NDA’s, agreements and having your own tooling in China

A lot of people are concerned when they produce their own design in China that the supplier will copy it and sell to other sellers.

First I would like to point out that in my nearly 12 years in China I have had almost only good experiences with suppliers even with my own designs and exclusivity agreements.
Today we are looking at your options and what it actually means to have NDA’s or Exclusivity Agreements in China and how likely it is to enforce it or hold up in a court.

Lets look at the terminology first and what they mean:

NDA’s

Whats an NDA and when do you use it?
An NDA or Non-Disclosure Agreement is used when you have your own product design and want that developed by a factory in China. You basically agree with the factory that they are not allowed to disclose, share or produce your design (or even ideas) with any other customer or supplier. Neither local or overseas. In most cases if you have your own design a tooling is likely need to be made. The first step you take before you send any designs to a factory is to ask them to sign the NDA.

Tooling

To produce your design it is very likely that the factory needs to make a mould or tooling for you. With this tooling – parts of your product will be manufactured and eventually assembled into the final product.
(Categories like Textile or Food do not need tooling). Toolings are often included in the price quoted to you when you hand over your design. However you can also opt to pay for the tooling if you want to own the tooling as well.
Toolings can go anywhere from 1,000-30,000+USD depending on the size of the product. Yes, things can get pretty expensive.

Can I move my own tooling to a secure location?

Toolings are usually very large and heavy as they are made out of die-cast in most cases. Moving them requires quite some logistics.
So if you are unsure that your supplier is going to use them for other customers you should move them to a secure location (e.g. a rented warehouse). This can easily cost a few hundred US$.
And every time you would place an order this tooling needs to be moved to the factory and after production back to the warehouse. An expensive enterprise.
So having said all that if you feel you need to have your tooling secure somewhere else you should not work with this factory in the first place.

So whats the best way to go about having your own designs & tooling?

Two scenarios:

  1. You are just starting out and have no factory contacts whatsoever.
    My tip is to work with a sourcing agent  that can help you find reliable and trustworthy factories.
    Don’t go onto Alibaba and randomly look for factories that could make your product. You don’t know them, they don’t know you and are unlikely to help you anyway.
    Even if they tell you: “no problem, we can make it for you” they are likely to copy your product or sell the idea to other sellers the minute you place an order.
    Just the other day a reader of mine told me he found a trading company on Alibaba for his design and placed an order of 300 pieces.
    When he got contacted by the actual factory about labels and other things they needed from him he found out that the trading company placed a total of 500 pieces with that factory.
    They ordered an additional 200 pieces (without the knowledge of the client & even with the clients logo) for themselves probably to sell it on Aliexpress or even Amazon themselves.
  2.  You’ve been placing orders in China for a while.
    Work with the factory of your trust. Even if the product you are now looking to manufacture doesn’t fit into their assortment. Factories have a large network and contacts with other factories.
    Ask them to help you source a factory that can make your product whom they trust. I’d he happy to pay a few cents more for this type of help if it means I get connected to someone trustworthy.
    Ideally your existing factory can help you manufacture your new design.

Mutual Exclusivity Agreement

Let say you find a product on Alibaba or at the shows and you want to buy this product exclusively to sell on Amazon. Suppliers are likely not to give you a Exclusivity Agreement if you don’t purchase high quantities from them or if you haven’t had any previous business with them. FBA sellers are in general very small customers for factories. The 1000 pieces (if even) you & I are going to want to place as a trial order cause more trouble to the factory than you could imagine. Setting up production and purchasing raw material for only a 1000 pieces is an expensive endeavour for factories. Most raw material suppliers have MOQ’s of 5000 pieces (per raw material) and up. So getting the material for 1000 pieces can be quite expensive. While some factories may have stock left of material or might agree to purchase the larger quantity from the raw material supplier in order to produce your order it is unlikely to happen in reality. Having said that you could approach things a little different to get your exclusivity:

You could ask the supplier to sign exclusivity agreements for 6 months. Meaning you could agree on a quantity that you will place within those 6 months and if you don’t reach the quantity the contract will be voided.
Which will give you the time to figure out if the product is selling and the supplier on the other hand isn’t forced to sign a deal for a long time.
After this period of 6 months the contract/agreement can be reviewed and extended for a longer period. Even if the supplier does not agree to an extension you have at least a head start of 6 months on other sellers.

Validity of agreements & contracts:

In the FB groups I often see question like: “How are those agreements going to hold up and what are your chances of winning an NDA dispute in China if you find out your supplier has betrayed you?”
Well to be honest the chances are slim. Does it help to have an agreement in Chinese? No. Even if you hire an expensive lawyer in China and win the case by the time you resolve the issue your expenses will have ballooned into thousands of $.
So unless you have a patent it isn’t even worth it pursuing a law suit.

You will also have difficulties finding out if your supplier actually used your tooling for another client. An un-trustworthy supplier will find many ways to wiggle himself out of the situation.
For example he could claim a disgruntled engineer of the company left the factory and took the designs to the next factory he started to work for. You won’t be able to proof him differently.

So whats the point of having an agreement at all and whats best approach?

To ask a supplier to sign an agreement or NDA shows that you mean serious business and they will take you and your project more seriously. If he doesn’t agree to it in the first place move on to the next supplier.
Work with a supplier whom you trust and have worked with for many months/years already. You will still need to have agreements in place with that supplier but the understanding is entirely different.
If you work with a supplier and you let him know he can grow his business with you over the years he will honour your agreement. The contract is more or less a formality.
Either place orders with a factory for ODM (products off the rack) in the beginning and eventually propose your ideas and designs after you worked with them for a while or hire a Sourcing Agent who can help you get you in touch with trustworthy factories.

For example in my case study I actually got exclusivity for my product (for an initial 1000 pieces order).
And the supplier honoured it. How do I know that? As you know my case study is public and people who join the course can see contacts of my supplier within the course.
After I launched my product and case study only a few days went by and my supplier contacted me to tell me that he had received quotation requests from 2 different US sellers already. Those 2 people wanted to copy my process (they even used my email templates and quotation forms that I offer in my course). The supplier refused to offer my product to those 2 guys. Thats not to say that they can’t go anywhere else but at least I know I have a reliable and trustworthy supplier.
So its all about finding the right supplier and develop a relationship with him. You will want to have agreements in place even after a long relationship but again, thats just really formality and if you found a trustworthy supplier they will honour agreements and in 95% of the cases help you if you have to claim money for example (defect or returned goods).

It also has to do with your professionalism and how you or your sourcing agent approaches the factory.
Imagine you are a factory based in China and someone with a Gmail address contacts you like this:

“Hi, we are looking to get products manufactured with you. Please see attached drawing and design. Please give us a price”.

The above is an actual email I received from a “potential” client in the US. I simply ignored it. But some suppliers will take this opportunity and steal your design or show it to their customers.
It’s entirely different if I would have received an email with an introduction, detailed business proposal and more background information from the buyer.

The point I want to get across to you today is not to worry too much about getting copied in China if you approach things professionally.

Getting copied will happen eventually because either:

  • Another factory copies/modifies the designs because they have seen it on Amazon.
  • Your competitor copies your product or modifies it.
  • Your approach was unprofessional.

Take the head-start that you have with your product and move on. Thats how this business is.

