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The Best eCommerce Fulfilment Company In 2020

If you’re an online seller, you may need an eCommerce Fulfilment company at some point. Whether Amazon’s warehouses are full or if you are shipping via your own eCommerce store, at some point you will want to hire a Third Party Fulfilment company. Recently because of Coronavirus, Amazon has also limited what you can send them (for a fair reason). So you may need a Fulfilment company urgently to fulfil your orders. For that reason I wrote up this blog post on one of the best Fulfilment companies in the space. Rakuten Super Logistics.

Ideally you’ve raked up sales in the last few months and created more and more turnover. Unfortunately that can also create quite a bit of stress for small and mid-sized online retailers that handle order fulfillment on their own. A spike in sales comes with a spike in logistics requirements. That means inventory management, shipping, returns, exchanges, dealing with freight carriers, and a ton of other headaches.

That begs the big question: Should I go for DIY shipping again this year, or hire a 3PL? This post will help you decide on the right answer for you.

DIY Shipping vs. Hiring a 3PL

Let’s start with some explanations and definitions.

There’s nothing inherently wrong with DIY shipping or self-fulfillment. In this model, the retailer (sometimes even a solopreneur) handles packaging, shipping and reverse logistics by him or herself. That includes everything from stocking inventory and determining shipping rates and methods to choosing packaging, calculating shipping costs and physically getting packages to the carrier with the right address.

(That’s all to say nothing of more complex situations, like restocking returns, processing exchanges, handling angry customers and shipping overseas.)

For some retailers, this model makes a ton of sense. For others, not so much. We’ll get into the differences shortly.

The other side of the coin is outsourcing fulfillment to a third-party logistics company, or 3PL. These companies handle retailers’ logistics and distribution needs semi-autonomously. Goods are stocked in the 3PL’s warehouse (or warehouses). When an order is placed, the retailer’s shopping cart software triggers the 3PL to pick, pack and ship the order. Ideally, the eCommerce seller never needs to touch any part of the distribution, warehousing and shipping cycle.

Is In-House Logistics Better Than Outsourced Logistics?

The answer to this question completely depends upon the situation.

DIY shipping offers a number of benefits, though they are primarily realized by companies with relatively small volumes (i.e., less than 1,000 packages shipped per month, or roughly 33 per day).

  • Complete Control: Handling all aspects of fulfillment and shipping yourself gives a unique level of autonomy over the supply chain. You can customize the entire process – from order through returns – to suit your exact needs. Of course, this can also be a negative. If you or your team don’t have logistics experience, you could be saddled with a set of tasks far outside your core competency.
  • Minimal Costs: If your order volumes are quite low, you might be able to save by handling fulfillment in-house. Scalability is questionable, but if you can easily handle your requirements today and don’t expect a spike in the near-term, DIY shipping might be a better option than outsourcing to a 3PL.
  • Personal Touch: If you sell a relatively small amount of a very personal product, like hand-made original goods, DIY shipping is often a good fit. It allows you to place handwritten notes in each shipping box, for instance, or to package each item by hand. This can be useful for sellers on platforms like Etsy.

Outsourcing to a 3PL, meanwhile, offers its own set of value propositions. In most cases, they’re attractive to eCommerce sellers that expect a spike in orders over the holidays, or those that want to scale their businesses rapidly.

Benefits of Outsourcing Fulfillment
  • Scalability: The most obvious benefit of outsourcing eCommerce fulfillment to a third-party logistics firm is scalability. At some point, even a hard-working team is limited by the number of packages they need to send out each day. If you figure that it takes an individual just five minutes to package and address a single item, even 10 orders a day takes about an hour to handle. When things get complicated (e.g., orders with multiple items, exchanges, etc.), that estimate of five minutes is probably very low. You can see how things get out of hand fast. A good 3PL can scale basically infinitely, meaning your sales are never limited by your ability to fulfill them.
  • Delivery Speed: Let’s say that you have a full-time resource dedicated to picking, packing and shipping your online orders from a small warehouse in Pennsylvania. That’s great; you can probably handle 100 orders a day or so. Problem is, if all your inventory originates from Pennsylvania, you’re completely at the mercy of the shipping companies. Next-day shipping (or even two-day shipping) is going to be basically impossible for the West Coast unless you pay exorbitant rates for expedited shipping via air. Leading 3PLs like Rakuten Super Logistics offer locations in major metro areas across the country, allowing you to stock your goods coast-to-coast and deliver just as fast to Nevada and New York.
  • Free Shipping: If your shipping rates and times vary, say goodbye to being able to offer free shipping. And free shipping is table stakes in the era of Amazon. The second you ask a customer to pay half the cost of their order for shipping, you’ve almost certainly lost them. Outsourcing to a nationwide 3PL allows you to realize consistent fulfillment and distribution costs, letting you budget for free shipping. If you have it and your competitors don’t, guess what? You get the order.
  • Experience: If you’re an online seller, chances are you’re more into merchandising, marketing and innovation than logistics. Working with a 3PL can make the whole critical aspect of shipping and logistics go away, freeing you up to handle what you do best.
  • Total Cost Savings: While self-fulfillment can be cheaper than outsourcing to a 3PL in some cases, there is absolutely a tipping point. Let’s say you’re spending four hours per day picking, packing and shipping orders, and another half-hour dealing with customer service calls. That’s more than 22 hours in a five-day work week. The opportunity cost there alone is significant, to say nothing of whatever you’re paying for physical space to house your inventory.

