Zero to Hero: Build a Brand series – Overseas manufacturing guide

I’ve probably written about this topic for as long as the blog is up (March 2015) but I’d like to give you a summary of the most important parts of manufacturing overseas in this blog series on how to build a brand.  

WARNING – LONG POST 🙂

So here goes: 

Guide on Manufacturing Overseas

There are a lot of statistics I could give you but I wouldn’t know where to begin. I want to break down China and its manufacturing in a few sentences.

Believe it or not, China is still the biggest production site by far. While there are several countries in the vicinity, such as Vietnam, Thailand, and Bangladesh, they simply do not have the infrastructure that China does. Imagine you need sanitary items, furniture, household appliances, insurance, and a smart phone. You walk into a Wal-Mart. You can find practically anything you need in there and that’s within 10,000 square feet. That pretty much sums up China’s infrastructure. 

Factory A provides plastic and tooling, Factory B provides packaging, Factory C provides raw material and components, and Factory D assembles everything. They are all within a stone’s throw away from each other. 

Most of the factory bosses are related to each other. They set up a perfect system within their “community.”

I’ll give you an example, and I am not kidding you, 95% of the world’s supply of electrical multi-sockets comes from a small town in Cixi near Ningbo/Shanghai. When I say “small” I actually mean small for China. 

There are over 1.4 million people in this town. When you step into “Ningbo Kaifeng” (World largest factory for electrical multisockets) you are overwhelmed. And when you step outside of the building you see five competitors across the street. All the factory bosses are related to each other. And down the street they can find everything they need – factories that make packaging, tooling, plastic, steel, and so on.

The Chinese are so effective in terms of production and infrastructure that some first world countries could really learn a lot.

The big retailers figured out a long time ago that nearly every large corporation, retailer, discounter, or online shop has a buying office somewhere in China/Hong Kong. I know this because I have been in the industry for over 17 years. When you walk into a factory and look at the production line you see cartons of goods with famous names on them. Whether it is a fan from Home Depot, an audio speaker from Target, or a ceramic pot from Bed, Bath, & Beyond, they were all made in China. Most products are made in specific areas.

Here are a few examples:

  • Guangdong province (South of China): Electronics of any kind, especially consumer and household, toys
  • Zhejiang province (Shanghai area): DIY products, tools, metal and fabrics, lighting
  • Hebei province (Beijing area): Textiles, coal, steel, iron, engineering, chemicals, power, ceramics and food

These are the main areas for production. However, nowadays production is also shifting inland to take advantage of lower labor and production costs.

Certification

First things first. You need to understand that certifications are based on directives and legislations. So for example the GPSD in Europe (General Product Safety Directive Legislation) or the CPSC for the US (Consumer Products Safety Commission) says that a product needs to meet certain standards and need to be safe in general to import or bring to the market. Simple right? Unfortunately not. The GPSD has tons of directives under its belt such as the CE, RoHS, REACH directive). Which means that for each product or category there are further sub-categories that have directives which tell you exactly what your product needs to meet. Wait a minute, what exactly are you saying? I can’t read all this technical jargon…. 

Ever went onto Google to look what your product needs to meet under which directive? Found a site and then there’s a 200 page PDF that tells you in technical mumbo jumbo what the directive is about and after reading that you still don’t know what to do? Well this is where a lot of people struggle (I am actually working on a course as of writing this that will take the guesswork out and make you understand what you need to know)

So which certificates do I need and do I need them all? 

Yes and No

The good news first. No you do not have to have all tests and certificates done by third party laboratories (both the US and Europe). What would suffice in (almost) all cases would be a declaration of conformity. Wow really? Yes, and here is the “however”. If you trust your suppliers blindly that all raw materials are free of hazardous chemicals, comply with electromagnetic compatibility (electronics for example) or meet certain other standards then that would be very foolish. If your supplier can’t provide any certification and claims that he complies with everything you ask for thats a huge red flag. I also understand that you don’t want to invest in any certification not knowing if it will sell. And this is the most important part where you as a entrepreneur and business person need to come to a decision. A) Is my product potentially dangerous (can it explode??). B) Is my product relatively simple and can’t harm anyone (e.g. leather wallet)? Once you’ve figured out what you need for your product you need to evaluate what should be invested. Lets take an example. For the sake of it lets look at a simple and a complicated product. 

Simple product:

Solar powered garden light for 1.2$. Comes with nothing but a few cables, some plastic and a solar cell. Simple right? Technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe. Now if I were to test all of these the costs would amount to roughly 2000USD with a very cheap Chinese laboratory. If it was TUV or SGS the costs would be triple that. Now what if I am going to order 1,000 pieces and my testing costs would already cost more? That doesn’t make sense. In this case I suggest to get self declaration of the above regulations and save yourself these costs. Obviously you’d still want your supplier to declare that he can fulfil those requirements so look for suppliers who already deal with customers in the country you want to import to and have a good reputation or can back up their claim that the item is compliant with raw material certificates for example (from the raw material supplier). 

Complicated product:

Small Electric fan heater 5.9$. Comes also with a few cables, some plastic, a plug and a PCB. Simple right? No. You see, I need to plug this product into the socket (230Volts plus) and the potential dangers are very high. If the unit tips over or a child puts a cover on top, the entire unit can burn up (and the house with it). Also here technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe. Ideally I will also want a GS mark for Germany because this is a product consumers want to have with GS. On top of that I want abnormal testing from TUV for example. Abnormal testing means they would test what happens if you cover the unit with a blanket or if it tips over that the unit switches off automatically. A good supplier knows that there needs to be a tip over switch installed and overheating fuse included. This abnormal test alone costs 4-5,000USD. A GS mark costs somewhere in the same vicinity (2-4000US$). The other tests (LVD, RoHS, REACH & CE) are roughly 2,000USD. Now we are looking at 10-12,000USD investment costs. Would I do all these testings before purchasing? Yes, 1000%. I do not want to risk my business or anyone else’s life because I wanted cheap. You may say ok but I don’t have that kind of money. Then you need to find a supplier who either has these certificates already or is willing to invest the money for you. If you can’t find one then its simple – the product is not for you and your budget. You can still go for it without all the testing and certifications but I think we are on the same page here that that would be a very foolish decision in case anything happens.  

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

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

Products & components to avoid when starting 

Some items really don’t make sense to import (together with the antidumping rate items). These items are usually license-required items, large items or items that are manufactured in a low-income country near you. 

China is getting some competition from a few countries, not only because of labor costs but also due to government import restrictions (antidumping fees for example).