And remember the above goes only for your own designs. It is a different story if you are buying products off the rack maybe with small modifications from a supplier that you found on Alibaba for example. In these cases it doesn’t make much sense to have NDA’s or Exclusivity Agreements because it is not your design in the first place. It belongs to the supplier. However if you make significant modifications and are able to place larger orders it makes sense to have agreements.

Update Case Study:

A lot of people have asked me about my case study project and asked me about an update.
As you know I’ve posted about being out of stock end of May: https://importdojo.com/7-weeks-case-study-update-i-am-out-of-stock/
My second small reorder of 208 pieces came into stock around 6th of June. However my BSR had dropped significantly to nearly 100,000 by that time.

In the last 4 weeks if seen a couple of sales a day but not much (hovering around 1-2 pieces) sometimes even none. The reason is mainly because I didn’t do anything in terms of promotions, PPC or give aways. But that doesn’t really bother me, the listing and the reviews are there anyway and I sold close to a 100 pieces within this month (doing nothing for it).
I didn’t want to run out of stock again before Prime Day (today) before my large shipment of 2500 pieces arrives around 15th of July. As of today my BSR is at around 20,000 and inventory is around 100 pieces and I’ve just lowered the price and started with PPC again to get back in the ranks. I should have enough stock to last me trough Prime Day until this second large shipment arrives. Then i will again go full steam on PPC, some give aways and promotions to get my ranking back to where it was. Stay tuned for more updates.

Hope this helps guys!
Happy sourcing,
Manuel

 

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

The ultimate guide on how to find a product

 

How to find a product?

This is the number 1 question I get asked on almost a daily basis. I have no definite answer for you today but I will try to break it down in two sections and a step by step guide on how I select products and hopefully you’ll get a few ideas 🙂

Lets look at your personal situation (scenario) first and then see how you can benefit from your scenario when picking the product.

1) How to pick your product niche:

Scenario 1: You’ve got money

Congratulations! While it is easier to get started the question of what product you are going to pick still remains open. More on that below.

Scenario 2: You don’t have money and you’re scraping together every little cent you have to reach 5,000$ because that’s the budget you heard of is the minimum (well its my minimum that I recommend to everyone).

While it is more difficult to get started you have the same starting point like everyone else out there. You probably want to make sure that the product you are going to pick is worth the investment. But even if your first product is not a killer don’t worry. You learn a lot in the process and in most cases you can at least get your investment back. Read on.

Scenario 3: You have a large follower-ship on social media

You are in a great spot. You already have a list of customers to get your launch and product going. It is imperative to pick a product that fits your social media.
In my recent case study (https://importdojo.com/case-study-how-i-went-from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-niches/) I reached out to bloggers and that boosted my launch immensely. Even nearly 3 months after my launch I still get sales from that site.

What does that mean if you have a large followership? Lets say I have an Instagram account with 50,000 followers that talks about eating healthy, fitness, the outdoors etc.. I could launch so many products to that followership, even competitive niches. For example:

  • Yoga mats
  • Accessories for the gym (tumblers, bags, sporting items etc.)
  • Backpacks, travelling gear, camping accessories
  • etc.

When you research your future niche and have decided on it build social media right away if possible. A client of mine built a social media follower-ship of 8,000 followers within 2 months (various social sites) and then launched her product. She sold nearly 100 pieces the first week only trough social media. That helped boost her organic sales and the rest is history.

So consider social media right from the beginning when choosing a product.
Ideally you will want to enlarge your assortment with similar products that all fit into your following. For example if your first product was a yoga mat and your followership is about exercising etc. it probably doesn’t make a lot of sense that your next product is a vacuum cleaner.

Scenario 4: You have passion about a certain product category

Let’s just say you love the outdoors, hiking, camping, and exercising in general (like me). So many products to choose from but you have one advantage. You know what you like and what your product should be able to do. You already have an advantage over many other competitors. Your passion for this category goes into your product. E.g. if you were to be upset about quality of camping mats you would already know what to tell your supplier where to improve. Look into categories you have passion for and then choose a product that you feel you can talk about, improve and passion in selling for.

For example if you like cooking you could look at developing a product that makes a certain cooking process easier. The exciting thing about this is that all your passion also goes into your product and listing and people just buy your stuff because you are so convinced of your product yourself.

For example I recently bought a travel bag from a German entrepreneur based in Thailand who loves travelling. Over the years he went trough so many of his traveling bags already because they were of poor quality (the straps broke, the leather peeled off etc.) and he decided to make his own bags. After 6 months of hard work he launched his site and product and it took off immediately. All his passion went into his product and site (https://www.travlmind.com/). You could tell by his story that he was really passionate about creating the best bags out there and not just copying the big brands. And only that convinced me to buy one of the bags even that it was at a higher price tag.

Scenario 5: You have vast experience in a certain industry

Lets imagine you have 17 years of experience in selling electronics (like me). What was the first product I picked? It was an electronic item. Why? Because that’s where I had my experience in. I believe you should not just have passion about your product but also have experience. When I sell a product online I want to be able to answer customers questions and inquires. To be able to do that I need experience in that category. Your passion and experience goes into creating your product. So when I choose my first product I improved an existing item based on my experience in that industry: https://importdojo.com/how-i-started-my-own-private-label/

So if you have a lot of experience in a certain industry make that industry your first product category.

Don’t have experience in a certain industry? What about a hobby? Or are you a parent? I am sure if you are a parent you have lots of experience with your kid/children and you could start in that category 🙂

Scenario 6: You have none of the above

Not to worry or be frustrated. Most of the people I know that get started start with Scenario 6 and there are still many success stories out there if you are within this scenario. Here’s an approach that you could use:

First: Take out a notebook and create a list of your interests and hobbies (or responsibilities as a parent for example) e.g. kitchen products, electronics, sports, your kids etc.. Yes actually write it down. Call me a bit old fashioned but I like to drop down ideas in written 🙂

Second: subscribe to newsletters of companies that talk about or sell products of your interests. See below on which sites for example (point 2)

Third: Gather a list of potential products from that niche. Collect at least 10 ideas.

Fourth: Research phase. Junglescout, Amazon, eBay, jet.com, local shop that sells the products etc.
See if there is any demand? Or is there space for one more seller (you)?

Fifth: If there is no demand is it because the product is in its fledging stages? Can you improve the product with your passion and interest in this product? Yes? Create a To-Do list of what you can improve based on customers reviews, what friends and family say etc. and move onto finding a supplier.

Sixth: No? Are you still convinced of the product? Follow your gut feeling and also ask around in friend circles. Move onto finding a supplier

Seven: No demand at all? Move onto product 2 of your list of ideas.

Lets say you found your niche, category or general product idea. Depending on above scenarios here are a few examples on how to find your product:

2) How to find your product ideas:

Choose your scenario and lets look at the following options:

  1. Amazon
  2. Blogs, Gadget or trendy sites
  3. Exhibitions
  4. Supermarkets, shopping malls
  5. Tools
  6. When travelling
  7. Alibaba & Globalsources

1) Amazon
You could look for hours on Amazon in the different categories and niches if you already have a certain product idea. But if you have no idea to start I suggest you start with the best seller list: http://amzn.to/1ZN3rY3

2) Blogs, gadget or trendy sites

Please don’t just look on Amazon! While there are great tools out there to scout Amazon for products (Junglescout, Cashcowpro etc.) I get many of my ideas outside Amazon.

