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#53 China Sourcing for Amazon: Keep money safe, Quality Control and Freight – with Manuel Becvar of Import Dojo – Part 2 of 2

(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.

FREIGHT

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!

CONTACT

How can listeners find out more about you or learn more from you?

Go to importdojo.com – there is a contact us page – or email [email protected].

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3

#51 Using Amazon Suppliers & Building Quality products with Manuel Becvar of Import Dojo – Part 1 of 2

   This episode, #51, is the first of two parts of the interview with Manuel Becvar of Import Dojo. Manuel has 11 years’ experience of sourcing in Hong Kong and China and also is an Amazon seller with several product lines live and selling well. 

EPISODE 51 SHOW NOTES

What took you to Hong Kong?

Went there for a 6 month internship  for an Austrian electronics firm in 2005. He was handling sourcing from suppliers. He fell in love with the city and a woman and never left!

He loved the drive and opportunities of Hong Kong. Very expensive but great place to live.

Do you also sell on Amazon?

Yes since August 2014. Also documented launching a whole brand. He currently has 7 products and 10 more coming in the next few months.

He’s focussed on getting after 3-5 categories in different categories. He launched then stopped a few more.  He has several businesses which were more of a priority till now.

What are they?

  1. Selling on amazon
  2. Sourcing company in hong kong for amazon sellers.
  3. A consulting and import course, step by step guide to import from china and sell on amazon but also sell to retail.

He started out with a consumer electronics brand, selling to retailers in Europe under own brand and their own brand, but also now on Amazon. Now Manuel is focussing on his own Amazon business as it is really picking up.

Tell me about stopping a product?

He used to sell smart phone accessories but then the prices got so low there was not much profit. Electronics can be very competitive.

What’s your process for selecting products? What are your selection criteria? Do you go by the numbers of individual products? Or build a brand in a niche?

Manuel is more old fashioned, doesn’t use Jungle Scout or ASIN inspection so much. He subscribes to relevant product websites. newsletters, goes to trade shows. Also looks at Kickstarter and Indigogo for product concepts.

Manuel doesn’t look into creating a huge brand in one category. Tries out one product in a niche e.g. coffee press. If that takes off, build into that niche. If not, don’t go into say grinders, filters etc. 

Coffee press now selling about 20 a day.

How do you  beat the competition?

you need to stand out to beat the competition.  Tries not to copy the competition. This is his approach. Will Tjernlund does copy the competition, but Manuel is more interested in creating unique products and building a brand.

How can we make a product unique in a simple way?

Example 1: Blue tooth speaker-

The sample looked bad, plastic finish, bad sound, packaging horrible. 

The finish rubber instead of plastic was 20 cents more but immediately looked better.  Then looked at components, sound was bad, different driver sounded much better and cost just 50 cents more.  Used photographer to get better photos. 

He turned a $10  product into a $30 product but only cost him $2 more.

Focus on finish, minor improvements etc.

Example 2 – Coffee Press

There are  lots of stainless steel finishes, but no copper finish.  So Manuel had that done and added in extra filters etc.

Look at the little things you can change.

Tell us about working with suppliers. What’s the best way to approach your supplier about this?

Introduce yourself including company presentation –

Create an excel file or word doc about the product- include bullet points, this is where it’s at, this is what i want instead. 

Also point out that if you improve the product, they will make more sales with other customers as well. so they are more willing to make changes with costs.

So you’re not trying to get an exclusive deal with them?

Amazon sellers are mostly a small part of a suppliers’ business. if Manuel does say $10,000 a year he’s a very small fish. that may be 0.5% of their turnover if you work with a big factory (this is true for his own coffee press. They also work with Tesco’s who order $1m a year)

How do you get an exclusive deal for amazon rights?

He has set up an agreement with the Purchase Order which says – “My plan is to order 10,000 units. Are you willing to give me exclusivity for a year. If I don’t reach 5000 units within 6 months, we can cancel this agreement. “

This give Manuel 6 months to figure out if he wants to place more orders and it means the supplier can make more profit too after 6 months. 

Manuel is okay with that because he would have a head start, maybe 100-200 reviews already. It’s okay to have competition. It’s not all about one item only.

Manuel is happy if he can do 6 months of excellent sales on one product. That repays the time and money invested already. 

Greg Mercer was saying if you get 6 months’ head start, you can defend your product against competition. So you agree with that?

Yes, that does work.

Where do you go to look for suppliers?

Manuel has collected over 1000 business cards for suppliers from previous job being a product manager, when he went to China every 2 weeks.

Manuel also works with a lot of trading companies. He will sometimes be willing to pay say 50 cents more and use a trading company, similar to agent. Some of them work as if you are working with factory, for example if factory doesn’t speak English, don’t know about country requirements eg CE (European Union), FCC (USA), FDA (Food & Drug Administration, USA) approval, doesn’t have experience exporting to a country, etc., etc.

So working with a trading company can make a lot of sense.

Alibaba and Global Sources Manuel does use if he can’t find anyone through his network – you can verify and vet the suppliers. You can still vet them by checking their certificates, asking who they work with,  Which markets they export to etc.

For example, If Manuel asks “where do you export to?” and they say, “Middle East” and you want to export to USA, don’t bother. He wants a supplier

It’s also good to know a few names in the industry eg small supermarket or worked with an Amazon seller before. Check business certificate.

What are the big does and don’ts for selecting a supplier? Assuming Alibaba, Global Sources or HKTDC and someone who is new to the process.