Products that are difficult for importing:

  • Anything related to gas
  • Cars
  • Supplements
  • Foods, drinks
  • Animals
  • Guns, weaponry
  • Hazardous material
  • and more

For the above items you would need to obtain proper licenses first and this can be quite difficult. So the above might not be your first choice of import. 

Contracts & Tooling Guide 

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.

Let’s look 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:

  • 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.

  • 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).

The point I want to get across to you 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.

Choosing a supplier

Most people start out on Alibaba because they cannot come to China. While I do recommend to come to China it doesn’t make sense if you are just starting out. If you are starting out, head over here to my Alibaba screencast which helps on choosing a supplier:  https://importdojo.com/alibaba-hacks/

Ordering samples & how to test each sample effectively

I ll cover three topics about sample management:

  • Sample costs
  • Communication
  • Supervision

Sample costs

Once you have settled on a supplier for your new product it is time to purchase a sample. Most suppliers will charge you for sending a sample. There is usually no way around this unless you have worked with the supplier for a longer time.

Even for me, being here and dealing with suppliers on a daily basis I can’t guarantee that I don’t have to pay for a sample.

Here are some Insider tips to “try” to get a sample for free.

  • Introduce yourself as an assistant of a large company. Suppliers tend to smell money when a large company is interested and are more likely to give away samples for free.
  • State that if the sample is OK you will place a large order
  • State that you have especially chosen this supplier to be your exclusive supplier for this product and he has the chance now to do business with you.
  • Ask him to put the sample cost on top of the official order that may follow if the sample is what you are looking for.
  • State that it is company policy that you/your company don’t pay for samples and if he wishes to do business he should agree to your sample terms.
  • Split the costs. Offer to pay for either the samples or the freight costs.

If none of these work I recommend you to agree with the supplier to deduct the sample costs from the official (larger) order. At least this way you save the sample costs if you decide to order from this particular supplier.

Be wary of sample costs in general

On one occasion I was sourcing for a textile accessory. The item itself can be made for approx 2 USD.

I screened around 10 suppliers and eventually narrowed my selection down to 5 suppliers. They were all in a similar price range.

When it came down to ordering samples one of the suppliers (who was also the most expensive) asked me for a sample fee of 100 USD to be transferred to his bank account. That didn’t make sense. I immediately knew it must be a trading company with no factory background.

They probably outsource the work to a factory because they have no own facilities. Eliminate suppliers that have high sample costs right in the beginning.

Samples are usually 10-50% more expensive than the originally quoted price. It is a common practice to charge more for samples, as many of the samples need to be handmade for the customer, especially if you have some sort of modification request.

Another reason why samples are usually more expensive than the quoted price is that they want to see if you are serious & sincere about placing a larger order later.

I can tell you that from my own experience as a manufacturer. I get about 5 sample requests per week and all of them want it for free. If a buyer is not willing to pay for a sample I won’t send it to him because I will be thinking he just wants to get a sample and there will be no follow up order.

Sometimes suppliers have stock of their items. If you do not need to have any modifications done, or you just want to check the quality before asking for more, request a sample they have in stock. If they have stock, they usually charge the regular (MOQ) price.

Communication

In my 12 years living and working in China I have learned to communicate with Chinese suppliers in different ways compared to communicating with Western companies.

What is being said or promised on the phone/chat or email is not always being followed by the factory or the supplier. Often you will find that something you said or agreed on is being done completely different.

For example you ordered a sample of a certain product in a certain color & quantity but what you receive is completely different from what you asked/paid for.

Unfortunately the chain of command in factories is not always direct. So when your sales contact gives your sample order to his sample or engineering team there may be 2 or 3 people in between.

In between often some information gets lost. So eventually the person responsible for making your sample will receive different instructions that deviate from your original briefing. Often there will be no meetings held on projects from clients (like we are used to in the western world), but rather a quick email to another person that has not fully understood what you actually want or need.

Often there will be no message or notification that your project may be urgent or requires special attention. That might be a simple instruction, for example telling the sample team to make the sample with a US plug or adapter. No one has told the sample team and common sense is unfortunately not requested when being a worker in the factory.

Which brings us to:

Supervision

I can’t stress enough how important it is to supervise & monitor your order/samples or other projects that you have with your supplier. Westerners work differently. We are more detailed and we expect people to have the same common sense that most of us have. Information will get lost. You need to plan for it.

After each discussion on the phone/chat or email you should follow up with written and agreed on-points. Try to think of everything for the supplier and make it as easy as possible for him to follow up & complete your instructions. Give him a “goodie” at the end of the email to advise him of the potential to be working with you.

For example (content in BLUE are my notes for you):

Hi Tony,

Thanks for the talk just now. I would like to summarize the discussed points:

– Sample to be sent to ……. (your address)

– Sample needs to be in working mode. A non-working sample is not accepted, as the sample will undergo quality tests by my third party laboratory. (this part doesn’t need to be true but he will think twice before sending you a sample in poor condition)

– Sample needs to have a US plug (attach him a picture of a US plug-make it easy for him)

– Please make sure the sample is tested on your side before being sent out.

– Please attach your model number & supplier name-tag to the sample as I am getting many samples and would like to know who sent which sample. (this way you will not lose reference of which supplier made your sample if you order from more than one)

– Make sure you mention “samples of no commercial value” to the Sample Invoice (in order to avoid customs tax on samples at your destination).

– Etc.

Please give me a written confirmation of all discussed points and your understanding.

If the sample works out well and everything is as it is agreed on, expect an order of… pcs.

Best,

…..

Here a few more tips on communication & supervision with your supplier:

  • Give deadlines to suppliers that you both agreed on.
  • Set yourself reminders on your smart phone/computer that will help you to remind your supplier.
  • Make simple sketches & drawings of your requests if the supplier misunderstands you.
  • Have him confirm each step of your modification or request
  • Keep emails clear and with bullet points to make your requests stand out

Once you have a feeling on what you need to pay attention to it gets a lot easier and your sample orders in China will be a lot smoother.

Inspections

I’ve been saying this forever and I still see people shipping their products from China without inspecting their products by professionals but my recommendation is never ever ship without inspecting your goods. 

Especially not if you ship directly to Amazon. If there’s a problem it’s too late to re-work the goods (in most cases) or ship back to China. 

There are several third-party inspection companies in Asia. Some of the big names are: Buereau Veritas, TUV-SUD, TUV-RHEINLAND, and AsiaInspection  (which I personally use) to name a few. The first three are usually expensive but also very thorough. AsiaInspection is a simple and cost efficient service that should work in the beginning for you. Register on their website and simply create an order with them. You can fill out all the details or even better ask your supplier to send them a sample.

