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Buying Private Label Products in China: A Complete Guide

You are reading ChinaImportal's Newsletter!   Importing Private Label Products from China is a shortcut to success. How hard can it be to just pick a product, send over a logo file and start selling something on Amazon? Well, as I explain in this article, reality is a lot more complex than what many importers may think. Keep reading, and learn why private labelling is not really what it seems to be in China, and why it can be more complex to get an ODM product right – compared to a custom designed product. We also explain what Startups and SME’s must know about Intellectual property issues, printing specifications – and how much you should expect to pay a logo print! Yes, this is by far the most comprehensive guide on private label imports written. What is Private labelling? A private label product is manufactured by Company A, but with the brand name (i.e., logo and packaging) of Company B. In theory, Company A (the producer) provides a ready made ‘product template’, to which other buyers can apply their own brands. The benefit of private labelling is that you can create a branded product, without investing into all too much time and money in product development – and tooling. Hence, you can launch a product much faster. Again, this is all theory, and I will explain later why this is not really how it works out in reality. But, the point is still valid. With all that said, branding is still a key for startups and small businesses, as these cannot compete on pricing. This is especially obvious on marketplaces, such as Amazon.com, or the incredibly profitable watch brand, Daniel Wellington* *Daniel Wellington is not a private label brand. However, their branding has been integral to their success. Is China the right place for sourcing Private label products? Private labelling was certainly not invented in China. It has existed for decades in the food, and other, industries. But, Chinese manufacturers have certainly widened the range of items available, for private labelling. Our customers often ask us whether Chinese manufacturers ‘allow’ their products to be private labelled. The answer is almost always, yes. Chinese suppliers are, in general, very flexible. They make products according to buyer specifications. The positive aspect of this is that you can essentially get any product out there private labelled. The bad side is that, well.. Private label products don’t really exist in China. Keep reading and I’ll explain what this means. Chinese suppliers are primarily OEM suppliers. Not ODM suppliers. Chinese suppliers are not proper private labelling manufacturers. They are still operating according to OEM ‘make to order principles’. In short, the OEM process can be broken down as follows: The buyer provides a spec sheet, reference samples, applicable safety standards and labelling files The supplier manufactures a product sample for two reasons: First, to learn how to produce the product, and to show the buyer that they have the expertise to do it. Production begins. The supplier procures materials and components from its subcontractors. After this is done, assembly begins. In theory, private labelling is supposed to work as follows: The buyer browses through glossy catalogs and websites, picking out what they want. The buyer sends a logo file to the supplier, and they work out the rest. The supplier starts production, and manufactures the product according to an established set of quality standards and product specifications. The buyer can just sit back and wait for the next batch. You’ve already figured out by now that this is not how it works in the real world. And, this is why: a. The suppliers most often do not have a fixed set of product specification They still want you to provide explicit requirements for labelling, materials, design and product compliance. Yes, even if you intend to buy a (so called) ‘private label product’. b. They don’t really develop their own products What you find in the supplier’s catalog are partly products they’ve done for other customers, partly products they want to show that they can manufacture (but never actually did produce, so far). That said, there are certain exceptions, for example the Drone industry in Shenzhen. c. Product catalogs are for reference only As mentioned, a product catalog is not much more than a case study of what the supplier has produced before, and what they suggest they can make. I have dealt with companies that has tooling for less than 50% of the products in their catalog. In these cases, there’s nothing but a 3D rendering. No molds, spec sheets or design drawings. Importing Private label products is not necessarily easier, than designing your own So, how do you go about to buy private label products? First, you need to find out what sort of products the supplier has existing tooling for. Second, you need to get a list of product specifications. However, as many suppliers lack both tooling, and product specifications – you may need to both buy tooling (which partly defeats the reason to buy a private label product) and provide the supplier with a complete spec sheet (which completely makes it irrelevant). Buyers often find themselves in situations where they must reverse engineer the ‘supplier’s product’. This can be far more time consuming than just hiring a product designer from the very start. The problem is that the supplier still expects you to provide them with a specification. Even when buying a private label product. If not, they’ll fill in the gap for you – and that’ll be in a way that benefits them (which means they’ll use the cheapest