What is going on in China right now – Part 2

In November last year I shared a blog post from the sourcing and manufacturing side in China. There were shortages on packaging material and many price increases across all suppliers in China.

To read about this blog post check it out here: https://importdojo.com/what-is-going-on-in-china-right-now/

Today me and my partners in our Sourcing Company (https://importdojo.com/sourcing/) wanted to give you an update on the market situation in China.

The world is changing. In the past 6 months we have been through ups and downs of currency, raw material and labour cost fluctuation. Also the political landscape does not prove to be as stable and solid as it was considered to be in the end of 2016. With the US taking a turn away from China the economies in Asia are looking at a changed customer landscape and an insecure future.

This newsletter will help you gain a bit more insight in what is happening on this side of the world.

What is going on in Asia?

As we enter Q2 2017, global demand for goods produced in low cost sourcing destination looked positive, with growing exporters such as Bangladesh, Vietnam, India and Indonesia all seeing big growth in exports and foreign investment. Some shifting of exports and trade allegiance was evident due to the U.S./Trump policy. It is very important to note, that alternatives to China are quickly developing in countries like Vietnam, India, Bangladesh and Thailand. These countries are taking a fair share of what is rightfully theirs. Especially the economic growth and the growth in export from Vietnam is remarkable, with a 15% increase compared to the last years first quarter.

So the small countries are on the fast lane while good old China keeps doing, what they do best. And let us be realistic, there is still no feasible alternative to China in terms of infrastructure, automation and efficiency.

It is also remarkable to see that based on China National Bureau of Statistics (NBS) data, the average monthly wage of migrant workers (who tend to work in China’s manufacturing sector) increased by 6.6% to 3,275 yuan in 2016, which is almost comparable to the average income of an eastern European worker in countries like Romania, Bulgaria or Hungary. 

What about the money?

Well, not much to say here. Since the USD/CNY exchange rate adjusted to its new level, the Euro zone is suffering whereas the USD zone is happily jumping around about their favourable purchasing prices.

The lush movement in the currency gave a bit of stability to the trading environment and is not expected to change unless the US politics dramatically change the course of the country.

Now what is going on with the raw materials? If production volume in China is going down then we probably have good cards to buy cheap raw material because the government wants to drive the economy.

Unfortunately the answer to that is a clear NO. Some analysts are predicting that oil prices will increase by up to 20% by late 2017, with ongoing conflict in the Middle-East and attempts by OPEC countries to limit supply. Natural fibers such as cotton and wool have trended up, reflecting stronger consumer demand and healthier global economic conditions.

Natural rubber prices increased through Q1, steadying off into Q2 as Asian buyers slowed down on purchasing. Prices are expected to increase, through 2017 based on expectations of a global economic recovery and a reduction in supply from rubber major producers. Metal prices will follow this trend. Cotton prices were strong through Q1 and into Q2, a trend which some analysts do not expect to continue through 2017. According to the International Cotton Advisory Council (ICAC), cotton stock-piles will reduce due to solid production, growth in global consumption and demand for exports.

Fine wool prices followed a similar trend to cotton, breaking a 29 year high in March, based on demand for better quality wool from Chinese mills. Unlike cotton or synthetic fibers, wool only comprises 1.5% of global fiber consumption and as a premium product, the price is really an indicator of consumer demand.

China is not a department store

On a last note I wanted to share some of our findings over the course of working with private label sellers. Many private label sellers believe that when they purchase something in China, the factories are just waiting for them to place a 500 pieces order with many changes, packaging requirements, additional features AND the lowest price.

Unfortunately this is not the case. China is not a department store where you can simply walk in and purchase something within a day and expect it to be delivered within 2 weeks. There is a lot to it. Supplier relationships, years of doing business together, production lead times, raw material purchase, packaging print and much more.

While some factories do adapt to the new eCommerce world with smaller quantities, many factories actually still have 90% of their turnover coming from large retailers, importers or wholesalers. We as Amazon/eCommerce sellers are small fish for most factories and while the trend is going into eCommerce rather than actual retail there is still a long way to go.

So you can’t expect to get the same price, priority handling or delivery time as a Walmart or HomeDepot. These guys buy hundreds of thousands of units per month, therefore they get the best price and are put in front of the production queue. Often you don’t have a chance against these retailers if they are also selling on Amazon. So the only way you can distinguish yourself is trough customer service, packaging and additional services.

I’ve also noticed that buyers are expecting drastic price decreases like 30-40% if they increase the order quantity say from 1,000 to 2,000 units. This is very unlikely unless you increase from 1,000 to 40,000 or 50,000 units. Price decreases when doubling the quantity usually results in 3% to maximum 6%. Most factories are laid out to produce 10-30,000 units of a single product in a day. Yes, believe me 🙂 So when a buyer comes with a 500 unit order it is certainly appreciated but it means that they have to squeeze in your order somewhere, negotiate low raw material purchase with their sub supplier etc. which is more of a hassle than profit for them.

Don’t try to squeeze every little cent out of a product when you negotiate. Let them have their profits so that they can continue to run their factory. Because what is it worth if you get the lowest price but then the supplier goes bankrupt or doesn’t help you in case you are facing quality problems. Live and let live.

Having said all that, with the right approach towards a supplier you can get your way around things. There are many suppliers who specialise on small order quantities or eCommerce sellers in general. Speak to your supplier in your initial inquiry if he is willing to work on your MOQ, prices etc. If you have the feeling they are hesitant move on to the next supplier. There’s nothing worse than making a deposit of 30% on your order and the supplier afterwards struggles to keep the prices or delivery terms and eventually not really motivated to produce according to your requirements.

