(6 Phase Sourcing) Successful import from China made easy peasy EPS09

July 29, 2017

  • How to import your product from China in 6 Steps

  • Where to get an overview for the product costs before contacting suppliers

  • What can be criteria’s for your supplier choice

  • How to know if your supplier is trustworthy

  • Why product development takes so long time





We’re talking about the six steps to successfully source a product in China. Nils has received lots of messages lately from people who want him to explain the step-by-step process. You only need to follow 6 steps to source your product in China. Before we jump in, thanks for the comments and for subscribing to iTunes.

If you have any questions and want to subscribe to the email list to ensure you don’t miss any hacks or tricks, go to EasyPeasySourcing.com so you don’t miss out.

(01:20) The six steps are:

1. your product choice (what product to source)

2. choose a reliable supplier (that you could potentially work with for years)

3. your product design (product look, packaging, and options)

4. placing the order (how to do it and how to pay)

5. quality control (do it every time you order, no matter how many times you have ordered)

6. shipping (which isn’t too hard)

(02:10) First step: be aware of what product you want to source. There’s a lot of criteria, and it’s not just about your brand, but what next product can make you a lot of money? Which has the highest ROI or return on investment?

Before you start sourcing, know how about much your product costs. It is 1 dollar, 5 dollars, 100 dollars? Can you make money with it and can you make a profit from it? This is the first step before you start. Go to Alibaba.com, type in your product, scroll through the listings to get a rough idea. However, if you’re dealing with smaller margins, you won’t know a precise price until you speak with suppliers.

(03:45) There’s a platform called Taobao (we discussed it in the previous episode, number 8) where you can order your item in small quantities for split testing or other purposes. This is basically Chinese eBay or Amazon. All factories and companies sell there, which drives the product price down. Use Google Translate to translate your product name into Chinese and search on Taobao to find the rough price.

(05:00) Now you have some idea of the product’s price, margin, and profit. Another benefit from browsing Taobao is that you might find related products and get more ideas of what to sell. You might discover a new product variation you hadn’t considered, such as different colors, material, or design.

(05:45) Second step: supplier search. You know what you want to sell and you need a supplier that can produce it. Finding a supplier to source your product is not enough, you must find a reliable (trustworthy) source. Have a partner you can work with for a long time, order more products and save the long-term hassle.

The focus is now only on the supplier. Are they responding, are they reliable, and what “gut feeling” do you have about this person? Many people make the mistake of only deciding based on price. They don’t notice that the cheaper supplier might re-negotiate the price or insist on their own forwarder. Many suppliers know that if you’ve spent months working with a supplier to develop a product, you don’t want to switch to a new supplier and lose all that work, so they’ll change the terms on you just before the order is complete, or change terms for the next order.

(07:45) You can find an agent or go on Alibaba and message every supplier you find for your product. Do not email any supplier twice, as they might have multiple listings. From this feedback, you can shortlist (build a funnel) to see the response times, do they answer all your questions, and do you get straight answers? What impression do you get from these suppliers that reply?

Over the next two weeks, make sure they understand what you want to source and how it should look. Make it clear to your supplier, even though the details might be obvious to you. Your criteria could be: response time, product price, does the provider accept PayPal, the location of your supplier (in case you want to visit them later when visiting the Canton Fair).

(09:55) You might start with 100 requests and narrow it down to a shortlist of 10 suppliers you could potentially work with. Order a sample from each, then compare the quality of each sample to make up your mind. Choose the two suppliers that match your quality and price the best.

Keep these two suppliers into the next step, so that you have a backup plan in case one supplier no longer wants to work with you or changes the terms at the last minute. Don’t feel bad if you don’t want to blame an order with one of them at the end, just blame your boss. Tell them you want to work on the project later in the year or that your department didn’t get the funding right now.

(11:10) Third step: you’re now one month into your product sourcing process. You’ve decided which product to sell, which supplier to go to, and now you must develop our product. You want your product to have your own packaging, logo, and possibly change parts (handles, colors, materials) and that is called product development.

This is usually the most frustrating part. You might order red glasses, add your logo, and the factory charges you 50, 80, or 100 dollars to make the sample and send it to you. Usually, the end result will not be perfect. For example, the logo could be engraved upside down. You contact the factory and tell them, and you’ll have to pay another 50 dollars for a new sample.

The second sample has the logo in the correct way but the samples are green instead of red. You contact the supplier again and indicate you’d like red glasses with your logo engraved. It can take a long time to complete this back-and-forth product to develop the product properly. It’s frustrating and takes a lot of time, money, and patience. Expect that this step will take the longest time. Your supplier will screw up a few times before they make it right.

To avoid this frustration, make it absolutely clear what you want. Make a list of things that are obvious to you and let them confirm (describe) what you want in their own words. After this is done, you have your final sample on-hand. At the same time, develop your packaging with a separate company. Don’t order packaging with the supplier because it costs more, and your competitors take this shortcut. You can make your packaging stand-out.

(15:45) To know your packaging options, go to Fiverr or Upwork to find someone to consult you for an hour or two on product development and packaging. You can save a lot of money in the future by getting someone to advise you on how to make your packaging easier, better, and cheaper.

(16:40) Fourth step: pay your supplier. Only deposit 30% in advance, and choose a safe (reversible) method of payment where you can get your money back. PayPal and Alipay are great solutions for this.

(17:15) Fifth step: Before the factory ships your order, have an inspection company check your order. This is called quality control and should be done before your product leaves the factory in China. It’s a mistake to skip this step for the reason of “saving money.”

Again, do this EVERY time you order and hire an inspection company to look before they release your order. If you create a baby product or food item, have that inspection company send an item off-site to test for specific materials. If the factory made a mistake, they can refund your money or recreate the item.

Sometimes, new employees come into the factory and might look into cost-cutting measures such as using cheaper materials (harmful plastic) or fewer materials (i.e. fewer screws than the product needs). Control these things every time you order.

(18:45) Sixth and final step: have the factory ship your order. Release the final 70% payment to your supplier, and only then will they ship your product. Shipping can be overwhelming because you have many options with forwarders, pricing, and 10-20 hidden fees and taxes with sea shipping.

If the factory handles that for you, you can be assured that they overcharge you and use the cheapest shipper they can find. They also might not arrange the transfer from the harbor into storage, so you might have to go to customs in your own country at the docks to pick up your order.

(19:45) The solution the first time around is to go with a well-known forwarder or a shipping service company like FreightHub. Don’t simply ship with the cheapest forwarder you find because they can add more and more fees.

Those were the six steps to source successfully. If you want to dive into one specific step, comment below this episode. You can also send an email or voice message at EasyPeasySourcing.com/ask. We also appreciate a review on iTunes. Search “easy peasy sourcing” to subscribe and leave that honest review. Also, let us know if you have any suggestions. We’re looking forward to seeing you on the next episode.

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