In the promo image for Fulfillment by Amazon, the graphic starts with sending the products to Amazon. But what if you’re importing? Your graphic has a few more items – selecting a supplier, validating your goods, and navigating the complex world of international logistics.
There are two major challenges when importing with the intention of selling through FBA: 1) local laws and regulations, for the product itself to be legal to sell and for it to get through Customs; and 2) ensuring that the product you think you’re purchasing is the product you actually sell so that you can meet your ODR (order defect rate) allowance.
For Trade Classification, there is the option of using either a brokerage, which can be rather expensive, or working with an independent consultant (i.e. http://www.iamtradecompliance.com/all-up-classification/).
Issue #1: Local Regulations
For Product Compliance, many consumer goods are regulated by the CPSC (Consumer Product Safety Commission), and those that aren’t may be regulated by FDA (Food & Drug Administration), FTC (Federal Trade Commission), FCC (Federal Communications Commission), NHTSA (National Highway Traffic Safety Administration), or the Coast Guard – and this doesn’t include any of the state or local level regulations which also exist, and this is just for the US. In Canada, you have Industry Canada or Health Canada, plus provincial authorities – and the EU has not only EU level laws, but also still often enforced country and state/provincial level laws as well. Navigating these requirements can be an enormous challenge because even if you do manage to contact someone at a lab who can help you, their risk profile is often very risk averse, which could result in payment of 3-5x what is reasonable to pay in the US or CA, and I have seen vendors pay up to 10x what is truly necessary on products being shipped to the EU. Not all regulations are made equal, and not all testing is strictly necessary. Depending on your risk profile, I recommend evaluating which regulations you will verify yourself versus which ones you will rely on your contractual relationship with your supplier to meet – with some of these, that option won’t exist because the importer is required to maintain and store records for sometimes up to a decade, but there are reasonable approaches to validating other requirements that exist.
Issue #2: Maintaining a low ODR
To meet an order defect of less than 1% requires more than just a solid testing quality assurance program, it also requires a solid factory quality audit and inspections program. Some NA/EU based importers and small manufacturers also want to differentiate themselves by having a social audit program, but this is different than a factory audit. A factory audit essentially determines the consistency with which raw materials and in process goods are made, stored, and used in the manufacturing process. A social audit is focused on the workers, their conditions, and the overall workplace hazards they may face. A factory quality audit will give you assurance that either the factory has solid procedures in place with a higher score, or indicate potential for failure or a higher rate of defects with a lower score. For factories with a lower score, I always recommend a regular pre-shipment inspection program, with an AQL (Acceptable Quality Limit) that is reasonable for the ODR/star ratings that you wish to achieve. The inspection protocol can be adjusted as well to fit your particular risk points or concerns, thereby lowering cost while increasing the likelihood of achieving an acceptable ODR and maintaining your good standing as an FBA seller with Amazon.
PSA: For those importing consumer goods, don’t overlook CPSC Compliance. Here is a guide to ensure you stay safe from fines and recall, and how to import from China successfully. x-post-/r/chinabuyers from FulfillmentByAmazon