What Is the Chinese New Year and How Does It Affect Your FBA Business?

The Chinese New Year is fast approaching. Familiarize yourself with the holiday – and how it affects your Amazon business.

In a few weeks, the Chinese New Year will begin, presenting a unique set of challenges for Amazon FBA sellers. For new and existing sellers alike, the holiday requires planning and attention to steer your business toward success.

When Is It?

Friday, February 12th marks the beginning of the Chinese New Year. While the celebrations can last up to 16 days, only the first seven days are considered a public holiday.

The upcoming year is the Year of the Ox. According to the Chinese zodiac, the Ox represents hard work and honesty.

What Is It?

In short, it’s one of the world’s largest celebrations, with estimates of over a billion people taking part in the fun.

The arrival of a new year is celebrated across China, with customs and traditions varying by region.

In Chinese culture, dragon dances are common for the Chinese New Year, as they symbolize good luck.

With customs and traditions varying by region, spectacular celebrations take place all over the country. Often referred to as the Spring Festival, Chinese New Year festivities are known worldwide for their glitzy fireworks display, Lantern Festival, and traditional dragon and lion dances.

During these traditions, all major businesses in China and Taiwan shut down for the holiday’s duration. These businesses, including factories, shut down for at least one week and could close for up to three weeks. Of course, this results in a pause in production for those depending on products from China’s robust manufacturing industry.

What Does This Mean for Amazon Sellers?

Since many Amazon FBA sellers source private-label products from China through suppliers such as Alibaba, the manufacturing halt can leave sellers vulnerable to inventory shortages if not navigated appropriately.

At this point, sellers should no longer expect the fulfillment of new orders before the holiday. Unfortunately, there’s little you can do to stock up if you haven’t already placed an inventory order. Marking your calendar in the months leading up to Chinese New Year would be wise.

If you’re a new seller leaping into FBA, understand this could complicate and delay your entry into the marketplace.

As you’d imagine, a heavy backlog of orders builds before, during, and after the celebration. Due to this, anticipate lengthier delays in months ahead as factory workers fulfill backlogged orders.

To successfully navigate through the Chinese New Year and the obstacles place in front of you is to communicate. When selecting a manufacturer, the importance of strong communication cannot be understated. Many suppliers with strong communication skills reach out to sellers in the months leading up to the Chinese New Year to effectively maneuver through manufacturing speedbumps.

If you have yet to have these conversations with your manufacturer, contact your manufacturer ASAP!

Don’t Sacrifice Quality

Additionally, the logjam of orders encourages speedier work. As workers rush to fulfill your order, quality may take a hit. But rushing orders by sacrificing quality leads to compounding problems for Amazon sellers.

Utilizing a China Quality Inspection company helps ensure quality control and save yourself from returns, negative reviews, or any of the potential consequences from quality issues.

While the holiday can disrupt your typical workflow, it’s important to empathize with your manufacturers and respect cultures! You may even consider buying your contact a gift to celebrate the occasion, especially if they have a history of going above and beyond for you.

In the hunt for FBA success, many forget or downplay the significance of the human element. But the benefits of a great working partnership far outweigh the cost of a token of your appreciation.

Best of luck in 2021 and the Year of the Ox!

What adjustments are you making for Chinese New Year? Leave a comment and let us know!
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The Importance of China Quality Inspection for FBA Sellers

Your first FBA journey is going to be scary. You’re in uncharted territory dealing with unfamiliar manufacturers who are hundreds, if not thousands, of miles away. Take a deep breath and keep your eyes on the prize — becoming a successful FBA seller!

As an Amazon seller, your main priority is sourcing and selling a quality product. Because without a quality product, you’re facing an uphill battle right from the start. You’ll likely see low sales, bad reviews and a lot of returns, which could put you in bad standing with Amazon and even lead to the suspension of your account. And oh yeah, you won’t be making any money!

But how do you monitor quality control from another country? Sure you can hop on a plane to China and go do it yourself, but is that really feasible? This is where a third-party China quality inspection comes in.

Let’s dig in deeper.

China Quality Inspection: A Crucial Step for Sellers

While you can contract an inspector domestically, it makes the most sense financially and logistically to hire a company in the same country where the product is being manufactured. This way, any minor damage or major defects can be corrected before the products are shipped to Amazon.

Regardless of whether a product is being manufactured manually or by a machine, innocent mistakes can happen — and they will. It’s common to have a small defect rate on every order. You just don’t want those products going out to customers! Hiring an inspector helps ensure only quality units are being sent to Amazon and only quality units are ending up in customers’ hands.  

Save Yourself Time and Money

To save on cost, manufacturers will often use cheaper, lower-quality materials instead of the more expensive ones. Avoid this issue by being very specific with your manufacturer regarding all materials, measurements, and packaging that your product requires. Give the same information to your inspector so he or she knows what to test and check for.

Refunds and warranties are rare in China and don’t mean same things as in the US. If you don’t discover a mistake or manufacturing error until you receive your product in the states, chances are it’s not going to be fixed anytime soon. So how do you protect your products and save yourself time and money? As a general rule, it’s recommended to do the following:

  • Tell your supplier straight away you’re going to hire an inspector
  • Never work with a supplier who won’t accept quality inspections
  • Have a firm purchase order and contract agreement in place
  • Withhold partial payment until an inspection takes place

Suppliers will be quicker to respond and make corrections if they haven’t received the full payment yet. This gives you more leverage before you pay in full and are fresh out of luck.