When Should You Hire a 3PL?

Clearly, there are positives to both sides of the coin. DIY shipping and fulfillment lets you control the process completely, deliver a self-consciously personal experience and avoid paying unnecessary costs if you’re shipping less than 33 packages or so a day. But self-fulfillment doesn’t scale well, and it might require expertise your team doesn’t have.

Conversely, a 3PL allows you to deliver a more upscale customer experience, offer benefits like free shipping and next-day delivery, and focus on your core competencies. But there is a cost to outsourcing fulfillment, and it takes some time. 

So when should you hire a 3PL? Outsourced fulfillment makes sense for eCommerce sellers who:

  • Ship 1,000 or more packages per month
  • Have relatively standard package sizes
  • Sell mass-produced or semi-mass-produced goods (i.e., not complete one-offs)
  • Need to compete with Amazon but realize higher profit margins
  • Plan to grow their operations in the next 12-24 months
  • Compete with online retailers who offer fast, free shipping
  • When Amazon doesn’t accept your shipments due to seasonal highs (Xmas) or events such as Coronavirus.
  • Deal with returns and exchanges
  • Want to ship internationally

By contrast, DIY shipping is likely a fit for online retailers who:

  • Plan to sell and ship less than a maximum of 1,000 orders per month
  • Rarely see complex or multi-item orders
  • Have in-house logistics expertise
  • Rarely deal with returns and exchanges
  • Do not expect to see a surge in orders over the holiday season

DIY Shipping vs. Hiring a 3PL: The Bottom Line

For eCommerce sellers, there are pros and cons to both DIY shipping and hiring a 3PL. That said, with the holiday season approaching, it really comes down to one thing. Will you be able to keep up with the rush? If you’re doing it yourself, will you be able to get your customers their orders faster and cheaper than the competition? And even if you can, do you really want to?

If you’re staying small this year, DIY is probably a great fit for your needs. But if things are going to get hectic, it’s probably worth calling an experienced third-party logistics provider. You can get a fulfillment quote from Rakuten SL within 24 hours for services that include:

  • Nationwide warehousing
  • 100% order accuracy
  • 1-2 day ground shipping to 99% of the U.S.
  • Seamless integration with your website
  • Responsive client support

I hope this post was helpful. Spread the word or leave a comment below 🙂

All the best,

Manuel

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How to import to the US for international sellers – ship to Amazon directly

Two of the questions I receive the most is: “Can I sell on Amazon US as an international seller” or “Can I send my order directly from the factory directly to Amazon? and “Can I ship from China to US directly?”

Yes you can!

This prompted me to do a write up on the topic and without further ado, here’s a quick guide for you that hopefully answers your questions:
You basically have four options:

  1. Using a customs broker acting as the ultimate consignee (No EIN needed)
  2. Using a courier service like DHL/UPS/FedEx etc.. I personally recommend FedEx (Amazon’s EIN recommended)
  3. Using a prepping and forwarding company that acts as the ultimate consignee (NO EIN needed)
  4. Using a forwarding company/customs broker when delivery by regular Air or Sea shipment (not by courier) and acting as the Importer of record and ultimate consignee yourself (Amazon’s EIN needed)

In all cases I still recommend you to get your own US Tax Payer Number or also commonly referred as EIN.

Simply follow this link for information and call the number mentioned under “Apply by Telephone – International Applicants”. It’s a very simple and straightforward process that takes about 10-15 minutes.

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN

Some important reminders:

1) Not all customs brokers can act as the ultimate consignee. The ones that do usually offer services on top to act as your ultimate consignee:

2) Very Important: Never put Amazon as Importer of Record on any document. In case you send goods directly to Amazon only use them as the ultimate consignee but never as the Importer of Record otherwise they will definitely reject your shipment.