Update on Import Dojo Sourcing Service

If you need help sourcing you are in the right place. We have recently celebrated our 1,000th customer and are growing together with the demand for know how and for the need of „eyes on the ground“. Our placed orders have generated a turnover of around 1.4 Mio USD with a steady customer base of around 250 customers. Together with this growth we could see that there is the need to adjust our service and pricing structure slightly.

With our 6 person strong sourcing team based in Hong Kong we want to provide the best possible service to our customers and we believe that the adjustment of our conditions and how our service is put together will help our customers be more effective, more cost efficient and more successful.

With our new concept we have less variety and are more focused on your needs. We are introducing the quick and easy Basic Sourcing for 99 USD, which delivers a quick supplier offer for an item within 5 – 7 working days to evaluate if your project is workable. In addition to that we have decided to provide at least 3 offers and supplier contacts with the standard sourcing request.

We have also decreased our photography prices by 25% and we can deliver 2 reference sourcing results if you decided to do sourcing and development with us for your price comparison and back up.

What is actually changing?

  1. Introducing our BASIC sourcing request for 99 USD – Delivering one supplier offer and their contact in 5-7 working days for quick reference.
  2. Extending service of STANDARD sourcing request starting from 169 USD – Delivering three supplier offers and their contact in 7-9 working days to you for a well established project base. 

Our service starts at 169 USD for one item, 299 USD for two items and additional 100 USD for every additional item. We are reducing complexity and increasing efficiency.

Decreasing photography costs

Reducing white background shots from 69 USD per picture to 49 USD per picture since we want to provide this service as a roundup for our customers.

We also adjust our full service pricing and keep splitting it to reorders and new orders. All other services will remain the same as before.

For those who believe our previous pricing is a better fit for them, you can still come to us and place your orders until 31/7/2017 with the coupon code #lastcall. If you present this in your email or in the flat-rate submission, we will be happy to handle your order with our old price logic even if we believe our new one is more beneficial to you. Please remember that all coupon codes are only applicable on flat rates. 

As always, it is a pleasure serving you and we are looking forward to the second half of 2017!

All the best,

Manuel & ImportDojo Sourcing team

How to deal with price increases from Chinese suppliers

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

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

So you received an email from your supplier that prices have to be increased because the Chinese Yuan (RMB) is being appreciated, his labor costs have risen or some other reason.

Never accept any price increase blindly. Let’s first analyze the situation:

  • Has he increased the price within the last year? If yes, how often?
  • Has he stated on his last quotation the validity of the price?
  • What are the reasons he wants to increase prices?

Here are common reasons for price increases:

  • Labor costs need to be increased
  • Raw material costs have increased
  • Chinese Renminbi (YUAN) has appreciated against the USD
  • Purchase of machinery to upgrade the factory

Lets go through them one by one and see how you could avoid the increase or find an acceptable solution between the both of you. I also want to give you background on each so that you can understand these reasons.

Labor costs need to be increased:

When I moved to Hong Kong in 2005 the average salary of a worker was around 250USD per month. Yes, that’s right, per month!! Nowadays a worker in the production line can get up to 1000USD or sometimes more. Some of the workers earn more than the staff in the office. Factories need to pay a high salary to workers because it’s so difficult to find them.

Yes, China has over 1.3 billion people but not everyone wants to stand in a workshop or production line doing rudimentary work. Education has improved a great deal since the early 2000’s and people want to work in offices rather than on production lines. So factories have to reach out to far provinces to hire workers. Costs automatically rise in that process. I have been told that some factories rent a bus and drive to far away provinces actively hiring workers to bring them back to the factory that same day on the bus.

What can you do in that case? Honestly not much. But if a supplier keeps increasing prices because of labor costs you might want to look for another supplier who has more machinery or automated processes that require less workmanship. This can actually be more expensive (because of the investment for machinery) but you should have more stability on prices in the future.

Raw material costs have increased:

This requires a little research but if a supplier uses this reason for price increases you can quickly find out if he is lying.

Go onto websites like the following and research the price index on your product’s main material:

http://www.meps.co.uk/raw%20material%20index.html

http://www.indexmundi.com/

Unfortunately, there is not much free information on the Internet; you have to pay for most services if you want real accurate data. You can also check out your local stock or commodity market online and see if you can get free data. Once you find your product’s raw material price check the development over the last few months or even years.

Compare it with the orders that you made to your supplier at the specific price drops or increases. If for example you ordered your item before at a lower raw material price than now, you can use this information to negotiate with your supplier.

I often find that suppliers use this excuse of raw material price to increase their profit margin. When you have data that backs that the raw material price has perhaps even decreased since your last purchase, let the supplier know and share the link or information that you found. Demand the same or an even lower price than what you are paying now.

If raw material really has increased then you might want to check by how much. If the supplier’s price increase does not match the actual raw material price increase, let him know and demand a lower price increase.

Chinese Renminbi (YUAN /RMB) has appreciated against the USD

The Chinese Yuan has risen over 60% since its revaluation in 2005 (when it was pegged against the USD). It has been undervalued for a long time but that has changed since the economic reforms under Deng Xiaoping. Since China opened to the rest of the world and became the world’s factory the Yuan has risen a great deal.

