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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

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Will my product sell?

What if my product wont sell?

Definitely a question that I get a lot would be “what if the product I picked won’t sell?

Sure, there’s always a risk when you pick a product that it won’t sell as expected. The market is getting more competitive by the day and competition doesn’t sleep either. 

However I’ve come to the conclusion that even if your product does not sell as expected there’s always a way to get around this and to get rid of stock or possibly even make a profit (or at least get your costs back).

  1. Sell at cost
  2. Run a promotion at high discount to get some traction
  3. Work with influencers/make use of social media
  4.  Sell on liquidation sites (US)

1. Sell at cost

I’ve had 2 products that just wouldn’t sell. And no matter what I did they just didn’t get any traction. Possibly the need for those products wasn’t there or I was too early with the products. So I decided to sell at cost. Meaning I sold at a price that would at least cover all fees (product cost, shipment, inspection and Amazon fees). In one case I even made a little loss. But seeing the bigger picture with having other successful products it didn’t matter that much. And even if your first product isn’t selling so well you can at least recover your costs (or perhaps with a little loss). 
 
But that doesn’t mean you should give up on Amazon altogether. Matter of fact those 2 products were products I launched in a row and it was disappointing to see them both fail at the same time. But the next product I launched was an instant hit, covering all losses and making me quite a bit of money in the long run. So the worst that can really happen is that you sell at cost and recover hopefully 80-100% of your costs. 
 
2. Run a promotion at high discount to get some traction
 
Once in a while you need to run a promotion to get back into the rankings. Especially if you’ve been out of stock for a while or if a lot of competition comes in over time. I’ve done this a few times on some products to run promotions at 30-50% discount for a few days. Sure I might loose some money on those but getting back to page 1 is worth more than a couple of $ I loose there. You can run promotions / give away coupons in seller central that will show up on your listing in the front end. This would look like this and any customer can apply these coupons:
 
 
While this may be so obvious to do, it surprises me how many sellers don’t do this. Even if you are not in need of getting traction to your listing and running promotions you can still do this. Simply increase/ artificially inflate your normal price by 20% for example and then give a coupon for 20% off.
 
The key here is that the customers think they get a better price and are more inclined to purchase the item. This may sound unethical but believe me retail & commerce (online & offline) has been doing this for centuries. 
 
3. Work with influencers/make use of social media
 
If above two simply don’t work try working with influencers or use your own social media. If you don’t have a lot of social media followers you can easily find influencers that have medium/large following in your industry. I did this a few times and it helped a lot in increasing traffic to my listings. The best thing about social media or working with influencers is that the review (of that influencer) stays online and is traffic for free for the years to come. In some case it may even go semi-viral and you’ve got a best seller in time. 
 
You can find influencers on sites like FAMEBIT.COM or do your own research on Instagram or Youtube. Simply search for the keyword of your industry (e.g. coffee) and then look for influencers that accept reviews or cooperate with brands. Normally these influencers charge, especially those with large following so try looking for influencers with smaller followership. These smaller influencers are even better in some cases because A) they don’t charge for a review because they know they are too small & B) they know they still need to build their followers and usually provide more value and care more about their followers compared to someone who already has 500,000 followers. 
 

On another note I’ve been preaching for years that for having a successful brand you need to be active on social media and build a community there. 

A friend of mine wrote a pretty good book on Instagram and Instagram stories and drills in the importance of social media marketing and how to do it right. Using this powerful platform the right way and to your advantage is crucial, and of course it applies to Amazon and e-commerce businesses. As you you all know I preach all about building a brand and Instagram is a great way to boost and scale your brand. 
This book does not describe how to gain followers and basically build a business on ZERO value, in fact it’s the exact opposite – hence why I am confidently sharing it with all you guys. Definitely a personal recommendation of mine. Pick up your copy here: 

4. Sell on liquidation sites

And lastly you could still sell on liquidation sites at a high discount to recover at least some of your investment. I’ve not done this personally but I know some people that have and quite successfully so.

These sites are great both ways. Sometimes you can get great deals of products on there to sell on Amazon later or sign up as a seller on there to get rid of stock. 

