Recovering From The Rejected Manufacturing Order – Dealing With Production Timelines

Michael MicheliniEcommerce Series, Podcast0 Comments

Last week, we discussed rejecting the Yiwu market order for quality issues, now we are sharing what happened and the factory visit results from last week. The pressure is on and we also answer some questions from listeners. Let’s get this interactive and – as we promised a live and real case study.

Topics Covered in this Episode

  • About Ino

    Introduce Ino Topalovic from Insight Quality

  • Report Since Last Time

    Lorenzo reports on what has happened since last time

  • What is Up with Yiwu Market?

    Ino explains about Yiwu market

  • Moving to a Factory Sourcing

    Now we’re going to a factory production run

  • Dealing with the 1000 piece MOQ

    Do we have to do make 1000 pieces?

  • Normal Rejection Rate

    What is the acceptable rejection rate?

  • 100% prepayment?

    Factory is asking for full payment upfront

  • Which products are Right for Yiwu Market?

People / Companies / Resources Mentioned in this Episode
Global From Asia Matchmaker
√ Shout out to a CBM sponsor – SF Express – for your logistics solutions

For the international logistics service, SF is devoted to providing convenient, reliable one-stop integrated service solution with international express, logistics, supply chain and financial services to manufacturers, trading enterprises, cross-border e-commerce and consumers all over the world. Connecting China to overseas markets, SF Express cooperates with Chinese enterprises to explore the overseas market and expand globally,moreover, to bring quality products from overseas to Chinese consumers.

At present, SF Express including SF International Standard Express, SF International Economy Express, E-parcel, SF International Heavy Freight, Overseas Fulfillment and SFBUY. Accordingly to satisfy the needs of customers from different industries. SF Express will provides integrated export and import logistics solutions with transportation, customs, clearance, fulfillment, warehousing and distribution service.

Episode Length 34:28

There you have it – let’s keep pushing forward and making this a successful case study. Keep the feedback coming from listeners.

Keep it coming

Mike – I Loved your episode Yiwu Catastrophe!
I love the drama and tension – great production!
comments on the production:
#1 it is hard for a new listener to pick up half way through – you need a jeopardy laden catch-up intro: “Previously on Ecommerce Gladiator…” and “…will they ship in time for Christmas? Tune it to find out”
#2 I Can never figure out whose voice is who – you need to keep doing name checks “Dave our partner from Israel, Pete our China based partner, etc”

comments on the Catastrophe!
#1 you said at the end “we lost nothing, maybe only ?150 bucks”
Wrong! You lost (let’s say) 10 days. 10days x 10sales per day x $10profit per coffee maker = $1000
#2 Product Safety checks?
Expresso coffee maker product usually has an over-pressure release valve on the side of the boiling chamber – if it fails the whole thing may explode and kill your user. Did you check it.

Moka Coffee Pot Explosion
An explosion of a Moka Coffee Pot, also known as a Stovetop Espresso maker.

– For bigger coffee machines that you discussed as future projects:
## See below example of a product that exploded in a UK supermarket coffee shop. 6 customers injured, none killed. 1 brand slightly damaged.
That one is still going through the courts…
Coffee machine blast fault found

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Podcast Transcription

Welcome to the Global from Asia Ecommerce Gladiator Series where you can follow along the progress of setting up a Cross Border Ecommerce business from start to finish. Hear insights of real product research, Amazon FBA, China manufacturing, branding, marketing, and all the blood, sweat, and tears of building a global business from Asia. Now let’s tune in.