Many factories increase prices once the Yuan gets appreciated against the USD.

If the Yuan gets appreciated against the USD it is usually in the news and you should hear about it. You can also check official USD/RMB exchange rates to verify this claim.

Not much you can do here either, except perhaps asking for one more order with the last price before you accept the new price.

Purchase of machinery to upgrade the factory

This usually doesn’t happen very often, but when the factory claims there is machinery to buy to upgrade the factory it’s actually a good thing for you. It will lower the labor costs over time and you should have a stable price for a while. Ask your supplier to explain the type of machinery he is buying and how you can benefit from it in the future. Let him give you a guarantee or confirmation that this will benefit your price in the future.

Advanced negotiation

Validity of prices

Always ask your supplier to give you a validity of the quoted price. A common time frame should be 90 days, sometimes more sometimes less. In any case, ask your supplier for a validity of 180 days (6 months). It might take you a long time to decide to order this product for various reasons.

If you get back to the supplier after a while and you haven’t confirmed validity he might increase the price. That can put you in a difficult spot if you gave the quoted price to your customer. You might have to re-offer to your customer and that’s never good.

Big retailers usually have 1 year or even longer terms with suppliers. They can do that because the suppliers know that the quantities will be large and retailers often take a long time to decide because of their decision chain/process.

How to avoid or battle a price increase:

Short term:

  • Insist on the last order price for this order. Tell him you are about to give him a re-order.
  • Look into raw material price sheets. There are free sources on the Internet. You don’t even need to be updated all the time, but simply look at a price curve of the main material of your product for the last few months.

Has the price dropped or risen significantly? Did the supplier claim that the “xxxy” material has sharply risen? Check it out before you trust him.

Long term:

  • Put measurements in place such as contracts or buying terms to which the supplier has to agree before you do business. Set up your own buying terms with, for example, a minimum validity of prices in all offers.
  • Ask for bonus payments or agreements. If you know that you will be reordering from this factory, make a written agreement that you will receive a discount of a certain percentage from the next order based on your previous year.

Bonus payments:

It is getting more common to agree on bonus payments these days. It works the same way as back home with your local supplier. You agree on certain delivery terms, merchandising payment, back-payments and bonuses if a certain turnover is reached per year.

This usually only works with suppliers that you already work with. But you can certainly try it on any supplier. Even if you get a few hundred USD discount or bonus payment it’s definitely worth it!

You could set the following simple bonus payments with your supplier:

Turnover Goal 2017: xxxxx USD

If reached, bonus payment of 5% (for example) to be discounted from the next order.

For every xxxx USD above this amount a further 1% (for example) to a maximum of X% applies.

Send this agreement to your supplier. You can obviously work out a more detailed agreement but this is a simple illustration on how it could look. In any case I am sure there is some bonus or discount that can be arranged on future orders. 

The best option would be a direct bank transfer of the bonus at the year’s end but most suppliers will only agree on a discount deducted from any future order.

Other ways:

How to negotiate a good price with a low order quantity:

It is quite common that the supplier will send you a price based on a certain order quantity. Say 10USD for a quantity of 1,000 pieces. Sometimes suppliers will give you 2-3 different prices for different quantities. If you are planning to order an item, you should have a general idea of how to negotiate when you ask your supplier for a quote. 

DOUBLE (2,000) or even TRIPLE (3,000) this expected order quantity when asking for a price. It’s a tactic I use to see what the price range can be. If I actually order this item later at the quoted price but I am below the requested MOQ of the supplier I will pledge with the supplier to keep the price so that we can get started.

I will also mention that it will be a trial order and if everything goes well I will order the initial MOQ that the price was based on.

Perhaps the supplier will not give you the price based on your 1,000 pieces but he will give you the price based on 2,000 pieces to show his support.

This works in most cases. A supplier always will want to support you because they need to feed their factories with orders, even if they t make less profit, just to keep production running and to be cost effective.

Ask for a mixed calculation:

Say you buy 4 items from the same supplier and there is one item out of your assortment that is really price sensitive but the other 3 items are not.

Ask your supplier to keep the price on the price sensitive item the same (or decreased) and allow him to increase the other items at the same time (up to the maximum of the original price increase).

This way you can still offer the price sensitive item at the same price to your customers and lose only a little bit of profit on your higher margin items.

Advanced raw material purchase:

Many suppliers like to increase the price on your re-order. Let him know that you have an order coming up and that he should purchase raw material now at the lowest prices and that you want to have a better price than the previous order. He may want a written order confirmation for that so that he can purchase raw material on your behalf. Other suppliers offer on hand (or not)

If you have other suppliers’ offers on hand that are cheaper than the same item from your current supplier then tell your supplier and demand at least the same price. If you don’t have another offer on hand you could also pretend that you have an offer that is (say 10%) cheaper. Some suppliers may ask who it is from or if they can see it, but you don’t necessarily have to send it to him.

If you do have an offer from another supplier I would actually send it to my current supplier and ask him to lower the price.

How I got 7 suppliers to pay my buyer 100,000USD in bonus payments 

I had a buyer for Christmas items flying in from Austria pre-order season. We arranged to meet up with 9 suppliers over 2 days in our office in Hong Kong. I asked the suppliers to come in and meet with us to discuss the upcoming orders and next season items. The suppliers were happy to come and meet us because we usually would place orders in excess of 100,000USD to each of them per year.

