System Archives - Amazing FBA - How to sell on Amazon UK

#50 Product Process, Suppliers, Freight and Amazon Future with Anthony Lee Part 2

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NEW PRODUCT PROCESS

So a product jumps out at you from the universe.

Can you talk us through your process with a new product (from selection to re-ordering)?
(from product selection, via supplier selection, freight/supply chain, getting products to Amazon, product launch)

What are your criteria/ numbers?

Look for main KW “The thing that it is” on page 1 – using Jungle Scout, Anthony wants to see at least 60% of sellers doing $15,000 sales each. He wants a handful under 250 reviews. They’ve probably been there under a year, so there’s room for AL to take some market share.

He’ll glance at BSR – a number between 2000-4000 =mid competition. Anthony is confident he can easily get on page 1.

80% of all factories in the world are in China – it has lots of real estate, dedicated to factories. Everything AL sources is located in China.

Next step is to find a supplier using Alibaba, Global Sources,. Global sources is his go to place. HK is an easy place to reach and many of their suppliers go to their trade show. HKDTC (never had much success so far) and Made in China as backups.

Criteria: Gold Supplier for 3 years – they have to pay for that. Make sure they take some kind of secure payment -they’re probably not trying to rip people off.

Send out your enquiry. Ask for samples first – if it’s crap, cost doesn’t matter! 3-4 samples generally.

You pare down – send emails. certain %age come back; ask for samples; certain %age respond.

Whittle down to highest quality then pit them against each other for quotes.

“I really like your quality and I personally would like to work with you. But my partners would like to work with your rivals because of price.”

ALWAYS make custom modifications. Put logo on product not just package, have the product itself your brand colours. Better for brand and for hijackers etc.

Give them design specs, place a 30% deposit but have them send you a sample of your design.

Use that to check quality and for photos.

How do you deal with Quality control?

Have an inspection co. like Asianinspection or Richforth. Contract them for a man day (unless it’s electronic in which case you might need a week) 300 USD for one man day.

Have it set against a margin of error. So you know it’s good to go before you leave the factory.

You tell the factory they won’t get 70%

You can work with a sourcing agent. It’s just hard to find someone you can trust. Most of them are very much making a deal with the factory and you. Get paid on the front end and the back end. It turns out AL has 15 years’ experience as an importer and AL is now communicating with him. That will help with QC – they can check factory, batch inspection.

The real low tech way/cheap way to do it – find someone on Upwork to go to the factory and send a Skype video or pictures of the production line or products. Have them toggle switches etc.

What are the biggest issues you’ve met with suppliers? What are your best solutions?

AL has been “lucky” but that’s because he has a lot of hoops to jump through before he’l work with them. He’s heard the horror story e.g. sample quality not real quality or jack up prices last minute etc. Not experienced yet.

The best way is to very very thorough about selection process.

What other hoops do you make them jump through?

Communication. How responsive are they? If it takes 2 days to get an email back, am I a priority?

When we get to a certain point, what’s your Skype? how about your mobile/cell phone?

I have them send pictures of the production facility. Because

see the factory. 2. How willing are they to do it?
The factory is your biz partner – they’d better act like it! If you were gong into biz with someone in your own country how you would you want them to act?

How do you handle freight? Supplier’s carrier?

How do you deal with inventory management?
It’s a big area of confusion! AL does not have a courier account with DHL etc. because he doesn’t do much air freight. He just uses supplier’s courier account for samples – he even has a standard template for samples.

For everything else he uses sea freight as it is significantly less expensive. Generally he shipped LTL (Less than a Truckload /LCL (Less than a Container Load) although now mostly 20-40 foot containers.

Because the closest US coast to China is the West coast, and the most common port is Longbeach, he specifically looked for a Freight Forwarder in LA. So that is freighting by sea and delivered the shortest distance. Then he does LTL pickup by Amazon who picks up palletized and labelled units ready to go to Amazon.

SO you’re looking for a one-stop shop for warehousing and freight?

Yes, wanted to make process as easy as possible. They contract with a customs agent to handle the customs clearance. AL just gets an email with the bill. They make it really easy.

An alternative is to use Asia based Freight Forwarders – they get amazing deals on fast boats out of China. So you need to go through the same process.

Amazon decided that everything is going to Moreno CA so West Coast made sense. However, every time they have a strike, his products get stuck. The absolutely best way is to go out and get as many quotes from FF as possible. As lots of questions and get one that will take the time to educate you. One of them might say “Well our clients do it this way” and make a suggestion.

Tell us about inventory management – when a product is selling, what then?

What about “Killing off” products with low sales or low profit?

AL doesn’t yet use inventory management software – doing it manually is a pain. It’s tricky because you base reordering decisions on two weeks’ sales; then you get a spike in sales and you will run out of stock. The other danger is demand drops off instead and you buy too much inventory so you pay high warehousing fees. That’s when supply chain management evolves.

You need to look at warehousing deals so at some point you can bring in whole containers and bring only a couple of pallets to Amazon.

Every product is seasonal. You need to be in the game before you learn that pattern for a particular product. A store manager might be your first hire – a necessary one if you’re going to have and grow a business based on importing.

When to let go of products?

A lot of people come in thinking they need to make lots of sales or it’s over. If the product is still making you a profit, you should maybe reconsider. Even if it’s only a small amount. If you get 5% return, it’s worthwhile.

What’s your approach to cashflow management?

Al is just starting that conversation – chances are you will run into this soon enough. The solution is not in the system itself. Cash injections become important.

AL’s short term solution has been credit. Will Tjernlund uses Amazon outside of PL to make cash faster – wholesaling ideas are fantastic. When you’re in this business, you’ll make a lot of connections. It could be someone in your local area who doesn’t have product on Amazon or it’s not selling well. You probably have more Amazon experience than they do. SO soft sell – let me help you with this – good way to make extra cash. AL has recently been working out profit share deals with people who want to

Leverage whatever skills you have. A lot of people want this skill but don’t have time to develop. A lot of retailers are on a 36 month contract and paying whether they make sales or not. You could come in with a solution and make them extra money.

You can work out a wholesale deal. You can do consulting. Whatever comes your way.

Bigger picture

What’s working well right now in your business (that you can reveal)?

Finding great margin deals by establishing relationships with factories and suppliers. Then get on page 1 for main keywords. AL has one product only selling 2 a day which will kill it in Q4.

What are the most successful sellers you know doing right now?

One person is leveraging Facebook advertising for both Amazon and Shopify sales.

Either learn an avenue really well, or pay someone else who knows it really well.

Another friend takes advantage of every single offer. Every beta programme they do, she takes it. She’s got someone at amazon who answers her email. She is killing it!

Find an area where you can get visibility for your products and get really good at it.