possible materials and components , to improve their own, meager, profit margin). Consider ODM products (private label products) as general design templates – nothing more. In the end, the process is still essentially the same as if you’d go for a custom designed OEM product. The only difference is that you may be able to say that you want the design to be based on an existing sample. But that’s about it. … and, certainly, not a good reason to step down your Quality assurance procedures As there’s normally no fixed spec sheet, or internal quality guidelines, applied by the manufacturers (remember, they expect that to come from you) – the risk of defective units and damages is always present. Yes, even when importing private label products from China. As such, your quality assurance procedure is as important now, as if it would be if you’d buy a custom designed product. You must still order pre-production samples, communicate your quality requirements in the form of a sales contract – and you must follow up with quality inspections after production. Intellectual property (IP) issues Intellectual property is another issue that especially Private labellers must deal with. What if you buy a ‘private label product’ that turns out to be patented? This questions was recently answered by Rachel Greer, of Cascadia Seller Solutions. This is what she says: Typically, we recommend checking if the product you’re trying to sell is the only version of that product on the website, and if so, it’s probably patented. As an example, there’s a car seat that uses heavy duty suction cups to hang in a window. The suction cups are patented, and so no one else can copy that exact design – only Amazon and the original seller are listing that product for sale. Sometimes you can also see when something is truly innovative that it is likely patented. There are many traditionally used products, or variations on the theme, that new Amazon sellers can use to build their brands, it’s not necessary to copy someone else’s brand or designs. That being said, patent infringement is quite hard to prove on Amazon, and typically Amazon will require some sort of proof of successful legal proceeding. Where we see sellers get into trouble far more often is trademark and copyright infringement. Sometimes, they’re using someone else’s name brand in their product description (never use the name Dr. Oz to promote your supplements!), or using someone else’s photo. Always try to have unique offerings and photos. Labelling costs Having a product branded is not expensive. The price difference between a private label product, and a noname product, is usually very small. Printing a logo on a product is most often not costing more than $0.2 to $0.4, per piece. In comparison to the added value (assuming you do it right), that is a very good return on investment. However, the costs depend on many factors, including placement, the number of colors and logo size. In some cases, suppliers also charge an additional tooling fee (print card cost), ranging between $50 to $200. Printing Specifications Getting your products labeled is not rocket science, but things can still go horribly wrong. As said, Chinese suppliers are accustomed to a “make to order” approach. Thus, they expect you to provide every relevant specification, in this case relating to the private label itself. The stakes are high, as the supplier will fill in the gaps for you, if you would fail to provide one or more labeling specifications. What makes things worse is that many Chinese suppliers will not alert you of mistakes or other issues (for example, incorrect font), even if something is obviously wrong. Yet, many startups and small businesses fail to realize the importance of providing comprehensive labeling specifications to their suppliers, and instead think that the supplier “should know how to get it right”. Yes, perhaps they should, but you are the one losing a ton of money when something goes wrong. First, make no assumptions, and second, nothing is too small or unimportant to be included in your labeling specification. This is what you must include in your label or logo specification: 1. Print type Your label can be printed, or affixed, to the product in various ways. There’s no right or wrong here, apart from the obvious fact that certain print types are not suitable for some products. Below follows an overview of various print types: Embossing Debossing Engraving Laser Silkscreen print Heat-Transfer Printing Hot stamping Embroidery Sublimation printing Inkjet printing IMD print Water transfer printing Carving 2. Colors Always refer to a Pantone or RAL color code, depending on which color matching system your supplier is using. Never refer RGB colors, or other digital color systems. 3. Print Position The supplier must know the exact position, on the product, where the logo shall be printed. Thus, you must provide reference measurements, based on the actual product dimensions. 4. Artwork The artwork must be based on the actual product design. Thus, you must either draft an Artwork template yourself, based on a product sample, or obtain one directly from the supplier. However, it’s quite common that Chinese suppliers either lack, or refuse to provide, artwork templates. 5. Files Most suppliers prefer to work with the scalable vector file format, EPS (Encapsulated PostScript) or an Adobe Illustrator file (.ai). It’s critical that the files are set with the correct dimensions and resolution. If you use a non-standard font, you must also provide the font file. Time and time again I see buyers making assumptions about these small things.  Call us Now: +60126694217 (Whatsapp) Email: alveolegame@gmail.com