There is a lot of filtering you can do. e.g. a microwave on Alibaba, filter by Gold Supplier, trade assurance, 3rd party verification.

You can also filter by region – say 10 different provinces of China.

Let’s say Guangdong have 5000 suppliers and another has just 10. That shows you where the main factories are for this kind of product.

If a region specialises in making those products, they have the resources and the infrastructure.

Say in Jeijung province, with 10 supplier results, they probably don’t specialise in that.

There are many other filters you can use.

Send out enquiries to 10 suppliers. 3 or 4 get back to Manuel with and answer all his to Qs

Email out “vendor profile”,  asking for:

  • 2 customer references for customers
  • markets. Has he exported to this country before?
  • business certificates, and certificates for prods
  • no workers; when company established; annual turnover.
  • do they do R & D? Have their own engineers? how many product lines?

You get a gut feeling after a while.

This is included in import dojo ebook as a downloadable document.

Import Dojo is actually a 60-page book which is a bestseller on Amazon! It is free at the company’s site. 

 What’s next in your process?

Get a soft copy of any certificates needed – prove he has it!

IF that’s okay, then ask for a sample from at least 2-3 suppliers. Same process with all suppliers.  If all samples are equal, go with most responsive/proactive and helpful supplier, even if price is a little higher. Then place an order. 

So you’re okay with higher prices?

They need to make profit too, they work hard. The factory will be business partner, it should be a fair biz relationship. As long as profit is built into your price, it’s fine to pay a little bit more.

If you have individualised products and with good product price, you can afford
If you’re building a brand, if you squeeze in cheap products, it won’t help. 

I guess it depends on whether you have customised products vs. commoditised products sold en masse?

Yes, I’m building a brand, so selling cheap products to make a quick buck is not part of my strategy.

What is the best tip for negotiating on product price once you have verified that the quoted price is in the fair region? Should simple customisations really cost that much more?

There shouldn’t really be a big difference. Unless the supplier has to invest money into a new tool or a new mould. If it’s just a colour difference, it shouldn’t be much.

To find if it’s reasonable, ask at least 3 suppliers for a quote. IF one is way off on price, he’s either incompetent or trying to rip you off!

To contact Manuel, click here for the Import Dojo contact page.

NEXT EPISODE

In Episode #52, Manuel gives details on keeping your money safe, getting quality control for Electronic Products, simple ways to start with Freight, overall process and predictions for the future of Amazon. Stay tuned!

HOW TO SUBSCRIBE TO THIS PODCAST

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For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.

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#47 Amazon Keyword Research, Amazon USA vs UK and Quality Control – Q & A Tuesday no 4

#47 Q and A Tuesday no. 4 SHOW NOTES

Q. 1 David G.

Merchant words vs KWI for accurate kW search volumes?

Danny :

Both use algorithms rather than qualified data from Amazon’s servers. Use as guidance rather than absolute numbers. The best data will be from your reports.

Michael: remember that all research numbers before you have product live are an approximate guide. If the numbers look good, go ahead and place an order, but just place a small one. You could go to AliExpress and make a really small order of say 20-50 units. Or go to a supplier on alibaba.com who will accept a small MOQ. Then launch the product with a few reviews and see if you can get sales at a reasonable price.

Either way, then you will get real data which you can then use to decide whether to place a full sized order.

Q2.  Kurt

Hi all, I am currently selling on co.uk and I am wanting to start selling on the .com market… do I need to create a brand new buyers account (with different email address) and then use that to create me .com sellers account?

Thanks

Hi Kurt, yes you do need a separate account. The advantage is that your business on amazon.com is separated from amazon.co.uk. So if there is a global issue (like account suspension) in one marketplace, you are safe in the other one.

You can link the reviews for a product between the two marketplaces as long as it is the same ASIN. This can be very helpful if you have for example a product that did well in the USA and you want to take advantage of the reviews in the UK. This is only going to work if it’s the exact same product.

Ruth B

Advice needed asap –

I have had long delays with my first order, the initial colour changes and gift box design took longer than expected and then it failed the inspection in China. 

My supplier said they would rework the problem items and with the canton fair happening, instead of the promised 3-4 days this took more like 3 weeks. 

I have had it reinspected and it still hasn’t passed – the previous major problem has been fixed but various other problems were found – all cosmetic – scuff marks, glue marks, slight gaps where the 2 materials meet (only a couple of these), damage to gift boxes. 

In total there were more defects found in the second inspection than the first (including major and minor defects). 

Where do I go from here in terms of negotiations/demands with my supplier?

I don’t really want to say goodbye to the product and lose my deposit plus all the time and effort that has gone into differentiating/designing etc, but i also don’t want to risk receiving an order of a defective product. 

The inspection pictures of the products without defects do look really good and the finish looks good quality but there do seem to be a number of defects which would result in returns. 

Having failed the first inspection my supplier agreed by email to replace (including shipping costs) any damaged items that might arrive in the UK, but how do I know they will actually stick to their promise as this is my first order with this supplier?

Nigel:

Ruth, sorry to hear that it’s a bit deflating and it happened to me with my 1st order last year. Our solution was

to have all our 1,000 items checked & pay for the ones that are ok & leave the others (after 3 inspections!)

This resulted in 203 out of 1,000 being passed &

given we paid 30% upfront we actually got a small refund.

Remember most inspections fail initially and you can accept or reject the order despite the result . Well done you though for having an inspection – many still don’t bizarrely & it’s saved you a big problem down the line.

In the end we had to change supplier for future orders.

Michael: Nigel’s advice is good.