Simple steps: You ask your supplier for a date when you can send an inspector (usually around 70-80% of the finished production), you book the inspection online and the Inspector will go to the factory on the arranged date. 

Once the inspection is completed they will send you an inspection report. Based on this report you can either:

  • Release the shipment to the supplier
  • Ask the supplier to re-work the goods according to your agreed terms and fix problems found during the inspection

Only when you are entirely satisfied should you release the shipment. In most cases there will be minor findings, such as scratches, dents, or packaging issues. If this doesn’t bother you then release. If there are major problems like faulty wires or wrong colours, ask your supplier to re-work the goods.

Trust me, he will re-work, as he is still waiting to get the full payment. Remember, NEVER pay everything up front. Once everything is as it should be you can give your logistics provider the order to pick up the goods and send them to the port.

You are of course entitled to skip this process, but it is highly recommended, especially for first-timers and for order amounts above 1,000USD.

Pheeww that was a long post but I hope that this serves as a refreshment or reminder on what to pay attention to 🙂

Next week in our blog series we’ll talk about eCommerce, what channels exist, how to build an audience, social media following and more so stay tuned 🙂

If you enjoyed this post please comment or share on your social media 🙂

All the best and happy sourcing,

Manuel

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

Zero to Hero: Build a Brand Series – Product Analysis & Innovation Part 1

In the previous weeks, we went over Business Banking & Incorporation – where we explored different strategies on how to legally and financially enhance your business. As a way to start 2017, today’s blog post will be focusing on Product Innovation.

The ultimate goal for any business is to be sustainable in the long term. To achieve this, you need to have a Unique Selling Point(USP) that differentiates your business from the competition. This mini guide and case study is meant to get you to think outside the box in terms of product selection and launch cool & innovative products.

In terms of Private Label products, sellers normally follow one of these options:

  1. General items with unique logo and packaging.
  2. Completely unique product.
  3. Improvement over existing products.

Importing general items used to be profitable, but it’s not sustainable in the long term! When choosing products, you need to think from the Amazon customers’ point of view. How would you feel(as a customer), if you’re searching for a particular product, and find something like this:

2

This is a very bad approach as the only way to differentiate between each product is:

  • Listing
  • Photos
  • Price

Price is the most obvious one, so more often than not, it becomes a race to the bottom. This is not what we want as a brand. By creating something that the market wants & improving upon it, you will have control over your brand. This is also an asset if you plan on selling to retailers in the future – Retailers love unique, branded and in demand products!

Today’s case study involves picking an existing product and completely breaking down each aspect of it and try to improve it.

Note: This is only an example and the strategy should be applied for your product of choice.

The Product

For this case study I picked an Interactive Dog Toy Ball. Let’s have a quick overview of the product.

  • Number 1 Best Seller in Dog Toy Balls
  • 4,432 reviews
  • 2 Variations
  • Multiple Colors

Based on the initial data, these numbers may seem prohibitive, however:

  • Multiple reviews indicate the product is popular
  • Variations show demand for different sizes and colours

All that needs to be done is analysing the product carefully and see if we can improve it. So let’s go ahead with our product analysis.

Product Listing

 

Surprisingly, the listing for this product is very lacking. As seen in the above image I have pointed out the 3 main features I find lacking:

  • Poor Images & Very Bland – A product with this popularity/demand should have higher quality pictures.
  • Bullet Points – The bullet points are too short and don’t describe the product features in detail.
  • Listing Title – This, in my opinion, is the most lacking part. The title is not Keyword Optimized and they have the words “Colors May Vary”. As a customer viewing the listing, the question I ask is:  What colors are available for this product? Which color will I receive??

Product Description

 

The seller has Enhanced Brand Content/A+ Content, however, they are not taking full advantage of it. The description is short and the pictures show only the packaging instead of highlighting the product’s features. Furthermore, they included a picture of another of their products!

The description should be a keyword rich, informative section where you provide features and details to the customer.

Reviews

Moving on with the product analysis, it’s time to check the reviews – The item is a best seller after all! Reviews of customers are extremely important, more so after the Amazon Review change where all the giveaway reviews have been removed. Let’s see what the reviews tell us about the product:

The most notable aspect is that 24% of 4,430 reviews(1063 reviews) are 3 stars or lower. This already shows me that the product can be improved upon, but let’s look at the positive reviews first.

Positive Reviews

Looking at some of the positive reviews, I picked up these features customer like:

  • Fun Toy and most dogs love it.
  • Adjustable difficulty of the item makes it accessible to any dog.
  • A lot of the reviews suggest customers bought 1 or more. This is a very good sign.
  • The product makes their dog exercise more.

Positive reviews are an important aspect, as they tell you what customers LOVE about the product. If you are innovating or improving an existing product, you have to know what customers like about your competitors.

Negative Reviews

Looking at the negative reviews throughout the listing, I have noticed a common theme:

  • Cheap material – most dogs break it easily.
  • Dangerous – Some dogs have risked choking because it comes apart easily.
  • Boring – some dogs found the toy to be boring, this suggests that the toy is only ideal for particular breeds.
  • Functionality – Some customers found that the treats don’t come out properly.

When looking at negative reviews, focus on a common theme – if many customers complain about a particular feature, this can be improved!

External Research

 

After focusing on the listing, it’s time to search if there’s demand outside of Amazon USA. Remember, the goal is to build a lasting and global brand, so you need to expand your research further. I will look at this particular product and see how it performs:

Google Trends

When launching a product, it’s easy to only focus on that particular product. However, the goal is to see if there’s demand in the category. I made a Google Trends search for the keywords “Dog Treat Toys” and “Dog Toy Balls” to see if there’s any demand throughout the year for this product.

As seen above, the demand for the product is fairly steady all year round with some months experiencing high demand. This is good news as it shows that this product is not seasonal and their is interest in this niche.

Non-US Amazon

The idea is always to first launch a new product in the US market(higher demand) and expand into other countries. As you can see below, I have made a search for this product in the Spanish, UK, France, Germany, Italian & Japanese Amazon marketplaces. Although this product is listed in all marketplaces – not a single review can be found. This can mean:

  • No demand for the product outside the US – Highly unlikely considering the category(Pet Supplies).
  • The seller main focus is only the US, so releasing a better product in the other marketplaces would give you an advantage.

Amazon DE

Amazon ES

Amazon Japan

 

Re-Cap

Based on the initial analysis, my conclusions are:

Positive

  • Quality is an issue – We can make a better product.
  • Material is low-quality hard plastic and therefore we can improve the material quality or use a different material.
  • Certifications – No certifications are mentioned in the listing, by obtaining certifications we can make the product better.
  • Photos – Higher quality photos.
  • Listing – Better product descriptions & bullet points.
  • Variations – Include colors in the listing & offer 2-3 colors.
  • Packaging – With some effort we can make a better packaging.