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Shipping Insurance When Importing From China: A Complete Guide

You are reading ChinaImportal's Newsletter!   Contact us:  +60126694217 Whatsapp                                               alveolegame@gmail.com                                                Skype: Rijalos Why do you need transportation insurance when shipping from China, and how do you even get one? These, and many more questions, are answered in this guide on Shipping Insurance When Importing from China. Keep reading, and learn more about how you can get your cargo insured, how much it costs – and how you can file an insurance claim. Why sea freight insurance is critical when buying from China Transportation damages are more common, when shipping from China, than many business owners might actually think. Cargo is not handled gently, be it in the factory floor, the port of loading in China – and the port of destination. Whenever they do occur, a transportation insurance, covering damages, is the only thing that will keep your business above the water. If you don’t sign a shipping insurance policy, you cannot claim compensation. How you can get your cargo insured There are various ways you can get your cargo insured. The table below explains two ways you can obtain insurance: a. Order a CIF shipment The CIF incoterm is shortening for Cost, Freight and Insurance. By definition, when you buy cargo according to CIF terms (which includes transportation from the factory to the Port of Destination), your cargo is insured. However, you should ask your supplier for a copy of the insurance policy. b. Order shipping insurance through your freight forwarder (Recommended) Buying insurance through the forwarder offers more transparency and control. First, you can request the insurance that specifically covers everything from inland transportation in China, to loading, sea freight and unloading. Insurance is, as mentioned, ‘by default’ included in the CIF. If you choose any other incoterm, you must communicate, either with your supplier or freight forwarder (or both, depending on your shipping arrangement), that your cargo must be insured. Freight insurance cost calculation There’s no valid reason why you should ever consider opting out of freight insurance. All you need to do is to basically tell your forwarder that you want your cargo insured, and pay a small fee, based on your order value. Normally, the cost of the insurance is set at around 0.5% to 0.6%, of the cargo value. Below follows an example: Insurance Cost = ((Cargo Value + Transportation Value) x 10%) x 0.5% Or Insurance Cost = (CIF Value + CIF Value x 10%) x 0.5% Filing a freight insurance claim Assuming you are buying regularly from China, the risk is quite high that you will, at some point, need to file a compensation claim. The good thing is that it’s relatively simple and straightforward to file a compensation claim. In addition, the insurance companies normally offer quick payments. Now, the first thing you must do when receiving your cargo is to check for potential transportation damages. If any damages are found, you must quickly, preferably within 24 to 48 hours of receiving the cargo, provide the following information to your freight forwarder: Images and video, documenting the damaged units and packaging A list of damaged products, quantity and the value of each damaged unit Proof of value (i.e., Proforma Invoice and Commercial Invoice) Proof of receiving the cargo (i.e., a receipt) As such, you may receive compensation for a certain amount of damaged cargo, or the entire shipment – depending on the damaged quantity. Normally, the freight forwarder can help you handle the claim, which means that you don’t need to deal with the insurance company. Once they’ve filed the compensation claim, you can expect a payment directly to your business bank account, within 1 to 3 weeks. However, this can prove to be more complicated, if you allowed the supplier to book your shipment, as they may not be accustomed to managing insurance claims. I’ve seen plenty of situations where Chinese suppliers simply tell their customers to sort it out themselves. Air Freight Insurance The focus of this article is on sea freight. That said, the points made in this article also apply, to a large degree, to air freight insurance. While the risk of transportation damages may be slightly lower when importing goods by air, there’s no good reason to why you shouldn’t get your air cargo insured. Insurance does not cover quality issues caused by the supplier, or lost sales Transportation insurance only covers damages occurring during transportation. While it may be obvious to many of you, I still want to highlight that insurance never cover quality issues and damages, caused by the supplier. As such, an insurance is not a replacement for a proper quality assurance strategy, including pre-shipment quality inspections. Worth mentioning is also that transportation insurance may not cover the freight cost. Hence, you will only be compensated for the damaged cargo value (i.e., FOB price). Hence, you’ll lose the money paid for shipping. However, that’s not the worst thing. A damaged shipment, in full or part, can ruin any business. As you’ll lose out on months of sales, until you can get a replacement shipment, it may spell the end for your business – even with an insurance payout. Why you should invest in high quality export packaging The best way to avoid the situation described, is to prevent transportation damages to begin with. While I still insist that you should get a shipping insurance, what truly matters is that your cargo is protected by high quality packaging from the very beginning. Many Chinese manufacturers lack internal guidelines for export packaging. As always, this means that you are responsible for providing explicitly clear export packaging requirements, and verifying that these are followed. So, what is high quality export packaging? As always, it depends. That said, it often looks something like this: Inner Cartons: 5 layers Outer Cartons: 5 layers Protective Plastic: Yes (Outer Cartons) Pallets: Yes (ISPM 15) Protecting your shipment is even more important if you, like many other importers, ship the products directly to an Amazon warehouse – without checking the cargo before distribution.