One of my favorite site to find interesting blogs and trendy websites is Kadaza. It’s a collection of the best and most interesting sites on product ideas:

http://www.kadaza.com/

Click on any of the categories and you will find x amount of websites in that niche. For example if you look under the Tech category (http://www.kadaza.com/tech) you will find “The Gadget Flow”. By subscribing to their newsletter you get weekly updates on trendy items (that may not even be on Amazon yet). Lets take a look at an example:

Just a few days ago I received an email from The Gadget Flow. Its a site that I subscribe to among many others. I found the site by looking trough above Kadaza links.

So when I opened the email there were a lot of products that are currently on sites like Kickstarter or other similar sites. But you know what? If its only on Kickstarter now it means it isn’t on Amazon yet hence you can take the product idea and even improve on it. So I looked at the first product that caught my attention (lots of other good ideas too in that email):

 

Screen Shot 2016-06-10 at 11.56.33 AM

 

Screen Shot 2016-06-10 at 11.56.36 AM

 

After clicking on the link I found that the company is based in Denmark and funded their product “the Sitpack” successfully on Kickstarter.

 

 

Screen Shot 2016-06-10 at 11.56.51 AM

Just a quick search on Alibaba.com and I immediately find a supplier:

 

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As you can see the supplier either stole the pictures or he is the actual producer for this company. I think it is the first one but it could be that they are the sole manufacturer.

 

Untitled2

 

 

Now I go on Amazon and see that there is only one seller, the actual company “Sitpack” selling for 149$!!! Look at the listing. So much to improve!!

 

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Also I am pretty sure that this product does not cost more than 10$ to manufacture. Wow what a margin!

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Screen Shot 2016-06-10 at 12.08.48 PM

 

Either way, the point I want to get to you is not to copy these companies but find ideas on blog sites (subscribe to them) and see how quick and easy you can research suppliers on Alibaba or Globalsources for suppliers. Maybe add an accessory, change colors or whatever you feel could improve the product. The best thing about subscribing to these sites is that you get ideas delivered for free to your email address.

3) Exhibitions
One of my favorite and most efficient way to find new products is at exhibitions. There are hundreds of exhibitions each year in many countries. You get to meet the supplier, see the products, and talk over details such as prices, models, and much more. On top of all of that I guarantee you that you will get inspired. To find exhibitions near you just Google the exhibition center near you and get your entry ticket. Most times you will need to provide name cards and contact details for that. You can order business cards for $5 these days. Going to an exhibition prepared and with a professional image gives the supplier a great impression of you.

There are countless exhibitions around Asia throughout the year but mostly during April and October. Here is a list of exhibitions for October 2016: http://www.globalsources.com/NEWS/TRADE_SHOW_CALENDAR_OCTOBER2016_A.pdf

A great write up from one of webretailers earlier posts of Danny McMillan who I had the pleasure of meeting in Hong Kong in April: http://www.webretailer.com/lean-commerce/sourcing-trip-china/

4) Supermarkets, shopping malls
Another way to find new products is obviously when you are out in a shopping mall or a local shop. To start your own import business means that you also work when you are out with friends/family at a shopping mall. Keep your eyes open and when you see something cool make a reminder for yourself on your smart phone to look the product up later.

5) Tools

A) Junglescout
You have probably heard of Junglescout already. Junglescout is probably the most advanced tool when it comes to navigating Amazon and finding bestseller products. Jungle Scout integrates into your Google Chrome browser, streamlining your product research. Extract rank, sales volume, FBA fee’s, type and quantity and a lot more! From what I hear soon also available for the German market.

I had the chance to meeet Junglescout’s founder Greg Mercer twice. He is a really cool and down to earth guy who seems to work purely for the community. Check out his blog and site where you can get hundreds of product ideas itself if not using his tool.

B) Cashcowpro

In January this year I was contacted by Antoni Watts, the founder of CashCowPro. I looked up his tool and was amazed by how he has probably put together the most comprehensive tool that not only helps to boost sales but also provides accurate insightful metrics for selling on Amazon. From all the tools out there I think this is my favorite when it comes to keeping track of all my sales as well as testing features.

It also works also iPhone and Android APP. Within the tool there is a Top 100,000 NICHE selector… They actually scanned over 100 million products + ASINs on Amazon to create this list.
They automatically calculate the factory cost and Air + Sea freight to give you the Top 100,000 most profitable NICHES on Amazon. Not products, but actual NICHES, using the average of the TOP 5 ranking products for each Niche to calculate the overall performance. The tool has many more functions apart from the niche selector that you can see here:

 

6) Travelling

Travelling is also a great way to find ideas. When you are out of your country or state you will likely see items that your country/state does not have. There could be many reasons why they may not be available where you live, but it’s always worth it to check an idea out. I remember when my friend told me about 10 years ago about Bubble Tea & Fancy Green Tea drinks sold in Hong Kong and Asia. She was from Germany and she had never seen these drinks back home. She didn’t go on any further with that idea but a few years later back in Germany these drinks started to pop up and were a smashing hit! So even when you think at first that idea might be nothing, it could be worth millions! Share the idea with a few friends and brainstorm about it.

7) Alibaba & Globalsources

A) Alibaba

First off when you sign up on Alibaba you generally need to fill in which product categories you are interested in. Based on this criteria and your recent product searches on Alibaba you’ll get automated emails with new product deals. Als you can subscribe look in their “selection site” where they post a lot of the newest and trendiest items from their suppliers:

http://selection.alibaba.com/?spm=a2700.7848340.0.0.tevCsV&tracelog=hd__cor_selection

B) Globalsources

Pretty much the same with Globalsources. You sign up and get automated emails with great product deals here. But not enough, they also have a section with the best deals and newest products out of every product category: Top Products. And my favourite part are their eMagazines that are updated on a monthly basis with the hottest and newest product alerts on their site.

Check out the links listed above and browse trough hundreds of products. Use the techniques and step by step scenario as described above depending on your situation.

Well that’s all I can think of today but there are literally so many other ways to find products. Even if you personally went trough some of the above ideas already I hope there’s still something for you that could help to find your next or first product. Some more ideas on how to find the “perfect” product also in one of my earlier guest blog posts from Thomas Albiez based in Switzerland: https://importdojo.com/how-to-find-the-perfect-product-2/

Once thing I can recommend everyone at some point is to come to Asia and visit some of the exhibitions. I feel it is just the most efficient way to find products. I know it may not be cheap to come here but I can guarantee its worth it. A plane ticket and a few nights at a cheap hotel can go from $1500. But you’ll see actual suppliers, products and samples in real. Saving you a lot of money and time in the process. Here are a few impressions from October last year and this year April’s exhibitions :

https://importdojo.com/news-and-trends-from-the-exhibitions-in-asia/

https://importdojo.com/news-and-trends-from-the-exhibition-april-2016/

I hope you enjoyed this post and that I could somehow inspire you a little bit to find your product ☺

All the best and happy sourcing,
Manuel

 

Ps.: some of the links are affiliate links and at no additional cost to you, I will earn a small commission if you decide to make a purchase.  I have personally used and tested all of these products or companies, and I recommend them because they are helpful and useful, not because of the small commissions I make if you decide to buy something. The cost to you remains the same, sometimes even cheaper if I have negotiated a special deal for our readers. Please do not purchase these products unless you feel you need them or that they will help you achieve your goals.

