Given what’s going on around the word, you may be not sure whether it is a good time to start your business on Amazon. On the other hand, you might worry about missing out. In this article, I will tell you the challenges you may face and some useful tips when sourcing products from China to sell on Amazon.
Challenges You May Face in 2022
As is known to all, Amazon platform has high requirements for sellers by formulating many rules, which may be challenging for novice sellers. However, as far as the current situation is concerned, Amazon sellers will also face the following two new challenges.
Shipping delays are a serious problem due to the impact of COVID-19. Previously, you might only need to prepare two or three months of inventory before your next shipment arrives, but now due to the uncertainty of shipping time and longer lead time, you may need to prepare five or six months of inventory in case the inventory runs out. That is to say, you will have to invest more money to secure inventory, and it will take longer time for your products to be converted into cash due to shipping delays, which will increase your cash pressure.
Amazon business is an inventory game. If you don’t have a product, then you can’t have sales. If you’re constantly running out of stocks, it’s impossible for you to build up your own product listing and rank the page to raise your sales. As I mentioned above, to prevent running out of stock, you may need to stock more than usual at a time, but if you stock too much, you may end up with overstocked products and increasing your costs. If you stock too little, you have no goods to sell before the next shipment arrives. So identifying the right inventory is going to be a tricky problem.
Tips for Sourcing Products to Sell on Amazon
If you want to set up your business on Amazon in 2022, please keep the following tips in mind which will be useful to you.
Pay Much Attention to Your Cash Flow
Due to longer lead time, you have to prepare more cash to support your business. For you to better understand what I mean, here is an example for you.
Product cost : 4 USD/ piece
Sales: 300 pieces/ month
Then the inventory worth of 1 month will be 4 x 300 = 1200 USD/ month
However, in order to keep this business going, you can’t just order these 300 pieces only, you need to buy the entire quantity during the lead time. According to the current situation, the lead time could be 5-6 months. Let’s say it is 5 months.
First order value: Monthly value x lead time = 1200USD/ month x 5 months = 6000 USD
That is to say, you have to invest 6000 USD to have these items in stock for the first order before the next shipment arrives. What’s worse, when your first shipment arrives at the Amazon FBA, almost immediately, you have to place your second order in order to prevent the stock out situation. That means, you need to invest another 6000 USD.
Conduct Background Check on Your Potential Suppliers
Choosing a reliable supplier can save you a lot of trouble. Therefore, it is necessary to verify the supplier before placing the first order. China is not an easy destination for most countries, the cost is too great. In this case, you can hire a third-party to conduct a background check or an on-site factory audit on the supplier to avoid scams.
Never Make Full Payment in Advance
The general payment method is to pay 30% of the order as deposit, and the remaining 70% can be paid after passing quality inspection before shipment. If you pay in full, you have no leverage to hold the supplier to your requirements. The supplier may react negatively to your order and you may not even receive your products.
Be Careful When Selecting Products
There are hundreds of product categories, so how do you choose the right one? And that’s the key to your success. You can identify marketable products through market research and research. Because of the rules on Amazon, you can find similar products, but they can’t be the same. In fact, some manufacturing companies in China copy the same products with different labels, so you should also pay attention to the selection of products, not the same as the existing products. However, if you feel it is troublesome, you can also find a sourcing agent in China who is familiar with FBA specifications. They can help you contact reliable Chinese suppliers, further facilitate preparation, inspection and verification according to FBA standards.
Check the Product Compliance & Regulations
All products must meet product compliance regulations in target marketplaces and different sites of Amazon have strict audit requirements for the compliance of different products. If the product is found to be non-compliant, it will be permanently removed from the listing. You need to check it carefully on Amazon’s website and the necessary certificates if you want to sell on your target market.
Quality Inspection Can’t Be Missed
Due to current rising freight, shipping delays and other factors, you may not be able to return the product if it is not up to standard. Therefore, quality inspection is necessary to ensure that the quality, packaging, labels of products etc. can meet amazon’s requirements.
Business on Amazon in 2022 may be more difficult than before and I hope you can benefit from the tips mentioned above. If you want to know more about how to import from China to Amazon FBA, you can contact us for help.