Mike: Ecommerce Gladiator Podcast series episode number 14. Friday here when the show goes live and I will be in the middle of one of our bigger events Cross Border Matchmaker. It’s gonna be intense. So whether you listen this day or in the future, just want to give a shout out to SF Express, one of our sponsors at Cross Border Matchmaker, it’s an international logistics service provider. You might heard of them, actually they just came to our door and deliver the package while I was recording this. They are reliable one stop and a great service for international express logistics supply chain and even financial services for manufacturers. You can check them out They will be at our conference if you happen to be there or if not we will be covering them more in the future episodes. Thanks again SF Express for your support of the Cross Border Matchmaker and Global From Asia. So for this week’s show we are talking about the production still. We’re still talking deeply about getting a product right. Last time we had Lorenzo our partner on the team giving us the report with our other team members Roland. And we had an issue of quality. We had to reject the order from Yiwu market. So thanks everybody for your feedback. I know it gets a little bit of confusing we have so many people on the show now and new names so I know some of you are little bit confused. So I’m just trying to recap a little bit. So is our brand. We’re making this stove top espresso makers. The big pressure is we’ve been trying to make it for Christmas and today’s show is we’re gonna discuss about that reality or not we’re at the end of October now. And Lorenzo was with Ino. Ino is working with Insight Quality our QC partner to take him to different factories to Fujian province so that was pretty intense. We are now doing a little bit of recap of what happened. That was about a week ago. They went to the factories and samples has been coming in to Lorenzo. We need to make some decisions in some factories and timelines. So it’s another insight for one, thank you everybody for your feedback. I’m glad you guys enjoy, let’s tune in.

Mike: Thank you, everybody. Now another Global From Asia Gladiator Ecommerce series. We’re doing this real time and today we have Lorenzo back with us partner in our Para Living Inc. Thanks, Lorenzo.

Lorenzo: My pleasure. How was going Mike? How was going Ino? We have a special treat for you guys.

Mike: Yeah, a special treat. We have Ino from Insight Quality man helping us out at Yiwu. Thank you for being here, Ino.

Ino: You’re welcome, my pleasure.

Mike: It’s great. So maybe first Ino do you want to introduce yourself and what you do?

Ino: Well, I based here in Yiwu and generally for Insight Quality Services for inspection that we’re doing and Zhejiang and Jiangxi province.

Mike: Nice. So you said we’re talking before the recording even out there since 2014 you’ve been with Insight, so that’s cool, that’s great. So then you and Lorenzo were working together on our project. Lorenzo, do you want to explain what has been happening since the last time?

Lorenzo: Of course. I just want to let everyone know that Ino has been our life saver even his wife Emma have been absolutely angels, without them would be completely lost and would, they saved this so many times especially when we had a very bad defective order from the espresso maker from the market. He was the one who saved us basically with keen eye and experienced. His patience always with me, picking me up, taking me everywhere and just want to take them live for all the efforts. You guys are amazing and I really appreciate that. Thanks Ino, thanks Emma.

Ino: You’re welcome.

Mike: Okay, cool. So as far as the business story. This has been the first time Ino on the show. Actually we’re getting listeners telling me they’re getting a little bit confused with all the different people. Again like we said Ino is with Insight Quality, he’s a third party inspection specialist. He helped Lorenzo our partner in the company to navigate Yiwu’s market and also last week, from our last show actually on the business we had that, maybe, I actually let Lorenzo report back.