What do you see coming in terms of changes that we should be thinking about adapting to… In the next year?

Predictions are mostly wrong! But a focus of unique products is coming – we’re in the middle of a Kickstarter crowdfunding craze. SO AL assumes that Amazon will get a lot more of untested unproven concepts coming out. This might be the next generation of sales. The marketplace has proven they like this kind of thing. There will be a lot less competition for those products.

If you have an idea, this will be growing, -there are prototyping companies out there, go for it.

In the next five years, there will be other marketplaces – whatever teenage girls are doing now will become big! App based – right now, teenage girls are buying products on App based programmes like Wish etc, which are basically like eBay

Do you have any parting words of advice?

The most important thing is: understand you are serving a marketplace, a niche, not just selling a product. Treat it like a business – it’s an investment – go at it with a calm pulse, understand that it takes time. The growth curve is never easy, it’s never in a straight line but stick with it.

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app. Every time I produce a new episode, you’ll get it downloaded right away.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask

#24 Richard Koch and the Star Principle for Amazon Business Owners

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This Episode, #24 , is another “bonus” episode that is a little less formal than usual episodes. Again, I hope you can forgive the more casual style and above all the lower audio quality – this was another episode squeezed in between visits to relatives and loved ones!

The start of a new year is a natural point at which to think about big-picture strategy and overall approach to business and business building. If you like this approach, let me know in the Facebook Group and I’ll give more summaries of powerful business strategy books I’ve been reading.

This episode is about The Star Principle, as espoused by the wonderful business strategist, Richard Koch (who is a fellow Brit!). This principle is behind Richard going from £3 million to above £150 million in net worth, with 8/16 investments making money, one with an astronomic return! (venture capitalists expect 1 in 10 to make money). This is almost unheard of – this guy utterly walks his talk!

SHOW NOTES FOR EPISODE #24 -Richard Koch and The Star Principle

American Amazon strategists mentioned:

Jason Fladlien was (and probably still is) the biggest single affiliate seller of Amazing Selling Machine
Ben Cummings was a star student of Amazing Selling Machine as sold by Jason Fladlien. He now works with Jason and runs his own courses, masterminds, etc.

Perry Marshall (who is an excellent Adwords expert and teacher) interviews Richard Koch here in a very extended, natural interview. Totally worth viewing.

Perry Marshall is also publisher of the best-selling book ever on Google Adwords (let me know if you would like to know more about this book).

Richard Koch worked for the Boston Consulting Group and although he didn’t enjoy the job, he learned a business strategy that was a simple but incredibly powerful strategy:

THE STAR PRINCIPLE

There are just 4 types of business and 4 actions to take:

STAR business: High growth and Market Leader. Action: INVEST!
Cash Cows: Low Growth Market but Market Leader: Protect!
Question marks: High Growth BUT not leader: Drive to leadership or Sell.
Dogs: Low Growth and Follower: Exit or Run for Cash.

So how does this work for an Amazon business?

Researching new potential product niches

Find & monitor trends in your industry or market:
- Be a member of your target market & be consistently observant of product trends
- Follow your industry/market magazines, websites; go to meetings, conventions, etc.
- Use Google Trends if it helps but use a variety of keywords
Go after markets where there is an upward trend overall

Reviewing/Reflecting on your own business

Once you have had a product or products live for a time, review your products. Aim: Determine whether you have found a Star, Cash Cow, Question Mark or a Dog!

MARKET SHARE

Monitor your position on Amazon in response to main keywords for your product(s).
If you aren’t yet within the top 4-6 positions for the most important KWs:
- give away product until you have at least 50% of the reviews of the no. 1 or 2 player
- spend aggressively on Amazon ads in launch phase BUT monitor profitability like a hawk so you know what the breakeven price will be.
- Try to be as differentiated as possible in title, photos and bullet points (main photo is the no.1 thing!)
If you are within that, aim for no. 2 or no. 1 on main keyword
Above all, focus on being no. 1 for any keyword that has a certain amount of demand and is profitable!!
#6 in main market is nice; #1 in a niche is better IF it is still profitable.
Aim to be the dominant player in your product niche, however small
If you can’t get onto page one after aggressive promotion, could it be that you have a Dog?? If you have, discontinue the product:
- Reduce Amazon ad spend to a minimum. Discontinue Facebook Ads, Google Ads etc. if used.
- Don’t order any more inventory
- If you need the cash back out to invest in a product that has proven to be a Star or a Cash Cow, consider lowering the price to sell out faster and get the cash back out faster.

COST CONTROL

Direct Costs

After your launch phase (so you have hit 50% of the no. of reviews of the No.1 product and have got onto page 1 for top 2-3 keywords), scale back costs so you make profit!
Amazon ads are often the no.1 place to cut back
ACoS under 100% does NOT mean you’re making gross profit!! ACoS needs to be substantially less than the gross profit margin. E.g., if your gross margin is 33%, ACoS MUST be under 33% to be making a profit.
Don’t rely on ACoS; add up all your amazon costs INCLUDING AMAZON ADS for a particular period; add up all the amazon sales for the same period – and determine gross profit and loss
A star business or a cash cow should have decent profit margins after launch phase.
- If it’s only breaking even, see if you can reduce your costs. Above all, monitor and reduce your spend on Amazon Ads!!
- If it still won’t be profitable, consider discontinuing the product

Four formulas to stay a star business (these need to be discovered and turned into routine and repeatable sytems):

Customer Attraction Formula (to ever more customers and ever more sales)
Commercial Formula (to lock in fat margins)
Delivery Formula (to deliver consistent, high quality products)
Innovation Formula (to stay ahead of rivals)

These are things that at first you probably can’t neatly formulate – but you should be using your experience to build these formulas over time and then refine them based on reality, not theory!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.” Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#20 Amazon Private Label Sourcing Mistakes – Part 2 of 2

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This Episode, #20 , is continuation from episode #18 of my personal Sourcing Mistakes and the solutions I’ve found.

Choosing Suppliers, Communication, handling Financial Arrangements, and Quality Control and Freight/US Customs can be some of the scariest things for a newcomer to a product-based business. They are also the source of many of the frustrations and blocks to progress for any Amazon FBA business owner, however experienced.

Here I continue to share with you all the mistakes I personally have made, and the solutions I had to find!

If you have similar stories to tell, please share them with your fellow Amazon sellers, either here, or in our Facebook Group. Let’s help each other!

For a detailed step by step guide to the sourcing process, listen to Episodes #6-#10, which are part of the 10-step Amazing FBA Startup System.

