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How to deal with price increases from Chinese suppliers

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

Read until the end – we have a giveaway on ImportDojo in the value of 997US$!!! But before that, let’s get into today’s blog post.

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?

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

Lets 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.meps.co.uk/raw%20material%20index.html

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.

Advanced negotiation

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.

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:

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. If you enjoyed the blog post, please share or comment below 🙂
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When and how to work with a sourcing company in China

Hey folks,

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 things are a little different and sourcing companies have adapted.

Here’s how most sourcing companies work and how they charge:

1) Up-Front Flat Fee:

ImportDojo (https://importdojo.com/sourcing/) was one of the first sourcing companies to adapt this model. 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 difersifying 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 commercer 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/pricing/ (choose the free membership plan). 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 Asiainspection/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 (https://importdojo.com/what-is-going-on-in-china-right-now/), 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 🙂

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 in the comment section if you have any questions 🙂
All the best and happy sourcing,
Manuel
Ps.: Here’s a shameless self plug ☺
I’ve been running my own sourcing company together with my partner over at www.asiainwest.com/sourcing-service for a little over 3 years now and we have great packages available.
Check us out here:https://importdojo.com/sourcing/ or email me (mail@importdojo.com) if you have any questions.
certification importing china

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

Hey folks,

First of all, apologies. It’s been a while since my last post. There are several reasons to that. Family & personal issues, selling one of my Amazon brands (more details in one of my next blog posts) and just a general time out that I gave myself.

But I am fully back to grinding and hustling on Amazon & eCommerce!

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:

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 thatthey 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 a 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. Lets take an
example. For the sake of it lets 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 Certification Course or post your question in our Facebook group here.

All the best and happy sourcing,

Manuel

Amazon algorithm 2019

How to Rank On Amazon and Grow Your Ecommerce Business in 2019

The ultimate guide on how to rank on Amazon in 2019

This is a guest post by Tom Buckland. Tom is the founder of AMAZONSEOCONSULTANT.COM

Tom Buckland

By Tom Buckland

There are many ways to make money online, from blogging and affiliate marketing to ecommerce. Ecommerce has become big business in the past few years and it is sure to only grow further in 2019. Ecommerce sales currently amount to over $2 trillion dollars a year, and are expected to hit $4.5 trillion in 2021. Of those sales, $118 billion were by Amazon marketplace (third-party) sellers.It’s not easy to build any business and Amazon has become quite competitive in recent years. It’s getting harder to make sales and that’s why we took a look at how to rank on Amazon in 2019. 

If you are looking to build an ecommerce business this year, there are a few ways to do this. In this article, we will look at one of the easiest and effective ways: as a seller on Amazon. Specifically, we will look at how to rank your products on Amazon in order to drive traffic, increase sales and grow your business.

Ranking Your Product on Amazon

As any online business owner or ecommerce seller knows, driving traffic to your listing is critical to be able to secure sales and revenue. Conversion is important, but you need the visitors to come in the first place so that you can convert them! In turn, ranking your product is the number one thing you can do to increase traffic to your listings if selling on Amazon.

Why is ranking on Amazon so important? Consider this: there are now over 6 million sellers in the Amazon marketplace, meaning that every time a user makes a product or clicks on a category you can imagine how many results they are given. Most users do not look past the first page of results (or even first few product listings), so it is critical to rank your product on page 1 and preferably in the first three product listings.

Ranking on Amazon is a complicated process, and it all comes down to the algorithm Amazon uses to rank products, which is known as the A9 algorithm.

What is The Amazon A9 Algorithm?

Most people selling on Amazon these days know that the site has an algorithm it uses to rank search results. Many people, however, make the mistake of thinking it is like Google’s algorithm. Although there are some similarities, namely that one of the major factors the algorithm looks for is relevance, there are some key differences.

The biggest difference is that Amazon’s algorithm has one job: to point users to products which are most likely to sell. This is because Amazon, unlike Google, is not a third-party which is disinterested in the results it is presenting to users. (This changes of course in the context of paid advertising and sponsored results, but this is intellectually true in general.) Amazon is a business, which takes commission from the sales made on its site, and therefore has a vested interest in promoting those search results which are most likely to translate into actual sales.

The A9 algorithm is extremely clever, and has actually been quite revolutionary. A9 was the first to use techniques which were later taken up by Google and others, such as adapting SERPs to users’ browsing habits, and visual street views. Despite all this, Amazon’s A9 algorithm is not well known by most users and even many sellers. This is largely because Amazon has not promoted their search technology because they are not a search engine. They are a business.

How To Use Amazon’s Algorithm To Rank Your Products

It is worth mentioning that in this context, “ranking” on Amazon refers to organic rankings. That is, the products which are listed below advertising for each search query. It is also worth mentioning that the A9 algorithm is relatively simple compared to Google’s algorithm, with far fewer ranking systems, which means that it is relatively simple to work with the algorithm and successfully rank products if you know how it works.