Negatives

  • The product is extremely popular and therefore hard to get the #1 spot.
  • Large amount of reviews – However, 24% are 3 star or lower, so a better product can outperform it.

Warning: If going this route, it is extremely important to check if any products you take inspiration from don’t have a patent associated with them. The idea is to have a brand with unique products – So be unique!

What’s Next?

Once you have made significant research about a particular product. You need to make any improvements come to life. The way to do this is by either:

  • Hiring a product designer to design a completely new product based on the feedback you give them.
  • Sourcing a factory that produces similar products and see if they can make the requested changes.

I recommend hiring a product designer as they can completely experiment with different designs and you would get a unique product for your brand. When you’re happy with the result, you pass on the design to the chosen factory and a mold + sample is made.

A Note About Product Research

We are all familiar with product research tools such as Jungle Scout or Unicorn Smasher. While these tools are great, they shouldn’t be used to exactly tell you which products you pick, BUT to discover hidden gems within the marketplace & monitor sales volume. The best way to truly build a lasting brand is to:

  • Build a brand around a category/niche you’re passionate about. If you have a strong passion/interest towards a particular niche, you know what the market wants.
  • If you already have a product in a category, focus on building a list & interact with potential customers via social media. Once you build trust with your customer base, they will often tell you what products they love/want.
  • Release products which are both unique and better than the competition.

Moving Forward

Once you release a new product on the market it’s best to release other products related to the brand. This is done to:

  1. Cover many sub-niches in one category.
  2. Show expertise in your niche
  3. Build trust with your target market(if you consistently release great and innovative products)

Good places to look for new products related to your item are:

“Frequently Bought Together” section

As you can see with our product from the case study, Amazon is already showing you an item that is frequently bought by customers. 

“Customers Who Bought This Item Also Bought” section

Same as above, Amazon gives you all the data you need to make your research easier for your next products.

“Sponsored Products Related To This Item” section

This is very important as it shows PPC activity surrounding a category. If other sellers are spending money promoting their products, then, there is interest in the market. As you can see below, Amazon is showing a lot of products.

Category Magazines

Magazines(both online and offline) are a good source of inspiration. These publications only cater to an audience actively interested in the category so they can greatly help you. Understanding the market and your potential customers will help you gain authority within your niche.

Forums

Forums are a great source because audiences discuss topics related to a particular niche. Which is very helpful because:

  1. You can get inspiration for blog posts
  2. You can segment your audience( Gender – Age – Household Income etc)
  3. Advertising – Forums have advertising sections, see what type of brands and products are advertised and do your research on that.

Tradeshows & Exhibitions

This is by far the best way to source new products. Trade shows are a great way to see trending & upcoming products and find potential suppliers. Manuel will talk about this in more detail as he has a lot of experience in this field.

Reminder: Always do your research before investing time and money into a product – Your customers and business will thank you later!

Conclusion

I hope this mini case study was helpful and hopefully it can serve as an inspiration for new products in 2017. Moving forward, the next blog posts will be written both by Manuel & myself and will focus on Sourcing, Manufacturing & Certifications. These topics have been widely covered by Manuel, however, we have some great information on how to apply them to build a brand.

We hope you had a great holiday season and both myself & Manuel wish you a Happy New Year! If you have any questions regarding this blog post, kindly leave a comment below.

All the best & happy selling,

Duncan

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

Zero to Hero: Build a Brand Series – Business Incorporation 101 – Part 1

Over the past few weeks we went over the basics of building a brand. One thing all major(and minor) brands have in common, is that they are protected from a legal perspective. Having a good business structure will give a lot of benefits moving forward. Although the initial set up process can seem overwhelming and expensive, it doesn’t have to be. Nowadays, there are many countries where you can incorporate remotely that provide a lot features, benefits and most importantly in a financially secure jurisdiction. 

In the next part of the series we will guide you through everything regarding business incorporation and banking – including some helpful tips on where to incorporate your business.

P.S. This guide is only meant as a resource. While a lot of research has gone into proving helpful and accurate information – We are not lawyers. Before incorporating your business, especially in countries outside of yours, always consult with a qualified professional specialized in international laws & taxation.

Why Incorporate? 

Many new business owners and online sellers alike often ask if they should incorporate their business before selling online or do it once they are established and have capital. This all depends on what type of business you run, in our case, what products you’re importing. If you’re importing products of high-risk liability such as:

  • Electronics or Electrical Appliances
  • Toys & Baby products – and any products used by children ages 3-10
  • Supplements
  • Cosmetics & Beauty Products
  • Food & Drinks

These are all products that need certifications and in some cases lab testing done. If you’re importing as a Private Label(and not an established brand), a corporate structure will offer you an extra layer of protection. 

Furthermore, having your business incorporated has numerous advantages which are helpful especially later on when your business grows larger. Some of the benefits include:

Personal Asset Protection

It is very important early on to separate personal assets and business assets. Aside from the initial stage where you have to fund your business, you should immediately get a business account for your transaction. This is crucial not only because some banks won’t allow you to use your personal account for business, but more importantly, having your personal assets separate, will protect you in the unfortunate event your business is liable for damages.

A business corporate structure, such as a Limited Company, will protect your personal assets. This is the main reason what makes incorporation attractive.

Transferable Ownership

In the event of an exit, company shares or members can be transferred. Making it very easy and attractive if you want to sell your company in the future. This is true if you have a Corporation structure, where you own 51% or more of the company, shares can be easily sold or transferred to the new owner.

Tax Benefits

Depending on the structure and country of incorporation, you might find out that you owe less taxes than self-employed/sole proprietorship. This is due to numerous tax cuts and deductibles offered to business owners. If you qualify, your tax bill can be reduced greatly, as always, consult with a law firm specialized in business incorporation or your CPA on what tax cuts are available in your country or state.

Important: This shouldn’t be confused with tax evasion and it’s by no means condoned. Tax avoidance is allowed only in accordance with the tax laws of the country of incorporation. For this reason, if incorporating in a country different than the one you’re resident in, consult with the tax authorities before proceeding with incorporation. 

Separate Credit Rating

Your company will have it’s own credit rating and it won’t be affected if your personal credit score is not good. Keeping a good credit score for you business will give you a lot of benefits, these include:

  • Increased overdraft facilities
  • Higher Credit Card Limits
  • Bank Account Upgrades
  • Dedicated Financial Advisor(depends on the bank and account history)
  • Reduced or No Account Fees

Having a good history will make your company investor-friendly as investors or potential buyers want a company with few debts or liabilities. 

