Sharing my lifetime experience in export/import. Product sourcing specialist.

[Alex H]

Hi Walter,

This question is about suppliers possibly copying your product.

1) Is there any reason for concern if the point of contact at the supplier is really good at English?
I thought no. We can converse with each other no problem at all. His English is much better than the average response that involves bad grammar, not answering my questions, etc.
But this made me wonder if they would be very skilled at bringing things to AMZ directly or navigating U.S. websites well to find their clients products and possibly copy them? Just a thought.

2) I spent hours designing my product and sent it over to them as he needs it to manufacturer a sample.
My product is not patented but is an improvement that does not exist in the market.
It also doesn't have a whole lot of parts, it's 3-4 pieces that assemble together max. I initially wanted to find 3 different suppliers for each part to protect myself, but after talking to each type of manufacturer, it presented an unnecessary problem of having to negotiate small amounts (or place high MOQ) with 3 different suppliers.

He said he could do both parts fully assembled, and send me a sample. I sent him my final rendition of drawings.
While the product doesn't have the last 2 pieces, it does indicate my brand name and logo (as he is printing it for me) and the 2 major parts is produced by him. He could technically look up my website if he was savvy enough and copy me. Technically. But I figured this is a threat no matter what you produce, whether it's private label or modifications. The manufacturer is also an industrial manufacturer, so think fabric manufacturer only, not clothing or hats, etc.

I haven't given him the info on the 3rd or 4th piece yet but it wouldn't be all that impossible to wait and look up my company website if he wanted in the future if he sees I'm doing a lot of volume.

I will be having him send the product to me directly so there's a layer of protection there.

It'd be great to hear of any situations where one should particularly avoid giving your supplier too much info.
If they are your main manufacturer, then they will know your brand/logo at some point and that means they can technically look up your product online.

My thought: Make sure they don't have the incentive to copy you in the first place.
I.E. industrial manufacturers like metal and plastic parts are less likely to copy you and produce retail sporting products. etc.

Thoughts?

HI

Dropping by to give some input. Believe it or not most suppliers/manufactures are too busy themselves to worry if you have a great idea to copy. I helped launch several 1000's of new products and not once has any manufacture copied the idea. Manufactures are focused on selling larger quantities not product innovation (i been to so many factories and seen so many sample rooms and can tell you "Innovation is not high on the list"

They would rather you be successful and order 2 million units a year from them vs trying to establish a market for something that is new.

But other people will copy your product if they think its doing well (it may not be a manufacture). Sadly, its usually your local competition that wants to copy your product vs a manufacture/supplier. I seen countless of people who have asked me to copy products that have patents or find ways to work around patents (these are people who could be your friend, neighbor, coworker, etc).

But if you are still worried about your invention, then i suggest you do the following.
1) produce local in your country first as a test to see if it can sell, if it can sell, then do the proper paper work (trademark, patent, etc), than mass produce in other countries

2) Find a good supplier/sourcing agent who you can build a relationship in that country who can help protect your IP rights. Most good sourcing agents, who work with manufactures will sign NDA (in case you are being copied and you can go to court).

3) Stop working on your idea , because if you are paranoid about your idea's, it won't be good for your health.

 

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[Denim Chicken]

HI

Dropping by to give some input. Believe it or not most suppliers/manufactures are too busy themselves to worry if you have a great idea to copy. I helped launch several 1000's of new products and not once has any manufacture copied the idea. Manufactures are focused on selling larger quantities not product innovation (i been to so many factories and seen so many sample rooms and can tell you "Innovation is not high on the list"

They would rather you be successful and order 2 million units a year from them vs trying to establish a market for something that is new.

But other people will copy your product if they think its doing well (it may not be a manufacture). Sadly, its usually your local competition that wants to copy your product vs a manufacture/supplier. I seen countless of people who have asked me to copy products that have patents or find ways to work around patents (these are people who could be your friend, neighbor, coworker, etc).

But if you are still worried about your invention, then i suggest you do the following.
1) produce local in your country first as a test to see if it can sell, if it can sell, then do the proper paper work (trademark, patent, etc), than mass produce in other countries

2) Find a good supplier/sourcing agent who you can build a relationship in that country who can help protect your IP rights. Most good sourcing agents, who work with manufactures will sign NDA (in case you are being copied and you can go to court).

3) Stop working on your idea , because if you are paranoid about your idea's, it won't be good for your health.