Here are some of the sites that I know of:

1) https://source.com/sell 
 2) https://www.directliquidation.com/sellers-faq/
3) https://www.liquidation.com/index

All of the above are simple to sign up and to apply as a seller. What you’d have to do is to remove your inventory from Amazon to a third party logistics company who can fulfill the orders on these liquidation sites.

Source.com has integrated shipping meaning you can send your inventory to them and they’ll take care of everything. 

I found that many sellers or becoming sellers don’t even start with a product because they are already worried about not being able to sell their product. You need to get over that fear and just start somewhere.

If possible test a smaller quantity from your supplier but the main message here really is just go for it and don’t worry too much! 

To our success!

Manuel 

china factory

How to verify a supplier in China

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

 

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? 
  • were 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 often use QIMA (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.) 
Sourcing Agents (https://importdojo.com/sourcing/

It’s also important to note that I am willing to work with more in-experienced and “new to the market” suplliers. 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: https://importdojo.com/4-ways-to-avoid-being-scammed-by-a-supplier/ 

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/

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

With the Cantonfair in April 2019 around the corner 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.

Some 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.

 

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:

Many hotels will provide a free shuttle bus to 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.

First things first. 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:

How to act and ask questions at exhibitions

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 fulfill 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
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.
Subways: 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.

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!

Importdojo

 

find your niche on Amazon

How to find your niche and develop your own product in 2019

10 Ways to Find a Private Label Niche to Sell on Amazon

How to find a profitable product in 2019 and onwards

How do you find a private label product to sell? This is the number one question I get asked on an almost daily basis. Be aware this is a very long post as I tried to really include my entire thought process. 

There’s no one method that’s right for everyone. Instead, there are many different methods you can use to find the perfect private label niche and product.

In this post, I’ll explain ten of my favourite research methods. Take a look and find one that works for you! The first few methods are traditional methods that still work well but in the last part I want to let you in on how I find or develop successful products to sell.

1. Follow your passion

Let’s say you love the outdoors, hiking, camping, and exercise in general (like me). There are so many products to choose from, but you have two advantages:

  1. You know what you like.
  2. You know what your product should be able to do.

So you already have an edge over many of your competitors.

Put your passion for this category into your product. For example, if you were disappointed about the quality of camping mats you purchased in the past, you already know what to tell your supplier to improve upon. Choose products you can talk about, improve and be passionate about selling.

Here’s a real-life example. A friend of mine was really into hiking and trail running but not satisfied with the products on the market. He started a outdoor gear company a few years back. Today he has a portfolio of 20 different outdoor gear products and making 6 figures every month. It wasn’t an easy journey and I followed along but it was well worth it.

2. Use your industry knowledge

Let’s imagine you have 17 years of experience selling electronics (like me). What was the first product I picked? It was an electronic item. Why? Because that’s where I had my experience.

I believe you should not just have passion about your product, but also experience. If I sell a product online I want to be able to answer customers’ questions and inquiries. So when I started my own brand I improved an existing item based on my industry knowledge and felt confident answering questions as well as re-presenting my brand.

What if you don’t have experience in an industry? Do you have a hobby? Or are you a parent? If you are a parent you’ll have lots of experience with your children and could perhaps start in that category.

3. Brainstorm and research

You shouldn’t worry if you don’t have a social media following, products you are passionate about or industry experience. Most people I know are in this scenario and there are still many success stories.

Here’s a brainstorming and research approach that I recommend:

  1. Take out a notebook and list your interests, hobbies or responsibilities. Yes, actually write it down. Call me old-fashioned, but I still find writing to be the best medium for generating ideas.
  2. Subscribe to newsletters from companies that talk about or sell products related to your interests. You’ll find some ideas for this in Part 2 below.
  3. Over time, gather a list of at least ten product ideas in that niche.
  4. Research existing products, consumer demand and selling prices using Amazon, eBay, Jet.com, local shops, tools like Jungle Scout etc. Is there space for one more seller (you)?
  5. If there is no demand, is it because the product is in its fledgling stages? If you can improve the product, create a to-do list of improvements based on reviews, feedback from friends and family etc. Then move onto finding a supplier.
  6. If there is no evidence of demand and you can’t improve the product, but still think it could sell, then follow your gut feeling and also ask around your friends. Move onto finding a supplier if you remain sure.
  7. Move onto the next product in your list of ideas.