7 weeks case study update – I am out of stock

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

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

How did this happen? 

If you re-call my last blog post (https://importdojo.com/case-study-how-i-went-from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-niches/) I was doing about 8-12 pieces organically after my initial launch.

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

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

IMG_4359

I contribute this to the following factors:

  • My listing and photos are better than the competition
  • My product is superior to the competition
  • Great copywriting does matter
  • 79 reviews within 5 weeks  
  • Launch tactic and tools used 

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

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

Alright, numbers:

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

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

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

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

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

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

Total cost: 8099$

Update numbers after 7 weeks:

Units sold: 1008 pieces

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

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

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

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

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

Conclusion of this case study

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  1. I have a product online that has quite some reviews already (mostly 5 star)
  2. No future investment needed (except re-order inventory)
  3. The product makes me 3,000$ a month minimum, possibly more.

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

  1. Escape the rat race and quit your job? Maybe not the safest decision but add one or 2 more products and you are good to go.
  2. Want to add additional income and keep your job? You’ve just added 3000$ to your monthly income.
  3. Want to go to tropical beaches on a holiday and not having to stay at budget hotels?  
  4. Want to send your kids to an expensive school? There you go. 
  5. Need more money to support your family? 

What I am trying to get to you today is:

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

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

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

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

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

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

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

All the best and happy sourcing,

Manuel

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

News and trends from the exhibition (April 2016)

So this post seems to be a recurring and I won’t break habits and therefore continue this series of giving you the news and trends from this April exhibition with the following sum up 🙂 I am also doing a Q&A at the end of this post, check it out. 

It has been a very busy 5 weeks for me as I’ve been to 12 different shows and I can see that more and more Amazon sellers are coming to Asia to visit the suppliers and shows. 

When I asked suppliers at exhibitions 2 years ago if they sell into Amazon they had no clue as to who Amazon is. When you ask them now if they sell to the US you get: “oh yes sure, we have many buyers on Amazon”. 

Not that I am afraid of competition but there is clearly a sign that sellers realize you need to go to the source to find the right products and suppliers. 

In recent months I have seen a gradual decline of my business to retailers (offline business) and more and more eCommerce sellers are starting to come to Asia to see the suppliers. 

This is a huge sign. Whether you plan selling on Amazon, your own eCommerce store or other online platforms (eBay, Spotify etc.) NOW is the time to get into importing and private labeling.

I see a lot of repetition at the shows but there are clear trends in several categories and I was able to find a few golden nuggets that I am thinking of launching as my next products:

Personal Transportation

The famous “hoover board” is almost outdated and I saw many new types of transportation devices. Personally I am not getting into this category as I believe it is too risky and their are no clear saftey standards. 

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Decorative items

Lots and lots of nice products at both the Houseware fair (HKTDC), Cantonfair (Phase 2) as well as the Home and Premium show (Globalsources). 

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My wife would have a difficult time choosing from the huge variety of products – there are lots of nice looking items 🙂

Interestingly but not surprisingly I met most of the Amazon sellers from overseas at the house ware/kitchen shows. A clear sign that this category is heavily competitive but also very popular AND still profitable. 

High quality and branded Chinese/Korean/Japan goods

Be it a mini projector screen from Korea, a “Lego” like learning tool for kids from Japan or high end bycicle helemts (with bluetooth) from China. Asian brands are starting to make waves and their quality is excellent. 

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However in most cases these factories are only looking for distributors and are selling their products with their own brand on Amazon or other channels. Private Label is not really welcome and if it is very high MOQ’s are necessary. 

However it is a good sign and nice to know that the asian brands are catching up in terms of quality, innovation and development. 

Sporting and camping products

A category that I personally love because I like the outdoors and love to work out. Seen a lot of suppliers offering things from kettle bells to yoga mats to roof tents. I found myself 2 products that I am thinking of launching soon. 

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While it is getting more competitive I think that with the right marketing, packaging and photos on your listing this is still a very good niche. 

Two categories that I have seen everywhere no matter if it was a houseware or gardening show: 

1) Silicone kitchen products! 

You see them everywhere on nearly every booth. Either from a trading company who’s main manufacturing line are electronics or from the actual manufacturer. My advice – be creative and don’t try to private label the next silicone mat. 

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This category is too saturated 

2) Vaccum flask / Tumblers 

Same here. I don’t know what it is but it seems when factories hear that their neighbouring factory is selling stainless steel tumblers like hot cake, they have nothing better to do than adding them as well into their assortment thinking they will sell them too – even though 40 other factories in the area are selling them already as well. Nearly every booth at the house ware and gifts show had tumblers and flasks in their booths. So unless you have a buyer list of 50,000 people and can sell your next stainless steel tumbler – Please don’t go into that category – the competition is too big. 

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The Global Sources Sourcing Summit:

https://smartchinasourcingsummit.instapage.com/

I had the honour of being the opening speaker at the Global Sources Sourcing Summit. There were about 65 (or becoming) Amazon sellers attending this event and I can say that it was truly a very exciting opportunity.

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During my speech

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Discussing strategies with a fellow Amazon seller

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Shall we go into Silicone products?

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Impressions from and after the Sourcing Summit with attendees.

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Q&A panel at the Sourcing Summit

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Will Tjernlund and fans 🙂

The line up of speakers was really impressive and to be honest I felt intimidated to be among such great speakers. We had Greg Mercer from Junglescout, Anthony Lee from Zonblast, Will Tjernlund (the Multi-Million $ Seller) Ash Monga from Imexsourcing, Mike Bellamy from Passage Maker …… among many other great speakers. The line up and summary is here: https://smartchinasourcingsummit.instapage.com/

But most of all it was great to meet so many Amazon sellers. I had some time in between to discuss strategies, procedures, importing and all that comes along being an Amazon seller myself. 

This was such a great event and I am happy to say that I will be at the next one in October 2016: 

https://smartchinasourcingsummit.eventgrid.com/

Factory trip to Shenzhen:

I had the opportunity to go with some ImportDojo members to their factory in Shenzhen to see the production and help negotiate prices:

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Arriving in Shenzhen

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At the factory with Omar who started less than a year ago and now working on several SKU’s.

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These guys seem happy with their product and factory choice 🙂

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Checking out the production.

UPDATE CASE STUDY: 

In the midst of everything I launched my newest product and case study item:

http://amzn.to/1TdzvFI

As of today my inventory down to 580 pieces (from 1008 pieces), 417 pieces sold in less than 6 weeks in a very competitive niche. I have nearly re-couped my entire investment (8000$) and I just put in a re-order with my factory for 2500 pieces (shipped by SEA this time) which should last me at least 4 months from date of arrival. 

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You can read on my previous update here and I will soon post another one: 

https://importdojo.com/case-study-how-i-went-from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-niches/

Impressions from the shows

CANTONFAIR 

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Breakfast for champions! A fellow Austrian brought me the famous Manner Schnitten from Austria and I had to have them for breakfast – thanks Stefan!

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As usual a crowded train on the day before the Canton Fair starts. Make sure to book your tickets in advance and pick them up at the train station in Hung Hom (HK) otherwise you end up waiting for a train hours later: http://www.it3.mtr.com.hk/B2C/frmFareGuangdong.asp?strLang=Eng

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walking to my hotel trough Guangzhou

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I usually don’t stay at fancy hotels as I see my business trips as a business trip, not a vacation. So I checked myself into the Lavande Hotel at an amazing rate of 60$/night. It’s right next to the Subway station so you can get to the Canton Fair very quickly. It’s not the greatest hotel and staff speaks poor English but you’ll get your room.