Thanks, yeah I decided to move forward. Assembly has to be done here for now anyway. I'm still deciding if its worth looking into a patent since it's not very expensive but one thing at a time.

 

[Walter Hay]

Hi Walter,

This question is about suppliers possibly copying your product.

1) Is there any reason for concern if the point of contact at the supplier is really good at English?
I thought no. We can converse with each other no problem at all. His English is much better than the average response that involves bad grammar, not answering my questions, etc.
But this made me wonder if they would be very skilled at bringing things to AMZ directly or navigating U.S. websites well to find their clients products and possibly copy them? Just a thought.

2) I spent hours designing my product and sent it over to them as he needs it to manufacturer a sample.
My product is not patented but is an improvement that does not exist in the market.
It also doesn't have a whole lot of parts, it's 3-4 pieces that assemble together max. I initially wanted to find 3 different suppliers for each part to protect myself, but after talking to each type of manufacturer, it presented an unnecessary problem of having to negotiate small amounts (or place high MOQ) with 3 different suppliers.

He said he could do both parts fully assembled, and send me a sample. I sent him my final rendition of drawings.
While the product doesn't have the last 2 pieces, it does indicate my brand name and logo (as he is printing it for me) and the 2 major parts is produced by him. He could technically look up my website if he was savvy enough and copy me. Technically. But I figured this is a threat no matter what you produce, whether it's private label or modifications. The manufacturer is also an industrial manufacturer, so think fabric manufacturer only, not clothing or hats, etc.

I haven't given him the info on the 3rd or 4th piece yet but it wouldn't be all that impossible to wait and look up my company website if he wanted in the future if he sees I'm doing a lot of volume.

I will be having him send the product to me directly so there's a layer of protection there.

It'd be great to hear of any situations where one should particularly avoid giving your supplier too much info.
If they are your main manufacturer, then they will know your brand/logo at some point and that means they can technically look up your product online.

My thought: Make sure they don't have the incentive to copy you in the first place.
I.E. industrial manufacturers like metal and plastic parts are less likely to copy you and produce retail sporting products. etc.

Thoughts?

I don't know why, but my reply didn't appear so here we go again:
1. I would not be worried if my contact had very good English language skills. Some overseas Chinese citizens have chosen to return to China to take advantage of opportunities there, and if they have gained good English skills that is a big plus for them.

I agree with Alex H that mostly Chinese companies are not interested in innovation, but where I differ is that a large part of smaller scale manufacturing in China runs on copying. This poses a real and ever present risk to those who ask for new designs to be made or for improvements to existing products to be produced.

I have seen plenty of cases in which a new design or new product is being offered by other suppliers in China before the one who submitted the design even gets a prototype.

Copying is not exclusive to China. A recent thread in which a US opportunist boasted about making a huge amount of money by stealing someone else's idea is a good example.

Protection by way of Patents, Design Registration and Trademarks at least works for some time in Western countries where IP rights are respected. Sourcing agents in China would struggle to protect IP rights in that country. A Chinese friend who is a practicing lawyer in China, tells me that expensive litigation rarely succeeds, and bluffing is more often successful. He does that for clients all the time.

2. I would still try to avoid having the manufacturer know the full picture, but if he already has your brand name, you are right in thinking that if he chose to, he could search for that in order to see the completed product.

It's too late now for you to obtain a patent as suggested by Alex H. Once a product is in the open domain it is too late. Also, if you sell any of the product without previously protecting your IP, it is open to copying.

For future situations, you might consider having brand and logo applied in the US. Cost can be lower than paying to have it done in China. There are many possibilities and I am putting the finishing touches to my book on how to generate and source post production and in production branding and labeling. I will announce when it is available.

Walter

 

[Denim Chicken]

I don't know why, but my reply didn't appear so here we go again:
1. I would not be worried if my contact had very good English language skills. Some overseas Chinese citizens have chosen to return to China to take advantage of opportunities there, and if they have gained good English skills that is a big plus for them.

I agree with Alex H that mostly Chinese companies are not interested in innovation, but where I differ is that a large part of smaller scale manufacturing in China runs on copying. This poses a real and ever present risk to those who ask for new designs to be made or for improvements to existing products to be produced.

I have seen plenty of cases in which a new design or new product is being offered by other suppliers in China before the one who submitted the design even gets a prototype.