Let’s say you have found your niche, category or general product idea. You are now ready to find your first private label product.

4. Lose yourself on Amazon

You can look for hours on Amazon in the different categories and niches, if you already have a product idea.

If you have no idea at all, I suggest you start with the best seller lists. Many categories are saturated on Amazon already so I recommend that you look into emerging and trending markets. This could be drone-racing, augmented reality or any other industry that’s just getting started. Be careful however not to choose a hype that’s going to fade in a few months. By that I mean a category like fidget spinners.

5. Blogs, gadget and trend sites

One of my favorite sites to find interesting blogs and trend websites is Kadaza. It’s a collection of the best sites in many different categories. Click on any of the categories and you will find websites in that niche.

For example, I found The Gadget Flow through Kadaza, and by subscribing to their newsletter I get weekly updates on trendy items that may not even be on Amazon yet.

They have a lot of products that are currently on crowdfunding sites like Kickstarter. But you know what? If it’s only on Kickstarter now, it means it isn’t on Amazon yet. You can take the product idea and even improve on it.

The point I want to get across is not to copy these companies, but to find ideas on blog sites and see how quick it is to buy from Alibaba or Global Sources. Add an accessory, change colors or do whatever you feel could improve the product. The best thing about subscribing to these sites is that you get ideas delivered for free to your email address.

6. Research tools

You may have heard of Jungle Scout already. Jungle Scout is probably the most advanced tool when it comes to navigating Amazon and finding best-selling products. It integrates into the Google Chrome browser to streamline product research. Jungle Scout can extract sales rank, sales volume, FBA fees, categories and more. From the early days only available to Amazon.com it is now available to track sales in almost all countries where Amazon is present. Last time I checked it didn’t work in Australia but all other countries seemed to work.

Junglescout has several tools at your disposal, from the “Niche Hunter” to the “Chrome Extension”. It is a paid tool but it has helped me many times to confirm a validity of a product that I wanted to sell. Personally I love their chrome extension that you can simply install and then scan the Amazon category pages. You get a lot of data from sales per month, potential profits and much more. My favourite has to be the “Opportunity Score” which can quickly tell you whether a product might be worth it to pursue. It ranges from 1-10 and while anything below 7 isn’t considered great with some of my following strategies you can still have an opportunity. The market might be saturated but I can still find gems with scores 7 or higher. Just the other day I found a product for one of my clients with a score of 10 (which is nearly impossible).

 

7. Get out in the world

There are hundreds of trade shows each year in many countries. You get to meet the supplier, see the products, and talk over details such as prices, models, and much more. On top of all of that I guarantee you that you will get inspired.

To find local trade shows just Google an exhibition center near you, then browse their upcoming events and apply for a ticket. You might need to provide a business card and contact details, but you can order cards online for a few dollars these days. Going to a show prepared and with a professional image gives suppliers a great impression of you.

Another way to find new products is simply when you are out in a shopping mall or a local store.

To start your own import business means that you also working when you are out shopping with friends or family! Keep your eyes open, and when you see something cool make a reminder for yourself on your smartphone to look the product up later.

Traveling is also a great way to find ideas. When you are out of your country or state you are likely to see items that you can’t find locally. There are many reasons why a product might not be available where you live, but it’s always worth checking an idea out.

I remember about ten years ago, a friend told me about Bubble Tea and Fancy Green Tea drinks sold in Hong Kong and Asia. She was from Germany and she had never seen these drinks back home. She didn’t pursue that idea but a few years later back in Germany these drinks started to pop up and were a smash hit!

Even an idea that at first seems like nothing could be worth millions! Share it with a few friends and brainstorm it.

8. Sourcing sites

When you sign up on Alibaba you generally need to say which product categories you are interested in. Based on this criteria, and your recent product searches on Alibaba, you’ll get automated emails with new product deals.

You can also simply type “newest products” in the product search function and you’ll find a lot of the newest and trendiest items from their suppliers.

It’s pretty similar with Global Sources. After signing up you’ll get automated emails with great product deals.

They also have a section with the great product as well as an “Analyst’s section over HERE newest products in every product category: But my favorite part is their Sourcing Magazines that are updated on a monthly basis with the hottest and newest products on the site. Whenever the magazines are updated you get a free e-copy delivered to your email. It doesn’t get easier than this and I’ve found some gems in their magazines sometimes.