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Another foggy day in Guangzhou.
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One of the halls at the Canton Fair Phase 2

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Walking the floors.

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Could already use a bath after a day at the show 🙂

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You can literally find everything here.

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This might be a good camping product?

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Not sure if this prototype will make it into production 🙂

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Just one of the many many halls, full with suppliers…

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Baby products

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Heading back to the hotel

HKTDC 

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Beautiful covers and bags

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a nice kitchen gift set

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Is this my next coffee product? A drip – cold press coffee maker

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Heading to Hall 3

Globalsources 

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Mugs, mugs and mugs

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A DIY learning tool for kids

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gaming headsets

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Interesting cable organizer

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checking out gaming hardware

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iPhone lenses and covers

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Getting myself some new ties. Even though I never wear them 🙂

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Accessories, accessories and accessories

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Looking to create your own brand of shoes? This supplier works for Li Ning (the big Chinese brand) as well as New Balance (NB). I just love flyknit (see my orange Nike sneakers :))

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Gaming headset

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Time to do some sight seeing with a colleague


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Meeting up with Peter Zapf from GlobalSources

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Interesting Solar camping lantern

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High end headphones

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Silicone cooking pods

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Decorative copper items from India

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Kids travel luggage

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This bike weighs less than 10KG and costs over 800$

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My next PL product? 🙂

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Having a coffee break with Will and colleagues (Pete & Laura) from Uganda who are looking for their first products.

Yiwu

One thing I should mention is the wholesale market in Yiwu. 

Where is that? It’s a “small city” near Ningbo (Zheijang province) that houses “The World’s Largest Wholesale Market.” 

Here is a report from Business Insider. 

http://www.businessinsider.com/yiwu-china-largest-wholesale-market-2011-10?op=1#ixzz3V5meL6e8

I personally didn’t go but I have heard of a few people that came to HK that they went there before the shows. Is it worth it? Yes and No. If you have no contacts and there is no exhibition going on at the moment then YES. But if you are looking for serious suppliers with good quality and buying from factories directly then NO. The thing is that these showrooms and “suppliers” in Yiwu are thousands of trading companies mostly selling stock (with Chinese packaging and NO quality control) to you in small quantities. Yes you can give it a try and not all suppliers are bad but I personally had bad experience with suppliers there. It’s worth to see and there are a few nuggets and you can buy small quantities, just make sure to check out the supplier in-depth and have agreements and if possible inspections in place. 

Planning on coming to the shows later this year? Here are the dates for October:

http://www.globalsources.com/NEWS/SIC-trade-shows-in-hong-kong-guangzhou-october-2016.HTM?source=GSOLHP_Product_Guide

Interested in last years reports? Check out these links: 

https://importdojo.com/news-and-trends-from-the-exhibitions-in-asia/

Recap and conclusion for myself:

While I have met many amazing people, fellow Amazon sellers and suppliers this has also been a fruitful trip for me. Apart from making new friends and business partners I have also placed order for 4 new items that I found during those weeks and after initial research I can say that there won’t be any or limited competition. I have invested a total of close to 20,000$ into new products and I am expecting to get a return of 6-10,000 on each product after the first order. Once again, I can’t stress enough how important it is of actually coming to Asia to source your products. 

I hope that this update gave you a bit of an overview of whats happening in China/HK and if you have any questions please do not hesitate to contact me.

All the best and happy sourcing,

Manuel

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

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. 

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

How to properly place an order with factories in China

So while I am waiting for my newest item to be in stock I thought I’d lay out a very important part of the order process to a Chinese factory to you.
(I you haven’t followed my case study check out my last webinar: https://www.youtube.com/watch?v=4tO5y-EHEwM)

So why is it so important to lay out terms and sign contracts with your supplier? Quite simple actually. You want to have safety nets and agreements in place if something goes wrong.
And trust me there can always be something that can go wrong. It could be a failed inspection, it could be that the item produced is severly damaged during transport, it could be that the material used is completely different from what you wanted and so much more.

You might ask yourself for what kind of order value should I have agreements in place? Because maybe you only have an order value of 1000US$, do I still need all this?
Yes! At least you should have agreements in place that bind the supplier to pay for a re-inspection. However to be honest not many suppliers sign agreements or terms if your order is very small.
But you should at least give it a try.

Just recently I heard from a student of mine that the inspection was fail and 25% of the products had faults, were damaged or not properly manufactured.
In this case the supplier wanted to ship out what was OK and wanted to re-work the other 25% later and ship it later. He even didn’t agree on paying for a re-inspection but simply said “ don’t worry, it will be ok”.
Well I wouldn’t worry if the original 100% would have been a pass results but how does he even have the nerve to tell me not to worry and blindy trust him when 25% of the order is screwed up? Not only did the customer have to pay for re-inspection (the supplier wouldn’t budge) but he had higher shipping costs because he now had 2 shipments!

You need to have agreements in pace that state clearly how each situation is to be resolved – to your benefit.

Sometimes it might be a minor issue such as that he forgot to put the labels on the carton. In that case it doesn’t make sense to send an entire re-inspection but you could rather have him issue you an LG (Letter of guarantee) stating that all items have been re-worked and if you find that what was promised was not kept he has to pay for any costs. E.g. he promises that he will label all cartons and then send it out and once you got the order you find out he hasn’t done it. You could charge him the label costs (as agreed on the LG).

So how do you make sure that your supplier follows each of the steps you want him to do? You clearly state things in your order email and in your purchase contracts and agreements.
Due to popular demand and because I was asked for it many times here is an example-email of how I place an order to the supplier (bear in mind to fill in the details of your own product here – please see my comments in red):

Hi xxxx,

As discussed I would like to place a trial order of xxxx pieces of product X to you.
If my calculations are correct I will re-order 2,000 pieces every 2-3 months.

Details as discussed and herewith laid down:

– Product requirement for particular item (FDA approved)
– accessory for this particular item (FDA approved)
– 1 accessory (in acrylic)
– Material; Stainless Steel and Copper
– extra screw on the handle in copper plating as discussed (little detail that you agreed on could be here)
– Color box packaging. To be provided by me in a short time. (You dont need to have the packaging design ready when placing the order. If you have a white box then there is no need anyway)
– Insert card to be provided by me in a short time.

Price: In order to support this first order and in view of all future potential business that we discussed please confirm price of xxx as agreed on during our last phone call. Again please confirm and I will make payment right away. (It is dificult for the supplier to say no here. You are ready to place the order and he smells the money :)

Sample costs: Please deduct the sample cost of Sample Invoice No.12345 of 150$. This was agreed on when I sent you the sample order on xxx.2016.

Please send PI based on above details with your bank acccount details so that I can make 30% T/T deposit to you.

1) I am also looking at an exclusivity deal. Since this model is more or less OEM in nature (modification and custom packaging). I would like you to sign the attached Exclusivity Agreement.
It means that anyone wanting the exact same specifications and is selling on Amazon United States is not allowed to buy from you.
You can still sell this model to other Amazon countries and customers but not with the same specifications like mine. (custom made file that he has to sign)

2) Please sign attached Purchase Order (a custom made file with all details again in a Word document.)

