#18 My Product Sourcing Mistakes & Their Solutions Part 1/2 - British Amazon Seller - the UK Private Label Specialist
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#18 My Product Sourcing Mistakes & Their Solutions Part 1/2

This Episode, #18,  is kind of a confessional: My Product Sourcing Mistakes & Their Solutions. To be fair to my past self, when I first got into creating an Amazon Private Label business with ASM 3, Amazing Selling Machine was a little light on detail of how to source from China. I did lots of research and have made many mistakes. If experience is the best teacher, it’s still cheaper, quicker and less painful to learn from others’ mistakes! So I hope I can help you avoid mine!

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SHOW NOTES FOR EPISODE #18

      1. risking money without diligence
      2. excessive fear of fraud
      3. being too perfectionist/scared
      4. FNSKU
      5. not re-ordering soon enough
      6. setting up a shipping plan and activating it without being ready to ship boxes within 24 hours!
      7. not using clear paperwork trail

My Two Personal Checklists for Doing Supplier Due Diligence all the way to ordering product follow here:

CHECKLIST ONE: Chinese Suppliers- Due Diligence
 
COMPANY DUE DILIGENCE
Pre-contact checks:
IF Alibaba Supplier:
Gold Supplier
Verified Supplier?
Assessed Supplier?
Onsite Check?
Escrow
If HKTDC Supplier:
Dun & Bradstreet Check?
Invertek verified?
Detailed Check:
Do you have an export license?”
Do you have a business license?”
“What is the business owner’s name?”
 
Email check:
is email@website.com or free email address?
Address check:
find address on website or ask for it
request they mail copy of catalogue
check whether factory address is printed on this (if no address, probably not manufacturer)
Tel check:
find or ask for tel no
check if tel.  area code corresponds to address location http://www.china.org.cn/english/MATERIAL/120745.htm
Trade shows
Please could you confirm which Trade Shows your company has attended?
 visit the Trade Show’s official website and verify that the supplier has in fact attended.
Pass ** owner’s name, co address, co tel no for checks
Co. Passed **’s checks?
Please can you let me know your Skype contact details if you use Skype?
 if not, please can you give me a direct contact telephone number for you personally?

PRODUCT DUE DILIGENCE

Is it the right one?
Can you do Private Labelling (OEM)?
IP (Intellectual Property)
Is there a patent or trademark on the product?
If so, do you own it?

If no, are you a licensed reseller?

Safety certificates:
check with Customs Broker what safety certifications are needed for this product type
Do you have these certifications for the product:
CE?
UL?
FCC?
Others needed?
Chinese Suppliers – Product Negotiation & Ordering 
PRODUCT INITIAL CHECKS
Check product is generally the type you want
if YES-check they can Private Label product (with logo) & Packaging
IF YES – Please can you send a product sheet with details of the product?
PROCESS/PACKAGING
Do you sell this product under your own brand? If so, where can I see it? (website address)
We have our own graphic designer- Can you give packaging specifications and sample artwork?
What is your usual lead time for first order between order and delivery EXW, FOB, landed in LA?
What is your usual lead time for FUTURE orders between order and delivery EXW, FOB, landed in LA?
What is your monthly fulfilment capacity?
(Once we provide the packaging design, are you able to look it to check it meets all USA regulatory requirements?)
PRICE / MOQ
Ask for Quote for PL (Private Labelling) at 5-10X the quantity you actually want
There are 3 IncoTerms (freight terms) that you will be quoted: EXW, FOB, Landed cost in Los Angeles (Air Freight). I prefer always the DAP (Delivered At Place) cost, aka, Door-To-Door, but not including US customs clearance costs or US customs duty.
Never ask upfront for MOQ
“We are looking to run a market test for this product as it is in a new category. What is your minimum order quantity?”
(“What is the price per unit at [the MOQ] & what about at these price points: 100, 250, 500, 1000, 2500 units?”)
Request a formal written quote on their own stationery
SHIPPING INFO
Request no. of cartons, weight, dimensions
If price is too high, politely thank them for quote but say have lower quote from competition.
Remove all company identification from competitor’s quote – names, addresses, tel nos, logos, chinese characters, company nos, product no.s
“What is the next step to getting our first order if we decide to move forward with your company?
“What is the next step in the Private Labelling process?” (aka “OEM” in China)
SAMPLES
(wait until you have received a catalogue before ordering samples)
Find out package weight & Dimensions
Check with own courier how much for Freight Collect door to door delivery from dispatch location in China to you.
Double check price includes customs clearance
Get this quote in Writing
Go back to supplier and ask how much they would charge for a pre-paid package.
If you do not have a courier account:
plead that freight collect charges are very high and see if they will accept pre-payment
OR say:  “All our suppliers pre-pay the freight and that is why we do not have an account”
Check rates via Hong Kong post offices here: http://www.hongkongpost.com/eng/postage/ 
FIRST ORDER
Don’t tell supplier what quantities you intend buying in future
if they ask, generalise or evade the issue!
Try for an order of about 10-20% of their quoted MOQ
Get the quote in writing
Ask about Payment Terms and Process
Request a Pro Forma Invoice (PFI)
Double check Pro Forma Invoice:
price
dispatch date
freight method
payment terms
Carefully confirm the order – including:
quantity
quality
price
freight method
freight term (e.g. EXW, FOB, DDU)
dispatch date
packaging requirements
weight
colours, size etc.
Please could you send written confirmation & notification on dispatch?
when you get written confirmation back: check it thoroughly
PAYMENT
arrange payment as agreed
remind supplier that you must have a commercial invoice to accompany the goods
also ask for a copy of commercial invoice by email
Specify that one copy of the Commercial Invoice be attached to the outside of the parcel
and one copy packed inside the parcel
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