We started off each meeting the same way. We told them we would be selecting new items and then we would tell the supplier how happy we were with the previous season and that we wanted to enlarge business this year. This got them in a happy mood. We selected a few new items to add to the assortment with each supplier. Eventually my buyer sat back and I started to talk about newly introduced bonus payments to each supplier. 

We wanted 10% of the last year’s order amount in bonus payments to be deducted from the next order. I also prepared an agreement to fix the payments right there and then with the supplier’s signature. We sat a long time with each supplier explaining the difficult economic situation, the EUR/USD exchange rate and how this all made it difficult for the buyer to succeed in his business. 

We needed the supplier’s support, there and then or else there might not be any increased orders. (You can always use other reasons, such as economic situations in your country, etc.) Two suppliers wouldn’t pay anything but we ended the 2 days of negotiation with over 100,000USD in bonus payments (some suppliers had orders of over 300,000USD from us). This was a lot more than we expected. 

How did I do that?

Initially the suppliers were reluctant. Since I wasn’t the actual buyer but the product manager it sure was a good thing the buyer was there. This way the supplier saw the buyer and had no way of wriggling himself out easily. Chinese do not want to lose face in front of their customers. They often promise the “best prices / best services,” etc., and it was time to prove they meant what they said. If you continually insist on a bonus and financial support they will eventually give in, because they want your future business and they don’t want to upset you.

In your case, since you will be the buyer, you see the importance of coming to China to negotiate your deals. A negotiation like this is highly unlikely to succeed via a phone call or an email. You don’t need to have an office here. You can hold meetings and negotiations in your hotel or at the factory. 

Even if your quantities or order value are not as big as the example above you still have an edge. Even the smallest discounts on your next orders could cover the airfare ticket you bought to get to China. Not to mention the suppliers you met on other days to source for new ideas. It will definitely be worth it.

Before you go into a negotiation with a supplier, plan ahead with a clear strategy similar to the one described above.

I do hope that this blog post helped you in some ways to get leverage when negotiating with your suppliers.

If you enjoyed the blog post, please share or comment below 🙂

IMPORTDOJO GIVEAWAY VALUED AT 997$!!

Now, before I let you off, we are currently running a Prime Deal giveaway here at ImportDojo. You have the chance to win 1 lifetime membership worth over 997US$! For more information click on the link below and sign up 🙂

https://importdojo.lpages.co/import-dojo-giveaway/

All the best and happy sourcing,

Manuel

2017 Seller Summit in Florida recap & trip report (got to meet the President of Nepal)

Hey folks,

So I just finished speaking at (and listen to other speakers) at the Sellerssummit in Florida, Fort Lauderdale. 

I was invited to speak about importing from China or to be more exact how to find the right supplier in China. 

Steve Chou, the host of the mywifequitherjob.com podcast and organizer of the event had invited me to speak and while it would be such a long trip I decided to go because I knew I’d learn a ton and meet amazing people. 

Before I get into the key takeaways from the Sellerssummit for me I wanted to share a few impressions with you from a personal side. 

This was a long trip for me – I took off on a Saturday morning and arrived on Sunday evening +12hours time difference so in total the trip was over 36 hours. 

That is also because I stopped in Sri Lanka to hang out in Colombo for a few hours before heading to Abu Dhabi, New York and finally Miami. 

Why was this such a long trip? Well to be honest with you I prefer laying flat and since I don’t want to pay for business class I used a lot of miles. 

Why do I fly business class? Not many people know this but I am extremely scared of flying and being in cramped spaces. 

When I mean extremely scared I mean the slightest turbulence or bump in flight would send my heart rate to 180bpm for half an hour. 

This “fear” all began in 2005 when I flew from Hong Kong to Germany and my plane had to land for an emergency landing in Kathmandu, Nepal because of severe turbulence. 

Since then I hate (or am scared) of flying and sitting in business class, having more space (I am also quite tall – 6’2) relaxes me and somewhat eases my fear. 

You would think that flying at least twice a month for the past 12 years would get me over that fear but it doesn’t. 

So anyway, I was prepared to take a long trip as long as I can relax. And some people might think flying business class is crazy expensive when it’s actually not. 

If you look long enough in advance, make use of mileage and credit card programs you spend less in business as in economy. I usually pay less or the same for my ticket than those in economy. 

So I ended up spending over 120,000 miles but only 260$ in taxes and fees for my return trip flight. Which also meant I had to hop onto 4 different planes to get to Miami. 

Call me crazy but I’d do that every time as opposed to a direct 14 hour flight in a cramped space. 

So anyway, I left Bangkok on Saturday morning on a 3 hour flight to Srilanka and was checking out a few sites in Colombo sine my stopover was 10 hours. 

I had quite a surprise at the start of the trip when I learned that the President of Nepal was sitting one row in front of me. There was tight security on the plane but I was able to shake the hand of the President of Nepal 🙂 

The president of Nepal

I just wasn’t allowed to take any photo with her so I snapped a few from my seat. 

I went to the Galle Face hotel in Colombo after I landed in Sri Lanka and was having lunch there, working a bit and enjoying the view from the terrace of the hotel. 

Arriving in Colombo, Sri Lanka

Tuk Tuk’s everywhere

The Galle Face hotel in Colombo

My flight was bound to leave at 10PM so I made my way to the airport around 7, worked a bit more and chilled before boarding the flight to Abu Dhabi. 