Retirement Plans and Payroll

Having your own company will allow you to create private retirement plans for you and your employees. Depending on the bank, business accounts have payroll management in their system. This will be very helpful if you plan on having employees or contractors.

Disadvantages of Incorporation

Unfortunately, while there are a lot of benefits to business incorporation, this comes with it cons. This is true to small business owners and people with limited capital. Some of the disadvantages are:

A Lot of Paperwork

Registering and maintaining a business comes with a ton of paperwork and filing. This can be very confusing if you’re new or if this is your first company. Each country has it’s own laws and if you’re selling globally, you have to comply with each country.

This can be quite overwhelming, but unfortunately it must be done. To make things easier, have your CPA or lawyer take care of your company filing – that way you have no risk of incurring fines.

Fees! Fees! Fees!

With tons of paperwork, comes tons of fees. Between registration fees, yearly licences, taxes and CPA fees; your outgoing expenses might increase. Maintaining a corporation can become expensive and shouldn’t be done without capital.

Limited companies are popular because the fees are lower and have less filing requirements than corporations. This is the structure that works best for new sellers and those in e-commerce in particular.

Liability Is Not Guaranteed

While incorporating your business may protect your personal assets, you may still be liable in some cases. Only a Corporation fully protects the personal assets of the shareholders. If you import products with high-liability, it’s best to consult with a lawyer on which structure is suitable.

USA Incorporation

There is a common misconception amongst people outside the USA that incorporating your business in the US is expensive and complicated. Furthermore, in some cases, if you’re importing in the US, you need to have a US company or subsidiary. Some dropshippers in the US will also refuse to work with you unless you have:

  • Reseller Licence
  • Employer Identification Number 

US LLC State Registration

It is recommended to start off with an LLC if you choose to incorporate. For US non-residents the 3 best states to incorporate are:

Delaware

Delaware State is the most popular place for foreigners who wish to incorporate in the US. However, Delaware is better suited for those wishing to form either an S-Corp or C-Corp.

  • State Filing Fee: $200
  • Certificate of Formation: $90
  • Annual Fees: $300 Alternative Entity Tax by June 1 + State Filing Fees $200 = $500

Nevada

Home to the popular Las Vegas, Nevada is one of the best states to file an LLC, with it’s very attractive tax rates and ease of filing. Besides the yearly fees, there are no other requirements to follow.

 

  • State Filing Fee: $75
  • Annual Fees: Business Licence $200 + Annual List $150 = $350

Wyoming

Wyoming is the cheapest state of the 3 for LLC costs. It offers all the benefits of states like Nevada and formation shouldn’t take longer than a few business days. Foreigners wishing to incorporate in Wyoming, must have a registered agent notifying the state in writing.

  • State Filing Fee: $100
  • Annual Fees: $100

In all three states you require a Registered Agent. A registered agent is a person or service that acts on your behalf in the state of incorporation. They would receive any letters/paperwork and notify you when paperwork and annual fees are due. Services normally start at around 49$/year and it’s required by law to have a representative in the state of incorporation.

Employer Identification Number

The EIN, is the tax identification for your business. This will be the number used to conduct business inside the US and for importing/exporting goods.

 If you’re a US resident or you’re a non-resident, wishing to get an EIN, the process is quite simple, and you can either get the EIN by applying online, phone or by mail. If you’re a US non-resident with a US LLC/Corporation, you will need a responsible party to get the EIN.

To get the EIN you need to fill out Form SS4 and send it to the IRS. Getting an EIN is very simple and fast – the whole process shouldn’t take more than 15-30 minutes and is free of charge.

Getting a Bank Account

If you’re not a US resident, this is the biggest issue you will face. It is extremely difficult and rare to get a US bank account(business or personal) without being physically present. In some cases, there are companies that offer the service of opening a bank account remotely, however, they are expensive. You can also consult with your CPA or lawyer and see if they can open an account for you.

To open a business account in the US, you need:

  • Passport
  • EIN & Company Registration Documents
  • Business Licence
  • Articles of Organization – This is a list of all the members in the company, you should get the documents when you register the company.
  • Operation Agreement

Keep in mind that every bank is different and requires different documentation. If you’re a non-resident, inquire beforehand on what documents are needed.

Virtual Address

You need an official business address, this is needed to receive company mail and to register for services & marketplaces. A virtual address will notify, forward and even scan your mail – There are numerous companies offering these services for as little as $90/year.

Phone Number

If you’re registering a US LLC as a United States Non-Resident, you need a US phone number. This is will be required by all businesses(including banks) and marketplaces you will deal with.

The easiest and best option is to simply get a Skype number, it is fairly cheap with low call rates. If you’re based in the US, it is recommended to get a business phone number. 

Conclusion

This has been a brief introduction on business incorporation. In the upcoming weeks we will explore Offshore Company Registration – including the best countries where you can incorporate, and business banking. Hopefully, after reading this guide, the incorporation process has become easier to understand.

If you want us to include a particular topic regarding business incorporation or if you have any questions on the subject, please leave a comment below.

All the best & Happy Selling,

Duncan

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

News and trends from the October 2016 exhibitions in China

I have made it a habit to give you an update on trends after every exhibition season in April & October within Hong Kong and China so I won’t break that habit this time 🙂

It has been a hectic 8 weeks for me. When I returned from Europe in September I flew straight to Hong Kong and had an extensive amount of work waiting for me. 

While the first few weeks were all about catching up with work after my holiday I was excited to go to the exhibitions in Hong Kong and China. Here are some of the exhibitions that I went to in October/November over the course of 4 weeks: 

Global Sources Electronics (phase 1)

HKTDC Electronics Fair

Global Sources Smart China Sourcing Summit – for Amazon and online sellers

Global Sources Electronics (phase 2, Mobile Electronics)

Global Sources Gifts & Home

Mega Show (Part 1)

Canton Fair Phase 2

HKTDC International Building and Hardware Fair

Mega Show (Part 2)

Canton Fair Phase 3

Without further ado here are some impressions from the last 8 weeks. 

Hong Kong is constantly at the Top 3 most expensive places to live in the world. Wonder how my apartment looks like in Hong Kong? 

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Yep, thats 8 square meter of pure space  

 

 

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At least there’s a rooftop with a view


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And not so bad to work with this view  🙂

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There’s also a co-working space downstairs. 

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Back at the office with one of my newest products.  Check it out if you are in need of a portable photo studio. 