3) Please sign attached Purchase Order contract (a custom made document he needs to sign in Word file)

4) Please advise shipment date. Again, please check if you can ship out before xxxx.2015. I could send you the giftbox and all other order details within Monday next week so you would still have 30 days for production.

5) PLEASE ADD “FRAGILE-HANDLE WITH CARE” STICKERS TO ALL EXPORT CARTONS (my product had glas in it so I wanted this warning on the shipping/export carton)

6) Please advise inspection date (when 70% is finished). Inspection to be conducted trough: Asiainspection (I will pay for the inspection). If there is a fail inspection you have to re-work the goods and pay for re-inspection (this is also mentioned in the Purchase Order contract)

Please provide address, contact details and telephone number and contact person in both English and Chinese for the Inspection company.
I will also need these details so that I can give you the shipment labels from Amazon Seller Central with the actual factory who delivers.

7) Shipment to be conducted trough:
Please contact my freight forwarder to arrange pick up of both AIR and SEA shipment
John Doe
Made up name logistics (SHENZHEN)
TEL:+86-12345678
Fax:+86-12345678
E-MAIL: john doe@madeupnamelogistics.com

8) 100% shipment by AIR to following address. Please add the address in the commercial invoice and packing list.
FBA: Mandarin-Gear Limited
Amazon.com.dedc LLC
560 Merrimac Ave
Middletown, DE 19709
United States

The following is for the documents:

Importer of Record:
Mandarin-Gear Ltd.
xxxxx adress, Hong Kong
Tel: +852 12345678
mail: xxx
EIN: 123455678

Ultimate Consignee:
FBA: Mandarin-Gear Limited
Amazon.com
4255 Anson Blvd
Whitestown, IN 46075
United States

Notify Party for customs:
Mandarin-Gear Ltd.
xxxxx adress, Hong Kong
Tel: +852 12345678
mail: xxx
EIN: 123455678

9) Labels for for export carton as attached.

10) Please send full certificate of FDA and Borosilicate glass for this item.

11) Please find attached logo to be printed by Silk-Screen on the item. Logo to be put at the bottom of the product.

12) If there is a polybag included it needs to have the attached suffocation warning printed on the polybag.

13) Products need to be packed very very well especially around the glass as you know the glass can easily break.

If you have any questions please do not hesitate to contact me.

I am looking forward to building a long term business-relationship!
All the best,
Manuel

So you see there is quite a few things you have to consider when placing an order. Usually I sit 2-3 hours when writing the order email and terms up to each supplier. Since I want to take my time and think of everything that I want the supplier to do. Make sure you attach all files and documents you want him to sign.

Since I am a supplier and manufacturer myself I am sometimes surprised at how I receive orders from customers.
Sometimes I get an email just stating the order quantity, delivery place and not much else. If anything goes wrong I could blame the buyer “well you haven’t specified anything” and there is nothing he can do.
Obviously I am not that kind of supplier but many Chinese suppliers work that way… You as the customer have the right to demand certain terms and if the supplier doesn’t agree to them well then you should move on.

I hope the above gives you a bit of an idea on what you can and should do when placing an order.

If you like this post please share on social media
All the best and happy sourcing,
Manuel

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

Ps.: I am expecting my newest product to be in stock in the coming days and will update you soon in form of another webinar, so stay tuned

Best Packaging Practice – How to create a great private label packaging!

Hey guys,

I recently asked in ImportDojo’s Facebook group (https://www.facebook.com/groups/1585493201714528/) what topics you would like me to cover on my next blog post and I listened.

So here goes, below is an overview on how you can improve your packaging and beat the competition.
Before you read on, I previously posted on packagings in general and you may want to read this post too here: https://importdojo.com/private-labels-packaging-differences/

But today I want to look into six different topics when it comes to packaging:

1) Why is a good packaging necessary
2) What differences are there in materials and what is the ideal material?
3) Simple things that greatly improve your packaging
4) Why is it so difficult to get a manufacturer print low quantites of packagings?
5) Great packaging examples (low and high cost)
6) Conclusion and where should I start?

1) Why is a good packaging necessary?

  • A great packaging adds value to the product. Think of Apple’s packaging. Have you ever bought a product from Apple and holding the packaging in hand thinking: “that’s a nice packaging, it adds value to the product and is therefore one of the reasons I bought this product”?When I bought my first iPhone I actually kept the packaging until today (that was 2012). I even still keep the packaging of my Macbook Air because if I ever want to sell it the packaging adds value and I can get a higher price.
  • There is a saying in German (my native language) in the retail industry. “Eine gute Verpackung ist die halbe Miete” which litearlly means, “a good packaging is half the rent” or if you have a good packaging its “half the battle”.
    No matter if you are selling online or physically at a store the packaging is the first thing your customers sees when he is exposed to your product.
    It certainly applies more to retail than when selling online because the potential customer can see the packaging. The first thing a potential customers sees online are the pictures in your listing but a good packaging still applies, I ll get to that in a little bit.
  • Protection. You will want your product to be packed well. Your product goes trough six different logistics cycles before it reaches the customer:
  1. Packed in mass-production
  2. Picked up by the logistics company sent by Air or Sea
  3. Received in the US and unloaded from the ship or plane
  4. Transported to Amazon
  5. Ordered by customer, picked and packed by Amazon
  6. picked up carrier (UPS etc.) and delivered to you

Imagine this being your shipment: https://www.youtube.com/watch?v=qJdZgQwRMBk
Now don’t worry, that usually never happens, I guess he had a bad day 🙂

However there’s a lot of people and hands handling your product and you’ll certainly want your box to arrive in perfect condition when the customer receives it.

How often have you read on Amazon reviews “product received damaged”. Thats one bad review you can avoid.

2) What differences are there in materials and what is the ideal material?

It is quite simple actually, I give my suppliers usually the requirement to pack products directly in a b-flute (e-flute is acceptable for light and simple products) and the gift boxes must be packed in a minimum c-flute cardboard.
A double wall (C&B flute) would be preferred but c-flute is accepted.

Here are the standard cardboards available:

A) Coroplast
B) Chip Board
C) e-Flute
D) b-Flute
E) c-Flute (standard)
F) Double Wall (c&b Flute)
G) Triple Wall

Rating:

Cardboard boxes (Corrugated Fiberboard) are rated by an industry standard known as the ECT (Edge Crush Test).
This indicates the pounds per square inch the board standing on edge can withstand.
A standard moving box (c-flute) has a rating of 32 pounds per square inch before crushing, therefore would have a 32 ECT rating.

Ratings You Can Choose Or Indicate To Your Supplier: 

  • No Test – really light
  • 26 ECT – light
  • 32 ECT – standard
  • 44 ECT – Strong
  • Double Wall
  • Triple Wall

Still not sure what you should use and what applies to the weight of your cartons? See below illustration referencing the carton strength to the total weight of each carton:

PastedGraphic-1

3) Simple things that improve your packaging

  • UV coating. I use UV coating for most of my packagings. It gives the logo or text you want UV-coated a nice 3D effect and feels great when having it in hand

  • Fun facts. I add “Nutrition facts” onto my packaging even they aren’t of any food nature. I sure add all technical description in there but I will also add a few “fun facts” making my product “hip”.

