Amazon FBA sourcing might not be such a new concept to some of you. Some of you might also already have your online stores set up on Amazon. But, what is new to eCommerce and especially to Amazon is the rising number of Chinese sellers or Chinese products that have flooded the website.
So, if you have ever ventured to buy power banks, electronic accessories, or even pet supplies, you might have noticed these products are either sold by Chinese suppliers or are made in China. So why are Chinese suppliers and Chinese products found in abundance on Amazon?
China is considered as the world's factory, and that claim is backed with evidence and ripple effects. The mass production of nearly all types of consumer products through vast industries has made China a household name. It becomes easier for Chinese suppliers to grab the target market with their dangerously low prices driving out competition. On the other hand, it also becomes easier for re-sellers to keep high-profit margins because of buying products in bulk at a fraction of the cost.
Did you know that according to recent data by the eCommerce research firm, Chinese sellers make up about 75% of Amazon's new sellers since January, nearly a 50% increase from last year? The sudden increase of intense domestic competition in China's retail industry is responsible for Chinese suppliers and products in new online markets.
What also helps their case is that Amazon needs Chinese suppliers and Chinese products for their diverse product portfolio and low cost that attracts customers to shop worldwide.
Many of you might think it can be harmful to Amazon just to have Chinese products or sellers. While that claim is partially true because of black hat practices employed by Chinese suppliers to get their products listed higher on Amazon. It doesn't mean that Chinese products should not be trusted. In fact, you may find that nearly 75% of the products available on Amazon are made in China. Not to mention that more than 90% of the Chinese products are sold by FBA sellers.
This brings us back to the focus of this article which is FBA sourcing from China, but before that, you need to know what FBA is?
Within Amazon, the addition of fulfillment refers to the entire process of handling orders, and it is a service provided by Amazon to its sellers. This includes storing, packaging, shipping, and handling exchange or refund terms. So, in other words, if you want to open your online store on Amazon and you need help with storage, packaging, and shipping, then Amazon's FBA service can come in handy. As a result, it takes the burden off of you as a seller, allowing you to focus on other aspects of your online store, such as marketing and product sourcing. Not only that, but it helps you to keep track of customer orders, ship your products on time, and even obtain information regarding products for promotion.
Amazon's FBA service works in such a way that sellers or suppliers will provide their stock of products and send it to Amazon's fulfillment center. This is where FBA sourcing from China comes in because some sellers decide to source their products from China to be sent to the Amazon fulfillment center. This center is a warehouse where products are usually kept until they are sold.
The Amazon fulfillment center is a lot like a world run by robots. In this center, robots work alongside Amazon employees.
This is where inbound associates receive products sourced from China through a trailer that arrives by appointment only. They are then stowed by storage pods into the inventory randomly, it might seem strange to do it randomly, but that's part of Amazon's web services technique. The products are then picked up, packaged to be ready for distribution.
This should help you gain trust in the process of Amazon employees handling your customer orders while you are only concerned with FBA sourcing from China.
That is not to say that fulfillment services cannot be availed from anywhere else. It just seems more aligned and better for Amazon sellers to use the FBA service as well. So how does one source Chinese products for Amazon FBA?
It is not common knowledge, but product sourcing from China for Amazon FBA is considered one of the most profitable Amazon business strategies. It is not overly complex, but it is also not just reduced to sticking a UPS label on a product. As an Amazon seller, your first and most primary objective is to source profitable products and cater to a diverse audience. After which, you would want those products shipped to Amazon fulfillment centers, also known as FBA warehouses, at the lowest cost.
Since trailers carrying a bulk of products arrive at Amazon fulfillment centers by appointment only. Hence, you have two options of shipping your products sourced from China to Amazon FBA warehouses:
You can ship directly to Amazon FBA warehouses from China. For this, you would need to work with a reputable freight forwarder in China who specializes in Amazon FBA. This can help you save more than working with a company based on your final destination.
One of the mistakes sellers make when shipping directly from China is not considering the impact that Covid-19 has had on shipping costs. Currently, shipping costs, especially air freight, have increased three times. Moreover, the shipping terms have also drastically changed due to Covid-19. With less manpower and vessels available, the shipping time from China to FBA has increased. Not to mention that the shipping terminals in different parts of the world are packed with traffic. As a result, one needs to keep in mind that it does increase the transit time by half a month more. This is combined with some shipping routes closing down temporarily, leaving only a few pathways to transport goods.
Another problem that occurs is communicating with Chinese manufacturers about the terms and conditions of not just manufacturing your order but also of keeping in line with Amazon FBA policies. However, now Chinese manufacturers are quite familiar with FBA specifications, but a little extra care can still save you from incurring unnecessary costs.
You can alternatively look for a company, a middle man, or put yourself as the third party. That means the products sourced from China would be transported to you. Once you receive your order you can forward the stock to an Amazon fulfillment center. However, be warned that this process has its benefits and drawbacks.
