One of the most popular and successful business ideas for e-commerce retailers is directly sourcing from China then sell on Amazon. For international importers, this choice is obvious given that Chinese manufacturers are more cost-effective than those in the U.S. or EU.
However, Amazon has tight requirements for the goods that can be offered in their marketplace, and buyers also have high expectations. Importers need to take particular actions to ensure they are acquiring a high-quality product from their supplier to succeed in such a cutthroat industry.
Finding the suppliers and also product sourcing for Amazon will take time and work once you have finished your Amazon product study. Sourcing China suppliers is a little too difficult, especially when there is a significant cultural, linguistic, and ethical divide between you and the Chinese provider.
The foundation of successful commercial relationships in Chinese culture is the development of direct, one-on-one relationships. Today, we will give some practical advice for successful product sourcing for Amazon from China.
1. Evaluate profitability
Determine if the cost of acquiring and sending the products to Amazon is much less than the amount you plan to sell them for on Amazon for each product you are interested in selling there.
You may separate your sales proceeds into the following 3 parts:
1/3 of sales for fees
1/3 in landed costs
1/3 is the profit you make.
The landed costs, which refer to the total expenses for producing and delivering your product to the warehouse, comprise:
Cost of inventory
Custom duties and taxes
The expenses also cover the referral fee, or "commission," that Amazon levies on each product sold through its online store. When you sell goods on Amazon, you typically pay a fee of 15% of the selling price.
2. Evaluate if your product is easy to ship
Lightweight and tiny products are easier to ship, less likely to sustain damage in transit, and more affordable when you are purchasing products from China.
These goods can also be transported more easily via air freight, which expedites their arrival at the warehouse and enables you to start selling them right away.
When you are sending in large quantities or when the item is heavy or bulky, ocean freight is often required.
Along with increasing the possibility of the products being harmed by changes in the weather or humidity, this could cause a delay in the distribution of the goods.
3. See if there is room for improvement
Suppose your clients give you unfavourable feedback or reviews after you source complex or extremely expensive products from China. In that instance, it might not be possible for you to ask the Chinese manufacturer to modify these goods.
Based on customer feedback, pick items that are flexible for improvement. To get a sense of what things are simple to change or improve upon, read the reviews for products sold by your competition in your niche.
4. Easy to produce
Electronics, glass, and other highly sophisticated products can be challenging to make, need a high level of technical competence, and could have production and quality control concerns. It is best to stay away from unreliable products when you first start out as an Amazon seller.
5. Compliance with country standards
Check to see if there are any specific requirements in the U.S. and/or the E.U. that your product must meet before beginning the search for trustworthy products to acquire from China.
Safety regulations, patent or intellectual property disputes, quality benchmarks, and any other legal prerequisites in the country where you are selling the products are examples of these.
There may be certain safety and technical standards that the manufacturer has to follow if you are wanting to sell complex products like electronics. Testing these in China might be challenging, and specialized knowledge and experience may be required.
6. Find the right supplier
Alibaba is often the first location to check for suppliers when you begin your search for product sourcing for Amazon because it is one of the biggest marketplaces in the world. There are many suppliers available for practically anything.
It is a key deal to recognize quality providers. Everyone needs to first be eligible to join the platform and the other possibilities like Global Sources to discover the best suppliers.
To identify and meet the Chinese suppliers in person, you can also visit trade shows linked to your sector. This is your time to get to know them better.
7. Differentiate between a manufacturer and a trader
In order to negotiate the best deal for you, you must determine if you are working with a manufacturing company or a trading company.
You could want to directly inquire if they are a manufacturer or make a guess based on their catalogue. If the products are in the same market segment, the supplier may be a manufacturer, for instance, an outdoor products supplier may sell anything associated with outdoor.
On the other hand, there is a significant possibility that a supplier is a trading company if they are selling a variety of goods in several markets.
8. Negotiate with your supplier
Keep in mind that there are many other issues to discuss during negotiations with the supplier in addition to the price of the product, including its quality, the terms of payment, the timing of delivery, etc.
Strong negotiating skills may allow you to lower the price below the price of the supplier, but this could result in lower quality, subpar packaging, late delivery, or other problems. Negotiating the optimum price for both sides is the key to starting a long-term partnership.
With Chinese suppliers, negotiation is a constant practice and even a part of their culture. You may initially pay a greater price, but by significantly increasing your purchase quantity for your second order, you can receive discounts.
Finding a reasonable cost for your initial order can be a smart place to start when negotiating. Dealing in person may be the ideal option if you want to get the best price and build a long-lasting friendship.
At a trade exhibition or in a Chinese factory, you can get a chance to meet the management or the owner. By doing so, you will be able to settle any issues quickly and establish a professional connection.
9. Ask for samples
A sample of your goods should always be requested before finalizing a deal with a supplier. This enables you to test the item and assess whether it satisfies the requirements set forth by your target market.
Before placing an order, it also enables you to evaluate the design of the product and the capacity of your supplier for producing high-quality goods.
You might ask your provider for three different kinds of samples. These examples consist of:
Factory sample: This item is already made and was not produced to your specifications. It is appropriate for determining the capacity of the manufacturer for production.
Custom-made product samples: A pre-production sample is a test item used to determine whether a manufacturer can make a product to your specifications.
Production Sample: These samples are taken from mass-produced products. They are employed in functional tests, quality assurance, and laboratory experiments. To make sure the production sample comes from a batch of the desired goods, it is advised to obtain it from a third party.
10. Establish quality control
Sellers, who want to use the FBA program of Amazon have to adhere to tight guidelines. If so, vendors might think about using a third-party inspection service in China to guarantee the calibre of their goods.
Your product will adhere to Amazon FBA requirements thanks to a third-party inspection service. If you do not think about an inspection, your products might not meet specific standards and quality ratings.
As a result, if there are too many complaints about the quality of your goods, Amazon may decide to remove them from the sale.
Besides ensuring that your product satisfies standards of the Amazon for quality and safety, implementing quality control can benefit you in the following ways:
Attract positive client feedback and high return rates once you promise your customers top-quality products.
Prevents the supply of subpar goods from dishonest manufacturers who prioritize profit above producing high-quality goods.
It averts major messes that may arise from mistakes in your labelling of the items or packing. For instance, utilizing the incorrect barcode may result in the shipment of your goods to the incorrect location. When you attempt to fix the mistake, it can end up being too expensive in the long term.
Do not presume that any aspect of the agreement has been properly understood by your Chinese supplier. All discussions should be recorded in the agreement, while product sourcing for Amazon and the supplier should sign off on them. Be proactive throughout the manufacturing process to safeguard your investment and the company relationship.