7 non-verbal cues that ooze confidence

Whether for work or interview, these cues are good to master to exude confidence in your conversations or presentations

1 Have a firm handshake

It shows confidence and conveys that you are genuine. A limp handshake implies half-heartedness and disinterest towards the person you are shaking hands with.

2 Maintain balanced eye contact

If you’re anxious about looking at someone in the eye, focus on their nose or between their eyes. They won’t be able to tell that you are not making eye contact because you’re still looking at them.

However, too much eye contact can seem intimidating. Communication experts recommend intervals of eye contact lasting four to five seconds.

3 Lean

When you lean your body slightly towards the person, you show that you are actively listening to what he or she has to say. When you angle your body away from the speaker, it can imply that you don’t care about the situation or conversation.

4 Smile

A genuine smile speaks a

thousand words. But be careful not to fake it because it is easy to spot a fake smile.

5 Be attentive to tone

A person’s tone of voice can change the whole meaning of a sentence. “I am happy to do that for you,” can be heard as genuine joy or utter displeasure depending on the tone you use.

6 Be mindful of personal space

How close or how far you stand from the other person can also convey a message. Moving too close to someone can be an invasion of personal space and may make the other person feel uncomfortable.

An appropriate distance for conversation would be if you are able to stretch out your arm and shake the other person’s hand.

7 Take extra care of your appearance

Choice of colour, hairstyle, and clothing, can convey different messages.

Experts advise you to do your homework and dress appropriately for a job interview because first impressions do play a role.

For example, a person’s attire for an interview with a fashion magazine company will differ from that of a law firm.

Dressing appropriately for the particular job shows your prospective employers that you are serious about it.

Checking Buyer Reference When Buying from Chinese Suppliers

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Buyer references are taken for granted in many countries. I mean, how else do you know that you can trust a potential supplier. And after all, they should work to sell themselves to you, not the other way around. Well, that’s how things should be. However, there’s a gap between how things should be, and the reality of a Chinese supplier.
In this article, we explain why many Chinese suppliers aren’t overly keen on sharing information about their existing buyers, and why you are part of the problem. We also explain why testimonials aren’t that relevant to begin with, in the world of OEM manufacturing.

1. Suppliers fear their competitors might approach their customers

Transparency is, for many reasons, an alien concept to most Chinese manufacturers. My personal experience, when discussing this matter with factory managers in the country, is that most consider giving away customer references, or testimonials, as an invitation to their competitors to move in on them.
And, they are right. Considering how price sensitive many buyers are, suppliers do well to hide their customer base from competing manufacturers.