The ranking signals, or that factors which Amazon uses to rank its products, can be divided in to roughly two categories:

1) On-page signals. These are things which you can add to your listings such as keywords to encourage the A9 algorithm to rank your product.

2) Off-page signals. These are external factors, many of which will be somewhat or entirely out of your control. They include things like what your competitors are doing and you customers’ shipping history.

Because the on-page signals are entirely within your control, these are what you should be focusing on in order to rank your products. Some of the key things you should do are:

  • Use the correct keywords to rank your product. This will involve extensive keyword research, using software such as Viral Launch or Helium10. Importantly, this should be an on-going process which continues after you have launched your product, to track how your listings are ranking overtime for your primary keywords.
  • Implement effective on-page optimisation by including these keywords in certain parts of your listing, namely the product title, bullet points, and product description. On-page optimisation also means ensuring these elements are written in a way which will maximise conversions, and having images which do the same.
  • Have strong sales. Amazon values revenue-generation potential above else, therefore if your on-page optimisation is terrible but sales are strong your product will rank regardless. Create a perfect storm through having the right product at the right price, encouraging great views, having a lisiting which converts and applying external marketing strategies to supplement traffic driven through your ranking.
  • Look at the product you are selling. Right back in your product development process, use competition analysis and market analysis to choose a product which will rank and sell better. You want to choose a product with adequate consumer demand but without excessive competition or very strong competitors.

To build a successful eCommerce business on Amazon, one of the most important things you can do is develop a solid understand of the A9 algorithm, and how to use it to your advantage. This will allow you to rank your products, and in turn drive sales, increase revenue and grow your business. Let’s dive deeper into the material below. 

Stage 1: Ranking on Amazon Starts with Research (Pre-Optimisation)

In this stage of the post, we’ll be outlining everything we recommend as a part of the ‘pre-optimisation’ process. This involves all actions that need to be taken BEFORE you even start optimising the code and content of a listing.

Most of these relate directly to the way you do your business. Needless to say, these are all extremely important. It’s quite likely that you have already completed these – but if you haven’t, you need to sort that out ASAP!

 

Competition Analysis

Competition analysis involves determining what product or products to launch into a marketplace and how competitive the landscape is for your chosen channel. You can implement competition analysis over an entire industry, but for obvious reasons we’ll be analysing Amazon only.

There are a few core take-aways we’re looking for when we run a competition analysis report;

  • Can we make our current product better? (Value Addition)

We can do this by looking at the positive and more importantly negative reviews of similar products in the marketplace and analysing if adding simple features to the product will add long-run improvements. This is a process we’ve used for multiple personal and client projects with great success. Something you may determine to be irrelevant could be the difference between the scathing 1 or 2 star reviews and the glowing 4 or 5 star ones!

 

  • What do the markets say? (Profitability and Revenue Analysis)

Is there enough demand in the marketplace to justify our entry?

This is a more important question for larger companies that want to earn a certain amount once established within Amazon. Smaller sellers and just-starting-out businesses should still do this – just not as rigorously, while paying more attention to the point below.

 

  • What’s the core competition for our target product? (Cash Flow Budgeting)

Cash flow budgeting is a critical pain point that bottlenecks the growth – especially for smaller sellers.

If profit per month once established is estimated at $50,000/month but it’s going to cost around $200k to reach this point, is this something we can invest in?

Simple question if the figures are on point, more difficult when there’s a lot of estimation going around.

 

  • How much will it cost to rank / gain traction? (Gaining the Market Share)

Similar to the above point, what’s the investment to gain initial share in a market for this product?

Although accurate figures are incredibly difficult to arrive at, simple common sense will help you understand whether you should be targeting a particular term/keyword or looking into something less competitive.

Competition Analysis Tools & Software

Luckily answering these questions isn’t overly difficult with the use of a number of advanced software on the marketplace. My personal favourite in 2019 is Helium10 but you can see our massive list of Amazon seller tools here for more ideas.

All this information is essential to develop a proof of concept before starting a campaign. You want to be 100% sure you have as good a product as a competitor (if not better), or, in the least, you can differentiate yourself in some way – which brings us on to the next part.

 

Target Audience & Buyer Persona Creation

Building your target audience & buyer personas is something even billion dollar brands make mistakes with. But the basics & core concepts are simple:

 

  • Who are you looking to sell to?
  • What are their traits, tendencies and desires to purchase? 

If you already have a product developed, branded and packed, this should be relatively obvious from your branding. If not, you may want to consider going back to the drawing board.

Developing buyer personas and understanding at a fundamental level what drives them to buy products like yours can really push your sales off the charts. Some points to consider in this context are:

  • Premium ‘name’ brands vs price-oriented ‘value’ brands (We have discussed this point at length in our pricing strategy post).
  • Branding, colours & packaging.

