Tips To Help You Stay Scam-Free When Sourcing For Private Label Products From China
As Fulfillment by Amazon (FBA) gains traction, more and more entrepreneurs are looking at the Amazon business model as a lifeline for their businesses. Even though Amazon is a merchant on its own platform, more than 40% of merchandise sales are credited to third party vendors. These vendors are the e-commerce entrepreneurs, riding the Amazon FBA waves.
Selling on Amazon can be very profitable, and most of these sellers are re-selling products that they’ve sourced online or offline. In recent times, the benefits of sourcing your inventory from suppliers in China have been made known to retailers worldwide. This knowledge has opened a new door with endless possibilities for entrepreneurs. One huge disadvantage of sourcing your goods from China, for example, is the need to stand out. But this can be achieved by private labeling.
By choosing to private label your products, you ensure that even though your competitors are selling the exact same products, your products will still stand out and be unique. If the product is trending in the marketplace, being an exclusive seller can be an extremely rewarding position for your business.
So what are the pitfalls of private labeling for Amazon FBA?
Among the toughest parts of starting your Amazon business is sourcing your products from overseas; especially China. Even though adding your brand to products is enticing, it has its risks; from sourcing to selling.
Most of the time, the simplest way to source and private label products is to contact a manufacturer or supplier in China and place an order for the same product they already are manufacturing. You could also simply purchase some of the products and get them to print your label on the products.
Most Chinese B2B marketplaces will give you access to several sellers, with a variety of products. But if you are not careful, and if you don’t follow certain steps you could get conned or scammed. The trick is to know whether a seller is legit or not.
How to avoid getting scammed during the sourcing and private labeling stage
If you do a little Google search, you’ll find a lot of narratives of Amazon sellers losing their companies almost overnight. Sometimes they receive great products and at other times defective products, and in some cases, they don’t even take delivery of products they’ve paid for.
Whatever the case, remember that if you receive defective or poor quality products from China, and still go ahead to list these products on Amazon, you could get banned. The risk of getting banned is very real, and can happen without warning. Below are some steps you can take to protect yourself from getting scammed or conned.
• Do detailed research
Research your supplier and communicate with them. Ask as many questions as you can, and request for samples first. You want to be 100% sure that the product is the real deal before you place your first order.
There are a few different ways to determine if a seller is legit. The first is to make sure that the vendor is classified as a gold or premium seller on whatever platform you choose. The more years they have been in business, the better. Premium or gold suppliers are required to pay a substantial amount of cash each year. Most scam companies will not pay a substantial amount for this classification.
Also look out for verification’s like onsite visits and factory inspection stamps. This information will have facts like the size of the manufacturing plant, the number of workers and assembly lines, etc. This evaluation is done by an independent inspector and is also useful because it shows that the business is real with a brick and mortar office space.
• If the deal is too good to be true, stay AWAY!
We’ve all heard this before, “if it’s too good to be true, don’t go through with it.” Too frequently business people get carried away by low costs, and this makes us open to con men and swindlers. As a rule of thumb, stick to your projected costs. It might not be a rip-off, but you must ask yourself, WHY???
Usually, you might be looking at an ROI of 10%-50% when reselling your products. And of course you may find some exceptions, but if the cost is much lower than your projected costs, then that’s the first sign that something dubious is going on.
• Requesting samples before placing your order
All Amazon retailers are interested in being successful, and we all want to make huge profits. Sometimes this need can blind us to the important information that we need to stay ahead. If you’re completely new to importing, don’t ruin your business by putting orders on your first few encounters. Take your time and get more information.
Request samples and check the quality with what others are selling. In most cases, the samples are always of better quality than the bulk order. You must get all the necessary information before placing your order. What material the product is made off, expiry dates, color variants, etc. Get the supplier to commit to certain quality and use an interpreter if you must. In case you are unhappy with the samples, request for adjustments until you are satisfied.
Don’t let your feelings rule your choices! It may be very tempting to simply get on with the transaction, even if some matters don’t quite add up. Don’t do it! Stick with certain guidelines concerning the product quality, because it’s better to let the deal go bad than to be sorry later on when you have lost your money.
• Do your products conform to U.S standards?
When looking for a Chinese manufacturer, it is vital to select one that can make your goods according to U.S. regulatory standards. Depending on your type of business, your product may need to satisfy certain criteria.
One major mistake retailers make when importing goods from China is to assume that the Chinese manufacturer will comply with US production regulations. It is your duty as the importer to ensure your goods are in conformity with U.S standards. You can also use an independent inspector in China to check this conformity; if your budget allows it.
DO NOT pay by cash transfers
Don’t pay by cash or money transfers. Don’t assume that a bank to bank transfer is safe either. Use escrow services and Paypal to be safe.
Paypal is a preferred method for importers as you are covered in terms of nondelivery etc. This is one payment method that can help combat fraud. Escrow is also another safe payment option that can save you a lot of grief if anything goes wrong.
Private labeling from China comes with its own risks, but can be very rewarding if done with care. It’s possible for you to follow all the guidebooks on the planet and still get scammed. That’s the miserable reality. The best you can do is take all the necessary steps to ensure that you do not get scammed.