2. Meanwhile, buyers aren’t too keen on giving away their suppliers

Picture your company name being listed on a supplier’s website, Global Sources or Alibaba page, for your competitors to see. I bet my tailor made 15 dollar (100 RMB) shirt that you wouldn’t like that.
As a matter of fact, many buyers require their suppliers to not share any information about their products, and them being a customer.
Hence, suppliers are often very limited when it comes to sharing buyer references. Surely, they are wise to not risk upsetting an existing, potentially long term, customer for the sake of pleasing a ‘maybe to become’ buyer.

3. And in all honesty, would you associate your brand with manufacturing in Asia?

We’ve had customers coming to us, requesting us to remove their testimonial, after it turned out that our site shows up on Google, whenever someone do a search for their company name. They want publicity, but not the kind of publicity that tells the world that they import their products from China.
Personally, I’d see a testimonial on sites like ours, as a sign that the brand in question takes their procurement, product safety and social compliance strategy seriously. After all, we know they have their stuff made somewhere in Asia anyway.
That said, I do see where they are coming from. But, before you ask your competitors to publicly label their products a ‘Made in China’, consider if you yourself are willing to do so.

4. In the end, buyer references are rather irrelevant

So, they make products for Disney, so they have to be ‘good’. That’s probably the case, when they assemble goods for Disney. However, suppliers aren’t categorized into ‘good’ and ‘bad’. There are a number of factors to consider.

First, many suppliers focus on different price segments. What works for one company, may not work for you. They may not have experience making the kind of product, function or quality that your business requires. They may not even have the right network subcontractors.

Second. It’s true that a ‘good supplier’ (I really don’t like using that term, for various reasons) is the foundation for a company that relies on manufacturing overseas. However, finding the right supplier is only half the equation. The second half consists your own product development, product safety and quality assurance procedures.

Disney has an army of engineers, product compliance and procurement experts that can make that happen. You don’t. As such, their success, with a particular supplier, does not automatically translate into the same outcome for your business.

Third. You are not Disney, so your orders will not be treated as theirs. This means that you will not get the same attention on the production floor. As a result the defect rate may increase, among other things.

That said, the fact that Disney buys from them is not a bad thing. But it’s not enough for you make a decision on a manufacturing partner.

5. If buyer references aren’t that valuable, what should we look at when selecting a manufacturer?

The lesson here is not that you shouldn’t ask for buyer references. In fact, you should ask them. And, as Mike Bellamy of Passage Maker mentioned in this podcast (by Global from Asia), one good advice is to ask for buyer references that not located in your home market. For example, if you’re based in the United States, ask for references in the European Union or Australia.

Instead, the essence here is that you should not rely on buyer references, when you choose a supplier. At best, they are a bonus. One of many signals used when assessing manufacturers in China, and other Asian countries.

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Importing Private Label Products from China and Selling on Amazon – By Rachel Greer

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Importing private label products from China, and selling on Amazon, enables startups and small businesses to rapidly bring products to an established market. While buying from Chinese suppliers is challenging enough as it is, selling on Amazon adds a whole new dimension of complexity.

To get things straightened out, we decided to ask an expert – Ms Rachel Greer, of Cascadia Seller Solutions. With years of experience working for Amazon, before she founded her own firm – she is truly a leading expert and industry insider. Keep reading, to learn more about compliance requirements, quality assurance and intellectual property issues – when selling private label products on Amazon.com.

Rachel, tell us a bit about yourself and what you do at Cascadia Seller Solutions?

I founded Cascadia Seller Solutions last May after leaving Amazon – actually one day later! When I was at Amazon, I first worked in the Transaction Risk Management department (Seller Performance, Fraud, Claims, Chargebacks) as a law enforcement liaison for fraud cases involving customers and sellers.


I then moved to the Product Compliance team, and managed Recalls, Product Safety, Private Brands Compliance, and Global Imports Compliance over the course of five years.
At Cascadia, I’ve assembled a team of former Amazonians who are uniquely well positioned to help clients build their own brands on Amazon, in a safe, compliant, and Amazon-centric manner. Whenever there is a problem with the account, one of the consultants who is a former NA Seller Performance manager handles these complaints.