Copying is not exclusive to China. A recent thread in which a US opportunist boasted about making a huge amount of money by stealing someone else's idea is a good example.

Protection by way of Patents, Design Registration and Trademarks at least works for some time in Western countries where IP rights are respected. Sourcing agents in China would struggle to protect IP rights in that country. A Chinese friend who is a practicing lawyer in China, tells me that expensive litigation rarely succeeds, and bluffing is more often successful. He does that for clients all the time.

2. I would still try to avoid having the manufacturer know the full picture, but if he already has your brand name, you are right in thinking that if he chose to, he could search for that in order to see the completed product.

It's too late now for you to obtain a patent as suggested by Alex H. Once a product is in the open domain it is too late. Also, if you sell any of the product without previously protecting your IP, it is open to copying.

For future situations, you might consider having brand and logo applied in the US. Cost can be lower than paying to have it done in China. There are many possibilities and I am putting the finishing touches to my book on how to generate and source post production and in production branding and labeling. I will announce when it is available.

Walter

Thanks, looking forward to the book.

I haven't released the product yet so I guess I can IP it but I would have to talk to an attorney about it if its that important.

You're right, initially my thought was that no which manufacturer in the process, one is going to know my brand and that person is the one that is printing the labels and applying the branding, since they know my company name. But by doing it in the U.S. it keeps them separate from my sources.

It's still not too late to adjust for me.
The 1 manufacturer I was in talks with gave me a really high MOQ and also said that they cannot assemble part #1 and #2 together. Which defeats the whole point of me choosing to allow him to produce both since part #2 I can source separately with better options and sizing.

His reasoning for the high MOQ was that when he makes the part, the waste that comes from it is equal whether or not I order 500 or 5000, so it is not profitable for him unless he does the MOQ he gave me. He seemed inflexible about it.

He wanted a 3500 unit MOQ, each piece costing a few bucks. Also wanted $50 per color in my branding and labeling as an initial upfront setup cost, and about $100 for 10 units of samples. I think it's fair but the MOQ I cannot agree to. A first production run of over 3000 pieces where things can go wrong, I may need to tweak some things, address customer feedback and concerns, is not viable for this product.

So with your advice and all that's happened, I will most likely look for other manufacturers and find 4 different sources for all 4 parts.

And you made me change my mind, rather than giving any of my manufacturers my brand name or logo, I will be printing stickers or decals and applying it myself for my first order as well as assembling it and packaging it all myself. If it shows reasonable traction, I'll pay for an injection mold for a custom shape and logo stamped into the product.

Thanks again for the wise words.

 

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[Walter Hay]

Thanks, looking forward to the book.

I haven't released the product yet so I guess I can IP it but I would have to talk to an attorney about it if its that important.

You're right, initially my thought was that no which manufacturer in the process, one is going to know my brand and that person is the one that is printing the labels and applying the branding, since they know my company name. But by doing it in the U.S. it keeps them separate from my sources.

It's still not too late to adjust for me.
The 1 manufacturer I was in talks with gave me a really high MOQ and also said that they cannot assemble part #1 and #2 together. Which defeats the whole point of me choosing to allow him to produce both since part #2 I can source separately with better options and sizing.

His reasoning for the high MOQ was that when he makes the part, the waste that comes from it is equal whether or not I order 500 or 5000, so it is not profitable for him unless he does the MOQ he gave me. He seemed inflexible about it.

He wanted a 3500 unit MOQ, each piece costing a few bucks. Also wanted $50 per color in my branding and labeling as an initial upfront setup cost, and about $100 for 10 units of samples. I think it's fair but the MOQ I cannot agree to. A first production run of over 3000 pieces where things can go wrong, I may need to tweak some things, address customer feedback and concerns, is not viable for this product.

So with your advice and all that's happened, I will most likely look for other manufacturers and find 4 different sources for all 4 parts.

And you made me change my mind, rather than giving any of my manufacturers my brand name or logo, I will be printing stickers or decals and applying it myself for my first order as well as assembling it and packaging it all myself. If it shows reasonable traction, I'll pay for an injection mold for a custom shape and logo stamped into the product.

Thanks again for the wise words.

I think it's a good move to order the parts from different suppliers.

The set up cost per color is about average for China, but in fact you will almost certainly find it will be less in the US. You seem to be at a critical stage in relation to your labeling/branding decisions, so I would like to send you a free copy of my new book so that you can make an educated decision. It's still in Word format. I will need your email address, because the Fastlane system won't cope with it.