The benefits are that if you have hired a sourcing company that will deliver the products to Amazon FBA. They would monitor your order properly from manufacture control. So you can be completely sure that the order of products that reach Amazon FBA warehouses is of top-notch quality. This also saves you time and makes your entire online business smooth.
Alternatively, if you choose to keep a middle man or yourself. The order will be delivered safely to you, but the chances of products getting damaged when you transport them to Amazon FBA are higher. This is because one needs to specialize in shipping regarding Amazon FBA. So, if you are not familiar with it you are bound to make a mistake somewhere.
Now that you might have decided on which of the two ways would work the best for your FBA sourcing from China. The main question is, how does the process work?
A good way to begin is to estimate the weight of your shipment. If you are opting for an ocean-based shipment, then you should look for a freight forwarder. A freight forwarder is only beneficial for air shipments if your order weighs more than 200 kilograms. Such orders will ship in 8 to 10 days by air freight and it will take 30 to 40 days by ocean freight. So what happens if your shipment order is less than 200 kg? You can just send through your Chinese supplier who will use DHL air express as one of the ways of transportation. The benefit is that shipment below 200kg will arrive in just 3 to 5 days. We recommend this because using a freight forwarder for shipments weighing less than 200kg will cost you a lot more than you would like.
An Amazon Shipping Plan can seem like another hurdle in your journey of FBA sourcing. But don't worry, we are here to tell you why this is necessary. When shipping goods to Amazon fulfillment centers, you need to create your shipping plan in the Seller Central platform. This step is to allow the correct information to exist and to inform Amazon about your stock so that there are no setbacks when your shipment reaches Amazon's FBA warehouses.
Don't worry about your shipment plan expiring because it doesn't!
This platform allows you to avail of Amazon's FBA service and want them to do the packaging or opting for just the unique Amazon barcode to be applied on your products. The decision is up to you. However, the popular opinion states that going to your supplier for packaging is more affordable than the option for Amazon to do it.
You can opt for the option of 'Small Parcel Delivery (SPD) or UPS. After which, you will complete the shipment packaging section by entering the units per box, the number of boxes, and the weight of each box. The approximate shipping cost will be mentioned in the Shipping charges. This is only to be used if you have more than 30 cartons. In the end, you will only need to provide your freight forwarder with Amazon FBA carton labels that can be generated from your Amazon Seller Central.
The second delivery method is 'Less Than Truckload' (LTL) an 'Amazon-Partnered Carrier'. It can be used if you have less than 30 cartons. The process of applying for it is exactly similar to how you opt for UPS.
The most common type of ocean shipment is 'Less Than Container Load' (LCL). This only applies if your shipment order is lesser than 18 cubic meters. Hard to grasp? Well, think about it in terms of the space your shipment order is likely to take up rather than the weight it has. If your products are falling in the category of LCL, chances are they will be shipped along with other sellers' products. What to prepare for? Your order will be first shipped to the United States of America, after which it will be offloaded at a container freight station where your order is prepared, and then it is sent to FBA warehouses. So opting for a freight forwarder can be very useful here.
The second type of shipping is 'Full Container Load' (FCL), and that applies if your shipment is beyond 18 cubic meters. The advance here is that your shipment will be transported directly to Amazon's fulfillment center, so there won't be any container freight stop overcoming. This is usually considered the best because it means your products are delivered safely to Amazon fulfillment centers without any trouble.
The third shipping method is via air which is considered to be fast and much more simple. The weight is usually charged, and it is used by airlines in determining the price to charge for carrying your shipment. So be careful that the air carrier will be charging you for whatever is appearing higher than the gross weight or the volumetric weight of your shipment.
Some sellers often skip this step even though it is very important to ensure your product is not removed by Amazon. You need to ensure the quality of your products because that determines customer reviews and orders. So always get your order shipment monitored by a third party even if you have shipped your order countless times through the Chinese manufacturer.
Shipment tracking is possible because if you are doing it with UPS on your Amazon Seller Central platform. Whereas, if you are using LTL, then you can track your shipment order on the carrier's website using the PRO# mentioned on the trucking bill of lading.
You need to set with your manufacturer incoterms which should be added to your manufacturing cost. The most are FOB (Free on Board) and EXW (Ex Works). FOB puts the responsibility on the manufacturer for delivering the order from the factory to the port, usually included in production costs. EXW allocates the responsibility to your freight forwarder for making sure your products reach the port from the factory.
Don't skip this step at all. Freight insurance protects the value of your order. That happens because your shipment is going through storage and handling processes that are more vulnerable to getting damaged. It comes in handy when carriers deny freight claims which tend to happen half of the time. This is important because if your shipment gets damaged during the transit period, chances are carriers will limit their liability by denying their role in it.
In short, freight insurance protects you from all such instances.
FBA sourcing from China can seem very complicated, with so many things to be mindful of. However, there is a reason why Chinese suppliers and sellers are willing to make that effort to increase their profitability. By following the steps outlined by Amazon FBA services, your experience will run smoothly.
However, if you would like to avoid all of that trouble, consider outsourcing this process to Maple Sourcing. We will provide you with a range of services starting from manufacture control all the way to order monitoring.