews) or in decline, an effective way of getting more clicks is to lower your sales price. This should increase traffic and sales, and in turn improve your ranking on Amazon.

Once you have restored your listing to a healthy level of traffic and sales, you can then consider a price increase.

Be careful not to price too low. I made this mistake on a listing myself. Traffic and sales on one of my products were in decline, so I wanted to offer a larger discount to customers to regain my ranking and sales.

I lowered my sales price to $8.99. However, this actually had a negative effect on conversion and sales!

My product had become an add-on item on Amazon. If your product is listed as an add-on item, it can only be purchased by customers that check out with a shopping cart of $25 or more.

Lowering your price is definitely a tactic that works to grow traffic.

However, it’s important to note that competing on price may work temporarily, but there’s nothing to stop a competitor pricing lower than you. Downward price pressure like this erodes your profit margin.

To avoid this, ensure your product offers some unique value / features compared to your competitors. This will help you succeed amongst the sprawling forest of generic private label products being sold on Amazon.

3 – Run A Lightning Deal

What is a lightning deal?

It is a promotional offering, where you provide a special discount for your product and Amazon features it on its Deals page for several hours.

This is almost guaranteed to provide a large influx of traffic and along with it, sales!

It’s an excellent way to revive a slow moving product listing.

However, not all products are eligible for lighting deals.

To check if your product(s) are eligible, go to seller central. Under “Inventory”, click “Lightning Deals”. The lightning deals that you can opt to run (if any) will be listed under “Recommendations” at the bottom of the page.

If the product you are seeking to boost is not eligible for a lightning deal, check back a week later as this page is updated on a weekly basis.

4 – Find New Keywords

The keywords included in your listing have a major impact on the traffic your listings receive.

Your product will not appear in Amazon’s search results if a customer uses a keyword that is not in your listing or search terms (also known as “back-end keywords”).

As such, by failing to include just one high-volume keyword that’s relevant to your product, you’ll be missing out on a significant amount of traffic.

To ensure all important keywords are identified and included in our listing, we must perform comprehensive keyword research.

With Amazon recently reducing search terms to a maximum of 250 characters, it’s more important than ever to identify and target the right keywords.

Tips when doing keyword research:

    • Experience with keyword research is preferable, including familiarity with tools and software that can provide data and automation to enhance the process;

    • Keyword research should be done by someone with (a) comprehensive vocabulary and (b) understanding of your product / niche, to ensure all important keywords (high volume and relevant) are identified; and

  • Understand the difference between keyword research for Google and Amazon. People search on Google for information, services and products, while searches on Amazon are just for products – prioritize keywords that have buyer intent, over more informational keyword phrases.

In summary, investing time in keyword research is essential as it has a major impact on the quantity and quality of traffic directed to your listing.

Don’t have the time or knowledge to perform comprehensive keyword research?

Hire us! Our listing optimization services features detailed keyword research, along with copywriting for Amazon US & UK, and localization (a mix of copywriting and translation) for Amazon EU (Germany, France, Italy & Spain).

As part of our listing optimization services, we also optimize your product title to get more clicks / traffic, which we’ll cover next.

5 – Optimize Your Product Title

Along with your main image and pricing, your product’s title is the other key variable displayed in search.

These 3 factors provide the first impression of your product to customers. The better they are, relative to your competition, the more traffic you’ll get.

We have covered main image and pricing already, so now let’s talk about improving your product title.

The first goal of an Amazon Product Title is to capture the attention of buyers. We do this by placing the most important keywords at the start of your title. If buyers don’t see keywords relevant to their needs, they likely won’t click on your product. This is also important because mobile devices (smartphones and tablets) display fewer characters of your title – almost 60% of Amazon customers report that their primary way to purchase products on Amazon is on their smartphone or tablet.  

Titles must be written in a compelling way too, encouraging customers to click on your product, instead of your competitors’ offerings.

It’s important to note that product titles in most categories are limited to 200 characters (including spaces). To maximize space and feature as many important keywords as possible, your title should not comprise grammatically perfect / full sentences – it should be a mix of keywords and copywriting.