SHOW NOTES FOR EPISODE #20 -Sourcing Mistakes

2. Getting exactly the same kind of product!
3. Not verifying supplier hard enough- solutions- checklist
4. Not checking about details of product
5. Not getting samples
6. Not ordering exact model (eg blue vs. black colour) with total clarity
7. Address errors (continent!!)
8. Over-long or native-speaker only english
9. Having only one possible supplier ready to go
10. Letting supplier change carrier to non-standard.
11. Not allowing for random delays eg typhoon, suppliers’ supplier (boxes!) delay, customs, supplier gets big order from big customer, hazmat
12. Picking a product needing or including batteries!
  1. not understanding the technical info for batteries
  2. not getting technical info from supplier upfront
13. Not getting products inspected in China
14. HAZMAT (“Hazardous Material”) or other Amazon technical delays
  1. Not preparing MSDS exemption doc
  2. Not allowing for Hazmat delays
15. Not allowing for delays by Amazon in receiving goods or Hazmat issues
16. Not moving other parts of the business forward when sourcing isn’t going to plan
17. Expecting the Chinese to give a straight answer to a confrontational question
18. Getting angry about things outside your control. Remember the ideal:

The Serenity (calm) to accept the things you cannot change; The Courage to change the things you can; and The Wisdom to know the difference.

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#12 Essential Daily Amazon FBA Actions

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This Episode, #12, deals with your Essential Daily actions to run and grow your Amazon FBA Business.

It is part 10, the final part, of the “Amazing FBA Startup System”, which is a very highly structured series of podcasts (with very detailed show notes) designed to take you from zero to having a product launched and selling on Amazon.

If you haven’t already listened, you’ll want to at least listen to episode #11, which deals with Product Launches .

Ideally, subscribe to listen to the whole Startup System, and start from episode #3 (episode #1 is a quick intro from me about the podcast, and episode #2 gives you the overview of the process I used to get to $20,000 in total sales in 7 months).

**STOP PRESS** REVIEWS CONTEST!
As announced on the show:

The first 25 people to review the show on iTunes will be entered into a draw. The winner will receive a £50 Amazon Voucher from Amazing FBA!
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!

SHOW NOTES FOR EPISODE #12

Daily Actions – on Amazon
1. Customer service
  1. Amazon 24 hour message rule
  2. communication with buyers
  3. replacements
  4. refunds
2. Sales stats review
3. Amazon Ads costs
Daily – non Amazon
1. Emails – do this AFTER you’ve checked Amazon & Done your most Important Tasks for the day! Don’t do it first!
  1. from suppliers
  2. customers
  3. other
2. (Paid advertising – check stats, set up or pause/end campaigns – OPTIONAL)
  1. Facebook Ads
  2. Google Ads
3. Social media (OPTIONAL to start with)
  1. Facebook Fan Page – update with posts, drive likes, etc.
  2. Instagram – post pictures
  3. Twitter – create posts
  4. Pinterest – find content for Facebook Fan Page
  5. Youtube – create videos, check stats, tweak
WEEKLY – on Amazon
1. Sales Stats
  1. by product
  2. daily, weekly, monthly
  3. trends
  4. conversion %age
2. Possibly tweak price or other listing elements
  1. KEYWORDS(Use AMZTracker to check your optimisation for keywords versus your competitors)
    1. Bullets
    2. Description
    3. Bullets
  2. Photos – try swapping the main image for a week and check conversions
3. Amazon ads stats review
  1. overview:
    1. check ACoS
    2. Sales in absolute terms
  2. Auto campaign
    1. Download auto campaign report
    2. check which KWs made best sales
    3. best ACoS
    4. most sales in absolute terms
    5. least sales
    6. worst ACoS
    7. break best performing KWs into manual campaign
  3. Manual campaigns
    1. monitor ACos by keyword
    2. increase bid on those KWs with ACoS under 100%
    3. decrease bid on those KWs with ACoS over 150% or so
WEEKLY- non Amazon
1. Emails
  1. TO suppliers
  2. customers
  3. other
2. Paid advertising
  1. Facebook Ads
  2. Google Ads
3. Social media
  1. Youtube
  2. Facebook Fan Page
  3. Instagram
  4. Twitter
  5. Pinterest
MONTHLY or (minimum) QUARTERLY
1. Monitor Inventory Levels
2. Big -picture planning: Vision
3. Growth plans e.g. possible new products (research)
4. new product launches etc. (I’ll do a future episode on Planning)
5. HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For Android listeners – Download the Stitcher Radio app (free) and search for “Amazing FBA Podcast.” Or, if you have already downloaded a podcasting client, follow the directions in the next sentence.

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#11 Amazon Product Launch

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This Episode, #11, deals with Amazon Product Launch.

It is part 9 of the “Amazing FBA Startup System”, which is a very highly structured series of podcasts (with very detailed show notes) designed to take you from zero to having a product launched and selling on Amazon.

If you haven’t already listened, you’ll want to at least listen to episode #10, which deals with Product Listing.

**STOP PRESS** REVIEWS CONTEST!
As announced on the show:

The first 25 people to review the show on iTunes will be entered into a draw. The winner will receive a £50 Amazon Voucher from Amazing FBA!
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!

SHOW NOTES FOR EPISODE #11

The launch is basically divided into two areas for me:

Prelaunch – before your product is live on Amazon- essentially creating lists of potential reviewers
Launch – going after reviews (to increase conversions) and driving traffic to your listing.

Don’t Forget to Optimise your product listing before actually Launching! Check Episode #10 notes if you haven’t already.

PRODUCT LISTING ELEMENTS

Photos
Title
Bullet Points
Product Description

Underlying the last 3 elements is the hidden “Key”:

5. Keywords!

See Episode #10 notes for more details on Optimising your listing

A. Prelaunch (all of this is semi-optional but it’s ideal if you have time)

Friends & Family – if UK based, build lists ready for “unverified” reviews
If US-based, do the same but you can also approach friends for actual Amazon Sales
Use own list of existing clients or prospective clients if you have one with strong cross-sell potential
Facebook Fan Page
1. Post 2-3 X/day – before launch
2. pay for likes aim: 1000-2000
3. run facebook ads to “fans”
Creating anemail list (very optional)
1. Run Facebook Ads
2. Optin pages: Lead Pages. Costs about $25 a month. Relatively easy to use, looks just great, quick downloading pages. I’ve used these for 3-4 months and it works well.
3. Email autoresponder:
  1. aWeber costs around $18 a month – the industry standard for most online marketers (unless you’re using Infusionsoft, which is over 10X more expensive). My current provider.
  2. madmimi is free for up to 100 subscribers. I haven’t used it but I’m tempted by the FREE price tag and a recommendation from Scott Voelker.