3) One thing that is super important if you decide to send products from China to Amazon without any stop in between (Prepping, Labelling or Quality Control company in the US):

HAVE AN INSPECTION. I can’t stress enough how important it is to have an inspection before sending anything to Amazon directly.

I know that many buyers have an inspection in the US. But what if the goods are defect to such an extent that you can’t rework them in the US? Are you going to send them back to China? Unlikely.

Save yourself this step and have the inspection in China with a reputable Inspection company like http://www.asiainspection.com

If there’s anything wrong during the inspections you can still have them re-worked in the factory directly.
On top of that you protect your initial deposit to the factory by having an inspection.

4) Also make sure you comply with Amazon’s packaging and labeling requirements (weights, labeling & carton measurements). Amazon’s fulfillment centers prefer palletised shipments but you do have an option to send the shipment un-palletised. There will be an option in Seller Central when you create your shipment that allows you to choose the option of un-palletised shipments.

5) Do as much labelling and prepping in the factory as possible!

Your factory can take care of all the labels and prepping needed for Amazon, you simply need to give them clear instructions when you place your order.

6) Think hard about “inventory placement” that lets you ship from China to one Amazon warehouse only.

This costs 0.3$ on top of the product cost but it might be worth it considering that you only have to invoice once. On top of that shipping companies charge extra for each set of documents on various levels and it is complicated to instruct your supplier to ship to 2-3 different warehouses. Think about all the labelling and coordination that has to be done with the supplier. However if you ship to multiple Amazon warehouses, have each order palletised for each warehouse while in China, so that you’re not using U.S. labor to de-consolidate a shipment and re-palletise goods.  You’ll also have to book the ground shipments after your ocean shipment has arrived, which adds complexity to the process

Lets look at each option in detail:

1) Using a customs broker acting as the ultimate consignee

There are several companies in the US that can act as your customs broker and ultimate consignee. If they offer to be a ultimate consignee they usually add a few services on top that they are looking to sell to you such as:

  • Clearing customs
  • Receiving cartons (LCL, LTL or FedEx / UPS / DHL etc.)
  • Apply shipping labels
  • Ship to Amazon
  • etc.

This can add up in costs on top of your product but they’ll make sure that items are properly packed, labelled and cleared by customs as an ultimate consignee.

I’ve been contacted by Rakuten Super Logistics a Third-Party Logistics (3PL)/Prepping/Customs Brokerage company based in the US and they had such a detailed process lay down in PDF that I decided to post them (with permission). Credit of the following content goes to Rakuten Super Logistics however please note the entire process is the same for other 3PL companies as well.

Why do I need a Customs Broker?

If your shipment is arriving by Regular Air Cargo (not by DHL, UPS, or FEDEX) or Ocean cargo, you will need a Customs Broker to clear the shipment on your behalf. All shipments must be cleared through Customs. Certain commodities are also subject to the regulations of other government agencies such as FDA, USDA, DOT and EPA. Please check with your Customs Broker for import requirements. Please do not ship without doing your research!

What type of Services does Western Overseas offer?

  • International Freight Forwarding (Shipping) – by Air and Sea
  • Customs Brokerage
  • Domestic Delivery from port to final US destination
  • Amazon FBA prepping
  • Warehousing

Should I use Ocean or Air Shipping?

Your decision should be based on how quickly you need your shipment and how much you’re willing to pay.

  • Ocean shipments are less expensive but take longer to arrive. The costs are generally 1/2 – 1/3 the costs to ship by air. You should figure approximately 3 – 4 weeks’ lead time.
  • Air shipments are more expensive but are faster to arrive. You should figure approximately 3 – 5 days’ lead time.

What is an EIN Number? Do I need one?

As a foreign importer, you do not need an EIN number for Customs Import purposes. You may need one as a seller on Amazon for State Tax purposes. Please check with Amazon and/or the Internal Revenue Service (IRS). You will be assigned an Importer Number by customs which will be used in lieu of an EIN Number for the purpose of the Customs declaration. You can be an importer without an EIN#. Customs will assign to you an Importer Number.

But you still need a Customs Broker and an Ultimate Consignee with an EIN#. If you use our FBA Prep Services, we will act as your Ultimate Consignee.
If you are U.S. based and are intending to import under a Corporation, then your EIN number will serve as your Importer Number. If you are U.S. based and are intending to import as a Sole Proprietor (e.g. John Doe dba ABC Importers), then your Social Security Number will be your Importer Number. If you are U.S. based and are intending to import as an Individual (e.g. John Allen Doe), then your Social Security Number will be your Importer Number.