I boarded the 4 hour flight and slept the entire way. I then had a 4 hour layover and transit in Abu Dhabi before boarding for my flight to JFK. This was a 14 hour flight and I was really glad (& excited) because for this flight Etihad uses their A380 plane. 

I did meticioulus research before booking this flight and made sure that I get to try their “business class studio” again which is by far the best business class in the skies.

Lots of space for the 14 hour flight.

Their A380 even has a bar in the middle of the plane. 

The bar on the A380 to New York

So I took a few snaps, had some wine and slept for the next 7.5 hours. I think I’ve never slept that long on a plane. 

Looking “fresh” after 7.5 hours of sleep 😀 (not)

Arrived in New York JFK on Sunday early morning and made my way to the another terminal for my final flight to Miami. I didn’t do much in Miami for my days there as I was mostly working in the hotel and walking around in the area. 

I had a webinar with Augustas Klygys on how to build a brand (which you can find here: http://augustaskligys.com/how-to-build-a-true-brand/), podcast interview and lots of emails to conquer before the conference. 

On Wednesday I made my way to Fort Lauderdale which is about a 50 minute drive from Miami and checked into the hotel to chill for a day before the conference started. 

Arriving in Fort Lauderdale

The line up for the summit looked like this: 

As you can see these are some of the biggest guys in the industry. Among them: Steve Chou, Greg Mercer from Junglescout, Scott Voelker from the Amazing Seller, Jeff Cohen from Sellerlabs, Bernie Thompson, Michael Jackness, Brian Johnson from PPC Scope and yours truly 🙂

Collecting my badge for the conference.

And we are getting started!

Steve Chou talking about how he runs his eCommerce store.

Create give aways or games like Steve Chou does with this “wheel spin” to collect email addresses.

Super important – the 4 pillars of a successful online store.

I am off to a good start 🙂

Scott Voelker is talking about how to launch your product in 2017

Just finished my speech and answering some questions.

Heading for dinner with Franz from Sellics (Marketplace Analytics) & Mike

Last session (ask me anything) and it’s a wrap!

With Greg from Junglescout and Carla at the networking event.

I definitely wanted to hear some of the other speakers and tried to sit in on as many sessions as I could. After the 3 day event I wanted to sum up my key-takeaways for you:

1) It is not too late

I am sure you hear it’s overcrowded, difficult to launch a product and stand out from the crowd. But that’s not the case if you have the right strategy. The potential of the market is so huge that there’s space for everyone. 

And the best part is that all the tools that you need (that many of us sellers didn’t have years ago) are available on the market. If you are looking to find a product, exact ranking, sales volume of a product you want to sell then use JUNGLESCOUT. If you want in-depth profit analysis, inventory management, keyword ranking optimization use SELLICS. If you want to research trends go use GOOGLE TRENDS. If you want to find product ideas outside of tools use one of my favourite sites KADAZA.

If you’re unsure with the process in China check out my blog. If you need launch strategies check out Scott’s podcast and recent launch strategies (https://privatelabelclassroom.com/product-launch-list-building-replay) There’s so much more out there that helps you grow or start your business. 

2) There are tons of other product launch strategies out there

Whether you are just launching your first product or your 10th product. You don’t need to worry about “can’t use reviewers anymore”. There are lots of strategies that actually work better than anything else. 

Just 3 months ago I tested a new launch strategy which admittedly takes time and effort but now I don’t have any PPC costs anymore. All my traffic to my listings is organic. Most importantly build a mailing list. With a mailing list you can kick start the launch of your new product – every time. You can also run give aways on your Facebook, Instagram or own website. The strategies are endless.

3) eCommerce is only growing and growing

Jeff Bezos is now the second richest man in the world and I think that says it all. eCommerce’s share in all of the retail business is only 8% at this moment. Imagine the growth potential. 

If you are concerned that the market is overcrowded don’t worry. There’s space for everyone. Perhaps not the 50th French Press but if you have a unique product and service proposition you too can make it in this market. 

4) Finding a product is not as important as actually pulling the trigger

I’ve seen it over and over again. People find a product which in my opinion is pretty good and then just before placing the order to the supplier they find excuses after excuses why the product all of a sudden isn’t a winner anymore. 

Granted, you need to do your research into numbers, demographics and market demand but you can overanalyze everything. As Scott Voelker says – Just take action! 

5) Amazon is working hard on getting Chinese factories onto their marketplace

You need to up your game and customer service. More and more Chinese sellers are coming to the marketplaces and Amazon is helping them. See the video here at around 2.27minutes: https://importdojo.com/importdojo-brand-evolution-branching-out-into-other-sales-channels-part-four-of-the-puzzle/

Amazon wants to offer the best prices to their customers and they do so by bringing in the actual manufacturers. However we have one definite advantage – customer service and unique product or service proposition. Two years ago I said “dont’ worry for now” over here: https://importdojo.com/chinese-sellers-on-amazon-dont-worry-for-now/ But now is the time to really step up your game. Here’s a breakdown again on how you can compete with the manufacturers:

  • 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

6) Building an eCommerce business and brand is not complicated. It just takes time

Many of the speakers at the conference started where you are today. Today they run 7-9 figures eCommerce businesses. When you asked them how they did it they all answer in the same way. 

Step by step and it just takes time. You just have to focus on building a brand and diversifying as much as possible. Not just sell products on Amazon but also branch out into other channels.  

7) Social Media & Influencer marketing will be the No.1 traffic source to come (already is in my opinion)

There were a couple of speeches on how powerful Social Media and Influencer Marketing is. PPC and general paid advertisement is great but expensive. 

