Sourcing A Product To Sell on Amazon

Part 2 (← Missed Part 1?)

In the last round up of the ongoing Million Dollar Case Study, we covered advanced product research and found a product that we want to launch for the Jungle Scout Million Dollar Case Study: Baby Hooded Towels.

The premise of the case study is to provide an in-depth, over the shoulder view of what it takes to launch a successful ecommerce business. Primarily we will be using the Amazon platform to generate one million dollars worth of revenue, and we are donating all profits to a very worthy cause, Pencils of Promise. Read more about the charity here.

Now it’s time for the next steps. This article is going to cover sessions 3, 4, and 5 of the case study which gives an in-depth insight into:

• Intellectual property research
• Finding a supplier
• Supplier outreach

All of the insights and best practices from these sessions gave any aspiring Amazon or ecommerce entrepreneur all of the information needed to successfully source a product and start to form a strong relationship with a supplier.

Intellectual Property

But before we delve into supplier and product sourcing, I want to outline an important reminder from Marc Karish, a patent attorney, with over 15 years experience working in intellectual property law. He did a great job laying out the fundamentals of intellectual property to help guide us through potential pitfalls, whilst also protecting ourselves legally.

In a prospering yet cutthroat marketplace like Amazon, protecting yourself legally (and avoiding infringement on others’ intellectual property) is a confusing yet important step to navigate.

He covered three really important components of Intellectual Property, Trademark, Copyright, and Patents…

Trademark

Taking the definition from the US Patent And Trademark Office (USPTO):

“A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.”

Essentially, Trademarks exist to protect the marketplace, to protect consumers and to protect brand owners.

Trademarks can exist in some of the following ways:

• Words — Apple, Nike, Adidas, Exxon
• Letters — AAA
• Slogans — “Just do it”

To research an existing trademark, simply head to the USPTO.GOV site, and search in the Trademark Electronic Search System (TESS).

You can search using basic design marks, ownership, words and so on. Then you need to ask yourself if your brand looks or sounds similar to an existing trademark.

Especially if you want to get your own trademark, you need to ensure someone else is not using something similar.

An interesting caveat that Marc mentioned is that some trademarks won’t be listed but have been used long enough that they can be enforced against you if needed. If it comes to such a state of ambiguity, it’s always safe to heed the advice, ‘consult with an attorney.’

Copyright

The government uses the following definition:

“Copyright is a form of protection provided by the laws of the United States. (title 17, U. S.Code) to the authors of ‘original works of authorship,’ including. literary, dramatic, musical, artistic, and certain other intellectual works.”

This gets tricky with selling on Amazon, as there are many products and listings that look nearly identical. However, if you copy some packaging or a manual, you are violating copyright law. Moreover, if you are inspired by someone’s product, they automatically have protection on the images, language, and packaging.

The best course of actiion here is don’t copy someone else’s work. And if you are worried about your own, get your own copyright. They generally last for the life of the author plus 70 years so it would be a worthwhile investment

Patents

Patents protect the idea behind the product. By definition:

“A patent for an invention is the grant of a property right to the inventor. Patents are granted for new, useful and non-obvious inventions for a period of 20 years from the filing date of a patent application, and provide the right to exclude others from exploiting the invention during that period.”

Patent owners are granted monopoly for a given amount of time, which is the benefit to patent owners. They have a term from 17 years of issuance or 20 years from filing.

There are two types of patent, Utility Patents and Design Patents. You can easily find if a product has a patent with a quick Google:

Utility patents protect the function, whereas design patents protect the design (you guessed it!).

However, in order to be in violation of a patent you need to be infringing on every element. So if there is a patent in place, you may want to seek legal advice before making a final decision.

How much does legal protection cost?

• Copyrights — Filing a copyright registration is inexpensive. The fees run $35-$55 on Copyright.gov, and might be $250-$500 if you hire an attorney to do it.
• Trademarks — Filing a trademark can run about $1000, which includes the filing fee for one class of goods.
• Searching for a patent and conducting patent research could run $2000-$3000. Depending on the technology that is being patented, and the research necessary.
• Filing a patent — This can cost $7500 to $9000! Plus 50–100% of filing cost to get it past for applying for a patent. Additional fees may include additional applications and drawings that need to be done to file the patent.

Get the full webinar replay on Intellectual Property Research here!

Above are the steps to get you started with your IP research. If you have specific questions on your particular product or idea, it is best to reach out to an intellectual property attorney. Marc’s contact info can be found on his firm’s website.

So far we have covered product research and advanced product research and made sure we are legally safe to proceed with our product idea, Baby Hooded Towels.