Walter

 

[Denim Chicken]

I think it's a good move to order the parts from different suppliers.

The set up cost per color is about average for China, but in fact you will almost certainly find it will be less in the US. You seem to be at a critical stage in relation to your labeling/branding decisions, so I would like to send you a free copy of my new book so that you can make an educated decision. It's still in Word format. I will need your email address, because the Fastlane system won't cope with it.

Walter

Thanks Walter, sure I'd love to give a read!

PM sent

 

[Walter Hay]

It's been heart warming lately to receive kind messages of appreciation from Fastlane members.

Here is one that I am posting with @Roli's permission because I think it refers to an important issue that many members could take to heart:

" Hi Walter,

I just wanted to thank you personally for all of your help both directly and indirectly. Especially your tips on saving face. My Chinese supplier is now throwing free samples at me; simply because I took care to be polite and understood his culture, which is down to you.

Thank you and take care
Roli"

The way we treat our suppliers or potential suppliers can have a profound effect on their attitude towards us.

That's not to say things always work out. One member has described having received horrible treatment from a new supplier. If money was no object I would walk away from them and cut my losses, but he is trying to be super patient in the hope of at least finishing up with saleable product.

He has been patient, has visited their factory, has observed proper protocol, and yet they have let him down in a most atrocious manner.

I publish this to show that even with best practice you can still suffer from suppliers who seem to treat new customers with arrogance. It's a bit like courtship and marriage. All sweetness and light during courtship might sometimes turn into unpleasantness in marriage.

Walter

 

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[Roli]

It's been heart warming lately to receive kind messages of appreciation from Fastlane members.

Here is one that I am posting with @Roli's permission because I think it refers to an important issue that many members could take to heart:

" Hi Walter,

I just wanted to thank you personally for all of your help both directly and indirectly. Especially your tips on saving face. My Chinese supplier is now throwing free samples at me; simply because I took care to be polite and understood his culture, which is down to you.

Thank you and take care
Roli"

The way we treat our suppliers or potential suppliers can have a profound effect on their attitude towards us.

That's not to say things always work out. One member has described having received horrible treatment from a new supplier. If money was no object I would walk away from them and cut my losses, but he is trying to be super patient in the hope of at least finishing up with saleable product.

He has been patient, has visited their factory, has observed proper protocol, and yet they have let him down in a most atrocious manner.

I publish this to show that even with best practice you can still suffer from suppliers who seem to treat new customers with arrogance. It's a bit like courtship and marriage. All sweetness and light during courtship might sometimes turn into unpleasantness in marriage.

Walter

Wow! That is really eye opening, and makes me really realise how lucky I am, I have only dealt with my supplier via email and skype, and the poor person you mention above actually went to China. I wish them the best of luck...

I had another question regarding face which I wanted to ask:

My supplier has basically said that if he realised I was selling on Amazon, he would have let me buy 500 units at a time instead of the 2000 MOQ. I think he's worked out that I'm smaller than he originally thought, (but of course does not want me to lose face) I'd love to be honest with him and come clean about this; what do you think?

 

[Walter Hay]

Wow! That is really eye opening, and makes me really realise how lucky I am, I have only dealt with my supplier via email and skype, and the poor person you mention above actually went to China. I wish them the best of luck...

I had another question regarding face which I wanted to ask:

My supplier has basically said that if he realised I was selling on Amazon, he would have let me buy 500 units at a time instead of the 2000 MOQ. I think he's worked out that I'm smaller than he originally thought, (but of course does not want me to lose face) I'd love to be honest with him and come clean about this; what do you think?

You should cooperate with his effort to help you save face. That will make him feel good. Just thank him and accept his offer of a lower quantity, and perhaps justify it by saying that will give you a good opportunity to build up a customer base and that should lead to more orders. (Or any better reason you can think of.)

Walter

 

[Denim Chicken]

Is there any reason I need some form of formal invoice for the sample/setup costs?

I've arranged with the supplier (previously mentioned with the high MOQ) that we are unable to do that high MOQ for a new product as it's company policy. I asked for a trial order of 300.
His response was that my color choice is not something readily available as I sent him a specific color code, and if we chose a more common color he can do the 300 MOQ for the same price to start.

Another option, he would need at least 500 MOQ and have me pay for the color powder upfront from his supplier and he will refund the amount on future orders. This is the option I am going with if samples work out to my liking.

