*This is Part 2 of My FBA Project – If you missed Part 1, you can find it here.
Finding a Supplier
So, finding a Chinese supplier sounded pretty simple to me (in theory at least).
Use Alibaba to source a few different suppliers, get quotes, get samples, and narrow it down to the best one.
In my particular case, my product is made by many different suppliers. In fact, there were so many potential suppliers, I had to sift through a lot of noise just to find some that could communicate clearly enough.
You can definitely use email to communicate with them, or you can use the Alibaba portal’s messaging system. At some point, they may even ask you for your instant messenger contact information (i.e. Skype, AIM, etc.). I chose to keep communications within the Alibaba portal initially, and eventually transitioned to email.
There was a bit of a language barrier with some of the suppliers. I decided early on, I wanted to deal with a supplier that I could communicate with moderately. What does that mean? Well, if I have to re-explain myself more than twice, or couldn’t understand what they were trying to say, I’d simply move on.
Part of this process is identifying suppliers that will provide you samples of your product. This is provided for “free” sometimes, and other times, not. I took this on a case by case basis, but typically, “free” doesn’t include the shipping fee since it’s coming from China. On average, I paid about $50 per sample.
Most of the suppliers will ship this via AIR, such as FedEx or UPS. Most of the samples arrived within a few days which was nice.
Buy Your Competitor’s Product
About the same time as you’re queuing up your samples (or even a little before), you should purchase your competitor’s product to evaluate their quality, packaging, etc.
When your samples arrive, this will tell you a ton of information about the supplier. Did it arrive on time? How is the quality? Since the samples are products the supplier is able to hand choose, you will hope they are close to flawless. Otherwise, what does it say about their craftsmanship and attention to detail?
Sadly, the majority of the samples that came weren’t better than the product I purchased from the leader in my category.
Settling on a Supplier
This process took me close to 3 months. Why so long? Well, I wasn’t completely happy with the suppliers. After I narrowed the supplier pool to 3, there still wasn’t one that was a clear runaway. They each had their quirks with the product, price, or execution.
Ultimately I settled on the one that had the best product, communication, and the quality was decent overall. Production cost was okay, but the shipping was super expensive.
COGS – Cost Of Goods
One of the biggest factors when selecting a product is to examine your cost of goods sold, aka. COGS. COGS is understanding what your full production costs are.
The shipping cost alone was more than the physical production because I was only purchasing 600 pieces in total. These pieces were then bundled into a 6-pack for a total of 100 units. If I were ready to make a larger purchase, I could have saved some costs by shipping via sea freight.
Lessons from My First Order
I learned a lot from my first order.
I didn’t hire an inspection company because I only had $1200 into the whole opportunity. So, I went out on a leap of faith.
They were pretty accommodating and were willing to add a suffocation warning label onto my plastic bags. Additionally, I asked them to add a product label with two colors and they were happy to oblige without additional fees.
The biggest challenge when it arrived was the way it was packed.
There were thousands of tiny bits of styrofoam that broke off from the packing material. Also, the shrink-wrap they used was sort of cheap and was damaged on some of them. (Any guesses what my product is?)
This was a rookie mistake, to be honest. You see Amazon will never accept styrofoam packaging, so I should have briefed the supplier and instructed them to only use air pillows, foam, or crushed paper.
A Comedy of Slaps in the Face
I forgot to mention during this entire process, Amazon decided to change their terms of service and completely wiped out incentivized reviews. That meant, no more giving away free product in exchange for reviews. This was a big blow to new sellers like me, but I forged on anyway.
So, back to my initial order of 100 units. They arrived with all this styrofoam debris and it was going to take forever to clean it up and then repackage everything the proper way before shipping it off to Amazon.
I had already conceded to clean these up and send them in when I experienced the next slap! Lo and behold, Amazon decided to change their terms of service again and no longer taking inventory from new buyers! This was apparently to curb the rush of holiday inventory cluttering up their warehouses.
I can understand their rationale, but that knocked me back 3+ months AND I missed the deadline by only a few days… argghhh.
The silver lining was I had additional time to clean up my 100 units!
The Clean Up
I finally realized the best way to clean this up was using our Dyson vacuum. That sucker can suck!
It was the best solution and cleaned out 90% of the bits, but there were still some that hid inside the packaging which I couldn’t do anything about.
Eventually (post-Xmas), I was able to clean, re-pack, and drive the shipment over to UPS.
So here’s the good news about shipping to Amazon’s warehouses. It’s relatively cheap because you’re piggybacking off Amazon’s shipping power.
They had me send a third of my units to three different warehouses around the U.S.
Dropping off was pretty easy since I just went to my local UPS store and used their pre-pay labels.
After tracking it, most of them arrived within a few days and the Amazon portal was updated with a receipt confirmation and manual inspection.
For my next FBA post, I’ll talk about Amazon’s seller interface and PPC (pay-per-click) advertising and whether or not this is going to be a profitable venture!
Readers, what’s the last thing you purchased on Amazon? Have you ever considered sourcing a product on your own to sell?
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