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End of September I head to an Amazon seller and eCommerce meet up in Shenzhen, China, organized by my friends over at EnterChina

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Rico Ngoma serial Entrepreneur and partner of EnterChina drops knowledge

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working on new projects for ImportDojo on the rooftop

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back at the office with the team 

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another hike at the end of September. Remember to work out whenever you can 

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The exhibitions start! I head to the Global Sources Electronics show Phase 1. Make sure to get your free train ticket ticket with your buyers badge. 

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Global Sources hosts two electronic phases with different categories from 11-14th and 18th-21st. 

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Walking the aisles at the shows. Predominantly Smart Phone accessories on nearly every booth. 

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Sport & Action camera’s are evolving and it’s amazing what you get these days. 

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Video & WiFi glasses/camera’s seem to be the newest thing. Maybe not the newest but a lot of suppliers exhibit those. 

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Smartphone cases. 

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I found this product to be quite interesting 🙂 

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An actual AI (Artificial Intelligence) 

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This automatic car cover peeked my interest. 


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Gaming & video backpacks seem to be popular as well. 

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Virtual Reality getting bigger and more interesting in terms of developments. 

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Drone’s are definitely still popular but less than half the amount of booth’s than in April this year. 

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Global Sources held the first Drone Racing Championship this year at the event. I wasn’t there to witness but it looked pretty cool.


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I head to the HKTDC Electronics show. Make sure to pre-register (its free)

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Quite a lot of buyers on the first day. 

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You’ve got big brands from overseas

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and big local brands from China. 

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The HKTDC doesn’t focus on Smart Phone Accessories only but has regular household electronics as well. 

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Smart Home Automation has made big leaps and improvements in terms of apps and technology

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Not sure what these guys do. 

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It’s a beautiful day in Hong Kong and I am stuck at the expo 🙁


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It’s my birthday and I hike to the beach with a couple of people

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I am invited to speak at the Global Sources Amazon sellers summit again. I got to present my case study there as well in April. This time I talk about how to select the right supplier.

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I meet a few fellow ImportDojo members and familiar faces from online 🙂 This is Taye from Hong Kong.


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Chris McCabe delivers amazing value in regards to Amazon account suspension and prevention. 

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Chris Davey & Danny McMillan arrange a meet up that evening in central Hong Kong. Over 40 Amazon and eCommerce sellers come. 

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Discussing with Mike Michellini from Globalfromasia some strategies for our business. 

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I talk about supplier selection and how to verify suppliers in China when at exhibitions but also online. img_6586

In case you are wondering what some of the testing companies charge. 

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I walk the halls of the Global Sources home and gifts. 

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Lots of packaging suppliers there as well. 



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The first suppliers with Lightning earphones for the iPhone 7. I test them and they are horrible in quality 🙂

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Interesting design for a power bank. 



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Flexport talks about the recent Hanjin collapse and the forecast of the freight forwarding industry at the Sellers Summit

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In between all of this I become the Number 1 bestseller on Amazon with my French Press case study. Even if only for a few days I am happy because I sell between 100-200 pieces per day 🙂


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Danny McMillan and Currencies Direct organise a meet up in Central with Will Tjernlund at a “fireside” chat. Will talks about Wholesale strategies and amazes the crowd as usual 🙂

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The next day a Typhoon with a signal T8 (the second strongest) hits Hong Kong and everything closes. I plan on heading to the Megashow part 1 but have to delay that until the next day as public transport closes all together. 

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I eventually make it to the Megashow for a few hours before heading to Guangzhou for Canton Fair Phase 2

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Remember to book train tickets in advance as they are sold out days in advance. 
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I walk around Canton Fair for the day and take catalogues and snapshots of interesting items

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On the next day I head to Shenzhen to visit one of my suppliers. Some of them go the extra mile!


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I check the production and facilities. 

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Testing equipment within the factory. 

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My wife gets me a birthday gift 🙂

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back in Hong Kong I check out the “OBEY” exhibition thats running for a month. Very cool art!


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My friend organises a “junk boat trip”. You basically rent a boat that caters food and drinks all day and you drive out to some island 

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Ignore the couple that is making out 🙂

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I head to Canton Fair Phase 3 and check in at the Aloft. The value you get for 60US$ is amazing. 

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I walk around Phase 3 for a couple of hours and meet existing suppliers and try to find interesting products for my outdoor brand. 

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Office and stationery is also very present. 


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Chris Davey from FBA4U organises his 4th Amazon Seller meet up in Guangzhou. The crowd is huge. Make sure to join his Facebook group if you are looking to meet up during your trip. 

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I meet familiar faces and friends from all over the world 🙂

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On 7th November I head to Bangkok for a couple of weeks. I hear a lot about UBER Hong Kong has Tesla drivers. I give it a try and I actually find a Tesla for my airport ride. I had to try it 🙂 

Pheew! Lots of photos and stories to share. All in all I’d say I’ve met a lot of great people, made new friends, found new products and definitely had a good time the last weeks.

If you are planning on coming to China I highly recommend you do.

In the coming weeks I’ve got a lot of news and amazing content coming for you. I am starting a new blog-series here on ImportDojo focusing on building a brand and how to drive traffic to your Amazon listing.

Furthermore we are going to show you how you can build a business outside Amazon, so stay tuned!

All the best and happy sourcing,

Manuel

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

7 weeks case study update – I am out of stock

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

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

How did this happen? 

If you re-call 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!!!

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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/

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

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:

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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/

Global Sources – The oldest (and most professional) supplier directory in China

So I previously posted about Alibaba hacks and how to navigate on there. 

I thought I’ll give you guys also an overview of Global Sources which from my point of view is more professional and has stricter guidelines when it comes to verifying suppliers. 

 

They also have a ton of valuable resources and information on their website. Check out the video and let me know if you have any questions. Enjoy 🙂 

Chinese Sellers on Amazon? Don’t worry (for now)

So I am pretty sure everyone read the news that Amazon is helping Chinese factories to get their brands listed on Amazon. It’s actually old news as the Amazon team has been on the grounds in China for a few years now.
Everyone is worried now which is understandable. One thing they definitely have advantage in is the price, but let me explain why that doesn’t matter.
Let me take off some of your worries right now and explain why this will not impact your Amazon business in a short time period and how you can prepare to be ahead of the Chinese sellers.

Minimum Order Quantities (MOQ’s)
Most factories have high MOQ’s and thats often because they need to purchase a certain amount of raw material from their sub-supplier. To do so they need orders. Bringing me to the next and most important topic, taking risks.

