Sourcing products from China is a risky game, let’s admit it. Essentially, you’re sending money to a supplier in another country who you have never met, so there’s always a possibility that something could go wrong. I have discussed Alibaba Scams on my blog in the past, but if you ask me, scams are NOT the biggest issue you face when sourcing goods for your Amazon FBA business.
In fact, if you’re sourcing unbranded, everyday goods and you do proper research and use safe payment methods, the chances of you getting scammed on Alibaba are very low.
Believe it or not, over the last five years, I haven’t received a single email from someone who has sourced goods using my guidelines claiming they were scammed by a supplier on Alibaba. And by a “scam”, I mean a scenario where money was sent and the goods were never received.
However, I do get emails every week from people who failed to follow my guidelines and, as a result, have been scammed on Alibaba.
It sucks, but it’s always 100% their fault. They try to source branded goods, electronics and phones for unbelievably low prices from very shady suppliers, and then they are surprised when it turns out to be a scam. This is something I have warned people about over and over again. You CAN’T source branded goods from Alibaba, so just don’t do it!
So, when sourcing goods using the correct approach, it’s not the outright scams you need to worry about. It’s something completely different: product quality.
People who are seasonal importers will fully understand what I mean. Product quality is your number one priority and the thing to worry most about when buying goods from Alibaba for your Amazon FBA business.
It comes down to how manufacturing works in China. The Chinese understanding of quality control is somewhat different to our standards, so if you don’t put proper systems in place from the outset, you may end up with an order that is completely unsellable on Amazon.
This is the very reason why all the large companies, chain stores and brands that manufacture products in China always establish offices there. That way, their own employees can fully oversee the manufacturing process, quality control procedures and everything else. You simply can’t trust that Chinese manufacturers will deliver a high-quality, defect-free product for every order. You simply can’t—that’s not how they work.
Obviously, most small-time Amazon sellers can’t afford to hire people in China to monitor their supplier, but there are things you can and should do to minimise the chances of receiving defective items. But before we get into that, let’s quickly cover what product defects are and how are they categorised.
Minor, major and critical defects
A product defect means that there’s a quality issue with the final product. In general, there are three types of defects:
1) Minor – these are small defects that don’t affect the product’s functionality. Usually, these are very small, visual defects, like some fingerprint marks, small dirt marks, uncut thread ends and similar.
2) Major – these will be more visible defects, but they still won’t affect the product’s functionality (in general). A major defect would be classed as bad packaging, poor assembly of the product, poor painting, low-quality material, etc.
3) Critical – these defects are critical to a product’s functionality, which means that items with these defects are 100% unusable and unsellable. This includes defects like broken parts, missing parts, wrong stitching, wrong colour, paint coming off, etc.
Now, the first thing you need to understand is that there will almost always be a small percentage of goods that are defective. That’s how manufacturing works in China, so you can’t expect 100% of your items to be perfect.
Defects are rare if your items are super simple, like plastic or silicone items coming off a single mould, for example—or something similarly simple, like a printed tablecloth, wallpaper or zip bags. The manufacturing process for items like these is automated and straightforward, so there’s not much room for error.
It’s a totally different story with goods that are made out of multiple pieces or that require sewing or complex assembly. For example, with laptop bags, you can’t press a button on a machine and have fully formed bags come out of it. No, it usually requires manual labour with many moving parts.
Mistakes are mostly made by the workers who are actually producing and assembling the item.
Either way, there will almost always be defects in a production run, so you have to be prepared for that. There are many ways you can look at such defects, but usually, there is a set MAXIMUM for defects that are ok and acceptable:
- Minor defects – 4%
- Major defects – 2%
- Critical defects – 0%
This means that out of every 100 units, there can be a maximum of four items that have minor defects, two items that can have major defects and zero items with critical defects. Critical defects are simply not acceptable as you can’t sell these units on Amazon.
These percentages are not set in stone, but it is a good guideline on what to expect from Chinese manufactures and what kind of numbers to use in your contract with the supplier.
Minor defects usually are not a big problem—they’re mostly small visual marks that won’t cause you any problems or result in bad reviews on Amazon.
But each and every product is different, of course. For example, if you sell LED mirrors, you can’t afford to have any scratches on the front of the mirror. At the same time, it wouldn’t be a big problem if there was a small defect on the back of the unit that people would never notice anyway when using the item.
Major defects will be more problematic. You could try selling such items, but Amazon is Amazon, so this will most likely come back to bite you in the form of negative reviews. I personally wouldn’t risk selling such items, even if it means disposing of them for good.
It goes without saying that critical defects are totally unacceptable, and you can’t sell these items on Amazon.
Ok, now that we have covered the classification of defects and the maximum allowed percentages, what does it all mean for real-life situations? How can we minimise or prevent defects from happening?
How do we handle defects with the supplier, and how can we check the product for defects before the shipment leaves China? Let’s find out!
How to minimise product defects?
It all begins before you even place your order with the supplier. At the research stage, you have to be very careful with the supplier selection process. You will need to get quotes from at least 5 to 10 suppliers, and the prices you receive will be all over the place.
We are all in this business to make money, so you might be inclined to go with the cheapest supplier in order to maximise your profit margin. Unfortunately, this is the most common mistake that new sellers make. They go with the cheapest supplier and end up with a low-quality product.
Don’t get me wrong, I’m all for getting the lowest sourcing price possible, but you have to understand that it often comes at the cost of product quality. It could be that the supplier is using inferior materials, a cheap workforce and outdated equipment to be able to offer you such a low price. While it costs less in the short-term, you end up with a low-quality final product, which costs you a lot more in the long term.