What is a Customs Bond and what is the cost?

Customs requires that a bond be posted with every ISF and Customs Entry to ensure that all duties, taxes and fees owed to the federal government will be paid. An Annual Continuous Bond can be purchased for $500 and it will cover both your ISF filings and Customs Entries. Having a Continuous Bond also reduces our ISF filing fee by $25. If you choose not to purchase a Continuous Bond, you have the option of purchasing Single Entry Bonds for ISF filings and Customs entries. This can become quite costly especially if your shipment value is high or is subject to other government regulations such as FDA. Furthermore, the bonding companies only allow a maximum of “5” Single Entry Bonds for ISF before the importer is required to purchase a Continuous Bond. You would be saving money in the long run. However, if you are planning to import only once, then a Single Entry Bond might be for you. Single Entry Bonds are subject to a $25 Bond Processing Fee. Our Bond costs are below:

  • ISF Bond: $75
  • Customs Single Entry Bond: $6.50 per $1000 of the shipment’s declared value + duties/taxes (minimum charge of $65). For OGA (other government agency – i.e. FDA, USDA) regulated commodities, the rate is $6.50 per $3000 of the shipment’s declared value + duties/taxes.
  • Customs Annual Bond: $500

What happens after I place an order with my supplier?

The process will depend on the terms of sale between you and your supplier. But the following steps are what typically occur for Regular Air and Ocean shipments. The below excludes shipments sent by Air Express Courier.

  • Production begins (seller might send you a sample for approval)
  • Determine if you will be using the services of an inspection intermediary service such as FBA Inspection or Earth Class Mail
  • Seller arranges the International Freight Forwarding if his cost includes this (CIF terms); if his cost does not include this, then you are responsible for arranging and paying for the freight.
  • Your supplier may have a couple of shipping companies to refer you to or you can obtain a quote from Rakuten Super Logistics. If the latter, seller will provide you with the cargo details which you will pass onto the forwarder giving you the quote. You will also want to include the U.S. destination address – whether it’s Amazon FBA or the Intermediary Inspection service of your choice.
  • Hire a Customs Broker if separate from the Freight Forwarder.
  • Get ISF details to Customs Broker (ocean shipments only)
  • Shipment departs
  • Send copies of all shipping documents to Customs Broker
  • Shipment arrives
  • Customs clears
  • Our invoice is paid
  • Shipment is delivered or dispatched

It is your responsibility as an Amazon Seller and Importer to know Amazon’s FBA requirements.

What is Importer Security Filing (ISF)?

There are 10 key elements about a shipment that must be transmitted to Customs at least 24 hours prior to the vessel’s departure from origin through Importer Security Filing (ISF). This filing provides information to Customs regarding the impending import shipment. Your Customs Broker is the most ideal party to handle this transaction. If the filing is late, misfiled or not filed at all, then the importer will be penalized a minimum of $5,000 (max $10,000). Customs requires that all ocean import shipments have an ISF filing whether or not it is late. Otherwise, your shipment will not clear Customs. A late filing or non-filing of ISF also guarantees that Customs will examine your shipment.

What is a Harmonized Tariff Code (HTS)?

The Harmonized Commodity Description and Coding System (HS) is the mechanism by which international tariffs are standardized. If you ship items overseas, you are required to classify them according to the harmonized system. Each country has its own Harmonized Tariff Schedule (HTS).

The description and coding system of global tariffs is an internationally standardized system of names and numbers for classifying products. The first 6 digits of any HTS Code is (in theory) the same for any country. Beyond the six-digit level, individual countries sometimes have different rules for classification. Importers and Exporters the world over must classify all goods moved across international borders using the Harmonized System of the country of import. Every item you sell must be assigned an HTS Code according to the Customs tariff schedule of the country from which you are selling. Each HTS Code has an applicable duty rate. HTS Codes are sometimes referred to as HS Codes and Tariff Codes.

What is the time length for my shipment to be cleared by Customs?

We must allow Customs at least 48-72 hours to clear a shipment, although it could be less.

Why did Customs put a hold on my shipment? I have never had a problem with my DHL/UPS/FEDEX shipment before.

Please bear in mind that Air Express Shipments are treated differently by Customs. They simply move too many parcels on a daily basis for Customs to be able to monitor each one. And because Customs allows Air Express Couriers to clear an entire manifest under their own name and bond, it’s possible that your previous shipment may have just flown under the radar.

