Quality Control & Product Compliance ⎜Qima⎜EP 143
Ryan Cramer: What's up, everyone? Welcome to my corner of the Internet. I'm your host, Ryan Cramer, and this is Crossover Commerce, presented by PingPong Payments, the leading global payments provider, helping sellers keep more of their hard- earned money. Hello everyone, thanks for tuning into another episode of Crossover Commerce. I'm your host Ryan Cramer, and this is Episode 143 of my show that I call Crossover Commerce. This is my corner of the Internet, where I bring the best and brightest in the Amazon and eCommerce industry, of course other experts that touch on the field that help share their insights on the most important aspects of selling online. You can be an Amazon seller, you can be selling at Walmart. com, you can be selling as a brand in retail and then moving to online. We're going to have experts that are going to help you elevate your business moving forward. That being said, this podcast is actually presented by PingPong Payments. Crossover Commerce is presented by PingPong Payments. What is that? It's not a table tennis company, as I like to joke a lot with people, it is actually a cross- border payment solution where people can actually send and receive remittance to different entities like BAs, supplies and manufacturers overseas, wherever they might be located in the United... in the world, I should say, but then also repatriating money. So if you're selling in multiple different marketplaces, you can actually save money instead of paying foreign transaction fees through banks or whatever services out there. So if you're interested, definitely go ahead and check out PingPong Payments with that link in the comments or shout outs below. It's free to sign up, but make sure that you're saving with your cross- border payment solution. That could be PingPong Payments. That being said, I want to welcome everyone who's tuning in today, whether it's live on our social media channels or be it listening to us on our podcast channels on audio format. This is a" We like to be everywhere" podcast, so if you're watching us live, this is an interactive. If you have questions, go ahead and submit those in the comments section and we can see those. Applicable to, obviously, this topic that we've been covering today. Other than that, it's a really exciting and fun show that I have with people that are experts in their field, and this episode is no exception today. Today's episode is going to be covering quality control and product compliance, lab testing and whatnot. The two important pillars of a successful eCommerce business. Is it the most important thing? I think I would actually argue, yes, it would be, actually, very important today as a business is growing, as businesses and brands are growing, because it's one of the most technically difficult ones to understand in terms of wherever you might be selling products or services, you must comply with different regulations in those marketplaces. You don't have the time, money, or effort to thumb through all those different regulations? Well, there's businesses and companies out there that can help you with that. We've had some of them on the show, but today, I'm very excited to have QIMA in the representative over there. His name is Rahul Chawla, he works with quality control for over 13 years now as a CSR and product compliance specialist. He's been assisting hundreds of global retailers and brands and eCommerce companies to help them mitigate their risk and help them with their supply chain questions and problems. That being said, him and his company have been lovely enough to join me on Crossover Commerce, so without further ado, let's go ahead and bring Rahul of QIMA. Rahul, thank you for joining me on Crossover Commerce today. How are you?
Rahul Chawla: I'm doing fine, thank you Ryan. Thanks for having me. How are you?
Ryan Cramer: Of course! I'm doing fine. And I was talking about this. Actually, it might be probably late at night for you right now, I'm sure it is. It's early morning for me here in the United States, but you're located in, we said Shenzhen, China. Is that where we said?
Rahul Chawla: Yes. Yes. I'm in Shenzhen.
Ryan Cramer: Okay. How long have you been there? Have you lived there for long, or how long have you been in China?
Rahul Chawla: It's been six and a half years now.
Ryan Cramer: Okay. So yeah, I was going to say, what brought you into the compliance space? QIMA, very big over in China. I'm curious inaudible, the topic we're covering on is a little technical, so I want to make sure that I understand what we're going to be diving into. So, compliance and product testing. We want to make sure that everyone listening to this understands, why is that important? Why should we care about product testing, right? " I don't have to do it, but I might need to do it," if that makes sense.