If there are struggles with Customer Service, our Customer Experience expert steps in to help clients create a blurb library and guidance on how to speak to customers effectively. Our whole firm is based around the Amazon ecosystem and thriving on Amazon.

In the last two to three years, we’ve seen a large increase of interest in selling Private label products on Amazon.com. Why do you think this is the case?

Amazon has some of the most amazing foot traffic in the business. Traffic is phenomenal, even for lower performing products. Additionally, while conversion at typical e-commerce sites is around 1-2% at best, on Amazon, conversion starts around 5% and can be up to 50% for many products.
This is a very attractive platform for many sellers, where the revenue jump from being on Amazon is not just significant, it’s turned small businesses into $1M+ businesses in a couple months.

The other reason private brands are appealing to sellers is that competing for the buy box is becoming more and more difficult, and relies on having strong suppliers, deep pockets, and excellent technology – or, a shopping cart in the clearance aisle.

This means a lot of midrange sellers are being priced out of the reselling game, either by the big wholesalers or Amazon, or on the other end, small size arbitrage sellers buying on clearance and reselling online.

Amazon recently cracked down on seller’s of non-compliant balance scooters. Should sellers start taking product testing and labelling seriously?

Sellers should of course be taking product testing and labeling seriously, for a variety of reasons. First is that the failure in this case burned down homes and injured people.

I know people want to be successful in growing their business and making money, but making money at the risk of someone dying because of you cutting corners is pretty dark stuff in terms of a strategy to get rich.

In more practical and less moralistic terms, the Fine Jewelry category used to be completely overwhelmed with garbage products that claimed to be gold and were not, and so on. So, they instituted a new QA program whereby everyone has to submit an application and have their products tested, and if they don’t pass, they can’t re-apply for a year.

In addition, they randomly test products in your catalog 2-3 times a year, and boot you off the category if you fail.
I strongly suspect that this will happen in other categories, especially high risk foods and supplements, toys, baby items, and plug in electrical devices.
In terms of risk, anything ingestible, topical, electrical, or for children are going to be the most risky. Of secondary risk are items that touch food in the normal course of use, and products explicitly regulated by the many government agencies in the US, like composite wood, Edison light bulbs, car parts, wireless devices, and more.

Does Amazon have any specific product compliance requirements for sellers?

The CPSC, FDA, FCC, and FTC are the most common agencies to encounter with any given product a seller may wish to sell in the US.

The CPSC regulates all consumer goods not regulated by another agency, and sometimes there is overlap.

The FDA regulates all produced food (milk and eggs are considered “produced”, the USDA governs agriculture and animals), drugs, cosmetics, and food contact products. The FCC regulates all communications devices.

The FTC regulates all labeling claims in “advertisements” (the detail page) at the point of sale, with specific regulations governing jewelry, made in the USA claims, furs and textiles.

The (Amazon) Terms of Service clearly state that the seller must be compliant. Amazon leaves this intentionally vague so that it can be enforced on however they see fit. To be truly certain of having no issues with Amazon, sellers should work with a qualified consulting firm like Cascadia, or directly with a lab, although the latter approach is often more expensive, but not always.

Amazon forced most Hoverboard sellers to provide the necessary compliance documents, including UL documents. Does Amazon normally check if the goods sold on its platform are compliant?

Amazon rarely checks for compliance documents, proactively. However, Amazon has been taking actions like it took with the Hoverboards since 2007. That issue just happened to be a very significant one, unlike the normal scope of the issue, which is limited to a few SKUs.
The team that handles these takedowns, the Product Safety team, typically takes action on products only, not on seller accounts. But for a private label seller, sometimes that is their best selling product, and in terms of the revenue impact, it may as well be like having the account suspended.
Having your ducks in a row for high priority items is always a good idea, and take EVERY customer complaint seriously.
It took Amazon weeks to take down the hoverboards after the first fire complaints started coming in; I would have advised a seller to price their product to move and not replenish inventory to try to get out from under that liability as quickly as possible.