With regular Air and Ocean cargo, there is always the possibility of a Customs Exam which may cause a 3- 5 days delay in release. Any exam related charges will be the responsibility of the Importer of Record. Customs exams are generally random unless they have had a recurring problem with the manufacturer, the importer, and/or the commodity. That said, please ensure your product and its labeling comply with Customs laws prior to shipping.
What information do I need to provide to obtain a quote?

For a Customs Brokerage Quote:

  • A full description of the item(s) you are intending to import – i.e. General Description/Name of Product, Function, Material/Composition, Declared Value, Unit Value, & Country of Origin.

For a Freight/Shipping Quote:

  • Terms of Sale (i.e. FOB or Ex-Works)
  • Address of your Supplier
  • Port of Loading
  • Number of cartons
  • Dimensions of each carton
  • Weight of each carton
  • First U.S. Delivery address

For Amazon FBA Prepping Services Quote:

  • Total Number of Cartons and Units
  • A detailed scope of the services you require – i.e. Check for product and package damage, Apply FNSKU labels, Bundle, Insert Cards, etc.

What other fees should I expect?

If you using the International Freight Forwarding Services of another company, then you can expect charges due to their U.S. agent. Your shipment will not be released from custody until those charges are paid. Rakuten Super Logistics can pay those charges on your behalf for a fee of 1.5% and include them on our final invoice. Other fees may include Customs Exam and related costs and Storage/Demurrage Fees.

Who should be listed as the Notify Party, Consignee, Ship To?
If we (Rakuten Super Logistics) are hired as your Customs Broker, we should always be listed as the Notify Party.

If you are a U.S. based importer, the Consignee’s name and address will be your information. The Ship-to party will depend on who will be receiving your shipment immediately upon release from Customs.
If you are a foreign importer, the Consignee and Ship-to parties will depend on who will be receiving your shipment immediately upon release from Customs.

My supplier is asking for Shipping Marks. What are Shipping Marks?

Shipping Marks are printed on the outside of each Master Carton of your shipment. They should contain the information that will identify your cartons from cargo belonging to others. The suggested marks would be:

  • Your Company Name
  • Carton Count – e.g. Carton 1 of 10, Carton 2 of 10, etc.
  • General Description of item
  • Country of Origin
  • Any special handling instructions – e.g. This side up, Handle with Care, Fragile, etc.

What shipping documents do I need to provide to Rakuten Super Logistics (or other 3PL)?

  • ISF Details (for Ocean shipments only; we must receive this at least 72 hours prior to the vessel’s departure from origin)
  • Ocean Bill of Lading or Air Waybill
  • Commercial Invoice
  • Packing List
  • The above documents are obtained from your supplier. If you use our Int’l Freight Forwarding services, then our overseas agent will supply us with the ISF details and the Ocean Bill of Lading.

When do I pay Rakuten Super Logistics (or other 3PL) and what type of payment is accepted?

Payment for an Annual Customs Bond will be due upon receipt. Payment for Customs Brokerage services including duties/taxes, delivery, freight, etc. will not be due until your shipment has cleared from Customs and is ready to be delivered or dispatched.

We accept the following payments:

  • Credit Card (Visa, MasterCard, American Express)*
  • Wire Transfer**
  • PayPal*

*subject to a processing fee

**full invoice amount is due without any deduction of your bank’s wiring fee
June 2015

—End of content from RSL—

2) Using a courier service like DHL, UPS, FedEx etc. (EIN recommended)

Air Express Courier shipments sent via FEDEX – my recommendation, DHL or UPS are different. Customs has special regulations for them where they are allowed to clear entire mass quantities of shipments under their own name and Customs bond. They simply move too many parcels for Customs to be able to clear every single one. Therefore, they are authorized to clear shipments that are on one cargo manifest of low-risk up to values of their own discretion. They also won’t ask you to apply for a customs bond or filling an ISF. They provide a one-stop solution and are therefore more expensive than forwarding or logistics companies/customs brokers.

You simply be the Importer of Record with your foreign address or you can subscribe to services like http://www.usamail1.com/ to get an US address (not obligatory) and apply for an EIN here (obligatory if you want to be the ultimate consignee): https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN

3) Using a prepping and forwarding company that acts as the ultimate consignee (NO EIN needed)

There are several services around that receive your goods (where you act as the Importer of Record) after cleared by customs. For example if you send in your order by courier (FedEx etc.) and then want them prepped, labeled etc. you can use prepping companies that can also act as your ultimate consignee. These guys are similar like the first example but usually don’t clear customs for you. You can act as the Importer of Record with a foreign address and will be assigned an Importer Number by customs. Once the prepping, labeling etc. is done these service provides will send in the order for you to Amazon.

