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September 3, 2015

#8 Amazon Sourcing From China 3/4

This is Episode #8. It is also  part 3/4 of the episodes focussing step by step on Amazon Sourcing From China.  AND It is also part 6 of the “Amazing FBA Startup System”!


CORRECTIONS From Episodes #6 and #7

alibaba.com “assessed” not “verified” supplier (It’s correct in the show notes)

DDU  Delivered Duty Unpaid doesn’t really exist.But some suppliers use the term.  The correct term is  DAP – Delivered At Place. This means you are paying the supplier to freight products from Factory gates to your chosen place (in our case probably a warehouse in the USA). It just doesn’t include Duty or other customs costs.  


Supplier themselves – IFE – Initial Factory Evaluation

Product Quality Control 

Pre-Production (processes, equipment, raw materials)

During Production Inspection (DPI) — Catch issues as early as possible and point them to the manufacturer. And take samples at random for laboratory tests, in case you need to comply with strict regulatory standards.

*Final Random Inspection (FRI)* — Confirm the average quality of a product batch, a few days before the goods are shipped out. The audit is based on a statistically valid sample. It is the most common type of inspection. 

Pre-Shipment Inspection (PSI) = pretty much the same thing, but should include notes on and photographs of outer cases, which is useful to monitor as they protect the inner cases ie products in their individual packaging. THIS IS THE ONE I HIGHLY RECOMMEND GETTING 

Packing & Loading Supervision (PLS) — Record the quantity and check the packing    method. And supervise the loading method.

AQL – Acceptable Quality Limit – Renaud does an excellent job of explaining this in detail here at QualityInspection.org. 

I strongly recommend you read that whole webpage and digest it. It’s very important to be clear in your own mind about this so you can be equally clear with your Chinese Supplier.

He also runs or is part of a business that does inspection and testing in China called Sofeast.com.  I have not yet used his business but I am in talks with him about a new shipment so I’ll let you know if I use it, how it is.

defect rates <1%=AQL I

Amazon defect limits are also set <1% and their definition of defects includes Customer returns as well as any defective units they find in their warehouse. So Amazon is (as usual) very stringent in their quality requirements. 

However,  usual consumer goods level = AQL II, ie <2.5% major defect rate. This is not good enough for Amazon- don’t accept it!

Chinese supplier mentality re QC –  higher level of quality =higher costs to them so higher to you.  

If they refuse inspection/testing, walk away!

Make payment of final balance dependent on passing QC. And make this clear in all final communications (Skype chat, email etc.) and put it in the Purchase Order!


Fraud prevention – escrow

Ease/Speed & some protection – Paypal

Most liked by suppliers – T/T Bank or Exchange experts

30/70 split


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Watch Great Quality Control, Easy Freight and Safe Payments to China

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Michael Veazey

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  1. Hi,

    Great podcast, I’m really enjoying how you dig into the details – I am new to FBA so this has really been helpful.

    I was wondering if you could help me out as I do have some questions. In the previous podcast you mentioned using DAP shipping terms (at least for getting shipping quotes). My question is, how do I work inspection in under these terms? Does the supplier ship to the inspection facility and prepay for shipping and then the inspection facility passes the packages along to the shipper? Or do these terms not work if I am using a third party inspection agency?

    Also, I am working on setting up a DHL account so that that I can pay duties and taxes for shipments upon entry to the US. I received an email from DHL with regards to setting up this account that is asking for loads of information – a credit check application, a business identification application, and more. Was this the case when you set up with DHL, or do you pay duties and taxes by some other means when using DHL? Reason I ask is this is I have yet to form a business entity, I plan on doing this once I start getting revenue and prove that this is going to work for me.

    Any light you can shed onto these questions would be much appreciated. Thank you Michael!

    1. Hi Max
      I’m really glad that you are enjoying the podcast. Yes I do try and dig into the details, as they say the devil is in the detail. Also they say retail is detail. In my experience that’s true!

      So we going to your first question, the way inspection normally works is that the inspection company or person goes into the suppliers premises i.e. factory to inspect the goods before they are packed for shipping. This is called a pre-shipment inspection. I would not advise that your supplier sends good off to inspection, it’s good for the inspectors to see the suppliers and see their premises as well. Plus it is standard practice.

    2. Regarding DHL, yes I set up an account for DHL to get customs duties in the US paid. Sometimes that works better than others, I must be honest. Even though both the suppliers that I am using at the moment (for three products) use DHL.

      It is definitely worth setting up. I don’t remember going through credit check et cetera, but then I own a limited company so maybe they are less worried about that than they are with individuals. I wouldn’t be able to make a direct comparison as I have not applied for a DHL account as an individual. I understand your hesitation about setting up a company before approving if this works, so it’s not worth worrying excessively about but on the other hand setting up a company is incredibly quick and cheap. It cost me I believe about £25 it can be done is for as little as £13. And it took literally four hours- not four hours of work but about half an hour of work and four hours of waiting. So worth considering.

      Otherwise just jump through the hoops that DHL want to. I would however advise you to also get a customs broker on board at least for your first shipment just in case things don’t work as smoothly as they should in theory. I have used western overseas corporation and they have been very reliable and good and about average price I think.

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