Lorenzo: Yes, once we had the bad shipment from the market, we ordered 432 cups and espresso makers and as soon as we opened them it was obvious that they were completely defective because there was a bit stains in all of them. There were bad welding jobs and pretty much everyone of them quite a few the lids and irons did not open completely or close fully. So obviously it was, we cannot accept that and Ino told me that, they failed basically over 80%. So by the way we messaged the shop owner and the bad samples with us among the 432 we explained to her that we cannot accept this. At first she was okay with giving us a deposit minus the 200 for fee to go driver pick up the goods. But I finally managed to convince her that is not our fault with the defective and so we cannot accept that and finally she kept her word she returned our full deposit 1,000 RMB and yeah so we now, after that on Friday, Ino was kind enough to at first we go to look for suppliers on the market and we go straight to the factories to get high quality and all that. We searched for other suppliers, other manufacturers and locate and book at them with 3 of them. We went on Friday first one was a trading company very nice office and nice showroom, very professional and we’re very impressed. And after that we went to another factory which is more like of a workshop reminds it was a small factory and they were okay they were good people, good quality and they give me samples of the espresso maker and they were friendly and nice. And after that we went to another company which Ino booked an appointment for us. It was a trading company which are a big factory was right on the premises, huge factory big production line and showed us the showroom and different types of the product they would do, they manufacture espresso makers of all types, Italian style, French style, anything style you name it. The other kitchen products and after that they took us for a tour of the actual line department which is quite impressive and quite interesting and I was able to get some pictures which I did share in the group. I’m still in touch with the 2 factories the 2 companies. I got 1 sample on the spot from the 2nd factory/workshop. It’s been a good quality and then I also messaged the other 2 companies, the trading company and the first one that we visited very professional one. The girl said would send it to me but would have to cover the cost for the shipment 1 by 1. She said she sent it yesterday but I still haven’t received that. And then also I’ve been asking the 3rd company trading company the big factory. I asked the girl yesterday and she said she would sent it to me today, ship today which I got. I just got it tonight. By the way she sent 1, the normal 6 setup classic espresso maker that can be used both electric and gas stove. But also she sent me another 1, a 1 cup very nice, inside and outside polished that makes look more professional. Because when we went to the showrooms and to become more familiar with the, got to show us more factories and companies with more familiar on what is the best type of espresso maker that would give us the best product and we found that the best one that have inside and outside polished because not only that much better quality but they last longer. So I asked the girl to send me 1 that is polished inside and outside 1 cup espresso maker and stuff and she sent that to me and didn’t asked for any money which is quite nice of her. So far I have 3 samples, I’m just waiting for 1 to arrive maybe tomorrow and can bring with me to Shenzhen and we can have test them, try them, take pictures and all the good stuff. So that is basically the summary of what have been doing.

Mike: Great! So going to Ino, Ino you’ve done this at least probably more than few years and you’ve worked a lots of different situations. Is this, like our last podcast for the gladiator series here, we were talking about maybe the Yiwu market lady said that this quality level is normal for the market and that this is what we should expect. Is that something would say normal?

Ino: The response from the foreigner like saying something like this, I would say is normal. But generally it depends on what kind of material is the product made of how complex it is. Like I would say what can be made fairly easy product without medical components I think most customers mention the China is more professional in injection plastics. Well it defers a lot, are you buying a metal product or plastic product. And of course once you are buying, for example before 2 years. I had 2 times order from same supplier. Then the first one ordered and the quality was also bad. But the customer demand it take the pieces that are good. So we selected out the bad pieces then just ship the good quality. Then when he did reorder he did bigger order and he asked to do it the same supplier. Then he was also afraid the quality but we chose the designs made by the, what the supplier had to offer. Then they made the product especially for him and all quantity was okay. So it’s really hard to say. I think 1 time Andy also mentioned in your podcast that if you are buying the product that is made for yourself for your buying something on stock, how long that product was in stock.

Mike: Okay, got it. Yeah, it’s true I wonder this stuff must have been like leftovers from the previous production and it’s almost like.

Ino: When we went to the shop to return the product then we were explaining the quality at first she said she will return the deposit because she cannot offer us any better because for the price that she is getting from her supplier from factory is, those are leftover that is probably what the QC company like us reject the shipment or the customer that orders I don’t know, 1 container that the shop in Yiwu market is probably under quality products and they sell it for cheaper price. Because when we visited all factory for the coffee maker they’re price was about 15 – 20% higher than what we had in Yiwu market. Even for the Yiwu couldn’t reach the market price.

Mike: Understand, yeah so it seems like at least for us we have to, we had to give up on the market, we’re going to factory so that you, it was Ino and Lorenzo probably right would guys want to see a lot of factories like Lorenzo was just reporting back to us. We have a WeChat group for the team and he was putting tons of pictures and videos. We’ll try to put some of those in the show notes. But you saw a few and like Lorenzo saying waiting for a few samples. I think probably the hard thing that I think is happening is we’re trying to get a low pretty low production run, right. We’re trying to do less than a 1,000 pieces.

