RFQ – 80/20 Sourcing

How to attend a trade show like a pro: Finding the right suppliers, Asking the right questions, and Getting the right Product

We are officially in the middle of trade show season. Whether you are attending the Canton Fair or smaller regional trade shows, here is how to attend a trade show like a pro to find the right suppliers, ask the right questions, and find the right product at the right price.

If you want to cut to the chase and get my cheatsheet that summarizes “How to Attend a Trade Show Like a Pro”, please sign up for my free newsletter.

AWE_CSF-EC_Ocr2011 -0720- — How to attend a trade show like a pro

First of all you might be asking why trade shows? Aren’t they dying when you can find suppliers online? Well, do you want to own a 7-figure Amazon business? FACT: according to a 2016 survey of Amazon sellers, MULTIMILLION DOLLAR AMAZON SELLERS ARE TWICE AS LIKELY TO ATTEND TRADE SHOWS? This is according to a survey done by webretailer.com.

What does this mean? It’s not just a matter of simply showing up at the Canton Fair and finding the right supplier right away. You have to know how to ask the right questions to find the right product at the right price. In part 1 I showed you how to prepare for a trade show. Here I will review best practices AT THE SHOW and AFTER THE SHOW.

First let’s take a step back. Many of you know the 80/20 Rule or Pareto’s Principle “The law of the essential few and trivial many”.

80% of the world’s GDP is controlled by 20% of the people
80% of a company’s sales come from 20% of its products (bestsellers)
80% of your results come from 20% of your work

In terms of sourcing: 80% of suppliers out there are NOT the right fit for you. Your job is to find the right 20% and focus on those! Let’s call them the YES suppliers for the purpose of this article.

So let’s apply the 80/20 rule to trade show sourcing. By now you’ve already pre-registered for the show and reviewed the map so you know which halls to target so you will hit the ground running. If not, see part 1.

AT SHOW:

At the show your goal is this:

See as much as possible in a limited amount of time
Decide WHO are the ESSENTIAL FEW to follow up with

In other words “80/20” the suppliers and don’t waste time on the trivial many. Trade shows are huge. When I visit one, sometimes I walk 20,000 steps a day!

Trade Shows are a lot like Speed Dating Events

In fact it’s a “Meet Market” and I compare it to speed dating. Just like one of these networking events, you’re not going to talk to everyone. Use your eyes to see which suppliers may be the right fit for you first before you approach them. As I’m doing this, I keep in my head 3 buckets: “YES, NO, and MAYBE”. I ask myself “Where will I put them?”

Before we get into asking questions, first you should question yourself. I prepare a short elevator speech introducing my experience and the product category I’m in, demonstrate an ability to buy, and then a call to action where I will ask them questions. Many first time trade show goers forget about this step. In fact a proper introduction will build confidence and make suppliers more comfortable in doing business with you. This can mean revealing products not on the trade floor, lower prices, and a greater incentive to do business with you.

At the show, here are 7 questions that I ask suppliers.

Do you manufacture [XYZ product]?
If yes, then continue. If no, thank them and move on
Are you a factory or trading company?
Many Amazon sellers prefer to work with direct factories so here are some ways to tell them apart from middlemen. Most times I ask them directly and they tell me. Another way is to look at their product selection and if there is a common theme. For example silicon product manufacturers will offer silicon baking sheets, silicon gloves, and silicon measuring cups so it makes sense they focus on one type of material. On the other hand trading companies will offer everything under the sun such as iPhone cases, USB power banks, and selfie sticks. Telling them apart is both an art and a science. I will dive deeper into this topic in the future so please signup to my free newsletter to be the first to know.
Which countries do you export to?
I call this the country test. If your marketplace is the US and the factory exports to Africa or the Middle East then BEWARE. Their quality will be about the level of a 99 cent store. In other words CHEAP. They will claim they can make better quality but this is risky. In fact their whole supply chain is configured to low quality standards from cheap raw materials, to low skilled labor, to low quality control standards, to heavy handed packaging procedures, etc. I normally select suppliers who have experience with my marketplace or similar quality level marketplaces.
What other products do you manufacture?
There are two benefits to this question. First you are double checking the common theme test to verify they are a factory. Also you can discover new product opportunities this way. Million dollar Amazon sellers report that they ask suppliers for product suggestions.
What quality control system do you have?
Depending on your product you can ask about quality control systems. ISO 9001 is one of the most common.
Beware: ISO9001 certification can be purchased and its quite common practice in China. So take this with a grain of salt.
Can you private label for me?
This is important for Amazon private labellers. It’s good to check if they can do this for you in the beginning. They will normally require a minimum order or tooling fee – both of which can be negotiated.
How much is this?
To me the price is just one variable of the supplier equation and not necessarily the most important at this time. I get an estimate first and then ask for a firm quotation by email after the show.