4) Using a forwarding company/customs broker and acting as the Importer of Record yourself (Amazon’s EIN needed)

If you send items by Air or Sea the regular way (meaning no courier like FedEx, DHL, UPS etc.) you will need a forwarding or also referred to as Third party logistics company (3PL) that can act as both the forwarder as well as the customs broker HOWEVER not as the ultimate consignee.

In this case you will be the Importer of Record and Amazon will be the Ultimate consignee. You don’t need an address or bank account in the US but you will need an EIN number of the ultimate consignee or Importer of Record. You can contact Amazon for this information but your Customs Broker should be able to obtain this information for you.

I also heard that sometimes Amazon refuses your goods if you don’t provide your own EIN but I haven’t found anything to the contrary.

You simply be the Importer of Record with your foreign address or you can subscribe to services like http://www.usamail1.com/ to get an US address (not obligatory) and apply for an EIN here (obligatory if you want to be the ultimate consignee): https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN

There’s one more option. If you know someone in the US who is willing to receive your order as the Importer of Record providing his EIN number you can go that way too. But I recommend you pay all fees upfront so your friend/acquaintance doesn’t have to bear them.

Miscellaneous:

I do recommend you to apply for an EIN for general tax reasons and to comply with IRS regulations. Amazon can track your sales tax back with you and your country of origin.

If you want to learn more about the process and import from China professionally please check out our ImportDojo Masterclass here:
https://importdojo.com/importdojo-masterclass/

I will be adding over 20 hours of new material to the class in February 2016 increasing the price in the process, so act soon.

Hope this helps and if you found this article helpful please share below trough social media 🙂
All the best and happy sourcing,
Manuel

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Product Liability Insurance for eCommerce sellers

Many people ask, do you need Product Liability Insurance as an online seller on Amazon(PLI)?

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

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

How does Product Liability Insurance work?

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

Who needs it?

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

Who can apply for a Product Liability Insurance?

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

Where can I get a Product Liability Insurance?

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

My top recommendation would be AXA:

http://axa.com.sg/

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

(Note: HSBC does not cover US businesses)

Miscellaneous:

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

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

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

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

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

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

All the best and happy sourcing,

Manuel

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

coronavirus treatment

Coronavirus outbreak and impact on your China business

Coronavirus outbreak and impact on your China business

I am sure by now everyone has heard of the novel coronavirus. Many of you do business in China and you are probably already feeling the impacts/effects of the current outbreak. In this post I’d like to help you to figure out what is happening and how it will impact your import business from China, selling products on Amazon or your eCommerce store in general. And more importantly what you can do to avoid major disruption in your supply chain. We’ll look at these three topics today:

  1. CORONAVIRUS QUICK FACTS
  2. IMPACT ON YOUR CHINA BUSINESS
  3. WHAT ACTIONS YOU CAN TAKE

1) CORONAVIRUS QUICK FACTS

First things first, what is a coronavirus? Coronaviruses are a large family of viruses found in both animals and humans. Some infect people and are known to cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS).

What is the coronavirus COVID-19 cause? The most recent coronavirus very likely came from a local seafood market in Huanan, China in late 2019. It was also suggested that bats were responsible for the virus but this has not been officially confirmed. Many of those initially infected either worked or frequently shopped in the Huanan seafood wholesale market in the centre of the Chinese city, which also sold live and newly slaughtered animals. As of February 2020 there have been more than 75,000 confirmed infections (74,000 in China alone)

 

2) IMPACT ON YOUR CHINA BUSINESS

What is happening in China right now? More specifically what is happening to factories at the moment? 

You probably heard already that the Chinese government has been actively taking strong measurements to contain the situation. At the moment the most affected area is Hubei province where the outbreak occured. The government is widely informing the general public via Television/Newsmagazines and Radio how to protect themselves. The Chinese government is working around the clock to contain and further improve the situation. 

 Many people have emailed me and asked me about the current situation and are obviously concerned not only about the virus but what it means for their importation business. What’s more, the Chinese New Year holidays just came to an end and the situation in some factories is chaotic to say the last. Many workers were not able to return because of restrictions or in some cases because of fear getting infected with the virus. Emailing or calling suppliers has resulted in no reponse in many cases. I also hear from many suppliers that are reachable, that buyers do not show concern or don’t understand the situation. 

 I also do understand buyers, not hearing about their production, thousands or millions of $ in product value in limbo, not knowing what is happening. What is making things worse for buyers is that they often can’t reach their suppliers. 

