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These are slides from a presentation at

“Private Label Sourcing & Amazon FBA

Selling” Meetup in Singapore

Online Trade shows Magazines Research

(NASDAQ-GS: GSOL)

Private Label Sourcing from China – Best Practices

Peter Zapf,

Global Sources

28 Sept, 2016

Problems We See

• Quality

• Payment

• Usually these are communication and process management problems

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Avoiding Problems

1. Define/Know your product requirements2. Qualify suppliers3. Request samples4. Write objective quality control (QC) criteria based on the

samples5. Issue PO with QC criteria included6. Receive supplier confirmation that they can meet QC criteria7. Pay initial payment (often 30%)8. Book third party inspection (for when manufacturing is

complete)9. Review inspection report10. Pay final payment (often 70%)

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Qualifying Suppliers

• Current export markets

• Main customers

• Product certifications

• Attend shows

• Manufacturer vs. Trading Company

• QC checklist

• Position yourself well

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Samples

• Requesting samples– Sample fees– PayPal payment

• Review quality: Product and packaging• Develop QC criteria / checklist

– Test name– Test description– Required result– Finding– Classification

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Defining Quality Requirements

• Quality Control Requirements– Defines what to check & how to test– Classifies severity of issue

• Critical: Product doesn’t function • Major: Product functions, but customer is likely to return product (or write

a bad review)• Minor: Customer is unlikely to return product (or write a bad review)

• Sample Size: Level II most common• Acceptable Quality Limit (AQL)

– Specifies number of defects allowed: • Critical / Major / Minor - 0 / 2.5 / 4.0 very common • Stores like Target or Walmart usually inspect at 0 / 2.5 / 4.0• 0 / 1.0 / 2.5 AQL is quite strict and would qualify an item as rather high-

end or luxury to some degree• For many car parts, plane parts, and pharmaceuticals, the accepted defect

rate is much lower

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Defining Quality Requirements

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Placing the Purchase Order

• Purchase Order– Products & Quantities

– Terms & Conditions• Supplier pays for re-inspection if first inspection fails

• 2% price reduction for every 3 days if the shipment is late

• Quality Requirements

• Packaging Requirements

• Certification Requirements (you should pay)

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The Inspection: What to Expect

• You receive the report, and you decide whether to accept the shipment

• Inspectors are paid to find problems…

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The Inspection: What to Expect

• If inspection fails you can:

– Accept product & ship

– Ask supplier to rework or replace product and then ship or re-inspect

– Walk away, losing your 30% payment

• Include a clause in your PO saying supplier will pay for any required re-inspection

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The Inspection Report: Summary

Free report at http://www.v-trust.com/

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The Inspection Report: Remarks

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The Inspection Report: Pictures

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Some Inspection Companies

• Who can help:

– Old guard: TUV, SGS, Intertek, Bureau Veritas

– Newer professional providers: AsiaInspection, Sofeast, InTouch Quality, ProQC, V-Trust, Asia Quality Focus

• What does it cost:

– US$300 per man day

– Usually 1 man day

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Managing Quality

• Quality doesn’t begin with the pre-shipment inspection, it ends with the inspection

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Payment

• Don’t buy branded products

• Bank account scams

– Rouge employee

– Phished account

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Managing Profitability

• Order size

• QC at factory

• Ocean vs. Air shipping

• Ship direct to warehouse

• Pack to avoid receiving miscounts

• Return rates: Product quality & reviews

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Keep in Touch!

• GlobalSources.com

• Global Sources Exhibitions

• Global Sources Summit – For Online & Amazon Sellers

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Online Trade shows Magazines Research

(NASDAQ-GS: GSOL)

Thank youJoin us for our next Meetup:

Singapore: http://www.meetup.com/Singapore-Private-

Label-Sourcing-and-Amazon-FBA-Selling/

Hong Kong: http://www.meetup.com/Hong-Kong-Private-

Label-Sourcing-and-Amazon-FBA-Selling/