The CIO of a major online sourcing platform recently asked me “How do you capture this information?” When talking with suppliers, I quickly take notes in my notebook which I will use when deciding whether to follow up. First I staple their business card to the page. Then I take down the name of the person I spoke with (not necessarily the same as the name on the business card) and the main points. Also I will note their booth number. I’ve forgotten to do this before and when I tried to find them again I got totally lost. This will save a lot of time.

I also take pictures of the product and the people. I learned this trick from one of my clients. It helps a lot after you return home and are trying to figure out who’s who. Also this builds the relationship or “guan xi” as it’s an appreciated gesture.

Finally I note the next steps for follow up: questions, request for quotations, and research (e.g. Jungle scout).

Common mistakes: I’m not perfect and here are some mistakes that I’ve made over the years attending trade shows.

Don’t fall in love too fast. Just like in speed dating there’s plenty of fish in the sea so don’t commit to anyone until you’ve walked the entire floor.
Don’t spend too much time with unqualified suppliers. If they’re a NO supplier, thank them and move on quickly.
Don’t spend too much time talking about pricing. Get a reference quotation first. There’s a couple reasons why. One is the salesperson does not have the authority to make a formal quotation by themselves. Normal the sales director, boss, and/or engineer needs to have a say. Also they just met you and don’t know you well enough to give you a low price.
Don’t forget to follow up. Just like you, suppliers will have met hundreds of buyers and they may have 100 things to do after returning to their factory. Take the initiate and email them.

Once you’ve seen the entire show, leave.

POST SHOW: But wait – you’re not done yet. You need to filter and follow up.

u-turn-road-sign — POST SHOW: You’re not done yet!

After the show I will have a ton of business cards, notes, and catalogs. I will separate them into 3 stacks:

YES: For Follow Up
NO: For the trash
MAYBE: Keep in case you need backup suppliers

So how do I manage all the emails after the show? I create a spreadsheet with the YES suppliers and their contact information, reference quotation, notes, and next steps. Then I follow up with an email template that I copy and paste. In the subject line I include their company name and product so I can quickly recognize who’s who.

Best practice: Never give them your primary email address! I create a separate email address for sourcing. Be prepared for a lifetime of Happy New Years, Merry Christmases, and endless supply of spam.

The follow up email will address these essential points leading up to a trial order:

Request for quotation based on your specifications. Please signup to my newsletter for a free RFQ template.
Questions about their company and product
Arrange samples if needed
Trial order

Here are some tricks of the trade that will get you ahead of your competitors at the trade show:

Get there early – There will be less people on the floor and you will get more attention from suppliers
Talk to the most senior person – I try to at least meet a sales director or manager as they have more decision making power
Take and early/late lunch to avoid the lines
Avoid the afternoon of the last day – Everyone will be closing down and not in the mood to talk business
Combine your trip with other goals – Factory visits and other trade shows
Get a VPN if visiting mainland China – Anything Google-related (Gmail, docs, maps, translate, etc), Facebook, Twitter, Instagram, New York Times, and others will be virtually inaccessible from China. More VPN info here. Make sure you get it BEFORE YOU ARRIVE. Many VPNs themselves are blocked in China.
Don’t go out and get drunk at night – Complete rookie move

Remember you’re at work and a good trade show can be priceless. With these tactics you will be on your way to finding the right suppliers and products at trade fairs so you can own that 7-figure business and swim in your money like Scrooge Mcduck!