If you start your social media platforms now or continue to grow them you’ll have a launch tool that works every time. 

8) Outsource & automate as much as possible. 

I sat in the talk of Bill D’Ambrossio and I was baffled by how much you can automate and focus on the one thing you should be doing – devise your companies future and strategies. 

A year ago I was doing pretty much all of my tasks myself. I just couldn’t let go of some tasks and I thought only I can do them. I was wrong. I now have several VA’s and permanent employees that handle my daily tasks. And I can focus on the most important part of the business – working on things that make money. 

9) Retargeting – don’t miss out on your customers

I realized I am missing out so much on customers that visit my store and listings. With Facebook or retargeting tools you can now easily retarget your customers. 85% of first time visitors don’t buy from you. The majority never returns. 

But with re-targeting you can catch a lot of customers. It’s not just Facebook retargeting with lookalike custom audiences but also catching emails of visiting customers to your own website. Have a pop up window with some give aways or a coupon code or anything that lets you catch the visitors emails. These are essential things you should be doing (including me). 

Wrapping up

The best part for me personally was the last day when all the speakers got together in a private room and discussed their wins & struggles. 

Everyone of us had 15 minutes to speak and share their tricks and strategies as well as ask for advice. 

I was sitting amongst people that do 8 to 9 figures a year (working on mine :)) and was getting advice from top level people in the industry! This was the best Mastermind I’ve ever been to. 

Obviously I had to share some of my secrets as well and I think people were surprised by a product launch strategy that I developed in the last 3 months (which I will soon reveal).  

Getting and sharing advice with the big guys 🙂

If you are interested in the speeches given at the Summit here’s a link to a virtual pass. The recordings will be up in a few days:

http://sellerssummit.com/members2017/virtual-pass/?ap_id=importdojo

I hope this gave you a bit of insight from my trip, what the trends in the Amazon world are and what’s to come 🙂 

I got back two days ago to Asia and I am currently fighting a massive jet lag. On top of that I am heading to a conference in Berlin, Germany tonight (http://amzcon.de/). If you are around say hi 🙂

Let me know what you think in the comment section. 

We got this! All the best and happy sourcing,

Manuel 

Zero To Hero: Building a Brand Series – An Introduction To eCommerce

Zero To Hero: Building a Brand Series

An Introduction To E-commerce: How To Build Your Own Audience and Gain Control Over Your Brand

In last week’s blog post, Manuel explored in detail how to deal with overseas manufacturers and the best practices for Private Label. In today’s blog post we will focus about building your own E-commerce store. While selling on Amazon has numerous benefits, nothing beats the feeling of having your own store and having full control over your brand.

While the process is time consuming and requires some capital investment, in the long run it will pay off. Here at ImportDojo we always recommend to expand into new countries and to have more than one sales channel – nothing beats having your own sales channel!

The Importance of Having Your Own Store

1.      Have a Stronger Online Presence

A website is not only an additional sales channel, but also an asset. If you manage to build up enough sales volume, the valuation of the site can be added to your company’s overall valuation. It’s never wise to build a business solely on someone else’s platform(Amazon/Ebay), by having your own website you have an additional channel to drive traffic to.

2.      Control Pricing, Offers & Marketing

Marketplaces like Amazon and Ebay have a lot of sellers competing for the same customers. This causes price wars and more often than not, it’s a race to the bottom. By having your own website, you can control your pricing, make your own offers and be in control of what you charge.

3.      Better Branding

A website offers endless possibilities when it comes to customization. Marketplaces have guidelines which restrict the amount of customization you can make. With your own site, you have complete say on what goes into the design, colours and overall branding.

4.      Customer Relationship Building

Through email marketing and social media, you can truly connect with customers in a much more meaningful way than Amazon. Amazon limits sellers on having buyer’s information and restricts communication with them. When you have your own website, you can focus more on the customers and listen to their needs.

The Challenges

Capital Investment

Although building an online store requires minimum capital investment, marketing will require a significant amount of money. This can be difficult in the early stages as you also need to outsource website copywriting, blogs and design.

Getting Traffic

This is by far the biggest challenge of an online store. With Amazon, sellers don’t need to focus much on traffic(except Amazon PPC) as the marketplace gets enormous traffic. With your store, chances are you won’t have visitors on day 1 so you need to dedicate a lot of effort for driving traffic. These include:

  • Facebook Ads
  • PPC(Adwords/Bing)
  • Blogging and SEO
  • Social Media Marketing

Website Set Up 

Luckily many platforms have made this part easy. However, you still need a lot of time to make the design of your store ideal. Most platforms like Shopify and BigCommerce have a lot of integrations which helps you sync inventory across all marketplaces.

Besides the design, the most important parts of a website are:

  • Have an SEO friendly website.
  • Design fits your brand and audience.

This can be easily done with the use of integrations, plugins and premium themes.

Content

Between the blog, website copy and your email capture & sequence, you need to write a lot of content. If you’re not a good writer, you need to outsource all of the writing which requires a lot of capital initially.

When writing content, a good tip is to diversify content not just on your niche but the whole category or subcategory. Use different long tail keywords that cover different topics and once you monitor traffic and engagement for a few months, you will find out what your audience is interested in.

You can use the data to release new products based on what your audience wants.

Essential Pages & Content For Your Site

About US Page

The about us page allows you to tell your brand story, mission and goals behind your products. This page is very important as it gives a “face” to your brand that customers can identify themselves to.

