(Part 1 of this interview for more from Manuel)
#53 Manuel Becvar interview – part 2 of 2:
How do you keep your money safe?
When you place order, tell them you’ll send an inspection team when 80% of production is finished, you’ll have to redo the goods and pay for the reinspection, and you’re not getting the rest of the money until the inspection is passed.
So never do 100% upfront payments; always pay 30% upfront, 70% when the goods are passed.
Even if you just order $1000, please get an inspection; there are companies that will do an inspection with a 20 page report for $100 for one man-day, eg Trigo if it’s simple. They send someone to factory and send report.
Others are more like $300 for one man day eg Asian inspection for difficult products like electronics. But no use for say a comb or a brush.
How do you approach Quality Control for electronics particularly? The advice famously is to avoid electronics from China. [I had about 10% defect rate]
Manuel has 17 years’ experience in electronics, knows what certificates are needed and which components to inspect. He doesn’t recommend it as 1st or 2nd product.
But just get certificates, experts in electronics inspection. There is a higher defect rate – Manuel’s is about 4%. Lots of customers just don’t know how to deal with electronics, so they often send it back even though it’s working perfectly.
Is there a way to reduce defect rates?
Take reviews and customer complaints – Speak to supplier – 5/10 of reviews have this issue, can you improve on this? Also speak to inspection company and have them focus on those issues in future inspections.
But Manuel does all this and still has 4% defect rate. Anything below 5% is okay in electronics. Above that, consider abandoning the product.
Air freight vs air courier -what’s the difference?
Air courier means someone like DHL, UPS, Fedex etc. They have special customs clearance channel and they handle the whole process for you. So it’s more expensive. An “All in” solution – where to pick up, where to deliver.
Air freight is same process but it’s usually a logistics company that works with big airlines e.g. China Airlines. There is more paperwork involved and you need to be involved. You need a customs bond, you are the ultimate consignee. You need to know the process.
Manuel has had rates for air courier of $4 /kg and for air freight of $2.30/kg so it can be a $2 difference.
Simplest solution is to ask the supplier about air courier or freight. Or ask their freight forwarder. Give them USA/UK address, tell them you need duties/import taxes upfront.
If supplier has no Freight Forwarder, just look on Alibaba or Google.
If you have to do DDU [Delivered Duty Unpaid], how do you avoid problems?
Suppliers usually have no idea how to deal with freight etc. – they are experts at manufacturing. Manuel works with a Freight Forwarding company DDP [Delivered Duty Paid]-it’s all in. They pick up at factory, they ship it direct to Amazon. He doesn’t get involved in customers clearance or amazon pickup appointments.
In the beginning he had to explain how to book appointments with Amazon.
So you ship direct to Amazon?
Yes. Always directly from China to Amazon warehouse.
What do you do about damage to packaging from Air Freight?
It’s a small %age. Always put a label saying “Fragile, handle with care” – this helps.
How did you train your Freight Forwarder?
They are based in Shenzhen head office. They knew how to deliver to USA -but they had never delivered to Amazon. Manuel chose based on price and helpfulness but had to train them in delivering to Amazon. He gave them a clear workflow. After 2nd order, no more hiccups.
So you don’t want someone who doesn’t know about exporting to USA?
True. If you can find someone with great price and knows about delivery to Amazon, even better. Manuel recommends Dolphin Logistics, based in Shenzhen. Reach out to Manuel if you want more info.
How did you get $2.30/kg air freight price?
$6 for air courier is average. Manuel gets good prices because he ships 28 m3 a month!
To make it simple, give your air freight forwarders a clear business process. Tell them they need to deal with Customs brokers and make appointments with Amazon.
They can set up a Vendor Express account with Amazon to set up appointments (they can’t just turn up at an Amazon warehouse!)
How do you send inventory direct to Amazon from China? I guess you save money with intermediate steps but what are the risks and how to you mitigate them?
Manuel thinks it can all be done cheaper in China. Get them to put FNSKU barcode on inner packaging, prepare cartons according Amazon requirements e.g. size, send them the shipping labels from Amazon seller central and you’re good to go.
If you have more than 20 cartons, the supplier needs to palletise the boxes in China, otherwise Amazon will give you a hard time! If you have fewer, it’s okay for Floor Loading.
How else can you speed up your supply chain?
Don’t take care of the details yourself. If you have 10-15 products and have customer service, taking photos, etc etc – outsource everything you can to inexpensive VAs.
Focus on growing your business:
- New products
- Optimising listings.
- New eCommerce Channels
- Retail! Go to local store and ask if they want say 50 units.
Tell us more about expanding business – selling to retailers
Manuel actually started own business selling to retailers (through his time in HK) because he just thought Amazon was another eBay. It’s easier to start on Amazon, built a brand, built a reputation for products then reach out to retailers, DIY stores etc etc to sell wholesale.
Any other tips on the best way to approach retailers?
Start locally. Look into smaller importers that set to big brands at an exhibition & approach local distributors. If you can’t go physically go to exhibitions, go to exhibition websites and check then names of companies that exhibit, check them out and email them!
“My name is X, this is my brand, I’m importing direct from China, are you interested in buying?”
Are there other ways other than unique products and high quality to protect your brand against competition?
One thing is to have Amazon brand registry. Other than that, be better in terms of quality. Don’t give the competition grounds to attack you – quality, customer service – try to be an awesome company. Even if first few months not highly profitable, eventually it will pay off.
What is your prediction for competition in the next year or two? How do we protect ourselves?
Manuel had 6 enquiries last month in his sourcing company for a product that everyone is selling! Nobody has any imagination, it seems!
Be unique, have expertise in your product and be creative. Yes, competition is increasing but so is the market – Amazon has 51% of the (USA) online sales. There will always be a customer for [good] products. The USA population is about 300 million people!
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