With over 2.5 million current sellers actively selling on the platform, Amazon has emerged as the leading marketplace. In the U.S., the Amazon shopping portal enjoys immense popularity, with more than 150 million users. More than 50% of sales in Amazon are from third-party sellers. Recent statistics show that over 49% of top sellers in Amazon.com are based in China.
China continues to be the premier manufacturing location for Amazon sellers despite recent trade tensions and rising labor costs. Although Amazon sellers have been sourcing from China for years, there are many challenges they face when it comes to Chinese suppliers. Many misconceptions exist on how to source and effectively manage the product quality of Chinese products.
Most misjudgements and mistakes that Amazon sellers make with Chinese suppliers can be traced to poor communication, poor preparation, and unclear requirements.
Here are the top five mistakes Amazon sellers make when it comes to sourcing from China and steps to take to avoid them:
The top five mistakes and how to avoid them
#1: Not sourcing the right products
The first question Amazon sellers are faced with relates to the type of products that can be sourced from China. While there are many suppliers who offer a wide range of products, one of the top mistakes sellers make is to source the wrong product. Some products are not suitable for e-commerce, while some suppliers may not have experience in a particular product that you wish to sell.
Amazon sellers who are inexperienced should particularly avoid sourcing these types of products from China:
Complex products: One of the first mistakes Amazon sellers make is to source a complex product from China. The reason why such products are unsuitable for e-commerce is that it is more difficult to maintain quality standards for such complex products. These can include high-value items such as watches, jewelry, or consumer electronics. These products often require sourcing of multiple materials and parts from different sub-suppliers. Even when the Chinese supplier sources all the parts, there may be limited or zero transparency on where these materials or parts are sourced from. The margin of error is higher when sourcing complex products and the supplier can misunderstand product specifications, production processes, or how the product is used. These misunderstandings can lead to poor quality and inconsistencies in finished products.
Products that are labor-intensive (unless you have boots on the ground to monitor them):Luxury goods, shoes, garments, and handcrafted products are some examples of products that are labor-intensive. These products will not only have higher labor costs, but the potential for quality issues is also higher. Products that are made using automated processes tend to be more consistent and have fewer human errors. Excessive glue on shoes, untrimmed threads in a garment are just some examples of product quality inconsistencies in labor-intensive products. With minimum wages rising to $348 per month, the higher labor costs can eat into the profits of sellers.
Counterfeit products: Sourcing counterfeit products can translate to legal risks, not to mention repercussions from customs officials and Amazon itself.
Steps to take to avoid sourcing the wrong type of products:
Always research the customer base, the intended market, and the product. You should determine if the product is made using an automated process or if it is labor-intensive before sourcing it from a Chinese supplier. You can also consider a test order to evaluate how the product sells prior to making a decision. The Anti-Counterfeiting Alliance of Alibaba has resulted in shutting down 524 manufacturing locations while Amazon uses machine learning to remove counterfeits.
#2: Placing orders without evaluating the supplier
Once you decide the products you want to source from China, the next step is to find the right supplier for the goods. Most Amazon sellers turn to B2B marketplaces in China, such as Alibaba, Made in China, and Global Sources for sourcing products.
However, being impulsive and rushing to place an order with the very first supplier you find on your internet search is a big mistake.
Paying upfront for an order without first evaluating and vetting the supplier in China exposes your business to wide-ranging risks such as fraud, supplier bankruptcy, and poor quality of goods. Even Amazon sellers with budget constraints can still perform an informal background check to know more about the supplier before going ahead with the purchase order.
Here are some of the steps you can take to ensure you are sourcing from a genuine supplier:
- Beware of suppliers who ask for 100% upfront payment.
- A supplier can be a wholesaler, manufacturer, or a drop-shipper. It is important to know the difference between these terms to determine your purchase strategy. A manufacturer makes goods for resale and has higher MOQ (minimum order quantities) requirements while the prices are low. A wholesaler purchases goods and resells the same to retailers. Dropshipping enables sellers to buy small quantities of items for a higher price.
- B2B marketplaces typically display business information and relevant details of Chinese suppliers. Browse the product catalogs of suppliers and evaluate if they specialize in a particular product or make a range of products. If the supplier only makes the product that you wish to sell on Amazon, the chances are higher that the supplier has the expertise and experience in supplying a good quality product.
- Evaluate the verification provided by the marketplaces. For instance, Alibaba provides different verification levels for suppliers. The ‘Gold Supplier’ badge is given to companies that have a valid business license and are legally registered. These are suppliers that have cleared the authentication and inspection process of Alibaba.
- Evaluate the documents the supplier can provide to authenticate and verify their operations. ISO certificates, business licenses, and test reports are some documents that can demonstrate proof of the legitimacy of the supplier. The issuing body can also be contacted to verify certificates.
- Look into the possibility of auditing the facility of the supplier. Even if you have no intention of following through, if the supplier refuses the audit, that should be a signal that they have something to hide.