B. Launch

B1. *Getting Reviews – TOP PRIORITY!**
1. Use Amasuite software to (semi) automate this and other essential tasks
1. Creating “Promotions” in Amazon (essential)
2. Contact Top Reviewers (optional)
3. Create your own list (see above) then email them your promo code
4. Paid review services (I believe one of these is fairly essential)
1. Email list if possible
  1. use Facebook page

B2. Driving Traffic to your listing

Start when you have at least 5-10 reviews; more if possible (depends on how competitive your niche is) – maybe up to 25 if you’re going to give away a lot/competitive niche.
Amazon Ads (essential )
1. start with auto campaign
2. run for a week then leave for a week
3. review ACoS (Advertising Cost of Sales) and Sales
4. break out best performing keywords into a manual campaign
5. You can also use the best keywords from the competition from your AMZtracker analysis
Other traffic sources (optional):
1. facebook page
2. Facebook ads (combine with page Likes ads)
3. email lists of buyers
4. Social Media generally:
  1. Youtube
  2. Twitter
  3. Pinterest – note, join the USA version to connect with US customers!
  4. Instagram

In the next episode we focus on Life After Launching…how to stabilise your business and your Essential Daily Disciplines (and Weekly Must-Dos…).
Including the ins-and-outs of Amazon Ads and Amazon statistics generally.

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#10 Amazon Product Listing Set-up

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Subscribe: Apple Podcasts | Android | RSS

This Episode, #10, is part 8 of the “Amazing FBA Startup System”, which is a very highly structured series of podcasts designed to take you from zero to having a product launched and selling on Amazon.

If you haven’t already listened, you’ll want to at least listen to episodes #6, #7 & #8, & #9 which deal with Sourcing from China.

Ideally, listen to the whole Startup System, so start from episode #3.

**STOP PRESS** In response to popular demand, in September 2015, I set up a Facebook Group for Podcast Listeners! To join the group, click on this link and put in your request to join!

Come join it while it’s still an intimate group and get personal attention from me!

SHOW NOTES FOR EPISODE #10

GLOSSARY OF TECHNICAL TERMS

UPC – Universal Product Code – this is what most of us think of as a barcode and it’s found on any products in your local supermarket. In fact, the code behind it can be expressed as a barcode but it’s the code itself that makes the product unique. It’s an important distinction between the CODE itself and the BARCODE FORM that expresses it because we have several forms of code in Amazon which can be in barcode FORM.

The purpose of a UPC is, as the name implies, to be a globally unique and universal code to identify a particular model or product.

SKU – Shelf Keeping Unit – This is a near-universal generic Retail term for a way of tracking products in warehousing or in retail spaces e.g. supermarket shelves.

ASIN – Amazon Identification Number – this is a code that only exists within the Amazon eco-system. However, within that system, in theory the ASIN is universal worldwide. I say in theory as I haven’t extensively tested that. But I have got one product in UK that was on Amazon USA and it does indeed have the same ASIN. So it does seem to be true.

FNSKU – The FBA SKU (FNSKU) is an Amazon product identifier for products that are Fulfilled By Amazon (the FBA of this podcast’s title) . The FNSKU identifies the product as yours. You need an FNSKU in order to create FBA Inbound Shipments, which is the next stage.

WORKING WITH YOUR WAREHOUSE

This episode is focussed on Product Listing but you’ll want to revise the notes for Episode #9 if you’re about to ship product to your USA warehouse. But we are going to repeat what I said about creating inbound shipping labels for your warehouse to use.

INBOUND SHIPPING TO AMAZON

Navigate to the “Inventory” tab, click on Create A Shipping Plan.

Follow the process. If you want me to do a detailed video walk through, please ask me and I’ll do it!

You will input the size and weight of your cases (cartons) and the number of them (and no. units/carton). Amazon will automatically assign your products to (a) specific Amazon warehouses(s). You just need to fill in all the info, click “Create shipping Plan” & then send the resulting PDFs to your receiving warehouse.

They should then complete the process of getting your products to Amazon. Voilà! You have product live, ready to sell!!

I’ve included the warehousing and inbound shipping info here as it completes the process of getting product from your supplier to Amazon.

PRODUCT LISTING ELEMENTS

Photos
Title
Bullet Points
Product Description

Underlying the last 3 elements is the hidden “Key”:

5. Keywords!

Optimising your listing

Photos

Get professional photos done of your product. Use your sample while you are waiting for your bulk order to be manufactured, shipped and clear customs/be received by warehouse/ship inbound to Amazon. I use Brian Cottam, who has done shots for many big names including Tesco and Argos. He’s got a real eye and is a perfectionist, plus a fun guy to deal with. UK based.
If you don’t have a sample with your logo on it, just get your photographer to photoshop on a logo (NB Only do this if your bulk order is Private Labelled i.e. your own branding with logo etc. Don’t put up any photos that don’t show precisely what your customer will actually receive
Try to get a photo of someone using the product. Note that for some reason, Amazon dislikes just someone’s hand plus product. Odd but they did actually penalise me for it. I wouldn’t get too worried but it’s a small point.
Try to look at the sample yourself from various angles so you can suggest angles to the photographer. A good one will have their own ideas but you might as well be as clear as possible.
Use all 9 photos for Amazon (so get your photographer to produce enough shots for you to choose 9 to then go to post-production, where you photographer should clean up and generally enhance the shots. So maybe 20-30 shots total, of which you choose 9.
Make sure you get at least 1000X1000 pixel size shots. That’s so they are zoomable on Amazon, which shoppers really like.
You can re-use shots from the sample in the packaging. In which case, you will have need to have the following workflow:

Get your photos done first.
Get the packaging blue print from your supplier for your designer.
Then agree the design (incorporating photos) with your designer,
then send the design to your supplier
then the supplier will start manufacturing the OEM (Private labelled) product and OEM (Private Labelled) packaging.
If you don’t want this delay, order a small order (say 200, 300 units) of unbranded units, get your product photos done and get the things produced and listed! You can then go back and get your designer working on nice packaging for your product while you are getting reviews, getting ranked and getting in cashflow.
This is the approach I’ve been taking with my 2nd product – I’m just waiting for 300 units unbranded now and am only going to start the branding process once they are in stock and selling.

My designer is Amanda Reid of Clear Moon Studios. Really friendly, has a great eye (she has a fine arts degree), knows how to create packaging for Amazon products, how to communicate clearly with you and with photographer, etc.

Brian and Amanda are actually friends so they communicate well with each other. My dream team – highly recommended.

Many people have had success with fiverr.com or 99designs.com – I can’t speak from experience as I’ve not yet used either.

Words – Title, Bullet Points, Description

The main thing to focus on with this is two areas: shoppers and keywords.

You need to think what words will help a shopper looking for your type of product. It’s not rocket science but try out a few different keywords in the search and see what comes up. What titles are helpful to you?