9. A combination of trends and existing markets

Sometimes I look at existing products and see if I can improve them with a design trend. Let’s say for example you Google for “design and interior trends 2019”. You then visit these sites that have reports on them and see what trends there are for the particular year.

The other day I combined an existing product with a design trend. So if for example floral patterns are in for 2019 perhaps I could sell bed sheets or pillow covers with floral patterns (just an example).

If the color “millennial pink” is in for 2019 I could think of a few products where I could apply that color.

If vintage is a trend for 2019 I could look into furnitures, lighting, or decorative items that exist and give them a vintage look or color. All you have to do is find an interesting and potential niche and see if you can implement a design trend into that particular product.

What also helps is Google Trends and Google Keyword Planner (It’s free if you have a Gmail account). Just head on over there and type in a keyword and look out for the monthly searches. Anything with a search volume greater than 1-10,000 is a good indication. Google trend also helps me because it also gives me keyword related keywords that I may not have thought of. So for example if I type in “vintage decor” I can see other suggestions or trending keywords in that niche below:

find your niche

I could now look into vintage bathroom decor or vintage suitcase decor on Amazon with Junglescout and see if I can find an opportunity.

10. Innovation before Improvement

Now that we’ve discussed traditional methods I want to discuss what is in my opinion the most important part on having a successful product on Amazon – innovation before improvement. Meaning that you actually listen to what the market needs and wants, ideally develop your own product, instead of thinking what you think the market needs. This may be contrary to above methods but I suggest that at some point you develop your own products.

Here’s my step by step checklist on developing a successful product:

There’s a saying in the tech industry: you’ll succeed by setting the industry standard and not to improve existing standards. Just think about Apple or Nike. These companies are leading the way in their industries.

Let me explain how I go about developing products. The goal is to create 1 or more rockstar products that define your brand and guarantee the success of your company. Think about a seed that you plant for the future, everything takes time.

Ideally the first product is what defines your brand and you should also stick with these values. Just like Nike or Apple are famous for their expertise in their field, you should be known in your field. Same goes for every industry. For example if you think about the best Italian restaurant in town they are probably famous for their pasta or pizza and not for having a fusion of Italian and Mexican food. Stick to your assortment and branding strategy. I am not saying you shouldn’t sell underlying product groups or assortments but don’t sell Bluetooth speakers and shower heads. Focus on 1 core assortment.

That’s were many people make their first mistake, starting with a product without defining their niche. Yes, 5 years ago you could go onto Alibaba, select anything and it would sell on Amazon and later you’d think about other products that would fit. But those days are over. What you’ll need is a clear branding and marketing strategy as well as a “product to market fit”. This term is one of the most important factors in the commerce.

Find your niche

First, find your niche. I’ve already discussed a few ways above but I want to give you an actual example later. Many people start with the idea of a product first and then notice that the market entry level is too high (either dominated by brands or too much capital needed). So find your niche first and have at least somewhat of an interest in the niche. All my brands are selling things that I have either a passion for or that I have an interest in.

Amazing products connect with the target audience

If you have amazing products and a target audience then you have the recipe to success. Think of it this way, if you have a happy customer or fanbase how likely will it be that they buy from you again? Very likely. People already trust you because of your rockstar product and they’ll buy from you again.

Finding interesting and established markets

So the first thing to do is to find interesting markets. Obviously you can follow the news but that’s perhaps not the ideal way. Most people want to make easy money but if you don’t venture down the more challenging part now it will be more difficult later.

If it were so easy to make money online everyone would be doing it right? A lot of people fall for marketing gurus that sell you pipe dreams like “make 40,000$ in 1 month with little to no work”. I can promise you that business does not exist.

You need to finding existing markets that have reached a mature size otherwise you don’t have customers – this is the most crucial part- product to market fit. These markets/niches can also give you the best feedback. If you don’t have a mature market where you can collect feedback from it will be very difficult as you would have to establish a whole new market by yourself.

If you don’t have a product to market fit and you need to establish the awareness or market at first you’ll need a lot of capital for marketing.

