by Fredrik Grönkvist
In this third part of our series on Buying in China and Selling on Amazon, we guide you through Amazon’s Product Guidelines, which are part of Amazon’s Seller Policy. In part, these terms refer to US product regulations and compliance, but also other, non-regulatory requirements sellers must meet in order to participate. In this article we explain Amazon’s terms for CPSC product compliance, defective products and counterfeit items. As always, we also explain how each term relates to the risks involved when importing from China, and other Asian countries.
If you’re interested in reading the first two parts of the series, you find them here:
“Sellers are responsible for tracking and complying with any regulations issued by the CPSC.”
Compliance with applicable US product regulations is never optional, regardless of whether or not the items are sold on Amazon.com. However, Amazon’s Seller Policy is explicitly referring to these regulations, clarifying that compliance is the sole responsibility of the seller. Ensuring product compliance when buying from China is, in my opinion, the biggest challenge faced by American importers. Below I explain the three main reasons:
Ensuring compliance is critical, not only for Amazon sellers, but all importers. At best, non-compliance results in a forced recall. However, you may also be forced to pay millions of dollars in damages, in case someone is hurt, or if property is damaged. Before you get started with your imports, you must first confirm which regulations apply to your product, and then limit your supplier selection to those who can prove that have a verified compliance record (e.g. previous test reports, certificates and American buyer references).
In addition, Amazon also requires the seller to comply with all applicable labelling requirements. These labeling requirements are often part product regulations, such as the CPSIA. Amazon.com provides templates, that enables sellers to add warning labels (e.g. Choking Hazard Warnings) directly to the product page.
Follow the links below to learn more about US product regulations and labelling requirements:
“Items in any of the following conditions are unacceptable for listing on Amazon.com:”
As any reputable marketplace, Amazon.com has set certain product requirements the sellers must fulfill. At a glance, these requirements may seem rather simple and easy to comply with, but things always tend to get a lot more complicated when importing from China. Keep reading, and I’ll explain what you must know about defective items, damages and counterfeits.
It’s impossible to completely avoid quality issues when importing products from China. That said, the severity and rate of these defects can be effectively reduced, and controlled, by implementing a comprehensive Quality Assurance (QA) strategy.
It may sound like a monumental task, too big for any small business to implement. In fact, QA is not as complicated as it may seem. What truly matters is that you implement a QA strategy from the very beginning, and not only in the later stages of the process. Click here to read more about avoiding defect and damaged products when selling on Amazon.com.
Apart from Quality Issues, transportation damages is another major risk. Many Chinese suppliers lack internal export packaging guidelines. As a result, many suppliers use cheap and substandard export packaging, thereby vastly increasing the risks of transportation damages.
During transportation, your cargo must be able to withstand heavy pressure from other cargo (especially when shipping LCL), shocks, humidity and liquids. Always provide your supplier with clear export packaging quality requirements, and instruct your quality inspector to include the packaging in the inspection protocol. Below follows some general export packing quality recommendations:
“The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited.”
This area is tricky. I think most of you understand that importing fake Gucci bags is not a good idea. However, things are not always as clear cut as obvious fakes VS original designs. How do you know if that stainless steel coffee pot is an original design, or a replicate of some obscure Danish design company you’ve never heard of?
There’s a reason Chinese manufacturers aren’t famous for being the worlds leading innovators. The items you see on sites like Alibaba.com are generally referenced products – either based on the products ordered by previous customers, or products that are more or less “inspired” by other brands. That said, some Chinese manufacturers also develop their own designs, but I dare to say they are a minority.
In fact, we’ve had a few cases when our clients’ products turn up on a suppliers Alibaba.com page. Luckily, Alibaba.com has become much better at acting against IP infringements. But, Alibaba.com, and other B2B supplier directories, can only act if they the infringement is reported.
While there may not be any cost efficient way to be 100% sure your product is not infringing on another company’s IP, there are still a few precautions you can take in order to reduce your risk of importing counterfeit items:
1. Create your own custom designed product
2. Modify an existing product
“Here are some situations when you may need to refund, accept returns or cancel orders:”
There are various reasons you are forced to refund a customer. Below I explain what you must know about the two most common reasons.
A customer is not always returning products due to defects or damages, even though quality issues are very likely to result in a high return rate. However, managing quality issues is already covered in this article, so let’s look into how you could end up in a situation where you fail to deliver orders.
In order to avoid a situation where you fail to deliver the products, you need to maintain a sufficient quantity in stock. This is often easier said than done. For natural reasons, importers want to avoid excessive inventory. On the other hand, lead times to restock are long, and prone to delay.
Chinese suppliers rarely keep products “off shelf”, and certainly not products compliant with US product regulations (e.g. California Proposition 65). Your items must be manufactured before they are shipped, a process which usually takes 30 to 50 days, largely depending on the quantity and complexity of the product.
Then the cargo must be shipped from China to the United States, adding on another 20 to 35 days. In total, you are looking at 2 to 3 months, before the items are restocked, counting from the order date.
However, that is assuming you face no delays whatsoever. But delays are common in China. Maintaining sufficient inventory is complicated, and requires very serious planning. It’s also a critical Sales Performance signal, that has a great effect on your ratings on Amazon.com. Click here to read more about how you can avoid delays when importing from China and selling on Amazon.
Amazon’s terms are not limited to the products, but also specify strict requirements for product packaging. In most product categories, the packaging requirements are related to whether the item is marketed as new, used or refurbished. However, certain products must be delivered in a new, and unopened, packaging. This is what Amazon.com requires for wristwatches:
“All watches must come in their original packaging, including all original packaging materials and instruction manuals.”
Also, even if not explicitly referred to in the Amazon.com Participation Policy, all US packaging regulations, and labelling requirements, are applicable. Before you place an order, you need to confirm which apply to your products, and verify the supplier’s previous compliance record.
Fredrik Grönkvist is the co-founder of ScandinAsian Enterprise in Shanghai. Since 2010, he and his team have helped hundreds of companies worldwide, primarily in the EU and US, to develop and manufacture products in China. He is also the main contributor on www.chinaimportal.com, a leading knowledge base for small- to medium-sized enterprises importing from Asia. For further questions, you can contact him on www.chinaimportal.com/contact-us/.