Pre-Shipment Inspections

Identifying problems before they’re fully packed and shipped out is much cheaper and easier to correct. There are typically two types of quality control inspections offered by third-party inspection companies:

  • Full Inspection: A review of each and every product
  • Spot/Random Inspection: A review of 〜10% of inventory

Obviously, a full inspection is going to cost more money, but in return you’ll get greater peace of mind. For example, say you do a partial inspection of 100 pieces and they find 20 with defects. What now?

You could either move forward and accept the risk that 200 units out of your 1,000-piece inventory are potentially defective, or you could pay for a full inspection (on top of what you’ve already paid) to be completely sure. Your best bet is to order a full inspection and get the peace of mind they provide.

What are QC Inspectors Looking for?

During an inspection, your inspector will be looking at:

  • Quantity verification
  • Conformity check (style, color, label, packing, and shipping conformity)
  • Workmanship check (appearance and basic function)
  • Function check (more in-depth functionality)
  • Contract product quality

You want products to match all of your specifications as well as any quality standards set by the industry. You’ll need to weigh the pros and cons of repairing or removing units with minor issues, but more severe issues should immediately result in your supplier repairing or remaking the product.

FBA Requirements

Another quality control check for FBA sellers to consider focuses on shipping and packaging. Amazon’s FBA program has its own inventory requirements, including those for product barcodes, packaging and prep, shipment packaging, and shipment labels. Failure to follow these requirements could lead to extra fees or Amazon returning your product.

If you’re not handling the packaging and labeling of your FBA products yourself, you must work with your manufacturer to make sure all of these requirements are being met.

Hiring a Pre-Shipment Inspector: Alibaba and Other Options

Aside from connecting you with an extensive directory of manufacturers, Alibaba can also connect you with professional third-party inspectors close to your supplier whose background and profile have been verified by Alibaba.com.

These inspectors visit the manufacturing facility in China and prepare a written report with pictures to verify that the products being produced and shipped meet industry standards as well as those specified by sellers. These detailed reports are typically ready to view within 2 business days and you can even track the inspection progression in real-time so you can follow along.

Inspections generally cost around $300 for each shipment and must be booked up to 3 business days in advance. Alibaba does offer deals for their inspection service, like this 50% off all inspections promotion for their annual #SuperSeptember event, which is shown below.

Source: Alibaba.com

There are many other China quality control inspection companies out there, and freight forwarders also offer inspection services.

Pro Tip: Look for Manufacturers, not Trading Companies

When you’re in search of a manufacturer on Alibaba, verify that whoever you choose is actually a manufacturer and not a trading company. Trading companies resell items from manufacturers, whereas manufacturers are actually producing the items themselves. Look for this information on the company’s Alibaba listing or check their business registration license.

Who Can Order Alibaba’s Inspection Service?

Alibaba’s inspection service is available to all Alibaba.com members outside of mainland China who have placed a Trade Assurance order. For those of you who haven’t placed an order yet and are unfamiliar with Trade Assurance, this is Alibaba’s free order protection service that covers buyers in the event of payment, shipping and product quality disputes.

To order on Alibaba.com, simply start a Trade Assurance order and select Product Inspection Service under Value-Add Service. After you make a payment, you’ll be able to track your order and see the inspection status on the Trade Assurance page.

Ordering a China Quality Inspection: Is it Worth the Money?

While ordering a China quality inspection is optional, it’s something that should be seriously considered when you’re breaking down costs and examining profit margins. Think of it this way: if defective products end up in an Amazon FBA warehouse, you’ll most likely have to pull all of your inventory to pick out the defects.

Then, not only will you be have to ship the products back to Amazon (again), you’ll have to somehow dispose of the units if you can’t donate or store them somewhere. This will undoubtedly lead to delays in current orders or even force you to make your listing inactive for a while, which is never good for meeting your margins and always bad for customer service.

Another issue you’ll be facing is Amazon’s order defect rate policy. Your ODR is determined by:

After these are all taken into account, Amazon divides it by the total number of orders during a given period to get an ODR. The Amazon recommended ODR is 1%, and they will suspend accounts with rates slightly above 1%. A rate much higher than 1% can be a cause for termination. You can find your ODR on your Account Health dashboard in Seller Central under the Performance tab. 

For sellers who only have a handful of orders each month, this could be a major issue as a single defective unit could skyrocket your ODR.

Inspections Keep Suppliers in Check

You don’t slack off when you know your performance is being monitored, right? The same principle applies here: if suppliers know a third-party inspection is imminent, they’re probably going to do a better job. Hold them accountable and don’t let them cut corners! After all, they’re not the ones going to suffer the consequences — you are.

You may be tempted to forego inspections as you build a long-term relationship with your manufacturer, but this typically isn’t recommended. No matter how reputable and experienced they may be, problems can still pop up — the manufacturing process isn’t an exact science. People (and machines) make mistakes!

A Quick Recap

A China quality inspection can protect your brand’s reputation, Amazon status and pocketbook. Are you willing to risk all of the above on something that could have been avoided?

Today’s shoppers are also more vocal than ever and will absolutely let you know if your products aren’t up to par. And as more and more sellers enter the space, having quality products can immediately set you apart from a sea of competitors.

As always, Viral Launch is here to help you in your Amazon journey. For tips on Amazon advertising, selling strategies and more, we encourage you to subscribe to our blog, check out our Youtube channel, and listen to our Follow the Data podcast.