Most importantly: Keywords.

My process is now the following:

Using AMZTracker (cost around $25 a month), start tracking which keywords my competitors on page 1 (and maybe page 2 if there will be plenty of sales still) are using to get found. This is incredibly powerful information.
Decide which of these keywords to target, bearing in mind that the most in-demand ones can be expensive to advertise for. Look at the competitive landscape. Is there a keyword that is not dominated by a competitor at #1 but which has good search volume/sales associated with it? (use Jungle scout to check sales on Amazon , which is a tool you probably last used a lot in Product Research. See Episode #3 notes if you haven’t already).
Put as many of these as you can into the Title, especially the Bullet points and above all in the Product Listing. Very important keywords need to go in all 3. Important keywords in both Bullet points and Description. Least important but still valuable keywords in the Description only.
Use AMZTracker to see how your listing is doing in terms of keywords.

It’s really important to optimise your listing so that you maximise Conversions – the percentage of visitors to your product listing page that turn into buyers!

In the next Episode, we’re going to talk about the next stages- Launching your Product: Getting Reviews, Driving Traffic to the listing, starting the easiest and most powerful way: Amazon Ads!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#9 – Amazon Sourcing from China 4/4

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This Episode, #9, is the 4th of 4 Episodes specifically dealing in detail with Amazon Sourcing from China. It’s also part 7 of the “Amazing FBA Startup System”, which is a very highly structured series of podcasts designed to take you from zero to having a product launched and selling on Amazon.

If you haven’t already listened, you’ll want to at least listen to episodes #6, #7 & #8, which deal with Sourcing from China. Ideally, listen to the whole Startup System, so start from episode #3.

SHOW NOTES FOR EPISODE #9

“PAPERWORK” i.e. Forms/Contracts etc.

Overview

It’s all about the Commercial Invoice (CI), folks!

Everything in the final stages of documentation (meaning anything you or your supplier write to each other, broadly) is leading up to the CI.

After you have finished negotiating on price, product inspection/testing, payment terms (100% upfront vs 30/70% split are the usual options) freight terms, & delivery date, you need to summarise everything in one crystal clear email. The end result of all your documents is the crucial COMMERCIAL INVOICE (See below). After that is agreed, your order is, in theory, set in stone

Of course in practice, you can look at a so-called “final” commercial invoice, realise you or your supplier have made a mistake, and go back to them and get a correction. But it’s a very good discipline for both you and your supplier to get documents right first time. The Chinese have a strong respect for written documents, so use that to your advantage. It’s all about 2 things: clarity of what you are both agreeing; and holding your supplier to that agreement.

So do your best to do any wiggling, renegotiating and corrections before you finally have the Commercial invoice.

Definitions and “final document flow” (see below for actual contents)

Draft Purchase Order Email – this is of course not a technical term! But I put it in as it is a prelude to the Pro Forma Invoice (see below). So you need to be extremely precise in what you ask to be put in the PFI. See below for an exact list of all the info you need to put in the email.
Pro Forma Invoice (PFI) – basically a draft Commercial Invoice (see below). As it is a prelude to the CI, check it very carefully.
Purchase Order (PO) – your business’s formal request to buy goods. This is a very important document so you need to basically do a “draft PO” by sending a very detailed email to your supplier (details below), so that you get a good quality PFI back and then your actual PO will be accurate.
Commercial Invoice (CI) -this is the final document to result from all your back and forth before money gets sent to the Supplier and then goods are manufactured then sent to you or your warehouse.

It is the final and most crucial document.

The word “Invoice” in normal business life implies a straightforward document. Of course accurate invoicing is important, but there are not too many consequences if there are errors, as they can be corrected with an apology.

However, the CI can’t be corrected once it is printed and fixed to all the cartons of your precious products, and it is the main document that will get goods through U.S. customs -or cause issues and delays if it is wrong.

So it is a much more crucial document than a normal invoice!

My strong advice: check and double check every single detail. Then CHECK AGAIN. Trust me on this. (use the info below as a check list)

CONTENTS OF COMMERCIAL INVOICE (so put all of this in your “Draft Purchase Order” email, telling the supplier to show all of this in the Pro Forma Invoice)

Address of “Ultimate Consignee” (US customers term for the person who is actually responsible for the products i.e. your business): Your Name, Your Business, Your Address or Business Registered Address, UK ( note- even if you don’t have a Company registered, use your business name on all documents, websites etc. Be consistent)
Delivery address: probably Your Name, Your Business, #Work Number of some kind, Warehouse address, USA
Make crystal clear to your supplier that your UK address is NOT the delivery address! Have the two different addresses in separate parts of the form.
Your business’s EIN number (definition below)
Your business’s DHL account number (or Fedex or UPS – whichever courier your supplier is using)
The products’ manufactured value
Freight charges, assuming your supplier is handling freight for you (it’s nearly always cheaper and works more smoothly at their end). Exact Freight incoterms, e.g., DAP (see below)
Any bank or Paypal charges you have agreed to pay the supplier
Payment Terms e.g. 30% deposit, 70% balance
Make it clear if you are making the payment of balance dependent on successful product testing/inspection. Spell it out.

I’ll put a sample of each type of document up in the next few days.

FREIGHT INCOTERMS

I first dealt with this in Episode 6, because even at that stage, when first comparing potential suppliers, you need to be aware what prices they are quoting mean so you can compare like with like.

At this final stage of negotiations and placing the order, it’s more critical to be crystal clear exactly what you are getting.

“Incoterms” are internationally agreed freight terms. Chinese Suppliers are familiar with some of these, although as ever, they tend to use them in their own way.

There are 11 incoterms, each with a unique 3-letter abbreviation. The most important thing each does is: to define precisely when the responsibility for the shipment passes from the Seller to the Buyer. You can further split that into Risks, Responsibility and Costs but I don’t believe you should overthink this at this stage of knowledge!

Here’s a chart showing the detail if you want to educate yourself.

HOWEVER – The good news is that there are only 4 incoterms you’ll probably need to discuss or understand as long as you are using air freight (and I do NOT recommend using sea freight for a first order):

EXW – “Ex Works” – this is the price straight from the Factory Gates. I would never advise you buying on these terms because it means you would have to engage a Freight Forwarder to get the product through all the hoops (clear Chinese customs, get put on board plane, get freight plane over to USA, clear USA customs, etc. etc). It is useful sometimes at the sourcing stage for a like-for-like comparison for price between different suppliers. But don’t agree to it at this final stage.

FOB – “Free on Board” – The Seller will pay for Land transport to the port, export customs, and loading on board the ship. This technically can only be used with Sea Freight but the Chinese use it all the time for sea or air freight.