Ino: Yeah, factory that we visited there initial, was that they’re MOQ was 2,000 pieces but we are trying to convince them that allow us to order 500 that would be test, just try out each other. Then as our supplier and they will deal with you guys as a customer.

Lorenzo: And I would just like to add that the market says our good if it comes Ino mentioned any simple product, the simpler the product the better. If it requires anything sophisticated, anything more advanced then I would recommend going to factory. Also depends on which market is marketing, if you’re selling to many market and customers in North America, Europe and obviously you need to go to the factories directly. But if you’re selling to less demanding customers let’s say in the Middle East, Africa or the Indians of continents then in that case the market would be fine. It also depends on what kind of market you targeting and what kind of products you’re looking for. That’s also one of the factors that put in consideration.

Mike: Got it.

Ino: When returning the product to the shop that they were saying they always deliver the same quality to their customers and they were selling it for few years already. The customer that continuously re-order would then not confirming the quality. They just accept that it is.

Mike: Crazy. I think sometimes when I talked to factory at trade shows are online. They want to know what market you’re selling to, probably.

Ino: Yes, well Yiwu market is generally more focus on Middle East and South America market. But the other product that we’re sourcing for you guys even without any problem, there was a lot of plastic.

Mike: Yes, like he said on the show I said, China is well know for injection mold plastic. I think metal is a little bit harder or not as common. So, there’s less choices for everyone.

Ino: Metal is normally produced for those defects during the production.

Lorenzo: And what would you say is the normal acceptable rate of defect for metal, metallic products from experience.

Ino: Well, I’m talking about the factories coming during production if they need to consider into the price then they take out from the, what we saw in the last factory that they have their own workers they called the bad pieces. Usually on metal products it can happen for 10, 20% that is defective in the the factory during the production and should take out and not ship to customers.

Mike: Alright, making sense. So do you think I haven’t kind of voting towards doing the 200,000 pieces of order. I don’t know I just feel like were, do you think these factories, seems like they’re willing to accept the 500 but like Lorenzo told me some of them wanted the 100% payment upfront.

Lorenzo: Yeah, the first factory that the second place the one that have the products 500 in stock. The second the smaller factory with the workshop I was trying to work with the lady from there and she requested to have 100% upfront.

Ino: When we visited them, we were talking to accept low quantity you guys need also the delivery time to be expressed 5 to 7 days max. So they were saying they would accept that but the, my opinion is impossible that they cannot schedule the delivery time so they are into the deposit than they promise 7 days. They cannot make on those 7 days. They are afraid that you will cancel the order but if you pay everything they will just try for long it will be after 1 day, 2 days. Then after 2 days they will say again after 2 days then it goes again for a long time.

Lorenzo: So how long do you think this little game can go on from the factories?

Ino: Well that like I said they feel like, workshop will promise almost anything for customer to get the order. In the end you will get the same delivery time as normal delivery time that is possible to achieve.

Lorenzo: And if we were to give say to go with that supplier and pay them the full 100% upfront let’s say that the materials I mean the end product as we said is unacceptable with the high rate of defect. What options recourse that we have to have them correct that and be accepted especially after that they’ve got the full money in their hands. What options do we have to make sure that they actually correct that.

Ino: Well the best thing to do is we can show them during inspection that we have for the product that we rejected from Yiwu market then define the defects that we cannot accept before confirming the order. Then we will have exact written trade from what we agreed on same type of defect we can take out the bad pieces then ask them for reproduce.

Lorenzo: Another question I have for you Ino and that you mentioned yesterday when I was chatting from that lady on the workshop about the payment terms and I asked that whether they would accept to have the transaction course Alibaba and the reply was, No. They never do with Alibaba they only the way with the via TT and that to me, made me ask them some red flags should we be concerned about that?

Ino: Well since we both don’t have experience with this supplier it could be happened without problem it could the end results will be the same with the supplier from the market.

Mike: Well I mean I never used Alibaba payment before so I guess that’s new thing since I’ve been out on the sourcing game. I don’t think on that before. So I don’t know if I everybody has adopted to that to be honest.

