China continues to be an attractive destination for sourcing products to sell on Amazon. There are incredible business opportunities that sourcing from China offers Amazon sellers and entrepreneurs. However, as is the case with most business ventures, China sourcing is not without its inherent risks. Most sellers are challenged by the task of balancing these risks with the tremendous opportunities that are presented by China sourcing. You can avoid common mistakes by adopting a structured approach to China sourcing. Overall this can help you reduce the risks while achieving your business goals.
Here are five mistakes related to China sourcing and how you can avoid them:
5 mistakes for China sourcing and ways to avoid them
#1: Not having a defined sourcing strategy
When sourcing from China, the importance of having a clearly defined sourcing strategy cannot be emphasized more. The sourcing strategy acts as a “road map,” and includes details of locating the most suitable supplier for your business as an Amazon seller. Not defining a strategy could result in not attaining the best overall terms in regards to quality, price, timely delivery or functionality.
The strategy should also include details of the type of product that you want to source from China, particularly if you are sourcing for the first time. Many sellers make the mistake of placing orders for a highly complex product. Vendors in China may find it difficult to adhere to the specifications or quality standards for products such as high value electronics, jewelry or watches. Labor-intensive products such as garments, shoes and handcrafted products may not be suitable for your reselling business as the potential for human error is high, while profit margins can be low.
Your sourcing strategy should be based on in-depth research on the type of product that is most suited for e-commerce to your customer base, as well as whether the vendor in China is using an automated process or human labor for manufacturing your product category.
Successful sourcing strategies are also based on:
- Identifying suppliers in China through trade shows, social media and the internet
- Vetting and verifying suppliers
- Managing quality control
- Determining the sourcing method such as direct purchase or partnering with a sourcing agent to achieve your business goals.
Pay close attention to the following before you finalize a supplier
- Geographic location – China being a huge country, you may have to research thoroughly to know if the supplier’s geographic location has any influence on pricing, labor and transportation costs and quality.
- Production capacity- Find out if the supplier can meet your current and future production needs. This is important in determining the right supplier.
- Quality standards. Define the quality standards that you expect from the supplier.
- Price range. Determine the price range based on a market research for the products being sourced. Create a list and compare the suppliers in terms of quality and cost.
- Communication and technology capabilities. Determine what kind of technology and communication capabilities you are looking for in suppliers and evaluate the risks versus benefits of these.