Again, this is a very common way of quoting price so useful at sourcing stage. At this stage of ordering, I think you should avoid like the plague. I think this leaves way too much for you to organise (international freight, clearing US customs, unloading in US Port, organising freight within the USA to your warehouse etc.)

DAP – “Delivered At Place” – sometimes (incorrectly) called “DDU” – Delivered Duty Unpaid (I am guilty of using this term too, possibly influenced by one of my suppliers!).

This means the supplier undertakes to do everything necessary to deliver your products from their factory door directly to your warehouse, EXCEPT for clearing U.S. customs and paying U.S. import duty.

This is the method I have used so far with both of my current suppliers and all my imports (6 to date). I like it because it takes care of most of the issues, but it still can leave you holding the baby with the U.S. customs. It is my recommended method unless you can get DDP (see below), which is even more straightforward for you.

If you use this method, you will almost certainly get a better freight rate than if you asked for it yourself. That’s because your supplier ships probably 100X more volume per month than you are importing. However, you can check this price is reasonable by opening an account yourself with DHL (or Fedex or UPS or whoever they use for freight), and getting a quote for air freight to your warehouse address.

You need to open an account with DHL (or Fedex or UPS) anyway so you have a way for them to easily invoice you for customs duty etc., so you might as well get a quote while you do that.

You’ll need to know the exact weight and dimensions of each (packaged) unit, or the weight and dimensions of each carton=case of products (and of course the number of units per carton). Then you can calculate the cost per unit and the total cost.

For reference, I’ve generally been charged about 7-8 USD per kilo for air Freight DAP to Portland, Oregon.

DHL/Fedex or UPS only, folks!

It’s really important if you use this method to only work with a supplier who will work with one of the standard courier companies: DHL, Fedex or UPS. That’s because of customs clearance in the USA. If you set up your own (company’s) account with DHL, they can pay for duty and customs charges upfront and will invoice you or charge you directly for it. This means you don’t need a customs broker to clear U.S. customs.

If you allow your supplier to use any courier company that uses a normal airline, you will need to use a customs broker, meaning more costs and more complications for you. SPELL OUT to them that they are not to do this! Guess how I learnt about this!

I haven’t yet found a supplier who is willing to supply on this basis, as it means they are exposed to the vagaries of U.S. Customs. BUT if you can find one, I totally recommend this unless the price is outrageous.

It means that you effectively don’t have to think about the Freight part of your supply chain and avoid any potential complications with the U.S. Customs.

U.S. CUSTOMS

This is possibly the most worrying/stressful single area of importing, but if you get your paperwork spot on, you should have few problems with it. I’ve only had problems so far when the supplier didn’t use a standard courier as discussed already.

Duty Calculator www.dutycalculator.com As the name implies, you can calculate the import duty %age that any product attracts. Just follow the simple prompts – which country importing from? which to? Product description? etc.

Duty rates vary from 0% to 37% but I’ve only found between 0% and 6.5% for my products so far. Only 3 credits for free so use only when you’ve shortlisted to 3 product types in product research. Then use again at this stage to double check your costs for your Profit & Loss calculations.

WORKING WITH YOUR WAREHOUSE

This is something I’ll go into in more detail in the next episode, along with Amazon Inbound Shipping. But I’m including both here to complete the end of your Supply Chain.

Once you’ve got products to Amazon, you’ve completed the end of your Sourcing Phase of the Startup process.

If your warehouse is experienced and competent, Like ECM or FBAI, it should not be a big deal for them to work sensibly with you. After all, for the first time in a while, you’re dealing with native English speakers (for the most part, anyway!). Huzzah! Also, most places are experienced with Amazon’s requirements.

Again, just be crystal clear

a. that you know what services they can offer.

b. that YOU know which ones you want

c. that you communicate to the WAREHOUSE exactly what you want.

Services receiving warehouses generally offer include:

receiving goods (this is the most basic service for which you are using them)
sticking on Amazon FNSKU labels (Amazon can do this for you at 20 cents each, which is similar to what other places charge, but check)
putting in inserts, e.g., “Go to this website to activate your warranty” – which I use to capture email addresses within Amazon’s Terms of Service (TOS)
testing products if you haven’t had that done in China (in which case you need to create and send crystal clear instructions – see episode #8 for details)
inspecting products and product inner packaging superficially
replacing damaged inner boxes **TIP** get your supplier to create about 10-20% extra inner boxes to replace any damaged in transit. So for 500 units, you want 50-100 extra boxes. Amazon will count damaged inner boxes as defective units
repackaging inner boxes (units) into outer boxes=cartons=cases ready to ship
liaising with UPS (Amazon’s dedicated courier for inbound shipping)

Try to agree it all upfront. That’s better for (i) budget planning and (ii) smooth working & quicker timescales with your warehouse. However, stay in touch with them and if you need extra services last minute, they are normally happy to do those. Just expect a small extra delay if you do this. First time out especially, you’re likely to need to tweak things. Don’t give yourself a hard time- just keep moving!

INBOUND SHIPPING TO AMAZON

I’ll cover this in more detail in the next episode, but you need to know about this at this stage.

You will need to have set up a product listing at this stage. I’ll get into detail of that in the next episode but do the very basic steps, so you can therefore get an FNSKU, and set up Inbound shipping.

A crucial Amazon term is FNSKU – The FBA SKU (FNSKU) is an Amazon product identifier for products that are Fulfilled By Amazon (the FBA of this podcast’s title) . The FNSKU identifies the product as yours. You need an FNSKU in order to create FBA Inbound Shipments, which is the next stage.

To get the FNSKU, set the product as Fulfilled by Amazon, and then launch it to Amazon. After a short period of time, Amazon will assign an FNSKU to the product. Click Get FNSKU on the Action Menu of the Amazon Properties page.

Inbound Shipping – simply means freight from anywhere in the USA (in our case, from our receiving warehouse) to whichever Amazon warehouse or warehouses Amazon chooses to store your products in. When you create a Shipping Plan (more in next episode), you will input the size and weight of your cases (cartons) and the number of them (and no. units/carton).

Amazon will then automatically assign your products to (a) specific warehousese(s). You just need to fill in all the info, click “Create shipping Plan” & then send the resulting PDFs to your warehouse.
They should then complete the process of getting your products to Amazon. Voilà! You have product live, ready to sell!!

I’ve included the warehousing and inbound shipping info here as it completes the process of getting product from your supplier to Amazon. However, the place to go into both areas in detail is in the next episode. So click here and listen and read your show notes!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#8 Amazon Sourcing From China 3/4

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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”!

QUALITY CONTROL

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.

QUALITY CONTROL

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!

PAYMENTS

Fraud prevention – escrow

Ease/Speed & some protection – Paypal

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

30/70 split

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#7 – Amazon Sourcing from China 2/4

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Episode #7 is the 2nd of 3 episodes addressing Sourcing Products, i.e., finding suppliers and ordering and receiving products.