Ino: Well we usually found that in Alibaba. They have 11 years member on Alibaba.

Mike: Okay, I see now. So they’ve been on for a while on using that.

Lorenzo: You mentioned that on the 3 suppliers that we visited there, that the least were with Alibaba the longest. And that can be any, the thing on their hand but that something to keep in mind as well.

Ino: Yeah they are, they have longest experienced in Alibaba. They really have, I feel they have so long experienced in 11 years of their workshop existence that they didn’t advance to be some higher quality factory then always take. To me it feels they always stay the same level. The showroom was actually office with 2 tables and 1 shelf for samples.

Lorenzo: And they look almost like a very traditional family run business that with that no plan to improve, upgrade, anything like that quite the opposite with the 2 other place that we visited. Very professional, very nice looking and much more.

Ino: You can also see usually when people from abroad contact their suppliers I tell them you can feel how good is the supplier based on the level of English. You also see the 3 suppliers that we visited that the sales person was talking with us what was their level of their English. For this workshop many question they couldn’t understand and I have hard time talk to them in Chinese.

Lorenzo: Well as the other 2, the first one was a lady was almost near fluent to English, Ana. And the last one the assistant she was pretty good in English even the owner, Alfred he was pretty, almost fluent himself. So that, I don’t have issue with them at all.

Ino: Yes and the difference when they quote you the price, the last factory was very specific about the details when they give us the quote, they can see the range of the product between 180 to 190 grams so they will not steal on the material they said they will the spiral on the bottom outside and inside, everything is defined in their quote.

Mike: Alright. So I think probably a lot of listeners are wondering as well as me. What kind of time frame are we looking at now. It said you know I guess we’re not coming on o 5 to 7 days. We’re still got to choose the supplier, make the payment, the contract.

Ino: Well the first company the first trading company she said about 30 days but at first she mentioned 60 days then 30 days. The workshop they said 7 days and then the last place was, when the owner said 30 days but when I chat with the assistant and she was mentioning anywhere 30 to 45 days, because right now they are pretty busy with the production until December. So we might be looking for more than 30 days so I’m still trying to sweet-talk my way to the assistant and have to get us a faster delivery time and I told them hey listen we like your company we’d like to deal with you and it’s a true, it’s honest that 1 that I have the best was the last 1 was also challenging with the assistant and all that very responsive. As soon as I messaged her, she messaged me right back. Very honest just to respond with the simple message. And so I said listen so far we are very impressed with your company. I showed the pictures to my boss and they are happy after work with you, you have to do if you can reduce the delivery time we will work with you. She said she’s gonna look into that so we’ll see now. That’s the latest that I can say.

Mike: Okay it’s part of doing the business. You know some of our listeners have been emailing me and they make comment the last time when we were saying we just lost 10 days or we just lost a 1,000 RMB I mean but he was trying to say well time is money and calculate the amount of profit or sales that you could make per day times the amount of day could be thousands of dollars which is true now. So I’m a little bit concerned with our time frame.

Ino: I know you have a pressure for time. But this is your first delivery and first project is better to start with good quality and the stable supplier that you can trust then don’t rush to get to the time frame than actually cut time means lose money.

Lorenzo: I agree with Ino because we’re on this game to deal the long term business and we’re not building a product, we’re not building the business just to make a quick profit. We’re building a business around and want to be known, want to place ourselves as a premium brand and the market and the niche. And for that, for us to do that the most important thing is to find a reliable qualified and experienced supplier and if it exist longer than usual then so be it. Much better to have take our time than to be pressured by the Christmas season because we have many more Christmas season and other sales opportunities provided that we can have, we can deliver quality product in the market. This way if we’re to speed up everything and get a low quality product we will get destroyed by the reviews and that is something that we don’t want to do and to happen to us because that will badly affect our business. So that is at least my opinion and I fully agree with Ino on that.

Mike: So basically yeah I mean I just feel like we might have to give up on Christmas this year to be honest, just to be realistic, right, basically?