Suggestions on finding your niche

Make a list of your areas of interest, split this list down into niches. Only list general interest at first and then research each one. This could be something that you identify yourself with, a hobby, an expertise, part of your profession or similar. Break down the niches and go into the smallest niches. For example if you are into outdoor sports go down into sub-niches:

There might be a core community on Facebook, forums or Reddit you may want to check out. You will want to solve a problem for these guys and really connect with them.

In an ideal world you’d find interests that you’d be totally enthused about. But don’t be an artist. Artists don’t survive on Amazon. Don’t try to invent trends that don’t have a future or demand. Don’t fixate yourself on one idea or industry because you personally are enthusiastic about it. Remember – product to market fit.

The right mindset

At this point it’s also important to leave your ego out of the business. I saw a few people in my time (including me) that were too attached to ideas and convinced that there idea is what the world needs. You need to see your business objectively and don’t let your personal emotions or preferences interfere too much. Only concentrate on what the market needs and not what YOU think the market needs.

Of course it is important to invent, develop and look into new markets but always keep the product to market fit in mind.

Do something that you aren’t comfortable with. That could even be items in a higher price range assortment. Most items that I release, cost more than 15$ in buying price.

Few people actually go into higher priced or difficult categories. But that’s where the air isn’t so thin as in low priced and common items. You could argue that you may not have the capital for it but on the other hand this is a business as any other and sometimes you need to take the risks. 15 years ago it was unimaginable to start a business that could generate 100,000$ within the first year with just a 5-10,000$ investment.

We have all the tools today that make it possible; social media, Junglescout and others. So it takes a bit of the following components: gut feeling, data analysis, community access and brand building to succeed.

I often hear that people don’t want to invest 200$ into a custom made sample for their idea. If you aren’t willing to invest 200$ into your business then maybe this is not for you anyway.

Research problems in the industry

During your research, find out what the problems of the industry are. Or what people ask for (a good example in a bit). Sometimes it’s simple things that make a product easier to handle or just more aesthetic in design. Can you do something about a product that makes people’s lives easier and make you a hero while doing it? Sometimes these communities are just waiting for the bigger brands to solve their problems or introduce the product that they so desperately want.

Obviously you want to tap into mature markets but also into markets that are still growing. A bad example would be fidget spinners. Not kidding you, when the trend came out I got 20 people within 1 month asking me to source fidget spinners for them. Imagine how many people went to other sourcing companies or sourced on their own? This really confirms that the majority wants to make quick and easy money without too much work.

You have to be the one who doesn’t jump on these trends but bring innovation to the market. This does not mean that you redesign the fidget spinner or bring it in other colors. You have to convince customers from the beginning and not bring a great feature only on your second product. Customers want to be wooed.

Your 1st Rockstar product should also be something that you can sell over and over again for a long time. Basically a cash cow in the long run. Sure, competitors will come and copy you, but you’ll always be ahead and ideally work on your next product once the competition catches up. Thus the competition will always try to catch up.

Your focus should not be on your competition but developing new products and think one step ahead. If you have 1 or 2 cash cows that bring a constant amount of money in, you also act much more relaxed when developing new ideas.

Access to the market

Before you even get started with the product idea you should make sure that you can actually reach your target audience and customers. A good example where you’ll fail would be branded goods like women’s bags. Consumers trust or want to have branded things. No matter if your product is superior.

Let’s say you had the idea of a women’s tote bag, found a supplier, ordered the product, listed it on Amazon and now you come to realize that people are not buying your bags. Naturally; because women want to buy branded stuff like Gucci, Louis Vuitton etc. You’ll also have difficulties getting magazines or influencers to write about your bags because they usually promote the big brands

To tap into such a market you need connections, years of marketing and essentially a lot of money. This can quickly be the end of your ecommerce career. What’s more, on high competition items like women’s bags you also have high PPC costs that can quickly evaporate your profits.

So again, you need access to the marketplace & its customers. Access to market is critical and you should be thinking of that right from the start, otherwise you are constantly in survival mode and run after sales. If you are constantly in survival mode, you simply have no time for product development, long-term strategies, or other important things that will shape the future of your brand. So – cash cow products, audience and access to the market.

Once you’ve settled on a niche, you should think about product ideas. For example what is currently selling well in this niche? Are there any technical or groundbreaking trends coming in the future? For example when I heard rumors in November 2015 that Apple wants to remove the audio jack on the iPhone and only offer the earphone with lightning connector, I was thinking about what that means for the future and the iPhone 7.