At this stage I can only recommend to keep contacting your suppliers, try to be understanding and possibly get some confirmation that things will resume normal once the situation is more clear. 

Some buyers are also concerned that products coming from China by cargo contain the virus. According to the WHO the virus may survive a few hours or more only. Considering that cargo from China takes anywhere from 7 days (air cargo) to 30+ days (via sea shipment) I believe it is safe to say that there shouldn’t be any concern. 

Let’s look at some facts and the possible impacts to your business:

 
  • Provinces Shanghai, Jiangsu, Zhejiang, Guangdong and Hubei have governmental order that prohibits work for the general population until 24/2 preliminarily
  • 80% of factories of consumer products are in these provinces 
  • The majority of suppliers cannot be reached so in most cases you won’t get full facts on delays or how long it will take for things to return to normal.
  • The suppliers that I was personally able to reach told me that the returning workers will be quarantined for 14 days before they can resume work. 
  • Chinese New Year just ended making the situation even worse as many workers did not return to factories
  • Travel restrictions for citizens in China, meaning some workers/staff cannot return to the factories. 
  • Logistics companies equally affected meaning that this will cause a bottleneck when things return to normal. 
  • Inspections cannot be carried out in the next few weeks as many inspection companies/test labs are working on minimal staff also
  • Sea ports and airports face the same issues as above.

 

What do I expect to happen?

Due to these unusual circumstances I anticipate a delay of 21 days for all shipments from week 7 to 15. This is an estimation based on my current knowledge and subject to change.

 

3) WHAT ACTIONS CAN YOU TAKE? 

  • Keep contacting your suppliers until you reach them. Try to get an update on the situation from them. 
  • Don’t panic about your production/order. If you have been working with a supplier for some time things should resume as soon as the situation is contained. 
  • Be mindful and don’t get aggressive. Many families / parents are affected and most people are worried about their health.
  • Try to plan accordingly. E.g. Send out newsletters to your customers and inform them about the situation (if you can) and about the delays. 
  • Inform yourself on official sites like the WHO here: https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports/
  • Possibly look into other production countries like Vietnam, Thailand, Indonesia, Taiwan etc. that are less affected. 
 
Lastly if you are personally concerned or If you are unsure and want to inform yourself about the novel coronavirus, get more information you can do so here on how to prevent coronavirus. If you are feeling ill, had contact with people from the affected area or have coronavirus symptoms consult a doctor.

 

I hope this post has been informative and helpful. Let me know what you think in the comment section below.

All the best,

Manuel 

french press

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

Hey guys, 

Here is an update on the case study. If you followed along in my webinar (Webinar) you know which product I am talking about. 

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Before I get into the results I wanted to share a few photos with you of the exhibitions here in Hong Kong last week and meeting up with a lot of fellow Amazon sellers and ImportDojo members. 

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

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Dinner with a fellow German/Europe seller 

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Heading for dinner with a couple of ImportDojo members and my business partner

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Waiting to speak at the Global Sources Sourcing Summit 

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Talking with a attendee of the Sourcing event

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Trying not to be too nervous during my speech :)

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Walking the Global Sources Consumer Electronics show with sellers

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Arriving in Shenzhen with ImportDojo members to visit a factory

Without further ado onto the case study

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

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

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

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

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

Here’s how I did it: 

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

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

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

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

Here are some of the numbers: 

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

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

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

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

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

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

Total cost: 8099$

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

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

Alright, numbers, milestones, strategies, giveaways and results after 10 days of launching in order of action taken:

Friends and Family: 95% of coupons used

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

Facebook groups: 

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

Blogger list: 

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

My email list: 

8 sales. Not great but my email list are mostly NON Amazon buyers and retail customers mostly. But either way, I just needed to send out 1 email that took me 10 minutes to write and I got 8 sales from that. In addition to giving them a coupon I also gave them a free eBook on how to roast coffee beans

Twitter:

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

Instagram: 

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

Reviewkick: 

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

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

Spikelisting: 

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Spikelisting’s boost took about 90% of coupons. Difficult to track the reviews but I would say 85% of those left a review so far. Spikelisting helped me from #56,000 to #16000 in Kitchen and Dining. You might think thats a huge boost but it isn’t so difficult to climb from 56,000-16,000 as opposed to from 16,000-10,000 for example. It’s much more difficult the better the BSR and you need to make serious sales to get into the Top 1000 within Kitchen and Dining. Either way give them a try if you need a initial or during sales boost. Their boost definitely helped me and if I were already on page 2 at this stage this would probably help to put me on page 1. 