If I contact seven suppliers and six of them give me a quote for $1.50 to $1.70 per unit, but one supplier gives me a quote of $0.90, alarm bells start to go off for me. I would be very sceptical of a supplier like that.
Why is it that everyone else charges $1.50 to $1.70 per unit, but this one supplier can offer the same product for almost half the price?
Usually, there’s a reason for that: lower product quality.
Each and every situation is unique, of course, and you have to use common sense at all times. Just know that it’s often more sensible to go with a slightly higher price from a more established, reputable manufacturer than to save some money in the short term but get a low-quality product.
Personally, I always inform the supplier from day one that I’m interested ONLY in the highest grade/highest quality materials and final product.
Sometimes, they will even change the price and materials used for production because the item can be manufactured in different “grades”. If you go for the lowest price, you will likely receive the lowest grade manufacturing for your final product.
Then, during the sampling process, you need to make sure that you receive a sample of the FINAL production unit. Don’t settle for anything less.
Often, suppliers will promise that they will fix any small issues during the production run. Don’t ever believe that. The final sample you get in your hands must be the 100% complete and final version of the product.
Now, there will be situations where this is not possible. For example, some suppliers may not have the proper equipment in place to provide you with the final custom packaging you’ve requested before it goes to mass production. Or, it could be that your item requires a custom mould to be made. In these cases, you will only see the final version when production starts.
What you can do, however, is ask the supplier to send you pictures and videos right away when production starts. That way, you get a clear visual understanding of how the final product looks, and you could possibly make adjustments if needed. This is not a perfect solution, of course, but it’s better than nothing.
Usually, though, you will have the final sample on hand, which will act as your golden measurement against any production units after that. What you should do is include a detailed description of the product in your contract or Trade Assurance order so that you have it all in written form in case things go south.
Be as specific and detailed about this as possible. Include all the sizing and measurements, materials used, the item’s weight, its functionality, a material description, a functionality description, etc. The more detailed you are with this, the higher your chances of winning any disputes over product quality issues.
Also, when you do this, you show the supplier that product quality IS your top priority and you won’t accept anything less than perfect. This will put some extra pressure on them to get things right from the beginning. It’s not like they’re going to be super-excited about fixing any problems or replacing items later on if the order gets rejected due to a high number of defects.
The next IMPORTANT step comes when your goods have been manufactured.
You don’t want your order to be shipped to you just to find out later on that a large percentage of your goods are defective and you can’t sell them. What you need to do is arrange a pre-shipment inspection while the goods are still with the manufacturer in China—and BEFORE you pay the second payment for your order.
I have already covered the inspection process in a previous blog post, so I won’t repeat myself here. Just so you know, inspections are the only way to check product quality and the only way to get your supplier to fix any problems, as they will want to receive that second payment from you.
For pre-shipment inspections, my recommendation goes to Richforth, an inspection company that has hundreds of agents all over China and offers very reasonable prices. Again, you can read more about how to handle shipments and how to deal with defective items in my previous blog posts.
Product defects are something you will simply have to learn to live with. It’s just a part of the process of importing from China.
And even when you do inspections, in most cases, you will only do a selective inspection (not all items in your order will be inspected). So, I always recommend that for your first two to three orders, you get your items delivered to your home or office first.
Then, you can go through every item on your own, check for any defective items and only send 100% perfect items to Amazon.
This will prevent negative reviews due to quality issues early on, which can greatly affect your ranking efforts. Later on, if the first few orders from your new supplier have been perfect, you can think about sending the goods directly from the supplier to Amazon.
I have tried to give general advice and information in this post, but the reality is that the product defect rate will highly depend on what kind of products you’re importing. There will be items that have no defects whatsoever, while in other categories, it’s simply a question of how many defects you will get.
From personal experience, I can tell you that electronics is a high-risk category. There are so many things that can go wrong with these items, so unless you’re dealing with a large, well-known manufacturer, you run a high risk of having to deal with a large percentage of defective items.
Another high-risk category is any product that involves sewing, such as clothing, shoes, covers, bags, accessories, etc. Not only you will have to worry about proper sizing, stitch quality and the materials used, but you will also see that many factories in China are simply not capable of sewing a HIGH-QUALITY item according to the standards we’re used to.
The lowest price will almost always mean low quality, so be extremely careful when sourcing these types of items.
On the other hand, there are plenty of items that are simple, easy to make and won’t cause you many headaches. If your appetite for risk is low, stick with these simple items when you’re just starting out on Amazon.
Product customisation will also affect the defect rate. If you’re making lots of changes to the existing product, using different materials, different parts, etc., there is a greater chance that things will go wrong.
This will be the first time that the supplier is manufacturing your unique product, so obviously that can create quality issues. Just be aware of all this information and be prepared to work back and forth with the supplier until the final, perfect product sample is done. If you have followed all of the other instructions I have given in this post, you will have minimised the chances of defects and unforeseen problems.
The same can be said for MOQs. Often, people don’t realise who they’re dealing with. For example, let’s say you have found a great, large, established factory with a good reputation and their MOQ is set at 2000 units. Somehow, you manage to negotiate the MOQ down to 500 units.
Guess what? Your order for that factory won’t be super-important!
They are used to dealing with large, multi-million-pound companies who order thousands of units! That’s why I’m not a huge fan of going after large manufacturers if their standard MOQs are very high. There will be exceptions, but in general, they won’t treat you as well as some of the other, smaller companies whose MOQs are within your reach.
And that’s it for today! I hope some of this information is helpful for new Amazon sellers and will help you to minimise your product defects rate when sourcing goods from Alibaba.
If you have any further questions or need advice on a specific situation, please leave a comment below the post. I will personally answer all questions within 24 hours, Monday to Friday.