What’s your #1 problem when attending trade shows? Comment below and let me know.

BONUS: For a cheatsheet that summarises “How to Attend a Trade Show Like a Pro”, please sign up for my free newsletter.

How to source from Chinese suppliers and not get scammed – Best practices, Dirty Tricks, and Advice from an American Sourcing Professional in China

My name is Gary and I’m an American based in Shanghai and have been sourcing from China since 2008. I’ve sourced a variety of products for clients ranging from industrial products, solar energy products, exercise equipment, auto parts, and more. I’ve worked with and visited hundreds of suppliers across China, big and small, and I’ve seen the good, the bad, and the ugly.

I’m offering general advice to help you not get scammed when sourcing from Chinese suppliers on Alibaba. I assume you know the basics of using Alibaba so I’ve focused on the strategy encompassing the process from initial request for quotation to negotiating prices and terms, to requesting samples and evaluating the factory, to placing the initial order and arranging a production inspection. Also included are some best practices to follow and dirty tricks to be aware of to help you save time and headaches later.

1) Product

Your goal is to make sure the supplier understands your product specifications and the level of quality.

Define the product that you’re looking for. To save time from going back and forth with the supplier as well as to organise your thoughts, spend 15 minutes to put together a Request for Quotation (RFQ) that you will send to the prospective suppliers. Here’s a template you can use:

Product Name – WIDGET ABC

Detailed Description

– Exact Product Name

– Size/Dimension

– Material and Grade/Quality Standard (for example 316L Stainless Steel)

– Application

– Packaging/Packing

– Any other special factors you care about

Quantity Required

Annual Purchase Volume (estimate is OK)

Target Unit price

Shipping Terms: FOB port (for sea freight) or EXW Factory (normally for air freight)

Destination Port

2) Evaluation

As you send the RFQ to suppliers and get their replies, you will evaluate them not just on price but also responsiveness and service. Think of it as a dating game – e.g. looks will be the first impression but are they down to earth, or flaky, or materialistic, etc? Some factors to consider include:

-Are they responsive?

-Do they answer your specific questions or do they give a generic auto response?

-Do they provide actual product photos or are they copied from somewhere else?

Best practice: Call them over Skype to follow up. Find out more about their company background, factory and production information, their main products, and export markets. Some questions to ask include:

-Do they manufacture these products themselves or are they a trading company?

Trading companies are middlemen. In the best case scenario they have better english skills and can make it easier to communication if you don’t speak Chinese. Also they may (or may not) have access to better suppliers which you may not easily find on your own. Also they may be able to negotiate lower minimum order quantities from the supplier because they have bulk purchasing power.

However there are some downsides which include higher prices due to their margins, lack of transparency as they may not reveal the actual factory, and the risk of getting scammed since they can disappear overnight. There are instances of unscrupulous suppliers shipping out a container of dirt.

Be aware that the supply chain varies by industry. For example industrial product manufacturers typically purchase components and in fact only assemble them. Unless you are dealing with a huge player, it’s rare to find a fully vertically integrated factory. For instance, even Apple’s contract manufacturer Foxconn does not manufacturer all parts themselves. They purchase from component suppliers – for instance displays from Japan Display Inc, chips from Broadcom and Qualcomm, batteries from LG, etc.

Also it’s common practice for factories to establish their own trading companies in order to export. Do you homework and find out.

-Which countries do they export to?