It is also part 5 of the 10-part “Amazing FBA Startup System” series of podcasts.

The steps in this episode are in part reiterating previous steps but in more detail.

The first thing to do once you’ve found up to 20 suppliers is to create an email template, then copy and paste and send it to each supplier (obviously changing the supplier contact name!).

Try to do it in one -two work sessions if possible – it’s much more efficient.

EMAIL TEMPLATE

Dear Supplier Name,

I am the Buying Manager for Mike’s Cookware Ltd. We sell Cookware products, mostly online on Amazon in the USA. Here is our company website www.mikescookware. com if you wish to find out more.

We are looking to add Silicone Spatulas to our product line and your product Model SS2 might be perfect for us. Please can you answer the following questions about your product?

Can we private label (OEM?)

2. What is the cost of a sample?

3. How long does it take to receive samples?

4. Do you accept paypal for samples?

5. Do you accept paypal for orders?

6. Do you use DHL, Fedex or UPS for delivery?

7. If so, What is the cost DAP/door-to-door with DHL, Fedex or UPS to [Warehouse address] in USA for 200 pieces? for 500 pieces?

8. How many days between your receiving the deposit payment and you finishing manufacturing? [manufacturing lead time]

9. How many days between shipping product from your factory and receiving product in USA? [shipping time]

We have contacted several potential suppliers and will choose 3 suppliers to get samples by X date [in about a week].

I would be grateful for your quick reply.

Thank you very much in advance for your help.

Best wishes,

Michael Bloggs,

Buying Manager, Mike’s Cookware Ltd.,

Registered Company: 12345678

33 Any Road, Anytown, POSTCODE, United Kingdom

Tel: 0208 1234 567

www.MikesCookware.com

Email Language/Approach:

Do not come across as brand new to business! Use phrases like “we are looking to add this product line” and “our company”. Don’t say “I’m thinking of” nor “new to business” nor “new to Amazon”.

Use simple language but don’t use slang. Keep sentences short (I struggle with this! Edit your message after you draft it).

Format properly with Capitals, check spelling, neat layout (come across as professional – even if your supplier doesn’t do any of these things.) Remember that email is easier to read with plenty of white space compared to printed letters.

Address supplier contact by name if you have one

Say you are the Buying Manager or Purchasing Agent or Procurement Agent for “Your Business” Ltd. Even if you don’t yet have a limited company, give your business a name.

Ask questions with numbering

Sign off with as many company/business credentials as possible, including registered company number (if you have registered a company yet), website address, dedicated tel. no. etc.

Size matters! It’s all about appearing bigger and more established than you are yet!

Setting up a receiving/inspection warehouse in the USA:

FBA Inspection – based near Los Angeles in California

Earth Class Mail (ECM) – based very near Portland, Oregon

International Payments for samples

Paypal – the simplest, quickest way of making international payments. It also gives you buyer protection. Not all suppliers will accept this because of the cost to them (ca. 4% of sum received) but it is worth offering to pay half of this cost or even all of it.

Otherwise, use your bank and do a “Wire Transfer”= T/T – Telegraphic Transfer.

Yes, there is small potential for fraud but when dealing with a small amount like $30-80 USD, I wouldn’t worry about it – keep the process moving above all. You can’t control delays due to samples being manufactured or their freight, nor due to actual products being made or shipped, so don’t add any other delays!

Details on payments and fraud prevention for actual orders are here in Episode #8.

Designers/Photographers

Until you have your sample, you can’t actually get photos done yet, but you can start the process of looking for and negotiating with a suitable photographer.

My Photographer: Brian Cottam of Brian Cottam Photography. He has done product photography for various UK companies that household names. Mid priced so not the cheapest, but the shots are of very high quality. High quality photos are seriously important for Amazon listings. He has an excellent eye and takes great care over the details. Also fast and very friendly.

Equally, you can’t design packaging until you have decided on your supplier and got the packaging details from them.

However, you can a. choose a designer

b. get a professional logo made. This can immediately be used on your business’s website to give a more professional look.

Also, the logo will be ready to send to your supplier to print onto your product when you are at that stage.

Ask your designer to give you two forms of logo: one ready to screen print onto products and the other web-optimised. Also, ask for black on white and vice versa. If you’re using colour, you may want to also ask for black and white versions.

My Designer: Amanda Reid of Clear Moon Studios – UK based designer with a very good eye and very broad experience, including having lived in the USA She has done design work (using templates from Chinese manufacturers)for me and several friends with Amazon businesses so she knows the routine. Very friendly and efficient.

She also does website design. I haven’t used her services for this yet but I’m planning to upgrade our company website soon and she will be my first port of call.

Other websites for design and photography

www.fiverr.com – probably the cheapest and easiest.

www.99designs.com – probably offers more choice and better end quality. You basically run a mini “Design competition”. A favourite of some internet business gurus like Tim Ferriss, so not to be sniffed at.

48hourslogo.com – specifically for logo creation, again, probably the cheapest and easiest.

Confession – I haven’t used any of the above for design or photography as I have my own trusted people. But I do know people who have had good results with all of the sites listed.

Subscribe to the Podcast to get the complete 10-part Amazon Startup System delivered to your favourite device!

HOW TO SUBSCRIBE TO THIS PODCAST

A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.

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

For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.

For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.

If you have any queries, just go to www.amazingfba.com/ask.

#6 Amazon Sourcing from China 1/4

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This Episode, #6, is the 1st of 3 parts dealing specifically with sourcing, i.e., finding suppliers, negotiating, getting samples, and getting product manufactured and sent to Amazon USA.

It is also part 4 of 10 of the “Amazing FBA Startup System” series.

**STOP PRESS** REVIEWS CONTEST!

The first 25 people to review the show on iTunes will be entered into a draw. The winner will receive a £50 Amazon Voucher from Amazing FBA!
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!

Resources mentioned

Supplier sites

Sourcing from China – alibaba.com. This is where nearly all private labellers shop.

What filters to use on Suppliers on Alibaba:

Gold Supplier – Supplier pays $2500 odd to list on Alibaba.com. Not in itself a great safety check, but check how long supplier has been listed. The longer, the better.

Assessed Supplier – Which I called “Verified Supplier” in the Podcast. Here is Alibaba’s explanation. Basically, a 3rd party inspection company has been in to check their claims are true and that it looks like a legitimate business. Of course, this being China, we can’t be absolutely certain of the integrity the 3rd party, but it’s another level of check.

Onsite Check – on a laptop/desktop, this only seems to show in the sidebar on the Alibaba site. This means they physically check the factory, which is obviously a lot better than just checking the paperwork.