Store/Shop

The store should be simple and easy to navigate. Like Amazon, include keyword focused descriptions and great images.

Blog

A blog not only give important updates and information about your niche, but it also helps drive traffic to your site and build up SEO.

Policies

The most important policies you should put on your website are: 

  • Privacy Policy
  • Terms&Conditions
  •  Shipping & Returns

Building an Audience & Getting Traffic To Your Website

The beauty of selling on Amazon is that you don’t have to worry about driving external traffic to your products. Aside from Amazon Sponsored Ads and Facebook Ads, Amazon generates enough traffic to their marketplace. What makes Amazon unique is that the traffic is mostly buyers.

When it comes to your own website, getting traffic will be the major challenge. However, there are a number of ways to drive traffic(and sales) to your E-commerce store.

Pay Per Click Advertising

Like Amazon Sponsored Ads, pay per click marketing is very powerful in driving traffic towards your products. The most popular pay per click networks are Google Adwords and Bing, when it comes to these two however, you will have higher competition on keywords so your strategy has to focus on long tail, less popular keywords.

Blogger Outreach

This is a similar technique to the one Manuel used for his French Press Case Study. When you’re a new brand, chances are that few people know about you. In this case you have 2 options:

  1. Build an audience yourself which requires time and money.
  2. Leverage someone’s existing audience to gain exposure.

Bloggers are perfect for gaining exposure! They are trusted by their audiences and gain consistent traffic to their blogs. When choosing bloggers to promote your brand or products, take into consideration the following:

  • Are they well known and trusted in my category/niche?
  • How much traffic does their blog get?(use Alexa to check this)
  • Are they active on social media?
  • Are they experienced in promoting products similar to my category/niche?
  • What is their target audience demographics?

One advice is to find someone that truly fits your brand, audiences can tell if someone is truly passionate about your product(s), so be very careful in who you pick. Once you filter down the blogger(s) of your choice, you need to contact them. You can do this either via their website(normally they have a specific Advertisers page) or via social media. Based on experience, these two incentives work best:

  1. Money offer with no commission involved(This can normally range from $50 to $1000 depending on the blogger).
  2. A free product sent to them and they get commission for each referral. They can use the Amazon Associates program or you can create your affiliate program on your website.

The second option normally works best as the blogger will be more incentivised to promote your brand. Bloggers are a great way to drive high amounts of traffic both to your Amazon listing and your website. If a blogger proves very successful, a good option would be for your brand to sponsor the blog as you get a permanent advertising presence.

Social Media Marketing

Social Media Marketing is the number one tool to drive traffic to your website and get exposure for your brand. Although building a following takes some time, you can drive huge amount of sales and traffic with targeted discounts or giveaways. The most popular social networks for E-commerce are:

  • Facebook – Great for all types of businesses and they have the best converting ads out of all social media networks.
  • Twitter – Although not very ideal for promotions and showing your products, it’s excellent for giving news, updates and connecting with influential people in your category.
  • Instagram – The most popular social network for E-commerce entrepreneurs, it’s design and features make it ideal to show your products. The only downside is that only the bio is clickable so you don’t have many options for driving traffic. However, it’s by far the number 1 tool for getting exposure.
  • Pinterest – Another great social media platform ideal to show your products and branding through images. It is the only social network that has a majority female following, so if your target audience is in this group, it is recommended to focus your efforts here.
  • Snapchat – This social media platfoorm is not ideal for every businesses, however, its popularity is growing and if you’re targeting millenials – you need to be on Snapchat.
  • YouTube – Out of all the social networks, YouTube has the most power to drive huge amounts of traffic and make your brand go viral. The only downside is that producing videos requires capital investment and a lo of time. A way to go around this is to send your products to YouTubers who target your niche, by doing this you leverage the audience of the YouTuber.

Conclusion

Building your own e-commerce store requires a lot of work and patience. However, the benefit of having your own platform and customers is very rewarding. While the Amazon platform will most likely always be the main source of revenue, having an additional sales channel that you fully control is the ultimate step towards having a strong brand.

We hope this blog post was helpful in clearing up some issues you may have when starting your own website and while e-commerce is a vast topic, this guide can surely point you in the right direction. In next week’s blog post will will dive into Social Media Marketing. Social Media has become a really powerful tool to drive traffic, sales and awareness of your brand – so having a social media marketing strategy is essential to quickly grow your customer base.

If you have any questions regarding this blog post, please leave a comment below. The aim of this series is to find out your concerns regarding importing & e-commerce, so we would really love to hear from you!

All the best & happy selling,

Duncan

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/

From Zero to Hero – Building a Brand – Introduction


My name is Duncan and I have been an Import Dojo Master Class member for the past 8 months. As mentioned in the previous blog post, I will be making a blog series on how to build a better brand and provide an in-depth guide on tools & strategies to help sellers expand beyond Amazon.

The Idea Behind The Series and Course

Over the last month, many established and new Amazon sellers have experienced several changes on the platform – both positive and negative. The biggest change was the update in Amazon’s review policy which made launching a new product much harder.

That’s when the idea of the Zero To Hero blog series came up. Both I and Manuel realized that to succeed on Amazon, you need to have: 

●      A good product

●      A strong brand

●      Multiple sales channels

Over the past few months, we have explored different strategies which will help you not only become a successful Amazon seller, but also gain exposure globally.