Where do you predict Amazon will go with this in the future? Should sellers expect Amazon to enforce labelling and document requirements more strictly in the years to come?

I have no evidence to justify my opinion, but yes, I do believe that there will be more enforcement in future, and product testing being done by Amazon itself, and then enforcement action taken on sellers.
It’s very simple to test plug safety, or test for lead content. Sellers should make sure that every product they import and sell on Amazon is safe and compliant, as Amazon won’t tell you when they might start a program like this.
The Jewelry QA audits were performed on hundreds of sellers without their knowledge, and then they were booted out of fine jewelry with no warning at all.

You also do sourcing. A major challenge for overseas buyers is assessing a manufacturer’s capability to make ‘compliant goods’. How do you manage this, considering that many Asian suppliers don’t even know which standards are mandatory in the US?

When we start working with a new supplier, we provide the testing protocol and inspection checklist with the required AQL in the purchase order. If it’s a higher risk item, we will do an audit ($750 one day audit) to assess the factory’s capabilities and areas of weakness.
In this way, we have made it clear what our expectations are for our clients, and the factory has agreed to meet them. We have also evaluated where they may struggle to actually meet them. To help with this process, we may advise the client to perform raw materials inspections on incoming materials, particularly with children’s products.
For other highly regulated products, such as electrical products, we recommend during production inspections, where the inspector can provide feedback to the factory directly and they have the authority to stop production for the client if the issues are egregious.
Basically, we assume that the factory doesn’t know what compliant goods consist of, so we spell it out for them, and we assess, test, and re-assess their performance.

Product compliance is not the only risk that Amazon sellers must deal with. Is it correct that Amazon only allows a defect rate of maximum 1%?

The Order Defect Rate, or ODR, can be only 1%. This refers to the number of customers who either file an A-Z claim or who leave negative feedback, or who file a chargeback. It is possible to have a much higher product defect rate than this.
Often, FBA will shut down sellers in excess of 5-15% defect rate, because this is obviously costing the seller quite a lot of money to pay the FBA fees each time, but this isn’t performance related. Keeping returns down helps to keep the ODR down, as typically customers who return items are returning them because something was wrong, and presumably, some of them will then file a negative review about the product.
But we’ve seen successful products with quite high defect rates in Clothing and Accessories, so the return rate is more of an indicator of where to look than a hard and fast rate.

What happens if a seller fails to keep the Order Defect Rate (ODR) below 1%?

When the ODR is above 1%, the seller is warned about this, and their funds are placed in reserve, typically for 30 days, to help Amazon cover any expenses related to those negative customer experiences.

Many Amazon sellers ship their cargo directly from the factory floor in Asia, to an Amazon fulfillment center in the United States. How can these sellers prevent a large number of defective units from entering the market?

Quality control inspections are essential. This is actually a bigger concern in terms of enforcement in my opinion than ODR for private label sellers.
What I see seller’s doing on a regular basis is failing to package items properly, or evaluate items properly, so they arrive damaged or in poor condition, and the customer then complains in their feedback, product review, or returns annotation, and the Amazon Product Quality sends the dreaded, “We have taken down your listing due to a buyer complaint about the condition of your product.”
This could be used, sold as new, or not as described, or inauthentic – most of these describe the same issue, though, which is defective or damaged product arriving to the customer. This can be because of sloppy production and a lack of quality control inspection before shipment or due to poor packaging that allowed the product to become damaged after production in the shipment.
Without the quality control inspection, you won’t know which one it is, which makes fixing it on the next shipment even more difficult. We recommend using packaging that meets the ISTA 3A standard, which also is the standard used for Amazon’s Frustration Free Packaging initiative.

Intellectual property is another issue that especially Private labellers must deal with. How do you go about to avoid selling a patented product on Amazon?

