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#18 My Product Sourcing Mistakes & Their Solutions Part 1/2

October 30, 2015

#18 My Product Sourcing Mistakes & Their Solutions Part 1/2

Podcast: Play in new window | Download (Duration: 30:07 — 24.1MB)

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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!

** REVIEWS CONTEST!**

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Head over to iTunes now and leave your review! If you haven’t already, you can also subscribe through iTunes to get all the info you need to start your own successful Amazon business!

CONTEST EXTENDED to the end of November or 1st 25 reviews, whichever comes first !

SHOW NOTES FOR EPISODE #18

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

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

Evernote Version of Supplier Due Diligence

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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Watch Amazon Private Label Sourcing Mistakes Solutions part 1

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Michael Veazey

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Anila says:

November 2, 2015 at 7:55 am

How do you do your due diligence on your supplier?

Thanks

Reply
Anila says:

November 2, 2015 at 7:58 am

Oops
Just saw the show notes on it

Anila

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