So I spoke to some suppliers and developed earphones with lightning connection. Granted it was a big risk to develop a product based on rumors but then when the rumors became true in September 2016, I was the only provider of iPhone earphones with lightning connection (other than Apple). Obviously many sellers came after but for about 12 weeks I was the only seller of certified iPhone lightning connector earphones and I made nearly $30,000 on a $6,000 investment. The moral of the story is that you sometimes have to take a risk but more importantly listen to the community or solve an existing problem.

What does the community want?

Listen in on what communities are saying in your niche. What are people talking about right now? Is there a certain problem within a niche? Here the community work is really very important. You can be active in 1-2 communities and really listen in on what customers prefer, what brands are popular, what are those brands doing or not doing at the moment etc.

A great indication of whether a product is needed is when people say that they have to use other products in combination with the actual product to make it work more smoothly.

For example, when Bitcoin and all the other cryptocurrencies came out, you could download the wallets to your computer or save them online on exchanges. Many people worried what if the exchange goes belly up or if their computer dies on them?

Then Ledger came and developed a hardware wallet that would store your cryptocurrency. You could then put your Ledger hardware wallet in a locked up safe or store it somewhere safely. Ledger was sold out for months and couldn’t even cope with demand. Again, someone listened to a problem in a community and solved it by offering a solution.

All these things will define your product. The more you incorporate problems of the community and try to solve them with your product you’ll minimize the risk of failing with your self developed product.

You will always see the following attributes for successful products:

1) A great solution,

2) Quality that you can trust, easy to get and easy to handle.

Are these all attributes of your article? If not, how can you apply these attributes to your product?

Imagine you are your own customer. Would you be satisfied with your product? Why would customers not buy your product? What does the product do for your customers? What doesn’t it do? At this point, you also have to come back to the point: Are you your own biggest fan or are you solving an actual problem with your product? Consider the product or idea objectively.

To further define your product, split your product into 3 categories:

1) The functional part (which problem does your product solve?).

2) The emotional part (how do people feel when they buy or use your product?)

3) The social part (is this product an icebreaker? Does it show a certain social status?)

Remember your product should solve a problem or be part of your costumer’s daily life. Why does someone need your product? Can your product solve complexities or frustration with other products that the customer experiences?

Entry barriers

At this point, it is important to take another step back and look if there are any other entry barriers. For example, sometimes industries are tied down and all suppliers are actively working for these brands or major customers. Like smart-phones. This industry is dominated by 4-5 big brands. Do you have a chance to even work with the suppliers of these brands? Are there any patents, license or royalty fees? Sometimes the costs, licenses or certifications required to succeed are simply too high.

Sometimes you also need to be honest with yourself and ask, “Do I have the technical know how” to develop such a product?

Ask your supplier which certifications; costs (including tooling) could arise. Or are there continuous product costs, royalty, licensing fees etc.

Another point would be your selling price. Can your target audience even afford your product? You could talk to your active communities and just ask what people would pay for a certain product.

Another option to validate a product or its price would be to simply start a PPC campaign on Facebook with a “buy now” button that leads to a listing where people can buy samples of your product at a certain price. Obviously there is no stock but this method makes it easier to show if people are interested at all. You can then look at the analytics and data and make better decisions for the price & product development.

Can you scale the business? Is there a point where you just cannot expand the business? (E.g. fidget spinner)

Conclusion

At this point, you are probably overwhelmed with all the theories and work ahead when developing a product and you are already thinking this will never happen.

Simply put, good things take time and you don’t need to rush. Imagine a long hike that you have to plan ahead of time. For example I always wanted to hike the Pacific Crest Trail in the US. The whole hike lasts between 4-6 months and you just have to prepare yourself with good equipment, read about how to find water and food, get maps etc. So it’s a long process to get prepared.

There is no shortcut in any business. Sometimes you can be lucky and struck a gold mine quickly but you can’t rely on that.

There will also be days when you have to ask yourself unpredictable questions or face unpleasant situations. There will be days when you are super excited about your idea, going to bed unable to sleep because you love your idea. And then on the next day, a difficult situation will bring you down and make you feel depressed about your idea. At this point either continue and ignore your ego, make improvements & changes to your product or actually say – ok this is too much to handle.