  • Don’t overconfuse with a lot of text and keep things simple. Rather use pictograms as per below examples. Instead of boring wording I use pictograms that describe functions of the product.

4) Why is it so difficult to get a manufacturer print low quantities of packagings?

Printing a packaging (color box) requires to create a so called printing film for the printing factory. Do not be confused, your supplier outsources this job to a separate printing factory.
I have yet to come across a supplier who also prints his packaging. That means that your supplier has no control over the minimum amount of pieces needed to be printed. This amount is determined from the printing factory.

Some printing factories offer from 500-800 pieces while some printing factories require at least a 1000 pieces per item/color. It is often useless to argue with your supplier to find another printing factory because they have running contracts with those printing factories that guarantee them consistent quality and low prices. So he won’t jeopardise his relationship because I the new buyer need 300 pieces of a color box.

However there are some printing factories who specialise in helping small time buyers to print lower quantities. Costs will be higher though. Have a look at my other post where I explain costs in detail:
https://importdojo.com/private-labels-packaging-differences/

5) Great packaging examples:

  • I recently travelled to Vietnam. Vietnam is known for its food and vietnamese coffee. I am avid coffee lover and I definitely wanted to bring back a coffee from Vietnam. So I went to a couple of stores and looked for coffee. I got myself a pack of Kopi Luwak coffee. If you don’t know Kopi Luwak check out Wikipedia https://en.wikipedia.org/wiki/Kopi_Luwak its quite special 🙂 But thats not the point of the story, while browsing for coffee one product and packaging really caught my eyes. It’s a tea packed in bamboo packaging. Vietnam is also known for its bamboo products. While I don’t really drink tea I bought the product even I didn’t really need it. Why? Because the packaging sold me the tea. Have a look at the packaging picture:

 

I really like the use of Bamboo here, not your every day packaging. This option is certainly more expensive but it sold me!

 

  • Simple packagings that are great and cheap. When you have a product that doesn’t need a fancy packaging because it is an every day use item you can save a lot of money and still have a decent packaging. This is also extremely helpful if your suppliers gives you a high order quantity for packagings.  I recently ordered a product from Amazon (as the Merchant) and when I received the packaging I was quite surprised at the simplicity but effectiveness of the packaging. No fancy packaging needed because it was just an iPhone charging cable.

This packaging is a simple but padded envelope and great for cables, rubber, plastic items and things that won’t easily break.

  • There is a campaign running right now from Lays Thailand (potato chips). The campaign says, post a picture of yourself on Instagram, tag the company and the product and maybe win xxxxx$. Not only do they have a great packaging but the customers are doing all their marketing for them. Have a look so you’ll see what I mean.

 

That Lays marketing campaign is brilliant. Engage with your customers on your packaging. Add a insert card or a link to your website and create a challenge, maybe even similar to above and you’ll get “free” exposure to your product and brand.

Try to think outside the box and think of little things that can improve your packaging but have a big marketing effect.

If you are looking for more ideas, simply Google “Great packaging ideas” and browse trough the various search results. Find something you like? Speak to your supplier and see if he is willing to help on your packaging idea.

6) Conclusion and where do I start?

So where do you start? I would say that your packaging should :

A: reflect the product inside
B: something that the product is affiliated with – a brand or a quality seal

Examples:

Reflecting the product inside:
1) Cigars are often packed in wooden boxes because they resemble a humidor.
2) Great example of Nike’s Air products. The product is actually packed in a bag of Air.

 

Something that the product is affiliated with or a quality/brand seal:
B: Swiss products usually have the white cross in the red circle (the country’s flag) on products because the Swiss are proud of their country and quality of their products. I have often seen cosmetics in department stores that have the Swiss flag on them with some wording like “Swiss formula” or “Swiss made”. It creates trust in the potential customer because people know or think that Swiss products must be good. Check out below examples:

 

Doesn’t that beer look yummy? Don’t you want to buy it just because of the packaging and trust in Swiss quality already?

Don’t you feel confident already brushing your teeth with Swiss made toothpaste? 

 

Ok, lets wrap it up. I am not saying that you should apply all these things on your very first packaging. Because a few of the above examples can become quite costly, especially if you have low quantities.
Try to start with a simple white box, put your logo & labels/barcodes on it and when you are ready to place larger orders improve your packaging by applying some of the techniques and suggestions above.

Now you may ask yourself why is it important to have a nice packaging for an online or fulfillment business? After all the customers doesn’t see the packaging when ordering online?
Well for all of the above reasons and your customer will greatly appreciate to get the product in a well packaged box plus it will increase the chance of getting a great review. You may also want to think ling term that your brand eventually becomes recognised and you want to deal with retailers or supermarkets to have your products also offline!

I hope this gives you an overview and I look forward to your comments. Please like and share if you found the post helpful 🙂
All the best and happy sourcing,
Manuel

Ps.: I’ve got some exciting news in the coming weeks that will make Private Labelling and importing from China easy, so stay tuned.

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

US Import Duties & Taxes – How much and when do I have to pay for import tax?

So you are wondering how much tax and import rates you have to pay on your product? You keep hearing that anything below “2500$” doesn’t get taxed? Lets look at import duty rates & taxes for the US in detail.

What we are talking about today is the:

1) Informal Entry

An informal entry is the entry of goods valued under 2500US$ and does not need to be cleared by a customs bond as it is designated for mostly personal importations. The amount used to be 1000$ before 2013 but the threshold has been increased to 2500$ since then.

2) Formal Entry

A formal entry is the entry of goods valued over 2500US$ and needs to be cleared by a customs bond. This type of entry is used for commercial importations only (e.g. re-selling goods on Amazon).

3) Lowering product costs to avoid taxation & rates

 

I’ll explain each entry in a little while. The word in the community is that anything below 2500$ doesn’t get taxed and no rates apply. Wrong.

First of all any amount is technically taxable if the product is intended to be re-sold but the US customs and border protection calls the entry with a value under 2500$ an informal entry. An informal entry are “goods for personal consumption or enjoyment”.

Now in most cases customs turns a blind eye and won’t tax or slap rates on your products imported under 2500$. That is if the actual declared product value makes sense. What does that mean? Lets look at two example:

1) Informal Entry

My actual product costs 4$ and I order 500 pieces. The total order is therefore valued at 2000US$. This is called an informal entry.

Now I technically have to pay taxes and duties because I am importing as an individiual or entity with the intent to re-sell these goods.

But customs doesn’t know that and since there is a threshold of 2500$ anyway they often don’t impose any tax or duties.

But that doesn’t mean that you aren’t liable to pay them. Because if you import 500 pieces of a private labeled product it is very likely that customs knows that you have the intention of re-selling the goods.

However, as I mentioned US customs turn a blind eye in many cases and release your goods without having to pay any taxes and duties (just don’t count on it and calculate duties and taxes anyway when calculating your profit margin)

This happens especially if you use couriers like DHL, UPS etc. because they have a special clearance lane and customs often “wave these goods trough”.

Also (see my last post on this here under point 2): https://importdojo.com/how-to-import-to-the-us-for-international-sellers-ship-to-amazon-directly/

If you were to ship by a freight forwarder (Sea or regular Air freight), the forwarder has to file for a Informal Entry and you will likely be taxed according the customs tariff number.

 

2) Formal Entry

My actual product costs 6US$ per piece to manufacture and I order 500 pieces.

