Here is what Amazon sellers need to know when sourcing products from China.
China is fast emerging as one of the biggest economies of this century. Even though product prices in the Chinese market are rising, the prices are still much better than the domestic market. Sourcing from China proves to be an incredibly smart move for many Amazon merchants.
Thousands of Chinese products can now be found on Amazon. Thanks to online marketplaces like Alibaba and Tmall, many companies, both big and small, find it easier to source their products from China.
If you are an Amazon seller and getting started with China product sourcing, here are a few things that you must ensure:
If you are new to China product sourcing, it is always a good idea to ask for a product sample from your Chinese suppliers. Test the products to ensure that it meets the safety guidelines of your country and any other standards that the product must be compliant to.
It is a common misconception that if you buy your products from a big Chinese supplier, they will automatically meet your country’s compliance guidelines. The quality and compliance standards of China are different than those of Western countries. To be on the safer side, ask for product samples before placing an order.
You may also ask the suppliers for necessary certifications to ensure that the products meet the legal and safety regulations of your country.
Most Chinese suppliers offer the quoted price for a certain number of weeks or months. Be mindful of the offer date as you would be able to take advantage of the low price during this time. The price of raw materials fluctuates often. Even if the raw materials get costlier during this time, you can still get your order at the original price. Buying at a fixed offer price means that you don’t end up paying a higher price due to fluctuating raw material prices.
Getting good quality products at affordable rates is the biggest advantage of sourcing from China. When you look at the Chinese product prices, never forget to factor in the logistics costs. Sometimes, logistics costs may be as high as 50% of the product price.
Most Amazon sellers new to China sourcing often make their most expensive oversight when they don’t factor in the costs for shipping, packaging, taxes, and customs clearance. Make sure you consider all these costs along with the product price to understand if it is a feasible deal for you.
Another mistake that many Amazon sellers make is that they believe that just because a supplier is selling on big marketplaces like Alibaba and Tmall, they are reliable. None of the online marketplaces guarantee that all the suppliers listed on their website are trustworthy. Thus, it is important to verify a supplier before you place an order.
How can you verify a Chinese supplier? The ideal way to do so would be to hop on a flight to China and meet the supplier personally. However, this is not a viable option for many. The next best thing is to hire an Amazon product sourcing agent.
A good sourcing agent is not only fluent in Mandarin and other Chinese dialects but also English. They can easily bridge the language barrier between you and the Chinese supplier. The right sourcing agent won’t just help you find the right suppliers, but they can also help negotiate the prices so that you get a better deal. They can also take care of transportation and quality control oversight, which should ensure that the suppliers meet the exact product specifications including quality and safety guidelines.
You can cut down costs by buying goods directly from the manufacturer and eliminating the middle links. However, it is easier said than done, especially in the case of larger manufacturers. Small-time Amazon sellers often fail to grab the attention of larger manufacturers. As such, it is best to work with medium-sized Chinese manufacturers.
This is where a China sourcing agent can prove immensely helpful. Not only can they connect you with the right manufacturers but they will also take care of other shipping and export concerns.
As much as it is important to work with reliable manufacturers and suppliers, it is also important to learn how the products are made. Verify if there are any engineers involved in the manufacturing process. Also, check what manufacturing processes are used by the manufacturer.
Amazon sellers must know how the product works and must take the time to test out the products personally. Occasionally an Amazon seller has had to disassemble and fix the product himself. As such, understanding how the product works, the materials used, and knowing anything else that may be concealed inside is a very good idea.
You should take special care when sourcing electronic items from China. Any defect or problems with such items only surface after weeks of use, which in turn leads to return and warranty claims. To avoid such problems, source electronic goods from only reliable manufacturers and test out the product samples before placing an order.
If it is a new product that you are trying to source, sending a prototype to the Chinese manufacturer can ensure that products are manufactured exactly as per your requirements. A good idea would be to have a sample locally manufactured and sent to the Chinese manufacturer. Not only does it help the manufacturer understand the exact specifications, but a prototype can also help you gauge if the delivered goods have lived up to your expectations or not.
Under no circumstances should you compromise on quality or accept goods of inferior quality. Remember that the standards that Chinese manufacturers follow may not be the same as that in your country. You must explicitly explain what ‘quality standards’ you are looking for.