This is very important because you want gauge the quality of their product to fit your customer’s’ needs. For example Yiwu has a famous export mart. The suppliers here offer mainly mediocre to low quality product. They are usually the domestic market and will quote in RMB. They may not have export licenses so you will need to either have to export yourself (documentation, arrange freight forwarder, customs clearance, etc) or go through a trading company. If these suppliers do export, they mainly export to African and Middle Eastern countries who’s markets prioritize lower prices and LOWER QUALITY than factories that export primarily to North America and Europe. If you are going to sell this product in the US or Western Europe this may not a good idea. Don’t try to fit a square peg in a round hole. You will bound to have struggles trying to sell product from a lower quality factory to a higher end market unless you are selling them to the 99cent only store.

3) Negotations

There a saying in Chinese: “一分钱一分货” “Yi fen qian Yi fen huo” – You get what you pay for

In China you get what you pay for. The cheapest product will be low quality. This carries the most risk of suppliers cutting corners and using inferior product (or substitutes). As you compare suppliers and quotations you will get a feel for the market price as well as the professionalism, responsiveness, production, and export capabilities of each supplier. You should make a decision based on these variables as well as the X-factor which is your level of comfort and trust with the supplier. Successful importers build long term relationships with their suppliers. Think of it as a marriage where both parties are invested in each other.

货比三家 “Huo bi san jia” – Compare at least 3 suppliers

Depending on your time, budget, manpower, and requirements never just talk to one supplier. Request quotations from at least 5-10 suppliers to get an idea about the pricing, compare specifications, factory sizes, and also get an idea of where the product production is clustered. Large corporations have entire sourcing and procurement teams that audit hundreds of suppliers. If you are serious about sourcing you must do your due diligence. Front-load your work to reduce risks and headaches later.

Best practice: Have at least one backup supplier in case you run into problems with your primary supplier. For example there will be delays. This is virtually guaranteed to happen and you don’t want to lose business especially during your peak sales period.

Volumes

Ask for quotation based on various levels. For example you can request based on the following three quantities: Minimum order quantity (MOQ), your expected first order size, and the best case scenario if your sales are explode.

For example 50pcs, 500pcs, 5000pcs. This way you can plan for an initial trial order and at the same time gauge the price spread as well as milestones to aim for to get better pricing. This also shows the supplier that you are serious about doing business.

4) Due Diligence – Online research

When reviewing pay attention to the supplier’s Product mix. This will be a clue whether this product is their strength, an ancillary product, or even if they are a trading company.

Is the product you’re looking for the primary product they offer? If you are looking for speakers and you see them listing of 60 variations of an unrelated product iPhone cases then most likely they are a trading company getting it from somewhere else.

Factory information – Keep in mind that this is normally self-reported so take it with a grain of salt

Factory photos – Good for a general idea but don’t trust it 100%. Copying and Photoshopping is all fair game here.

Contact information – Do they reply to emails? Do their telephone numbers work?

Company registration/Business license, registered capital – this is nice to know but not a deal breaker in my opinion.

Certification: It’s common knowledge that in China many types of quality management certifications for example ISO-9001, is easily bought. Despite Xi Jinping’s best efforts, corruption is still here. So take these certificates with a grain of sale. There’s a saying 天高皇帝远 tiān gāo huáng dì yuǎn which means the Sky is high and the emperor is far away. This means that there are limits to the reach of the government.

Gold supplier certification – This is purchased by the supplier and one of Alibaba’s revenue streams. To be fair, Alibaba does attempt to verify the factory’s information but I wouldn’t rely on just that.

Website – Don’t judge a book by its cover. Even a college student can put together a good-looking website. Trading companies are great at this. On the other hand, many legitimate factories don’t even have a website nor are they found on Alibaba.. They may not even have a person that speaks English! Take the website with a grain of salt and do your homework.

5) Samples

After you have a good feel for the supplier and have decided on an agreeable product specification and initial pricing now it’s time to request a sample. Some people take a leap of faith and don’t request a sample before placing an order so it depends on your risk tolerance, time constraints, and budget.

If you do decide to request a sample, you will need to workout the payment and shipping method. Normally for a small and lightweight widget you can ask the supplier to ship it by Fedex or DHL for most countries. For low value items, the supplier may even waive this cost and only charge you shipping.