Taking Risks
Many factories won’t take the risk of producing for their own stock and try to sell it trough some sort of sales-channel. They do in some cases, but these items are mostly found on Chinese websites and Aliexpress or DHGate.com
When they sell on these sites, the packaging you get is probably in Chinese, as is the instruction manual.
A factory does not produce on their own risk and try to sell it somewhere. They always need a customer behind an order. Be it a large retailer, a small time buyer from the Philippines or the occasional Amazon buyer.
They don’t have stock of the necessary raw material or packaging because the longer they store it, it will get smudged, dirty and might not be possible to sell it anymore. I know this because I have been to 100’s of factories in my time in China here.
When you go to a factory you won’t find their own packaging or raw material on stock. They ALWAYS purchase the material once they have an order incoming.

It’s just not economical for the factory to purchase raw material on their own behalf. Margins are so low these days, they need to maintain cash flow for their customers. Sometimes they have some stock but that’s probably from a over-production or from a client who didn’t take the entire quantity. Sure some factories have good cash flow, design & marketing departments and they will sell on Amazon. Those are the ones that you can see now already. But they do not posses the knowledge on how to SUCCESSFULLY sell on Amazon (yet). I don’t know anyone in China who has taken a course on Amazon selling or listening to podcasts on how to be successful on Amazon. And most factories in China just won’t take the risk of investing money into their own product to sell it online overseas.

It is not within the Chinese culture that you take a risk for something that you don’t know is going to pay off. Chinese won’t create a listing on AMZ without knowing that their product will sell.
They always go after the sure thing (there are exceptions of course).

Quality standards
When a factory develops a new item and they get their first order for it it is likely a “naked” item with no standard whatsoever. The factory needs to rely on each customer’s input on what the customers needs in terms of quality.
A small importer in Thailand has completely different quality requirements than a large German retailer. The importer in Thailand may require nothing, while the retailer in Germany has all sorts of requirements that involves large investments on the suppliers side. Who do you think the supplier will rather want to work with? Exacly, the Thai importer. Because his quality requirements are low and not much effort is needed to sell the product. So many factories do not have the necessary quality standard on new products. Amazon is heavily investigating into products that do not meet current American quality standards and if your product does not comply it gets removed. There are of course established factories who have meet all necessary quality standards but they are likely comfortable selling to their existing customers.

Certification & Requirements
I often hear from suppliers when I ask for a certification of a certain product: “you don’t need that, other customers don’t ask and we don’t have it”.
Well excuse me but I will decide what my market and selling channel needs in terms of quality & certification. Amazon is cracking down on many sellers who don’t have proper certification for their product or in most cases they won’t even allow sellers to list products without certain certifications or test reports. After all Amazon cannot afford to be sued by a customer who for example bought a plastic product that comes in touch with the skin and now the clients has a rash because the plastic is made out of waste material and has high toxins and chemicals in it.

Innovative and trendy
I have yet to walk into a showroom of a factory and see something new apart from the occasional exception at an established factory with retailers or customers in the West. That is after living and working here for over 10 years. There are of course suppliers that develop their own products but in many cases they miss the product to market fit. They always rely on the input of a customer on how a design of a product or the functionality has to be. I read a report a few weeks ago that quoted Former Hewlett-Packard CEO Carly Fiorina:

“I have been doing business in China for decades, and I will tell you that yeah, the Chinese can take a test, but what they can’t do is innovate,” she said. “They are not terribly imaginative. They’re not entrepreneurial, they don’t innovate, that is why they are stealing our intellectual property.”She added teaching innovation, risk-taking, and imagination “are things that are distinctly American and we can’t lose them.”

The quote caused some outrage around China but the majority of Chinese people actually agreed with Carly Florina and posted on Chinese forums like Weibo (largest forum in China). Saying they need to be more innovative and take more risks sometimes. They weren’t offended and I think she didn’t want to offend them, but she did point out the weakness where they have to improve. And that cements my earlier statement “ taking risks” is simply not in their nature.

Customer Service
I doubt that Chinese sellers can manage the customer service from China. They would need to hire perfect English speakers and dispatch them completely to their Amazon business.
I can tell you that if I ask my suppliers to do so they will probably ignore me. It is considered an investment “not worth it”. At least as of today.

Marketing Strategies
It is very unlikely that a factory knows much about launching and promoting a product trough blogs, landing pages, Facebook promotions (Facebook is banned in China), review groups and so on that many of you have paid good $ amounts to learn.
But these are the channels that a new product needs when it launches or when it needs to grow. Otherwise your product just drowns amongst the competition and never lifts off to be in the top sellers.

Price Point
Yes, they do have advantage over the price. But that is not the key issue when you sell on Amazon. When a supplier quotes you a price of 5$ his own profit will probably be less than a $. And that doesn’t really give him an edge, because YOU (the experienced AMZ seller) has years of experience, PPC knowledge, Facebook followers, mailing lists, existing products with reviews & social proof etc. that the customer is willing to pay for when making a buying decision.

Legal Issues & Company Setup
It is not very easy to set up a company in the States for a Chinese company. To be really successful on Amazon you need a private label, have a trademark registered and a company set up.
Not many sellers from overseas will go trough this process.

Facebook pages
Facebook is banned in China. Sure they can get a VPN connection and go on Facebook but who are they going to promote to?
Build a Facebook audience with zero friends and followers? That is going to take a long time. Are they going to post on Facebook groups like The Amazing Seller or ImporDojo to post their products?
No. The last time a chinese seller promoted his product in my group I banned him. Not because his product wasn’t interesting or I don’t allow it but the way he did was pure spamming. Joined the group, no interaction at all, no feedback to other group members, simply wanting to promote his product to the group members without providing any real value to the group. So you can take one of the most important promotional tools for your new product (Facebook) already out of the equation.

Branding & Packaging
When I set up my own company (www.mandarin-gear.com) in late 2013 I had one goal. Affordable products at a great quality with excellent packaging.
What Chinese lack at this moment is an eye for design and western preferences when it comes to packaging. They also do not have properly translated instruction manuals on their own.
Sometimes they use their customers proof-read instruction manual when they sell to other customers but for new items they don’t have anything. Imagine what Amazon customers think when they open the box and can’t understand half of what’s written in there? How do you think that will affect the review? That’s why, whenever you buy a product in China always try to have a proper instruction manual. Check out my other post on this: https://importdojo.com/private-labels-packaging-differences/

English language barrier
Have you ever been on a Chinese website with English version? Yes? So you have seen the horrible grammar mistakes. This won’t change when Chinese sellers list on Amazon. Yes, they can now list their products trough a Chinese Seller Central account and it’s all in Chinese but that doesn’t change the fact that you need proper keywords and wording with excellent grammar when you want to list & sell your product successfully.
Suppliers simply wont be investing their money into proper English translation because they don’t believe in going the extra mile without knowing they will make a profit; so their listings will look horrible.
Would you buy a product when you don’t understand half of the text or description?