Rahul Chawla: Yeah. So let me just quickly give background on myself and QIMA. I've been working with QIMA for six and a half years, and before that I was working in India for seven years for other QC companies, and speaking of QIMA, we started 15 years ago by the name of AsiaInspection, founded in Hong Kong. And today we are known as QIMA, and we got office in 35 different places across the globe. We also got our own laboratories, and we have on- ground staff in more than 85 countries to serve our clients from different parts of the world. Diving into the topic of today, and actually it's a evergreen topic which everyone needs to take care of, and I'm so glad you started with emphasizing on the importance of it, so lab testing and quality. And people tend to do mistakes, even the big sellers, the eCommerce platforms, which really is quite a saddening state of affairs, because as eCommerce is growing, the more it's a responsibility of the sellers who are on eCommerce platforms. But the problem is, most of the eCommerce sellers are people who were earlier consumers, and they never realized the importance, they never knew what is actually happening in the background. Me and you, when we buy things from Walmart or Target or Dollar Tree and so on, we just buy, and we are happy with the product, but we don't realize what these companies have been doing in the background to make sure that we, as consumers, are kept safe, the products are safe, we don't die, we don't choke ourselves, or we don't have critical illnesses like kidney issues or cancer and so on. So that's a big reason why I see that sellers don't really understand the importance of it, and they tend to do mistakes. So, why we actually need lab testing. The key is product safety. The key is to keep the consumer safe. Now, it could be physical safety or chemical safety. And again, going to the earlier reason what I told is, people realize the repercussions or the hazards which could happen immediately. If I'm standing on the terrace of 32 floors building, I know if I fall, I'm going to break my bones. But if I'm consuming a product which has carcogenic dyes or some chemicals, those things show effect after several years, so people don't realize the issues around chemical safety very easily. And that's when people think, " Oh, this is not really harmful. It's okay." But the things are very different. If you are buying any product, let's say you have children's toys or the shirt I'm wearing, every product can have chemicals. And that's another misconception in eCommerce industry, is people think only the gated products or children's products or food supplements, only these things have to follow the regulation. That's a big mistake, and that's a big misunderstanding, because every single product has to follow certain regulation. There are regulations for almost everything which is being sold in the market, and majority will be at least for chemical compliance, if not physical safety. So the biggest reason, like I said, why you need lab testing, is to keep you and me safe. Yeah, you could be selling a product, but you are also buying products. Of course, what you'd like to buy is a safe product, so why not also sell a safe product? crosstalk That's really important.
Ryan Cramer: Right. A lot of what you had mentioned, it harpens to... as a consumer, there's a lot of trust in the eCommerce. So specifically what we're talking about, this can be for physical products and retail, but also it alludes to literally any form of commerce in general, and that's what we like to talk about on this show, is that safety for products at the end of the day... it was a really big prominent focus online crosstalk. If you have products that are being sold in marketplaces, you don't know where they're coming from, potentially. On a marketplace like Amazon, you used to have products that would explode or catch on fire or would cause topical or... you know, just harm to individuals. But now Amazon has actually the stance, because of clearly legal reasons, that for sellers on a marketplace, who's really at risk here? Well, ultimately, depending on if someone gets hurt or whatnot, it falls back onto Amazon, but also third party sellers to an extent. So there's lots of different things you have to be protecting of yourself as an entrepreneur on these marketplaces. With that being said, just in general, we want to make sure that everyone is safe and secured, not creating issues with the products that they're selling. I think that's a given on a lot of cases. But at that, it comes maybe with a difficulty to understand, if I want to sell apparel for example, like this t- shirt, it has dyes in it, it has constraints to it, which type of material I'm allowed to sell on marketplaces, if it has inaudible up- cycled or recycled material, can I sell that? All these different nuances that you go in this deep dark hole if you will. You're going to help navigate the seller to figure out, " Hey, these are all the things if you want to sell this kind of product. We're going to make sure we can get you there." Is that fair to say?
Rahul Chawla: Yes. Yes, that's very fair to say, and I totally understand, because most of the eCommerce companies are smaller companies, it may be just individual seller or maybe a bunch of five guys who make a new company and start selling. They might not have a dedicated person to manage compliance, unlike big retailers and brands, who have dedicated departments, not just one person, they have departments to take care of all this. So it's very understandable, and that's why companies like us, we are there to handhold the sellers and guide them through the way, because we have all the expertise and the knowledge what we can translate to the product compliance for the seller.
Ryan Cramer: Gotcha. With that being said, if I'm a seller and I'm beginning my journey, I'm a small or medium sized business, I'm going to come to you, Rahul, for... When am I ready to come to you? Do I have my product already? Have I sold on Amazon before? Or do I need to do this all pre selling online, or in any sort of marketplace capacity?