I declare 3000US$ Total Order value on my Invoice which means I (my forwarder/carrier) have to file for a formal entry. I get taxed at the import rates and duties as filed under the official US Harmonized Tariff Schedule” https://hts.usitc.gov/

It’s not easy to navigate around that site and often you need to look for a long time to find the correct tariff number. If you aren’t sure you can also go to: www.dutycalculator.com and look for your tariff number there.

However there are only 3 free “look-ups” and then you’ll have to pay.

Let’s say for example my product is the famous “Garlic Press”. I do the research and find out that the garlic press has a import rate of 3%. Therefore the taxable amount and import rate is 90$ (3% of 3000$).

There will be merchandising processing fees that are usually a couple of dollar. In total I won’t be paying more than roughly 100-120$ for import rates and duties.

I am happy to pay that amount and import my product in a fair and square manner.

 

3) Lowering the product value on the Invoice:

Now a lot of sellers/buyers manipulate their product price on the invoice to avoid any taxation because they have heard of the “2500$ rule” but they aren’t aware of the actual regulation (informal/formal).

They do that because they have heard from other people in Facebook groups that they do that as well. Or their supplier told them that they will lower the invoice to help them save costs…. Please don’t!

Say for example they manipulate that 6$ product to a price of 4$ instead to stay below the 2500$ threshold. In most cases customs will not check and therefore you can import your products “if you’re lucky” at a zero percent tax rate which is an informal entry.

While I don’t encourage you to do so this procedure is very common and customs is aware of it. I guess the US supports their economy and has better things to worry about.

However If you greatly underprice your item you can get in trouble. Say for example that the supplier puts 1$ (or even less) on the Invoice to make the total amount out to 500$ (for 500 garlic presses).

How will you explain that your 500 pieces of private label garlic presses are for personal consumption? How will you explain that a product that sells for 15-20$ is being imported by you for 1$ a piece? You can’t and you will likely be taxed the full amount as well as a fine for deceiving customs.

Those fines can be in the excess of thousands of US$, depending on the product and the circumstances of the case.

Also bear in mind that the assesment of the total product value is the option and at the opinion of the customs officer on duty.

They aren’t stupid and if a product obviously has a higher value than you have declared they will definitely slap you with the full import rate and/or a possible fine.

In order to avoid any mix up with the correct customs tariff number I recommend you to tell your supplier to mention the correct number. If you aren’t sure which one is the correct number look on https://hts.usitc.gov/ or www.dutycalculator.com

If you still can’t find it then you can also call the phone number on the customs tariff website and they will give you this information for free.

So I’d recommend you to declare the real value and if you really must to save a few $… lower the price to a reasonable price. (E.g. 5.5$ instead of 6$).

I personally declare the real value because it’s simply not worth to falsify a customs invoice to save 90$ of taxes (in above example).

Important: Samples are a different scenario. You actually should declare your samples at a low or NO VALUE at all because they are simply for your evalutation and order decision. You will most likely also not re-sell that sample.

Therefore you can declare samples at a nominal value (1$) and mention on the sample Invoice: “Samples Of No Commercial Value”. Your supplier can put this on the sample invoice for you. See an example below:

 

How do I declare informal or formal and how do I properly file this with customs?

You don’t have to worry, your logistics company will declare that for your. This could be a freight forwarder or a courier like DHL.

In any event, the forwarder/courier knows the amount of total product value and will know how to declare for you.

1) Informal Entry

https://help.cbp.gov/app/answers/detail/a_id/215/~/filing-an-informal-entry-(for-goods-valued-at-less-than-$2500)

2) Formal Entry

https://help.cbp.gov/app/answers/detail/a_id/214/related/1/session/L2F2LzEvdGltZS8xNDUyMzk4NDUxL3NpZC9zTU50bzhHbQ%3D%3D

3) Merchandising Processing Fee

https://help.cbp.gov/app/answers/detail/a_id/334/related/1/session/L2F2LzEvdGltZS8xNDUyMzk4NDUxL3NpZC9zTU50bzhHbQ%3D%3D

 

IMPORTANT: There are exceptions to the 2500$ rule! One exception to the “valued under $2,500 rule” includes textiles. For this type of trade-sensitive merchandise, a lower value of $250 applies. A variation, or subcategory, of informal entry is known as “Section 321” which allows the duty-free entry of merchandise valued at $200 or less – as long as it is imported by one person on one day

I hope this helps and shines some light onto the subject 🙂

All the best and happy sourcing,

Manuel

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” and “Can I send my order directly from the factory directly to Amazon?

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. (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 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 http://www.westernoverseas.com 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 Westernoverseas 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.

If I choose Western Overseas as a Customs Broker, how do I open an account? Is there a fee?

There are several forms that you must complete to set up an account. Please contact us at Ecommerce@westernoverseas.com. We do not charge a fee. However, we may charge for a consultation fee if extensive research on your product is necessary.

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 (through Western Overseas) 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, Earth Class Mail or Western Overseas.
  • 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 Western Overseas. 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 Western Overseas 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. Western Overseas 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 (Westernoverseas) are hired as your Customs Broker, we should always be listed as the Notify Party.

Western Overseas Corporation
510 Myrtle Ave. Ste 208
South San Francisco, CA 94080
Tel: (650) 952 – 2955
Email: Ecommerce@westernoverseas.com

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 Western Overseas (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 Western Overseas ((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 Westernoverseas—

 

 

If you are interested in their fees and other services here’s the contact information:

Susan Park
Business Development Specialist
Western Overseas Corporation
11605 Pike St.
Santa Fe Springs, CA 90670
Tel: (562) 985-0616 x5069
Direct: (714) 243-5069
Fax: (562) 364-7798
Email: Susanp@westernoverseas.com
Website: www.westernoverseas.com

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

 

Air Express Courier shipments sent via DHL, FEDEX, 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 (DHL 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 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

A beginners guide to 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 an basic overview what you need to pay attention to.

 

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

 

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

 

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

 

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

 

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

 

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

Lets take a look at general regulations first.

EUROPE

 

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

CE


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

GS

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

R&TTE

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

LVD

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

EMC

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

ROHS Directive


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

REACH Directive


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

WEEE Directive


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

Sub – Regulations & Directives:

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

 

UNITED STATES

 

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

FCC


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

UL


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

RoHS

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

Further information you should be aware of

Full certification:

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

 

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

 

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

 

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

Labelling & Marking

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

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

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

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

Returns and damaged products

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

 

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

Self-declarations

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

 

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

Lets take a look at a few examples

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

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

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

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

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

Miscelaneous:

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

 

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

 

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

 

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

 

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

 

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

Inspections

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

Product Liability Insurance

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

 

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

 

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

Summary

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

 

RoHS is also easily obtainable these days and if a supplier doesn’t even have a self-declaration or certification for incoming raw materials look elsewhere. Unfortunately each product has different regulations however above general guidelines give you an idea what to look for. Also there is no website that tells you exactly what you need for which market (Business Idea??? 🙂 ) and all is done trough research or ideally you speak with your third-party inspection company. In most cases they will charge you for giving out this information but if you work with them for a while already they might do you a favour and give you the information for free.

If you are interested in learning more about certification and other product categories head on over to my Certification course here: https://importdojo.com/import-dojo-certification/

All the best and happy sourcing,

Manuel

ImportDojo

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