Lorenzo: We’re still trying to push our best to, I’m trying my best see if we can find right and balance between quality and speed. And that’s why I’ve been trying to sweet talk my way with that suppliers, assistant and all that. And I feel that, I still have hope on that we can have something going to be there right on time for the Christmas rush. We could not make it, let’s say every Monday or Black Friday but for Christmas is an option for us and that’s what I’m gonna push forward to.

Mike: Okay, Ino what do you feeling?

Ino: Well, it actually depends on what will you decide on. We can try to have them and talk with the supplier that been asking you guys to pay 100% upfront. We were trying to explain to them that they don’t know us, they don’t know them, meet halfway. That’s the, if they have deposit is not a problem but you guys need have some leverage on the quality side because we told them it will come from Yiwu and will do the inspection after everything is done. Then release the payment.

Lorenzo: As long as we could get some kind of safety or guarantee from them then yes we would, if we were to release the funds in full we would want to have some kind of options, should the product be defective and not to our satisfaction then we need to have them correct the change and that’s something that has to be in contract as well. And they need to fully understand that and agree.

Ino: Yes, agreed.

Mike: Alright. So it has been a great discussion so far. I think we should kind of wrap up by, so you guys are the people in charge of marketing department and other team, of course we’re on standby basically. I’m excited and you know this has been this is like what wanted it’s real. So what’s the plan for this week and maybe next week on choosing, we’re still trying to get all the samples like Lorenzo said they are coming down in Shenzhen for the Cross Border Matchmaker and some other things, the team here.

Lorenzo: For me the game plan right now is just to get all these samples I can and bring them with me and attend the event. I’m extremely excited about it and then at the same time we got to continue to talk with all those suppliers and try to see if we can get better delivery times and get a feel for the 1 that is most willing to work with us and I will present all of my findings and my talks with the team on Friday and Saturday when we meet with the rest of the team in Shenzhen. And then we can make and form a decision with the head altogether. And we can move forward from that.

Mike: Great man. Alright Ino thanks for your time and it was late, too. It’s much appreciated and to be on this show. And also helping us so much and really caring about it, so appreciated.

Ino: You’re welcome.

Lorenzo: And once again, thank you very much Ino and thank you Emma, thank you Andy for putting us in touch with your best people. They have been amazing, they’ve been a lifesaver. Thanks to both of you and thank you Andy and let’s keep working I guess.

Mike: Definitely. Alright guys, have a great evening.

Mike: Okay. Hope you guys enjoyed that one, we are again that is something, only episode 14. I always want feedback from you guys is the best email to get to me for this. And we are just improving as we go so it’s nerve wrecking I mean of course there’s an event, anybody who has organized an event knows how stressful it is. So it’s coming up really fast and it will be happening while the show is publish. So that’s happening and of course, we’re trying to get this Christmas deadline. I don’t know what you think but like this on the show, we got to focus on quality over speed and you know these mistakes really happen when you’re trying to go fast. So we need to make sure we build a strong long term brand and a quality product. And that’s what we’re doing and I will be sharing about some of this on the event at the Cross Border Matchmaker and other things. So let’s all stay positive and make right plans and make right moves to grow your businesses and I hope you guys are having success and I wish you all the best. Also again thanks to SF Express sponsoring the Cross Border Matchmaker. They are logistics service provider that really works deep and you can like order for 1 day and it comes like even same day or the next day with their really popular in China for speed and quality. And speaking about quality and they can up in your import and export logistic solutions. They have transportation customs clearance for fulfilment, distribution and more. Alright everybody enjoy your weekend. It’s a Friday show and Tuesday we have our interviews so enjoy everybody and feedback is always appreciated and know that we’re improving as we go. Thank you, cheers.

Welcome to the Global from Asia Ecommerce Gladiator Series where you can follow along the progress of setting up a Cross Border Ecommerce business from start to finish. Hear insights of real product research, Amazon FBA, China manufacturing, branding, marketing, and all the blood, sweat, and tears of building a global business from Asia.

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