I needed one more push. 

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

Zonblast also used a “heat seeker” URL with my main keyword that pushed my listing to page 1. Contrary to many other review sites, boosts and pages that help you climb the ranks, Zonblast boost your product over the course of 5-7 days which essentially helps more than just a 1 time boost or give away (in my opinion anyway). Zonblast put me on page 1 within 7 days and my BSR from #16,000 to #1320 in Kitchen and Dining. Zonblast’s COO Anthony Lee (who I had the pleasure meeting in person last week here in Hong Kong) was a huge help. He provided keyword research, analytics and was always there when I had questions. 

Conclusion of tools and services to boost your product:

  1. Friends and Family are important for intial boosts. 
  2. Reach out to bloggers and advertisement services. 
  3. Build your Amazon customer email list asap. 
  4. Grow your social media (FB, Twitter, Instagram etc.) from the beginning and target specific interest groups from the beginning (relating to your product). 
  5. Use tools and services to help you. 

What service worked best for me and what is my personal favourite: 

Zonblast is the No.1 tool/service on the market 

Why and when you should use them:

A: launching in a very competitive niche (your product should be superior if you launch in a competitive niche)

B: pushing your product on page 1 in a matter of a week to 10 days (no guarantee there but it worked in my case) 

C: trying many different things to get to page 1 but you just don’t get there.

NOTE: 

I will give AMZtracker a try next week to boost and see how far this product can climb. I’ve been excited giving them a try but I haven’t gotten around it this week. 

Also I wanted to wait and see what the others can do so that I have a clearer picture of what AMZtracker can do for me. I am super excited to try them next week and push my product even further in the rankings. 

Will give you an update asap. 

Some more numbers: 

Reviews so far: 

38 – 5*-reviews 

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

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Ranking:

Top so far: 1320 in Kitchen and Dining

Currently: 5400 in Kitchen and Dining

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Category: 

Top so far: #7 in french presses

Currently: #25 in french presses

Sales: 

Total Sales so far: 6548$

Toal Units so far: 219 pieces

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AND Currently averaging 8-12 ALL ORGANIC sales per day 

Next steps:

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

Conclusion:

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

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

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

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

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

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

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

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

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

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

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

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

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

All the best and happy sourcing,

Manuel

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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 unforeseeable issues. I recommend that you check out AXA’s commercial insurance
Even you may have manufactured a product to the best of your knowledge something can go wrong or someone mishandled the product but you may not proof it. For example a few years ago I worked for this large German retailer and we had a fan heater manufactured to all possible standards and regulations.

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

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

Summary

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

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

pexels-photo-1549702

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.

Pro tip: Remember that China blocks pages like Facebook, Youtube and Gmail (among many others). So I recommend that you get yourself a VPN client so that you can access all these sites while in China. I personally use VPN Express – which works great but you can also check out NordVPN.

 

How to register?

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

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

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

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

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

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

 

Know your goals

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

Price preparation

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

Prioritising

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

Hotels during the exhibition:

If you are looking for hotels to stay during the period, I always book my hotels on AGODA. Many hotels will provide a free shuttle bus to exhibitions. Check with the hotel staff to see if this service is provided.
Book hotels now if you haven’t booked them yet! Hotels during exhibitions can get very expensive. The sooner you book the better.
I usually won’t stay too far from the exhibition area, as I don’t want to waste time. Unfortunately that carries a price tag.
If your budget doesn’t allow this, find a hotel near a subway station (MTR).
Whatever you do, don’t take a taxi TO and FROM the exhibition. Take the subway or free shuttle buses provided by your hotel. At the Canton Fair, for example, it is impossible to get taxis at night. You can take a taxi in the morning TO the fair; that should be ok.

Flights:

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

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. For booking hotels prior to arriving I recommend AGODA.
Bus: There are buses leaving to major hotels during peak hours (9am 5pm) for free. Major hotels also arrange buses TO the exhibition. Check with your hotel.
Taxis: Taxis are a nightmare to get. You can take a taxi to the exhibition in the morning from your hotel but in the late afternoon you can sometimes wait up to 2 hours to get a taxi. There are illegal taxis everywhere but they charge 10 times the price. I recommend to take the hotel bus or the Subway.
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.

Pro tip: Remember that China blocks pages like Facebook, Youtube and Gmail (among many others). So I recommend that you get yourself a VPN client so that you can access all these sites while in China. I personally use VPN Express – which works great but you can also check out NordVPN.

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

 

ImportDojo

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