The reason for that is because the color powder is only available in large amounts (1 ton), so it makes logical sense that he would not want to pay for it for a small order.
I am OK with covering this cost upfront and getting reimbursed/credit on next orders, but I realize it is a risk since his quality might be bad or I may not order again with him for whatever reason.

He has suggested we move forward with samples first so I can see. He did say the samples will be fully produced with the right color and design.

They accept Paypal so I am planning on paying via credit card.

In your experience, is the Paypal invoice sufficient for the sample/setup costs or should I have him send me more formal for this?

Sampling Costs:
$200 samples
$50 shipping by supplier
$100 printing setup fees
total $350

I don't have a problem with this, I just want to make sure due to the color powder credit mentioned that it may be wise to have it written somewhere.

He's the only supplier btw that has been timely and has great communication and understands exactly what I am asking. He has also not been shy to say "I cannot do that" which makes me trust him to not say whatever I'd like to hear.

 

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[Walter Hay]

Is there any reason I need some form of formal invoice for the sample/setup costs?

I've arranged with the supplier (previously mentioned with the high MOQ) that we are unable to do that high MOQ for a new product as it's company policy. I asked for a trial order of 300.
His response was that my color choice is not something readily available as I sent him a specific color code, and if we chose a more common color he can do the 300 MOQ for the same price to start.

Another option, he would need at least 500 MOQ and have me pay for the color powder upfront from his supplier and he will refund the amount on future orders. This is the option I am going with if samples work out to my liking.

The reason for that is because the color powder is only available in large amounts (1 ton), so it makes logical sense that he would not want to pay for it for a small order.
I am OK with covering this cost upfront and getting reimbursed/credit on next orders, but I realize it is a risk since his quality might be bad or I may not order again with him for whatever reason.

He has suggested we move forward with samples first so I can see. He did say the samples will be fully produced with the right color and design.

They accept Paypal so I am planning on paying via credit card.

In your experience, is the Paypal invoice sufficient for the sample/setup costs or should I have him send me more formal for this?

Sampling Costs:
$200 samples
$50 shipping by supplier
$100 printing setup fees
total $350

I don't have a problem with this, I just want to make sure due to the color powder credit mentioned that it may be wise to have it written somewhere.

He's the only supplier btw that has been timely and has great communication and understands exactly what I am asking. He has also not been shy to say "I cannot do that" which makes me trust him to not say whatever I'd like to hear.

I doubt they are required to buy 1 ton of pigment. They might have to buy 1 ton of what is called a Masterbatch. That is plastic that has been mixed with the pigment (it's not quite that simple), but it is ready to inject into the mold.

Raw pigment can cost a few dollars up to $40 per ton. MOQs for pigment alone will be as little is 25 kgs, but the usual MOQ is 200 kgs.

Have they quoted you for the ton, which I am sure would be a Masterbatch not just pigment? It could run into thousands of dollars.

I would be inclined to accept their standard color unless that color match is critical. If you quoted a PMS color, you should get a sample of the colored plastic and check it against a Pantone color chart. Don't do the comparison online. Screen colors can be way out. You need to check because in my experience I have found that the color matching skills in Chinese factories are pathetically poor.

His timely and helpful communication, and willingness to say that he can't do certain things are good indications, but ... one of the earliest lessons I learned in business was "Never Trust Anybody". Maybe he has read my book and knows what I have written on the subject of Chinese reluctance to say no.

Whatever you decide, you should have all quotes in writing. A Proforma Invoice should suffice by that, provided when confirming your order you refer to the PI as embodying all terms,conditions specifications, and prices.

Walter

 

[Denim Chicken]

I doubt they are required to buy 1 ton of pigment. They might have to buy 1 ton of what is called a Masterbatch. That is plastic that has been mixed with the pigment (it's not quite that simple), but it is ready to inject into the mold.

Raw pigment can cost a few dollars up to $40 per ton. MOQs for pigment alone will be as little is 25 kgs, but the usual MOQ is 200 kgs.

Have they quoted you for the ton, which I am sure would be a Masterbatch not just pigment? It could run into thousands of dollars.

I would be inclined to accept their standard color unless that color match is critical. If you quoted a PMS color, you should get a sample of the colored plastic and check it against a Pantone color chart. Don't do the comparison online. Screen colors can be way out. You need to check because in my experience I have found that the color matching skills in Chinese factories are pathetically poor.