Once you’ve answered all these questions for you, it’s time to start sourcing with suppliers, negotiate prices, ordering prototypes, and putting everything together. Also, don’t give up too soon just because the first suppliers don’t want to do what you ask or completely redesign their existing product. Just because you haven’t found a supplier after 7 days doesn’t mean you won’t find one.

For one of my own products, I looked for a supplier for 6 months and I finally found them that at a trade fair. Of course it also makes sense to go to China (or go to local trade shows in your country) when it comes to selecting suppliers.

But also be open for suggestions from the suppliers you talk to. Talk to suppliers about modifications or suggestions that could improve your design. Do not cling too much to your ego when 10 out of 10 suppliers say it doesn’t work that way.

Now that the community, trend & general research is done you should have a pretty good feeling with your product. Often you actually don’t have to go through all the above steps and sometimes results will come much quicker in a way you didn’t anticipate. My point is to be aware of these situations.

Once you’ve actually cleared all doubts and realized “yes the world needs my product and it will even sell very well” then there is actually no reason left, not to do it.

If a big investment of say $ 20,000 is your only problem, then entrepreneurship or this business is not for you. A certain risk will always exist but with this strategy and calculated risk, there is really nothing left to stop you.

Now you could say, yes but should I not start with something simple first? Sure, I’ve explained how and when in Steps 1-9. But considering that the competition is getting bigger and bigger and the strategy I just laid out for you worked on many of my products, you may want to ask yourself if you want to improve or set standards.

Because if you are always just making me-to products and just trying to improve other products with an add-on or other colors or more accessories, you are behind the market. But if you have several self-developed products on the market that bring you more money in the long and always put you ahead of the competition wouldn’t that be worth pursuing? To make simple products at first is totally OK but if you want to do this as a full-time job, you have to think innovatively over time and follow this process.

Remember, you don’t have to reinvent the wheel but just adding a different colour to an existing product in today’s market won’t be enough. Listen to what your customers want or need and take it from there.

Bonus:

Last but not least if you are still struggling to find or develop a product I may have a solution for you. In January 2019 I released a service where I personally will find a product for you to sell on Amazon!

I receive emails on a daily basis from people asking me to help them find a product for them. This lead me to introduce a new service on ImportDojo. I now offer the help of finding a product for you and preparing an entire strategy along with it.

Last year September I did this in a live workshop in Austria. I selected 15 people to attend my workshop in where I gave them a product based on their hobbies, interests, skills and passion. Combined with my 20 years of experience in retail, eCommerce and manufacturing I worked out a unique product for each attendee. During the workshop I presented the product to each attendee along with a tailor made product and branding strategy. The workshop was a great success and I have now decided to do this again for my readers.

I’ve prepared detailed information on what is included in this package on my website along with the most frequently asked questions over here:

https://importdojo.com/find-me-a-product/

I’ll be doing 8-10 hours of research on each product plus 1 hour coaching with the student so act fast as I will limit this to only 15 slots available for each month!

When I released this service, slots were sold out in 2 days and the waitlist is ever growing. So make sure to watch out for my email or subscribe to my waitlist here at the very bottom of the page: https://importdojo.com/find-me-a-product/

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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

 

Online Income Bible cover small reso

How to make money online blogging

Fellow ImportDojo readers,

In the past 8 months or so I’ve been working on a new eBook about online entrepreneurship, how to make money online, how I built one of my businesses, scaled it and sold it. It’s divided in 3 parts where I explain how I built mine, how you can make money online with blogging (absolutely no get-rich-quick schemes but hard work) and the last part explaining in great detail how anyone can build an online business.

 
I’ve just released a Amazon Kindle version titled “The Online Income Bible” that I am giving away for 5 days for free (07.01 – 11.01) here: Amazon Kindle eBook
 
I genuinely want to help people and I’d love to get your feedback on it!
If you’re too late for the Kindle promotion I am also giving it away for free (lifetime) on my new personal website here
 
I do hope this helps some people here who might be just starting out but not sure how.
All the best and too our success!
Manuel
 
Ps.: happy to answer any questions on the book or even online entrepreneurship
ImportDojo

Contact Info

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mail@importdojo.com

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