Language can be a huge hurdle when communicating with manufacturers or suppliers in China. Engaging a sourcing agent can help you overcome the language barrier and ensure that the manufacturer understands your exact specifications in terms of production as well as quality. Typically, the best China sourcing agents are fluent in Mandarin, Cantonese, and English. They can make sure that the manufacturer understands your requirements and the guidelines that they need to adhere to.
If you are new at China sourcing, you may also want to check out the brands and trademarks registered at Amazon Brand Registry. It can save you a lot of time and effort that you may spend on removing the brand and patterns.
Amazon sellers who are experienced in China sourcing would know that most Chinese suppliers don’t prefer to use PayPal as it is quite expensive for them. However, you may use this payment option when ordering a sample for review.
At the rates that you buy products from China, the manufacturers there do not have a very high-profit margin. Hence, you must discuss the payment terms before signing the sales agreement. It is not unusual for most Chinese manufacturers to agree to a 50:50 deal. It is also safer to pay some of the money upfront and then to pay the balance upon delivery.
Also, always remember to add delivery charges and customs duties (when applicable) to the purchase price of the goods.
When it comes to finding the right suppliers, most people would straightaway recommend Alibaba. However, when you restrict yourself only to Alibaba you shortchange yourself out of potentially better options.
We do not mean to say that you should never look at Alibaba. After all, it is a leading website featuring a host of small and medium-sized businesses. However, you will seldom find big companies listed on Alibaba. You can also look at other such online marketplaces, but typically the results will be the same.
Using a trusted sourcing agent is the most effective way to find the best manufacturers in China. When you hire a China sourcing agent, you don’t just pay for their sourcing expertise, but also their extensive experience and connections.
The right sourcing agent can help you connect with the right manufacturers that specialize in the products that you deal with. From recieving the initial quotes from suitable manufacturers to getting the products delivered to your warehouse, a sourcing agent can basically take over the entire procurement aspect of your business.
Manufacturing products is a time-consuming process, and the time required may vary depending upon the products that you need. The Chinese manufacturer would be able to give you a fair idea about the amount of time it would take to manufacture the goods. However, that is only the manufacturing time of the goods. You must remember to factor in the time taken for delivery and customs clearance to get a realistic view of the time that you may need to wait for. Consider all these factors so that you can plan your Amazon inventory accordingly.
Sourcing products from China requires some amount of research. The process can be a little complicated, but it is certainly attainable.
Here are our top 3 tips for sourcing products from China:
Whether you find your suppliers through Alibaba or a China sourcing agent, finding the right supplier is the key to sourcing products from China. Developing the right working relationship with your supplier in China can prove highly beneficial for your business. When shortlisting a supplier, figure out if you are dealing directly with the manufacturer or a trading company. You can negotiate the best deals if you know who you are working with.
It may sometimes be a little difficult to navigate the process on your own. However, if you engage the help of a sourcing agent you will ensure that you potentially get the best deals as they can be a big help during negotiations. Plus, a sourcing agent would only connect you with manufacturers that specialize in your products.
When we think about negotiations, we typically only think of the price. However, there is a lot more to negotiate such as quality, payment terms, and delivery time.
You may pride yourself as a strong negotiator. However, if you manage to negotiate too cheap a price, you are possibly setting yourself up for failure. Extremely cheap products are often of inferior quality, or there may be other problems like poor packaging or late delivery. When you negotiate, you should try to arrive at the best price not just for you but also for the supplier.
Negotiations do not end with your first order. With repeat orders, you may get a higher discount through effective negotiation.
Maintaining a check on the quality of the products is extremely important for Amazon sellers. Safeguard yourself by incorporating all aspects like product design, raw materials, dimensions, quality, packaging, and shipment in your sales agreement. You can also incorporate mandatory quality checks in the sales agreement.
When you monitor quality throughout the manufacturing process, you can reduce costs by eliminating waste and rework. You may request a pre-production sample to review the full production quality. Always match the quality of the sample you receive with the manufactured items before you make the remaining payment. If you do notice any issues, you may ask the manufacturer to fix the issues or replace them with the quality of the product that was agreed upon in the sales agreement.
The process of sourcing items from China for Amazon sellers can be time-intensive. There have been times when buyers have ended up with poor quality products or high priced items that eat into their profit margins. Hiring an Amazon product sourcing agent in China can ensure that you do not face issues of price or quality. Engaging a good sourcing agent can be a smart business move that helps to maximize both your profits and business growth.
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.
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