Finding a supplier & outreach

In sessions 3 & 5 we covered finding suppliers, how to identify the good suppliers from the bad, and how to contact potential business partners.

First up we were joined by my good friend Gary Huang, founder of 80/20 sourcing, to discuss how to find those important manufacturers.

“Ideas are easy. Execution is everything. It takes a team to win.”

— John Doerr, Venture Capitalist, Kleiner Perkins

Gary likens finding a good supplier to finding a spouse. When you think about it, you need to find a supplier that can trust, that you like and that is willing to be your partner for long-term success.

So what defines a good supplier?

What To Look For

A good supplier will show all of the following qualities:

• Good communication and language skills
• Has experience in your product niche and the capabilities to product your product
• Willing to go the extra mile to manufacture the exact specification you are after
• Fits comfortably within your price range
• Cooperative and eager to start a partnership

Whilst the signs to look out for that may indicate a red flag are:

• Have not been in business for very long or have a lack of experience
• No experience with your product type
• Pricing that is far too high, and equally, far too low (quality is very important and will save you a lot of hassle in the future)
• Non-responsive and not very cooperative to work with your requests

Where to Look

There are many ways to find a list of suppliers to reach out to. Here’s my favourite:

Alibaba
This is the best marketplace to browse suppliers that produce products similar to yours. There are literally tens of thousands of suppliers on here. You can filter by country, and see useful information such as how long they have been trading, which countries they most regularly supply and what other products they manufacture.

You can also create a free account and build lists of favorites to make life easier, and message suppliers directly within the Alibaba platform.

→ Global Sources
After Alibaba, Global Sources is the next go-to marketplace for finding a supplier for your product.

→ Trade shows
Another really useful tactic is to attend trade shows. The Canton Fair is one that you will definitely need a day to recover from, but it’s so useful and allows you to cram a lot of product research and face-to-face supplier sourcing meetings in one.

Well worth having sore feet from walking the show all day!

→ Makersrow
This is a neat marketplace for finding US based suppliers.

→ Chambers of commerce
Maybe you are developing a fashion product and want to source a supplier in Spain or Italy? Maybe your product is textiles and you’re thinking of sourcing from India? You can actually contact the chamber of commerce in the country you are seeking a supplier and they can usually send a list of useful contacts.

Required information for supplier outreach

Whatever it is you are looking for, make sure you go in prepared with the correct questions as previously mentioned.

When you initiate contact with potential suppliers, you are going to send a Request For Quotation (RFQ).

The goal of sending out RFQ’s is to gather basic information about a supplier (can they make your product? Are they a good fit? What is the tentative pricing?).

You can send the RFQ’s via Alibaba’s communication platform, and can do so very quickly using a pre-written template.

If you can define your product in specifics, you immediately show that you are serious. These details include:

• Product Measurements
• Material
• Specifications
• Packaging
• Any other critical points (safety, branding, etc)

And to conclude your RFQ, include a list of specific questions that you want answered:

• Can they manufacture this product?
• Past experience with this product?
• Product modifications
• Request price for volume order and sample

Example supplier outreach email

It’s worthwhile creating a list of 15–30 suppliers. For my Baby Hooded Towels, I found a list of 21 suppliers and created an email template to send to them all. Here’s what it looked like:

Subject: RFQ Baby Hooded Towel

Hi There,

My name is Greg from Jungle Creations. We are looking to purchase baby hooded towels for the US market. See attached photos. Our primary sales channels will be online. We estimate up to 20,000 to 30,000 pcs annual purchase volume after a trial order of 500 sets and samples evaluation.

Specifications:
Size — 34in x 34in (92cm x 92cm)
Hood should have “ears”
Material: 100% Bamboo, organic preferred
Quality: high thread count and very softNo loose threads
Color: white, no dyes

Do you manufacture these types of bamboo baby towels with hood? If so please provide the following:

1) Photo, Specifications and EXW Quotation
2) Are you a manufacturer or trading company?
3) What is your lead time for samples and trial order?
4) Can we add our logo to this item? If so, where can the logo be added?
5) What is the sample cost with shipping by express to USA?

Appreciate your reply. Thank you.

Greg Mercer
Jungle Creations

Of the 21 factories that he reached out to, there were 14 responses, and 3 were worthwhile to follow up with. So we are narrowing down the potential partnerships as we go, taking into account all of the criteria we want to see.

You can see some of the responses we got in this webinar recap!

Final words

That’s it for this roundup. Next time, we’ll be covering evaluating our samples of the Baby Hooded Towels and branding and packaging design. See you there!

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