Aim For Long Term Success: Building a Strong Brand with Multiple & Global Sales Channels

The main aim of the blog series is to go from idea to a strong, recognizable brand in your niche. Unfortunately, a lot of entrepreneurs are focusing solely on the Amazon platform. While it may be the easiest and the lowest barrier to entry; there are many disadvantages:

●      No control over your brand since the customer belongs to Amazon       

●      Amazon has made several changes which affected sellers badly   

●      Building a business on one income stream is never good   

●      Higher competition & lower pricing   

●      Some markets are saturated

In Zero to Hero, we will go over other E-commerce platforms, both in the US and in other countries. The series will provide an in-depth guide on which channels work best, including marketing strategies for each, including:

1.     Which E-Commerce platform to use to build your own online store

2.     Expanding in the US beyond Amazon, this will include stores such as Walmart and also small retailers(How to find them & approach them)

3.     Selling in Japan & EU

4.     Product branding – How to custom packaging, handling customer service & inserts

5.     Social Media Marketing – A deep look into Adwords & Facebook advertising for e-commerce

6.     Outsourcing & Building a Team – Where to find Virtual Assistants and which tasks make sense to outsource.

This is only a fraction of what will be included in the full blog series. Below is a representation of what Zero to Hero will offer. In the next blog series, we will have an introduction on what makes a successful brand and how to apply it to your brand or product.

An Overview of Our Blog Series


 
 

Please feel free to share and comment if you have any questions or if you want something included in the series.

All the best and happy selling 🙂

Duncan

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

Product Liability Insurance

Do you need Product Liability Insurance (PLI)?

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

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

How does Product Liability Insurance work?

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

Who needs it?

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

Who can apply for a Product Liability Insurance?

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

Where can I get a Product Liability Insurance?

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

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

(Note: HSBC does not cover US businesses)

Miscellaneous:

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

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

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

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

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

 

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

All the best and happy sourcing,

Manuel

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

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

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

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

Lets look at the terminology first and what they mean:

NDA’s

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

Tooling

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

Can I move my own tooling to a secure location?

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

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

Two scenarios:

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

Mutual Exclusivity Agreement

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

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

Validity of agreements & contracts:

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

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

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

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

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

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

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

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

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

Getting copied will happen eventually because either:

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

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

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

Update Case Study:

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

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

Hope this helps guys!
Happy sourcing,
Manuel

 

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

The ultimate guide on how to find a product

 

How to find a product?

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

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

1) How to pick your product niche:

Scenario 1: You’ve got money

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

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

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

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

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

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

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

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

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

Scenario 4: You have passion about a certain product category

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

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

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

Scenario 5: You have vast experience in a certain industry

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

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

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

Scenario 6: You have none of the above

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

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

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

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

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

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

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

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

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

2) How to find your product ideas:

Choose your scenario and lets look at the following options:

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

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

2) Blogs, gadget or trendy sites

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

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

http://www.kadaza.com/

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

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

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

 

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

 

 

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

 

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

 

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

 

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

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

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

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

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

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

5) Tools

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

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

B) Cashcowpro

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

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

 

6) Travelling

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

7) Alibaba & Globalsources

A) Alibaba

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

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

B) Globalsources

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

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

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

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

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

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

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

All the best and happy sourcing,
Manuel

 

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

News and trends from the exhibition (April 2016)

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

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

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

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

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

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

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

Personal Transportation

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

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Decorative items

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

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

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

High quality and branded Chinese/Korean/Japan goods

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

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

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

Sporting and camping products

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

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

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

1) Silicone kitchen products! 

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

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This category is too saturated 

2) Vaccum flask / Tumblers 

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

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The Global Sources Sourcing Summit:

https://smartchinasourcingsummit.instapage.com/

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

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During my speech

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Discussing strategies with a fellow Amazon seller

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Shall we go into Silicone products?

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Impressions from and after the Sourcing Summit with attendees.

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Q&A panel at the Sourcing Summit

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Will Tjernlund and fans 🙂

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

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

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

https://smartchinasourcingsummit.eventgrid.com/

Factory trip to Shenzhen:

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

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Arriving in Shenzhen

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

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These guys seem happy with their product and factory choice 🙂

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Checking out the production.

UPDATE CASE STUDY: 

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

http://amzn.to/1TdzvFI

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

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

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

Impressions from the shows

CANTONFAIR 

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

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

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walking to my hotel trough Guangzhou

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

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

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Walking the floors.

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

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You can literally find everything here.

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This might be a good camping product?

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Not sure if this prototype will make it into production 🙂

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

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Baby products

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Heading back to the hotel

HKTDC 

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Beautiful covers and bags

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a nice kitchen gift set

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

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Heading to Hall 3

Globalsources 

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Mugs, mugs and mugs

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A DIY learning tool for kids

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gaming headsets

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Interesting cable organizer

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checking out gaming hardware

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iPhone lenses and covers

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

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Accessories, accessories and accessories

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

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Gaming headset

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Time to do some sight seeing with a colleague


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Meeting up with Peter Zapf from GlobalSources

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Interesting Solar camping lantern

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High end headphones

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Silicone cooking pods

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Decorative copper items from India

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Kids travel luggage

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

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My next PL product? 🙂

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

Yiwu

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

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

Here is a report from Business Insider. 

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

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

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

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

Interested in last years reports? Check out these links: 

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

Recap and conclusion for myself:

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

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

All the best and happy sourcing,

Manuel

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

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