See if it is possible to review the product sample before placing an order. Reviewing the product sample is a reliable way of verifying the supplier’s quality standards and production capabilities.
#3: Assuming the supplier in China understands your product requirements
Amazon sellers are surprised when they learn that the supplier in China does not understand the product requirements. One of the most common mistakes sellers make is to think that if their product requirements make perfect sense to them, then they will automatically make sense to the Chinese supplier but this usually is not the case. Due to cultural differences, language barriers, and inexperience with the particular product category- these all can factor into the Chinese supplier or manufacturer failing to understand the specifications.
Common misunderstandings encountered with Chinese suppliers relate to:
- Intended product use: Chinese suppliers may not understand the intended use of the product. For instance, ovens or clothes dryers are rarely found or used in Chinese homes.
- Unit of measurements: In China, the metric system is followed commonly, which can create confusion when you place orders and specifications using the Imperial system used in the U.S.
Labeling and packaging: Another common element that Chinese suppliers may not understand is the wording for labels, packaging, and instruction manuals.
Steps to take to avoid these common misunderstandings:
- Ensure the supplier understands your product’s intended function, even if it makes perfect sense to you.
- Clarify and confirm the units of measurement for packaging and product manufacturing.
- Provide the content for labeling, manuals, and packaging in a format that is easy-to-print so that it does not have to go through any editing. You can provide diagrams and images to show where the symbols, logos, or text needs to be placed.
- Provide product specifications and requirements to your Chinese supplier in a format that is easy-to-understand. Create a quality control (QC) checklist that outlines all the details and requirements for the product, including
◦ Product requirements, such as dimensions and weight.
◦ Packaging specifications such as materials, labeling.
◦ Product test procedures, such as safety and function testing.
◦ Inspection equipment requirements such as scales, gauges, or electrical testing equipment.
◦ Defect classification typically based on major, minor, or critical defects.
Even sellers with no formal training in quality control can create the checklist when they know the quality and function requirements for their product. If required, you can also take the help of a quality control professional to draft the checklist if you are unsure about the standards and processes.
#4: Assuming your Chinese supplier knows about the Amazon platform
Many Amazon sellers make this common mistake of assuming that the supplier in China is familiar with the platform. While Amazon is the most popular marketplace in the U.S. and is widely used in Europe, it is not used as much in China where the preference is for local selling places such as JD.com, Taobao, or Tmall. Even the regular exporters to markets in the West do not often understand the legal requirements in those markets.
Steps to take to ensure your Chinese supplier understands the platform
As an Amazon seller, you will need to explain to your Chinese suppliers the platform-specific requirements, including FBA labels (Fulfillment by Amazon), legal requirements, and suffocation warnings for polybags.
However, ensuring that the supplier understands and complies with the requirements during production can be tricky. Some options you can explore include:
Amazon prep services where a prep center inspects and packages the product before it is shipped to Amazon. However, the downside is that these centers inspect the products after leaving the supplier’s facility, which means it can be too late to correct quality issues. You can try to find a prep service in China that can inspect and return defective products for rework.
Quality control inspection carried out by a third-party company is another way to verify compliance with quality standards. You can consider hiring an inspection staff, although this can be cost-prohibitive for many sellers.
#5: Not working with a sourcing agent
Particularly when you are starting out with your Amazon selling business, it is important to get the guidance and support from the right experts. Failing to do so can expose your business to serious risks, including fraud, product quality issues, and legal risks.
A China sourcing agent is well-versed in all aspects of sourcing products from China for Amazon sellers and offers assistance throughout the process. Starting with selecting the right supplier, negotiating the best price, and shipping the order; even experienced sellers benefit by working with a reputed sourcing agent.
As the sourcing agent has an office in China, not only can they carry out a visual inspection of the manufacturer’s facility but they can ensure a fair deal while building a strong relationship with the local supplier.
The sourcing agent also conducts a factory audit and performs an objective assessment of the staff, equipment, processes, automation and management structure, as well as other factors such as social responsibility or sustainable sourcing.
They carry out quality control inspections that can involve
- Visual inspection for defects such as color inconsistencies or scratches.
- On-site performance, safety, and function testing that helps identify any issues.
- Packaging inspection that can include labeling, shipping cartons, and manuals.
By being involved in every step of production, sourcing agents can help keep the communication lines open between you and your supplier while ensuring your order stays on track. They can also help cover any delays in real time while leading arbitration in case of a misunderstanding or conflict. These agents can also help you find a better fit in case you wish to part ways with the Chinese supplier.
E-commerce competition is getting fiercer than ever. Amazon sellers who maintain robust quality control and source genuine products are the ones who will avoid negative reviews and therefore retain a competitive edge, potentially earning a spot on the bestseller lists. Working with the right sourcing agent is one of the best ways to achieve your goals as an Amazon seller.
Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since 2006.
For more on China sourcing visit our website or write to us at email@example.com.
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