For example, let’s assume we are selling a wallet made from high quality leather. In a full sentence, we would write, “the product is made from premium leather”. For an Amazon Title, the phrase “Premium Leather” is better – we don’t waste too many characters, but emphasize the important feature we want to.

You can derive a new title for your product using these tips.

However, it’s important to verify that it actually improves the performance of your listing.

Run a split test to check if the new title gets more clicks than your original title.

Next up, we’ll talk about advertising. While this is a paid method to increase your traffic, it is certainly an effective one.

6 – Advertise on Amazon

There are 2 ways to advertise your products on Amazon:

Sponsored Products – for promoting / advertising individual listings.

Headline Search Ads – available to brand registered owners, with 3 or more product listings.

Low traffic and not advertising your listings on Amazon?

Get started with sponsored products. It’s easy to do and will drive traffic to your listing. Amazon offers a $50 credit to those starting out oo.

If you are advertising on Amazon, but still have low traffic, there are a few things you can do to get more traffic from advertising:

    • Increase your bids on keywords – this will improve your ad placement and help you get more clicks

    • Increase your daily budget – this will increase the number of clicks you can get from advertising in a particular day. Do this if you are regularly spending / reaching your daily budget / limit set on Amazon.

  • Perform keyword research to identify new keywords to target in your advertising campaign

BONUS TRAFFIC TIPS FOR AMAZON EUROPE

For those selling on Amazon Europe (UK, Germany, France, Italy and Spain), here are some other ways to increase your traffic.

A – Enable FBA Export

FBA Export allows sellers to choose which European countries their products can be shipped to.

If your listing’s export settings in Seller Central (pictured below) is set to “Disabled” or “9 Countries”, you are missing out on traffic from many countries in Europe.

Update to “26 countries” and open up your listing to traffic and sales from a number of other European countries. Note that sellers are not charged additional fees for FBA Export orders – as you can see below, there are “no additional fees for FBA Export orders on Amazon”.

B – Keyword Research & Amazon Europe

If English is your first language and you’re selling on non-English speaking marketplaces (Germany, France, Italy & Spain), make sure your keyword research is done by a native speaker.

A comprehensive vocabulary is key to ensure the best keywords for your listing are found, and included in your title and search terms – both key to generating traffic.

Also, a native speaker will also ensure that only keywords relevant to your product are included in your listing and search terms – non-relevant keywords will lead to traffic from customers not specifically searching for a product like yours, and likely hurt your conversion rate. Also, targeting non-relevant keywords is technically forbidden by Amazon.

You may be tempted to save money and just translate your English keywords. But this is not recommended. Without doing the “research” part, you will fail to identify keywords and limit the potential traffic to your listing. Furthermore, direct translation of keyword phrases (two or more words) from English into another language will often produce a phrase that has a totally different meaning than intended.

C – Product Titles for Amazon Europe

As we learned in section 5 above,a good Amazon Product Title captures the attention of buyers by including the right keywords and being written in an appealing way.

The best way to ensure this for the non-English speaking marketplaces (Amazon Germany, France, Italy and Spain) is to hire a native speaker to write and optimize your listings for Amazon EU.

A poorly written or translated title (like the example below) will reduce your credibility in the eyes of your potential customers and is certain to hurt your traffic and sales.

I hope you liked this post and use the tips provided to increase your traffic on Amazon!

If you’re looking for help with new listings or to boost your current listings, check out our listing optimization offerings for Amazon US / UK and Amazon EU (Germany, France, Italy & Spain). Designed to increase your traffic and sales on Amazon!

We have also created a listing optimization blueprint – it’s a checklist you can work through to improve your listings. It’s based on what we’ve learned from optimizing hundreds of listings to date and I’m sure it will provide you with a few helpful tips – download it for free here! www.amzeurope.com/amazon-listing-optimization-checklist

Before signing off, I’d like to say a special thanks Manuel. There is a lot of excellent content on his website, and it’s a real pleasure to have my post featured here.

If you have any questions for me, you can get in touch directly through AMZEurope.com or comment below. Please share this post if you like it too!

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