His timely and helpful communication, and willingness to say that he can't do certain things are good indications, but ... one of the earliest lessons I learned in business was "Never Trust Anybody". Maybe he has read my book and knows what I have written on the subject of Chinese reluctance to say no.

Whatever you decide, you should have all quotes in writing. A Proforma Invoice should suffice by that, provided when confirming your order you refer to the PI as embodying all terms,conditions specifications, and prices.

Walter

Hi Walter,

I reread his message and he said that with his supplier, they usually buy enough color powder for at least 1 ton weight production. So it wasn't 1 ton of powder, but enough to produce 1 ton of product. Makes more sense given that he said the charge would be $300 for it.

The color is important in the sense of design. I have all my source files in illustrator and photoshop and the color palette to reflect it. Its nothing that can't be changed however.

The color is, by his words, rare for production. Which I guess it is since I requested a certain color that has a different hue and look than the regular bland white/black/red/blue/orange/green color. Think something equivalent to metallics, candy, fluorescent, pearl, variations of standard colors, etc.
Not exactly those but something like that where it's more of a specialty.

It's not an easy color to pull off so I'm hesitant but since I'm going to order the samples anyway.. if he cannot produce it the way I want it to look in the samples, I'll let him know and ask that we try a different color (that's easier and more readily accessible).

I'll ask him for an invoice though, esp when confirming the actual order.

 

[Walter Hay]

Hi Walter,

I reread his message and he said that with his supplier, they usually buy enough color powder for at least 1 ton weight production. So it wasn't 1 ton of powder, but enough to produce 1 ton of product. Makes more sense given that he said the charge would be $300 for it.

The color is important in the sense of design. I have all my source files in illustrator and photoshop and the color palette to reflect it. Its nothing that can't be changed however.

The color is, by his words, rare for production. Which I guess it is since I requested a certain color that has a different hue and look than the regular bland white/black/red/blue/orange/green color. Think something equivalent to metallics, candy, fluorescent, pearl, variations of standard colors, etc.
Not exactly those but something like that where it's more of a specialty.

It's not an easy color to pull off so I'm hesitant but since I'm going to order the samples anyway.. if he cannot produce it the way I want it to look in the samples, I'll let him know and ask that we try a different color (that's easier and more readily accessible).

I'll ask him for an invoice though, esp when confirming the actual order.

That makes more sense. I should point out that fluorescent pearl and some metallics are at the lower end of the price range for pigments.

Walter

 

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[Walter Hay]

I have today received an interesting question, and I am posting it here together with my reply because I think it is important, not only in relation to my thread, but also other long running threads.

Q: I'm new to FLF and I started reading your thread "Sharing my lifetime experience in export/import. Product sourcing specialist." I'm on page 9 so I have a long way to go until I am done. I am interested in your book and I want to know whether I should read your book instead of the forum as some of the earlier posts may be outdated by 2017. How much of the content in the forum is original and should I go back to reading the thread once I've finished the book?

A: I am pleased that you have thought about the possibility of forum posts becoming obsolete. They do, and occasionally I have reason to post revised information, but I can't continually revise them all.

This is why I revise my book annually. The current edition is under review at present and might not be out until mid year. It's a big job.

The need for constant revision is also why all book buyers are automatically entitled to a free download of all revisions.

The current edition renders a lot of the forum posts obsolete, but is still of sufficient relevance that if I released it as new today I would be confident that I have provided probably the best and most comprehensive sourcing and importing guide available.

And yes, I would recommend reading the thread because there are answers there to questions that I don't cover in my book.

Walter

 

[Ultra Magnus]

I just went over the last couple of pages and liked your every post Walter.

There are a lot of very valuable threads on this forum, but many of the popular ones are very general in nature and/or have a lot of emotional content (which in no way means I think they are useless or not valuable, it's just that they're easy to relate to). Your thread is simply a relentless barrage of factual information that answers specific queries.

Why am I pointing this out, especially since you have a product to sell and we are your prospects?

Because not many people seem to realize the value of having someone like you answer specific questions FOR FREE in the public domain (membership on the forum is free as well). Often when I read your posts I'm reminded of a day or week or month in which I was completely preoccupied with an issue relating to my business (back then it wasn't even a business). I then think about how I learned the same things you said the hard way, risking my meagre capital and sacrificing my time. Yet you make it so simple for people.