But they already sell successfully on Ebay and provide free shipping?
Yes, the Chinese sellers have taken on Ebay a few years ago and some are very successful. But only successful in terms of their sales and because the Chinese Government heavily subsizdes freight costs from China (China Mail).
I would say 20-30% of the items sold on Ebay from Chinese sellers are returned or the customers are unhappy with their purchase because of the quality of the product.

You can’t refund the item to the seller, you won’t send the item back to China, will you?
And even if you can, are you going to leave a positive review?
Amazon doesn’t work like that and everyone has to pay the local shpping costs in the US. So while the Chinese seller can send in his product at a cheap rate he still has to pay the local freight costs. And what stops you from getting good shipping rates from China? Most suppliers will offer you the same rates they get when sending goods overseas.
Also you can’t just list everything you want (there are restricted categories and legal compliances to be met) and whenever there are returns the clients will leave a negative review.

Amazon won’t hesitate to ban the sellers account immediately if the return rates are as high as 20-30%. Amazon has a strict policy when it comes to customers satisfaction and the way I see it not many Chinese factories can comply with their “basic” product on Amazon without having input from overseas buyers on how to improve the product.

Now having said all that, there are suppliers out there who already sell on Amazon and there will very likely be more in the near future who are capable of all the above especially with the help that Amazon is doing in China now.

But those are are only a few and “we” all have a headstart, the understanding of the marketing, promotional strategy and how the Amazon machine works best.

Eventually Chinese factories will figure all these things out but I am giving this at least 5 years. Essentially what is happening now (or has been happening in the last 2 years) is that a retail giant (Amazon) is trying to teach an entire army of manufacturers why they should sell on Amazon. This is a tremendous project and will take some time. In 5 years, survival of the fittest will have set in so now is the time to step up your game and be among those survivors. One of the most important tasks ahead of you now is to master the import trade so you can compete not only in marketing & sales on Amazon but also price wise.

So here are some important steps for you to remember:

  • Improve your product quality based on reviews
  • Pay a little more for better quality and regulations-compliant products
  • Develop your own products and packagings and make them exclusive for you on Amazon
  • Build or grow your brand with cross product selling and larger assortments
  • Build or grow your audience (Facebook, mailing lists etc.) and be ahead of the Chinese competition
  • Build relationships with suppliers for the long term and become one of their largest customers so that they don’t have to sell on Amazon themselves

And most importantly: Learn the import/export trade from the inside out
What else can you do? Step up your import knowledge and learn the entire import/export business from the inside out so that you not only have advantage over the Amazon marketing & sales process but also know as much about importing/exporting as the Chinese do.
Check out ImportDojo’s Masterclass, teaching you the in’s and out’s of sourcing from China here:
https://importdojo.com/importdojo-masterclass/

Happy sourcing 🙂

Podcast Interview with SellerDojo

I recently got interviewed by SellerDojo and I wanted to let you guys listen in on the (49mins) episode.

SellerDojo are the guys behind AMZshark and they have just started this podcast. I was honoured to be the first one they interview for their podcast. Here is the link to the podcast directly:

http://sellerdojo.libsyn.com/interviewing-manuel-from-importdojo-on-sourcing-products-from-china

If you don’t have time to listen all the way through, just browse the show outline below to find which spot to listen.

Begin Show Notes: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

In this episode the SellerDojo meets ImportDojo and we have a party talking about ninja tips for sourcing from China. Manuel, the ImportDojo Sensei, has been living and working in China for over 10 years, with 17 years in the sourcing business. He has his own brand, sells to retailers, is a supplier, and does FBA on Amazon. Enjoy this episode as we talk about everything from Alibaba tricks, demystifying electronics, and the Canton Fair.

Show Outline:

Opening & Manuel Introduction, his history in working with suppliers for Austria’s largest retailers. And his internship in the Hong Kong sourcing office.

  • 3:35 – What did you learn and what sparked your interest to get into your own Amazon and sourcing business?
  • 4:35 – About Manuel’s brand, Mandarin Gear and also Import Dojo.
  • 8:05 – What advice do you wish someone had told you when you first began sourcing from China?
  • 10:20 – What types of products do you source? Because I know many people avoid things like electronics or moving parts, but I see that you don’t shy away from them? Why is that?
  • 13:25 – Manuals ninja rule of thumb: nothing lower than 30% margin (after fees etc)
  • 14:00 – What category would you go into if you were just beginning?
  • 14:30 – What sourcing sites do you recommend for importing from China?
  • 18:15 – What is Global Sources and how is it different?
  • 20:05 – Tips for paying suppliers in China. Small orders and big orders etc. Paypal, trade assurance, and inspections.
  • 22:25 – Sourcing certain product categories based on their location and Province in China. How to use Alibaba’s search filters to determine and find the right suppliers in the right location.
  • 24:30 – The 3 reasons it’s important to find a supplier in the correct Province.
  • 25:45 – What are the biggest mistakes you’ve ever made in sourcing and selling?
  • 27:30 – How should buyers navigate the many parts of the long negotiation? What about large sample fees? Or transaction fees?
  • 28:45 – How to get a refund / reimbursement on sample costs from your supplier.
  • 29:15 – Why there are sometimes large transaction fees, especially with PayPal.
  • 30:30 – How to ask your supplier to refund sample fees once you place a larger order.
  • 31:20 – When first vetting suppliers, what essential questions do you ask every time? And which ones are deal breakers?
  • 33:45 – Once you’re happy with your samples, then let’s talk about customs, freight forwarding, how to get your inventory, do you send to yourself, or to FBA? What’s the process?
  • 35:00 – Manuel’s rule of thumb for calculating landing price to FBA warehouse. Tips for shipping directly to FBA.
  • 37:30 – Pretend you are starting over tomorrow. What niches do you think look most promising? What do you wish you were in now?
  • 38:50 – The niche Manuel thinks is really promising in the future.
  • 40:45 – All about China’s giant expos, Canton fair, and other niche fairs in order to find trends and new products.
  • 43:20 – What’s an interesting trend that you’ve noticed from within the supplier industry in China that most people outside don’t know about?
  • 46:40 – What’s one weird lifestyle habit / skill you’ve gained which you think helps you as an entrepreneur?

Hope you enjoy this podcast and would love to hear your feedback in the comment section below.

Please share on social media if you have the chance 🙂

All the best and happy sourcing,

Manuel

ImportDojo

Contact Info

18/F., Blk. B, Tung Luen Ind. Bldg. 1 Yip Shing St., Kwai Chung, Hong Kong

mail@importdojo.com

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