6) Receive sample, evaluate and modifications if needed. If OK then proceed.

7) Purchase Order

Place a purchase order to the seller to clarify the product specifications, quantities, price, and terms.

8) Payments

Payment terms:

When placing orders with a new supplier, never pay 100% upfront. The only exception would be for small samples orders where the amount is not significant.

There is no industry standard but 30% advance payment and 70% due upon shipment after inspection is usually fair. Some suppliers request 50% advance and 50% before shipment for initial orders. You should negotiate better terms as you strengthen your relationship.

Payment method:

Bank transfer is typical for large orders. Paypal is also common especially for small orders and this would work for credit card holders. In all my years I’ve never used Western Union.

Dirty trick: Make sure that the beneficiary’s name matches the registered company name. If it does not that’s a definite red flag and many have been scammed this way where the money ends up in a 3rd party’s account.

9) Shipment

Quality Inspection – The factory informs you that your order is ready for delivery. Do you trust them to ship? This depends on your appetite for risk, the complexity of the product, and your relationship with the supplier.

For low value total orders, you can ask the supplier to send a self-inspection report with photos. Of course you would indicate the inspection criteria and be as detailed as possible with measurements, pictures, and accepted quality levels (AQLs).

For medium to larger-sized orders, I suggest hiring a 3rd party inspection agency. Asia inspection is affordable and sufficient for most simple product inspections. They start at $309 per man-day. For inspections that require a higher degree of technical expertise you can consider larger inspection agencies such as Bureau Vertitas and SGS at a higher cost. After the inspection and if the products pass inspection then you will pay the remaining balance and have them ship the product.

Dirty trick: Corruption is very rampant in the quality inspection realm. Kickbacks to inspection agents from suppliers are very common. There’s a saying that many multinational firms have become too “localised”.

BONUS: Advanced tactics to test whether a supplier is an A-player, mediocre, or a scam:

Request a sample – and evaluate the quality. While you are doing this you will be benchmarking their responsiveness, attitude, and service. Think of it as a first date. How do they look? How do they behave? Are their values similar to yours? If you’re serious about sourcing, look to build long term relationships. This is win-win as forward thinking suppliers would rather invest in a reliable long term partner rather than have to constantly go fishing for new leads. After reviewing the sample, give the supplier your feedback and corrective action plans and see how do they react?
Factory Visit – If you are serious about doing business with this supplier I strongly recommend visiting the factory yourself or hiring someone to do so. This is a chance to see how things work and how things are made, meet with management and begin to build a relationship, as well as see if things add up.This also shows that you are putting some skin in the game and are serious about doing business. If you put yourself in the factory owner’s shoes, making the effort to visit the factory separates you from your competitors in that you are serious about doing business and not just window shopping for RFQs on Alibaba. After the meeting if you can have lunch with the supplier definitely do so. This is a chance to build “guan xi” e.g. building relationships and even friendship with the factory staff. The Chinese are normally very friendly and will be curious to learn about you and your country. But watch out for drinking and toasting though. But that is beyond the scope of this article.

Red flags

Factory does not manufacture the product you are looking for. Sounds obvious but you hear excuses such as we had a large order of widget B so we don’t have any widget A on the assembly line. But I can show you widget A in our showroom. This doesn’t mean anything. Dishonest suppliers will event take products from competitors, other client samples, or even buy them elsewhere and put them in their showroom claiming they made it. If you visit the factory and don’t see the raw materials, equipment, and production to product widget A then don’t believe it.
Is the factory busy, slow, or empty? Unless you are in immediately before or after a major Chinese holiday (insert Chinese holiday calendar) an empty factory is not a good sign. They may be in dire straits and have laid off their workers. Or they may be new. Or they may be shutting down. Don’t expect them to seamlessly onramp after you place an order. Also don’t bear the risk for their learning curve if they’ve never produced this product before. Good factories have busy workers and a palpable buzz in the air.

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