I only have some experience in product development, manufacturing technologies and materials and local sourcing, but for everything you say in those areas I always find myself nodding in agreement.

So here's a BIG THANK YOU for this thread! Godspeed, good sir!

 

[Denim Chicken]

This may sound like a basic question but.. are you supposed to use the order protection/submission form through the website like alibaba for samples when you're paying for samples? Or should I just ask him for his company's paypal address? I've asked him to outline the specifics of how many pieces, shipping method, total, etc. and asked for a Proforma Invoice.

 

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[Vigilante]

Regarding cultural study, I recommend the book

Thick Face, Black Heart: The Warrior Philosophy for Conquering the Challenges of Business and Life

 

[Denim Chicken]

Regarding cultural study, I recommend the book

Thick Face, Black Heart: The Warrior Philosophy for Conquering the Challenges of Business and Life

Interesting, thanks.

 

[DBXI]

I'd like to pass it forward on the book giveaway that @Ronak and @Brian C. started. If any members want a copy of Walter's book please PM with one thing you are hoping to learn from reading the book. Best response before 4/20/2017 gets the book!

@Walter Hay biggest takeaways for me was how to deal with suppliers in regards to emails and culture. Also sample and negotiation on quantity was big for me. The validation on some of the sourcing sites was nice to see. I had used a few of them but I was always kind of flying blind and wondering if what I was doing was right. This is a great book for someone just getting started or even for someone who's already importing but feels like they have gaps in their knowledge. Really helped with confidence and is a quick way to learn from someone who's been in this game for a long time.

Thanks again @Walter Hay and @Brian C.

 

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[Walter Hay]

This may sound like a basic question but.. are you supposed to use the order protection/submission form through the website like alibaba for samples when you're paying for samples? Or should I just ask him for his company's paypal address? I've asked him to outline the specifics of how many pieces, shipping method, total, etc. and asked for a Proforma Invoice.

If the sample order is very small in value, it might be OK to just order the way you are thinking of, that is, to check the PI is correct, and send payment to their PayPal account.

Regardless of order value, I would prefer to use the Alibaba system all the way. There's very little real protection in that system, but if a supplier doesn't want to use it, that could be a red flag.

Walter

 

[Denim Chicken]

If the sample order is very small in value, it might be OK to just order the way you are thinking of, that is, to check the PI is correct, and send payment to their PayPal account.

Regardless of order value, I would prefer to use the Alibaba system all the way. There's very little real protection in that system, but if a supplier doesn't want to use it, that could be a red flag.

Walter

Sample Costs including the color print setup and shipping is $400
I just figured PayPal using a credit card would actually give me more protection from a scam than Alibaba. Both thru PayPal disputes and credit card chargebacks.

For what it's worth this supplier is also listed under your other China marketplace website and addresses etc all check out.

 

[Walter Hay]

Sample Costs including the color print setup and shipping is $400
I just figured PayPal using a credit card would actually give me more protection from a scam than Alibaba. Both thru PayPal disputes and credit card chargebacks.

For what it's worth this supplier is also listed under your other China marketplace website and addresses etc all check out.

Regarding PayPal disputes, see here: <a href="GOLD - Sharing my lifetime experience in export/import. Product sourcing specialist.">Sharing my lifetime experience in export/import. Product sourcing specialist.</a>

Credit card chargebacks are far more secure than PayPal disputes. With CC's the customer is always right.

To get that benefit, your preferred approach is the best.

Walter

 

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[Denim Chicken]

Regarding PayPal disputes, see here: <a href="GOLD - Sharing my lifetime experience in export/import. Product sourcing specialist.">Sharing my lifetime experience in export/import. Product sourcing specialist.</a>

Credit card chargebacks are far more secure than PayPal disputes. With CC's the customer is always right.

To get that benefit, your preferred approach is the best.

Walter

Thank you. These are pretty expensive samples, comes out to $420 with the 5% paypal fee. I hope their quality is on point.

I've been meaning to ask but I always forget. Everyone says don't do western union. But why does this service exist? It's so vastly associated with scams here domestically and thru importing, I wonder what is the advantage of sending WU over a TT and aren't the risks the same? A bank transfer is gone once it's sent with little recourse internationally..

 

[Walter Hay]

Thank you. These are pretty expensive samples, comes out to $420 with the 5% paypal fee. I hope their quality is on point.