Both strategies, when implemented correctly, work great. A word of caution: Please don’t try doing both at the same time. Understand your brand and target audience and simply market to them.

 

It’s very interesting to view within Amazon’s reviews of similar products that positive reviews of premium priced products almost always talk about “quality” “love of the brand” or “the best”. Whereas the price oriented positive reviews tend to focus on “great for the price” “great value” etc. Ironically the negative reviews are along the same lines, with negative reviews of premium priced products stating “poor value for money”, and negative reviews for price-oriented products focusing on more broad “low quality”, “broke straight away” type reviews that talk about the product than the price.

There’s a lot of information on buyer personas and target audience creation online. In fact, there’s probably too much information and it’s very easy to lose the focus. All you need to realise here is that even though the scope of organic rankings within Amazon is limited, you will still be selling to real people with real personalities, needs and expectations. Understanding the target audience takes you one step closer to making a real world connection with your potential customers. Just as importantly, this helps when it comes to the copywriting & on-page optimisation stages of a successful Amazon SEO campaign.

 

Keyword Research

It wouldn’t be SEO without keyword research!

Amazon recently announced they’d closed a “loophole” that allowed third parties to generate accurate keyword data for sellers to use.

Although I’m still not totally convinced on any one particular software for keyword research, there are a few on the market that are “good enough”. Before we talk about those, it’s important to note what we’re trying to achieve:

 

The function of keyword research for Amazon is to discover search terms your target audience are using within the Amazon search engine to look for similar and related products to the item you are going to launch/sell. The more accurate you can build your keyword research, the easier the optimisation process becomes.
 

Tracking Keyword Positions

In the ever-shifting Amazon universe, nothing really stays the same. New features, new trends, new products and new sellers – there are enough forces out there trying to dislodge your listings from the top of the Amazon SERPs.

To make sense of all this chaos, it’s essential to track keyword rankings day in and day out. Organic rankings for your specific keywords should be considered a major ecommerce KPI to your Amazon business as any drops will massively impact sales.

Tools like KeyworX do this for you automatically on a daily basis. Once you spot the problems and identify potential reasons for drops, it becomes infinitely easier to fix the impacted listings.

Stage 2: Amazon Product Listing Optimization (On-page Optimisation For Amazon Listings)

Once buyer personas, keywords and competition analysis have been completed, it’s time to launch on Amazon.

You’re here to learn How to actually rank a product first in Amazon. The process starts right here: with on-page optimization.

Once live, Amazon’s algorithm will crawl your listing and analyse its content to determine what you are selling. It will then categorise the on-page content and combine it with all other signals to “rank” you in a certain position based on what the customers are searching for.

This is how all search engines work: They have multiple signals that are used to determine the relevancy of the search result (whether that be a website or a product) and then rank these results based on the “score” that’s received. The higher the score, the higher the rankings.

On-page optimization is a part of this “score” we can control.

Although on page optimization ISN’T the part that carries the most weight, we need to pay a great deal of attention to this simply because it’s 100% within our control. And you can be sure that your competitors are trying their best – 24x7x365 – to out-perfect you here.
 

Amazon product listing optimization is broken down into 6 major parts.

  1. Product Listing Title
  2. Bullet Points
  3. Description or Enhanced Brand Content
  4. Back-end Search Terms
  5. Category
  6. Benefit Driven Imagery

To get an idea about these, we’ll tackle each point separately. 

 

In the interest of sharing content on here as well as on Tom’s page, Tom has written and laid out the entire strategy here: https://amazonseoconsultant.com/amazon-seo/ and I wholeheartedly recommend to continue reading. I’ve already implemented a few things and I can already tell the difference in traffic and sales. 

 

To our success!

Manuel 

 

ImportDojo

 

Screen Shot 2017-03-28 at 2.13.21 PM 1

A beginners guide to importing electronics from China

Importing electronics from China – 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. First off I wanted to let you know that I’ve created an in-depth course with over 7 hours of material on the topic titled ImportDojo Certifications. You can get it on Udemy for $10.99 here: ImportDojo Certifications.

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.

Lets take a look at general regulations first.

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


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 certian product from a supplier and it is say for example CE or FCC certified it should have automatically been certified by the sub-regulation.

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

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

Miscelaneous:

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.

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 unforseeable issues.
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 that tells you exactly what you need for which market (Business Idea??? 🙂 ) and all is done trough research or ideally you speak with your third-party inspection company. In most cases they will charge you for giving out this information but if you work with them for a while already they might do you a favour and give you the information for free.

If you are interested in learning more about certification and other product categories head on over to my Certification course for $10.99 here: IMPORTDOJO CERTIFICATIONS

All the best and happy sourcing,

Manuel

ImportDojo

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