Typically, we recommend checking if the product you’re trying to sell is the only version of that product on the website, and if so, it’s probably patented.
As an example, there’s a car seat that uses heavy duty suction cups to hang in a window. The suction cups are patented, and so no one else can copy that exact design – only Amazon and the original seller are listing that product for sale.
Sometimes you can also see when something is truly innovative that it is likely patented. There are many traditionally used products, or variations on the theme, that new Amazon sellers can use to build their brands, it’s not necessary to copy someone else’s brand or designs.
That being said, patent infringement is quite hard to prove on Amazon, and typically Amazon will require some sort of proof of successful legal proceeding. Where we see sellers get into trouble far more often istrademark and copyright infringement.
Sometimes, they’re using someone else’s name brand in their product description (never use the name Dr. Oz to promote your supplements!), or using someone else’s photo. Always try to have unique offerings and photos.
We also see a lot of our sellers targeted by nefarious sellers trying to take their market share by copying or hijacking their listings. We support our clients by doing test buys, reporting to Amazon, and filing detailed complaints of anti-competitive behavior like fake reviews.

Thank you. Now, how can Cascadia Seller Solutions help companies looking to sell products on Amazon?

We are uniquely positioned to help brand owners because most of the company worked on Amazon’s own private brands, AmazonBasics and Pinzon (among others), when we were at Amazon.
We are the undisputed experts on how to do private brands, on Amazon. Each of us has our own specialty that we bring to the table, and I end up involved in pretty much every client interaction at some point!
These specialties include sourcing, testing compliance, audits, packaging, customer experience, US Customs/freight forwarding, and performance. Our goal is to help small to medium sized enterprises grow from the ground up, and to go global.
Some of our clients are just starting out, while some of our clients have solid US based businesses, and they want to be compliant going into Canada, Mexico, the EU, Japan, or China.
We are also able to help our sellers with our years of insider knowledge in understanding exactly what Amazon is asking for in those vaguely worded performance emails asking for things like invoices or in explaining what exactly the meaning of a particular report is for a seller, or in how to achieve greater traffic and conversion and better reviews for your product.
For some of our larger clients, we engage in a shared risk model, rather than our typical fees for services model, where we work to build up the account and revenues in exchange for a fixed percentage of net receipts.
At the end of the day, our goal is to help our clients be successful on a truly remarkable platform, one not built on relationships or catering to buyers, but one based on data, sales, and understanding the pulleys and levers in the system. Happy Selling!

More About Rachel Greer

Rachel Greer spent over 7 years at Amazon in roles supporting the legal teams and private label/import compliance teams after previous roles outside of Amazon in legal firms and teaching abroad in Austria and Singapore.
While at Amazon, Rachel received her Masters in Business Administration from Seattle University, which can be seen either as a testimonial to hard work and perseverance, or just being too stubborn to admit when one is in over one’s head!
Rachel is passionate about making complex and difficult aspects of product development and global launches like quality assurance and regulatory compliance understandable for young small to medium sized enterprises.
Rachel founded Cascadia Seller Solutions primarily because she prefers to steer her own course. But she soon realized the market was so great she needed more help, and brought on some of the lovely women she worked with previously at Amazon to make a formidable branded product launchteam for eCommerce sellers.
Rachel enjoys crafting, and spending time outside in the beautiful often rainy Pacific Northwest, where she lives with her husband, two children, two cats, two parakeets, one dog, and a whole bunch of fish that her husband brought home one day.
She loves solving client problems and helping them achieve their dreams of financial independence and freedom from the grind of the 8 – 6 pm workday (let’s be real, it hasn’t been 9-5 for a long time), and enjoys working with people as passionate about making and selling great products as she is!

More About Cascadia Seller Solutions

Cascadia Seller Solutions is a boutique consulting firm based out of the Pacific Northwest that is dedicated to helping small to medium sized businesses succeed with selling on Amazon. Our primary areas of competency are:
1) Amazon accounts management; a shared risk model in which we guide the company through the best ways to grow their Amazon selling business for a portion of the net receipts;
2) Building a brand from the ground up, inclusive of global sourcing, product testing and inspections, Customs/freight, and marketing; and
3) Expert advice on how to manage with seller performance enforcement contacts, such as performance warnings, and how to have stellar customer service on Amazon as a seller.