Certificates – again, in the sidebar. For certain products, you’ll need certification for the product. E.g. 1, silicone spatula touches food so it will need FDA (Food & Drug Administration) approval in USA.
E.g. 2, electric lamp as an electrical item will possibly need certification (More in episode #8 how to find out what certification is needed).

ALTERNATIVES TO ALIBABA.COM

HKTDC.com (Hong Kong Trade Development Corporation). These companies are more likely to be Hong Kong based, which has a stricter regulatory environment, a legacy of its days as part of the British Empire. You’ll find slightly higher prices, somewhat less choice but hopefully more consistent quality and business practices

Recommended by a friend of mine who is chief Procurement Officer for Europe for a huge company, so worth taking seriously if you’re concerned about supplier reliability/product quality/potential fraud. I found my supplier of my first product here.

To filter out riskier suppliers, use these filters:

Company Verified – (Checkbox just below the search bar)

All the major company information has been checked by Dun & Bradstreet, a very established (nearly 200 years old!) and respected auditing company based in the USA. About as safe as it gets in China/Asia generally.

Certificates Verified (Checkbox just below the search bar)

Quality Compliance (Checkbox just below the search bar for some searches) – a check that the supplier at least on paper has

Information on how to deal with Chinese Suppliers

China Importal – This company will try to sell you into a quick pricey service where they will find and assess suppliers for you. I don’t recommend that, but their blog (linked above) and their free email series are useful guides.

Proven China Sourcing (eBook) by Walter Hay & Jim Cockrum. This site is a sales page for “Proven China Sourcing”. It costs $97 USD. I bought it and I must say it is no B.S. precise information. But there is a lot to absorb and implement so I only recommend it if you are going to have time to do things thoroughly. If you try to implement everything in this eBook, and can only work it very part-time, you will possibly delay things by months – more or less the trap I fell into.

Glossary of Technical Terms

MOQ – Minimum Order Quantity – the lowest number of units that a supplier is prepared to produce in one order.

Pieces- this is simply the Chinese preferred word for “Units”, i.e., the number of “copies” of a given product line to be produced. Abbreviated to “pcs”.

Private Label Product – A product produced by a manufacturer who will put your logo on the product and/or your design on the packaging. The same as “White Label Product”.

This is the essence of the business model that I use and that for example Amazing Selling Machine promotes. That’s because it is technically a “new” product so you can use a new UPC (product code) on Amazon and have a unique product so nobody else can compete for the “Buy Box” (more on this in future episodes). Also you are building your brand every time you sell a unit.

OEM –In normal usage with Chinese suppliers, it means the same as “Private Labelled”, ie with your own logo and/or packaging design.

In theory, OEM stands for “Original Equipment Manufacturer”. Also in theory, it refers to your own design being produced by a factory. Technically the alternative term for Private Labelling should be “ODM” but I’ve yet to find a Chinese supplier who uses that term.

FREIGHT INCOTERMS

Freight is dealt with in more detail in Episode #9, but I thought it worth putting this in here as you’ll need to understand what prices you’re being quoted during the phase of looking for suppliers and negotiating.

“Incoterms” are internationally agreed freight terms. Chinese Suppliers are familiar with some of these, although as ever, they tend to use them in their own way.

Here’s a chart showing the detail. The good news is that there are only 3 incoterms you’ll probably need to discuss or understand:

EXW – “Ex Works” – this is the price straight from the Factory Gates. I would never advise you buying on these terms because it means you would have to engage a Freight Forwarder to get the product through all the hoops (clear Chinese customs, get put on board plane, get freight plane over to USA, clear USA customs, etc. etc). But as it involves basically no Freight, it means you have a like-for-like comparison for price between different suppliers if you want to be extra thorough.

This is a very common way of quoting price but I still think this leaves way too much for you to organise (international freight, clearing US customs, unloading in US Port, organising freight within the USA to your warehouse etc.)

DAP – “Delivered At Place” – sometimes (incorrectly) called “DDU” – Delivered Duty Unpaid (I am guilty of using this term too, possibly influenced by one of my suppliers!).

If you use this method, you will almost certainly get a better freight rate than if you asked for it yourself. That’s because your supplier ships probably 100X more volume per month than you are importing. However, you can check this by opening an account yourself with DHL or whoever they use for freight, and getting a quote for air freight to your warehouse address.

DHL/Fedex or UPS only, folks!

DDP- “Delivered Duty Paid” – This is the De luxe and simplest of all Freight terms – your supplier will pay for and be responsible for everything from their factory gates up to your warehouse gates. I haven’t yet found a supplier who is willing to supply on this basis, but if you can find one, I totally recommend this unless the price is outrageous. It means that you effectively don’t have to think about the Freight part of your supply chain and avoid any potential complications with the U.S. Customs.

Checking Customs quotes

To check the price is reasonable, get a quote, then go and check all the customs costs. Even if it ends up being somewhat more, I’d still be inclined to take it, just to simplify my first purchase.

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INSPECTION IN CHINA

Again we get into this more in Episode #8, but it is important to try your best to get independent (3rd party) inspection and testing of your goods in China before they get shipped if you possibly can.

Since one of the keys to quality inspection is the integrity of the inspection person or company, it’s by far the best to get a recommendation via trusted friends or colleagues. This is when being a member of a community of fellow Amazon Sellers is most useful. Also look among your friends with corporate jobs – you may well find someone who deals with international buying, in which case, they’re very likely to deal with China frequently, since China exports pretty much every type of product in huge quantities. If you’re using a freight forwarder or Customs Broker (about which more in Episode #8), ask them if they have such contacts – that’s how I first found my first inspector in China.

However, if you don’t yet have such contacts , Alibaba.com has now started offering a service to find you a quality inspection company – click here to use this service.

I have yet to use these but am considering doing so for a new shipment. I’ll keep you posted as to how it works.

I’ve paid about $80 a day to an individual.

Bearing in mind that a day was enough to inspect and test 80/500 units and thus pass Quality Control for 500 units, that’s a cost of 16 cents or 10 pence per unit for QC – totally and utterly worth it for a crucial part of the supply chain.

The only company I’ve foundvia Alibaba.com potentially suitable for my next shipment (that covers my type of product and in the right location) , charges $198 USD a day for full inspection.

You’ll need to have your chosen supplier’s factory location to find inspectors of course – at least, the City and Province.

If you don’t have products tested in China, then at the very least get them tested in the USA when they land. You will pay a lot more for it and it gives you less control over your supplier. But at least it minimises the number of defective units going to Amazon.

That is the absolute must in this business to prevent a. Your account with Amazon being put into bad standing (remember, they want under 1% defect rate), b. lots of 1-2 star reviews and reputation damage.

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