I've been meaning to ask but I always forget. Everyone says don't do western union. But why does this service exist? It's so vastly associated with scams here domestically and thru importing, I wonder what is the advantage of sending WU over a TT and aren't the risks the same? A bank transfer is gone once it's sent with little recourse internationally..

Western Union is totally unrecoverable and untraceable. The money can be collected anonymously. It would be just like sending banknotes.

Under some circumstances bank transfers can be recovered.

WU serves a useful role for unsophisticated individuals to send money to relatives back home, They don't always get it either if they are careless.

Walter

 

[illmasterj]

Hi Walter, I'm currently trialing some products to see how well they convert and test pricing, so I'm looking for agents offering items at lower MOQs. Understandably, smaller orders mean higher prices. I'm fine with this.

What I'm concerned about though, is setting expectations - that at some stage in future I can reduce that price for larger volume. Is there an accepted way of proposing this and exploring volume pricing up front? I know it will save everybody's time to discuss it before the trial order, but I'm not 100% on the way to go about discussing it.

 

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[CommonCents]

What are the latest and greatest sources for overseas shipping/trade data? That is prob a good way to find legit suppliers and also reverse engineer competitor products/sources. I saw panjiva charges 150-600 a month. thanks!

 

[Walter Hay]

Hi Walter, I'm currently trialing some products to see how well they convert and test pricing, so I'm looking for agents offering items at lower MOQs. Understandably, smaller orders mean higher prices. I'm fine with this.

What I'm concerned about though, is setting expectations - that at some stage in future I can reduce that price for larger volume. Is there an accepted way of proposing this and exploring volume pricing up front? I know it will save everybody's time to discuss it before the trial order, but I'm not 100% on the way to go about discussing it.

The difference between what you pay (by negotiation) for a smaller than MOQ order and what an MOQ order would cost is not as great as most expect.

I posted on this subject in answer to a question in January, and have cut and pasted it here:

"You won't find any such chart unless the supplier publishes a price list. In any case you will most likely be disappointed to discover that the reality of discounts for volume is that they are small.

Negotiating the best price to start with is the best way to go. People very often think they have found the best supplier because to their eyes the price looks very low. If you follow the right methods to get quotes, as outlined in my book, you can be reasonably confident that you are in fact getting the best price.

As a guide to the real situation, here's a brief extract from a price list published by one of my former suppliers from whom I and my former franchisees ordered several million dollars worth of goods over a long period:

Unit price in US$
100 0.76, 200 0.74, 300 0.72, 500 0.67, 1,000 0.64 , 2,000 0.62 5,000 0.60, 10,000 0.56, 20,000 0.53, 50,000 0.505


You will observe a few things:

• The first decent price break starts at 1,000 pcs. This is because that is the practical cost effective production run size that amortizes set up costs.
• The next good price break starts at 10,000 pcs. This is the point at which production efficiency really kicks in.
• Finally, by the time they get to a price for 50,000 pcs, there is no real improvement in economy of scale. At this stage they are cutting margins to a fine margin, so much so, that even .005 c is worth them asking.
• The volume discount amounts to 32%, but that deduction is closely related to their actual costs. If a supplier can't themselves obtain volume discounts for materials, and if they can't make real efficiency gains for increasing volume, they can't pass them on to you.

You will rarely find Chinese suppliers offering incentive volume discounts in the way we see in western countries. They really do work on a cost + basis. Initial quotes might be on a "what the market will bear" basis, but once you have succeeded in negotiating a price at or close to their real cost + basis, there is not a lot of room for them to move.

Bear in mind that they have to factor in exchange rate fluctuations, and the rises and falls in commodity prices. For this reason, don't condemn them if for your next order they quote a higher price. It might be due to those factors, or it could be due to them believing they have you as a captive customer. This is why you should always find backup suppliers."

I would also add that rather than buy from agents because you think they will supply lower MOQs, you should negotiate a smaller order size with the actual manufacturer. I teach this as a basic principle.

MOQs are rarely set in concrete.

Walter

 

[illmasterj]

Thanks @Walter Hay you are a wealth of information!

 

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[DBXI]

Congrats @Longinus you get the book. He was the first one to respond and showed some hustle. @Walter Hay let me know how I can get the payment over to you and book to sent.

 

[Longinus]

Congrats @Longinus you get the book. He was the first one to respond and showed some hustle. @Walter Hay let me know how I can get the payment over to you and book to sent.

Awesome, thanks guys!