Rahul Chawla: Okay, so the first thing is, you need to test every product. Doesn't mean only children's products or toys or food supplements and gated or non- gated products. Everything has to be tested for one thing or the other. The easiest thing is you come to us early on, because the earlier you find the problems, it's better to change the materials if you need. Number one tip, which I always suggest to my clients, is, you should actually ask us for a free quotation at the product research stage. Now why I say so is because, like I mentioned, this is something you have to do, you must do, you cannot get rid of this. You cannot skip it, because one, it is mandatory by the regulation, two, you have to make sure that your product is safe. So you cannot skip this process of lab testing, and since you cannot skip, you need to make sure that you include this in your budget. Now, when do you do your budget? You do your budget at the product research stage. Right? So of course, you have brilliant tools, like Jungle Scout or Helium 10 and whatnot, for very nice product research that you can make, okay? So let's say you've found three nice products that you think are scalable and sellable. But then you have to look into the product compliance. The easiest thing is you send us an email to QIMA, send us the details of the product, and we provide you with a free quotation. So you get a sense of the cost for the lab testing which is going to be incurred. You can put that into the budget. If it fits into your budget, great, go ahead. If it doesn't fit, stop right there. Choose a different product. crosstalk
Ryan Cramer: What are you talking about in terms of cost? Because I want to understand... I'm assuming it depends on the materials, what category you're in. Is there a safe range to... If I'm a listener right now and I want to know, how much should I theoretically budget for, is there a range that you're going to be telling customers, for testing, to make sure your product's just safe in general and crosstalk, this is what you should budget for inspection and quality control, essentially?
Rahul Chawla: For lab testing, there is not really a fixed number or a range, because like you mentioned, it changes with the materials. It really depends on the product details. It's a very common example I always tell people is, a bottle. Now, when I just said bottle, it can mean anything. Any kind of bottle. It could be just a bottle to put some oil in, keep it in your garage, or it could be a drinking water bottle, it can be a drinking water bottle for children. It can be a drinking water bottle with a nice logo around it, maybe a cartoon character. So things change drastically. It depends on what materials it has. Is it made of steel, is it made of plastic? What kind of plastic? What are different materials used? Even the colors. Is it only white? Is it red? Is it multiple colors? And like I said, the use of the product. If it is for food contact, there are different regulations. If it's just general products, there are different regulation. If it just is tiny figurine, just a showpiece, it's different. And if it's for children of a certain age, it's different. So there's not really a range. It can be few tens of dollars to even thousands of dollars. It really depends on the product. Tomorrow, if you have a wifi- enable water bottle, things change, because you have wifi modules attached to it, so crosstalk.
Ryan Cramer: The more complex your product gets, the more testing crosstalk, so...
Rahul Chawla: Yes. Yes.
Ryan Cramer: Maybe specifically in categories, if I were doing lab testing, is there an area that seems to be more difficult than others, in terms of... Let's say the biggest market in eCommerce is Amazon.com inaudible most people are going to first start in the United States to sell their products. If I want to sell a good in the United States, that being my barrier, if you will, barrier to entry, what is the most difficult category to get into, in terms of compliance regulation, lab testing and so forth?
Rahul Chawla: Let me put it this way, it's not really difficult if you follow the right thing. It could be more costly compared with...
Ryan Cramer: Sure, let's go that way.
Rahul Chawla: How I really suggest is, if the seller is at a very beginning of his business, he or she should go for simpler products, like really, really simple. Try to avoid electronics, try to avoid which are, let's say, children's products, and the lesser the materials, the easier and cheaper it is.
Ryan Cramer: You said less materials, not the lesser quality material? Okay, gotcha.
Rahul Chawla: Yeah. So let me give an example. There was a friend of mine in Hong Kong, and she was trying to sell those party packs, if you have balloons and whatnot, five, 10 different things. And the problem is, there are so many materials, and for such products, maybe the value of the product, the cost of the product is really low. It's a party item, so it's use and throw. So the margin was really low, while the cost of testing was getting higher. So she had to drop that product.
Ryan Cramer: Gotcha.
Rahul Chawla: Yes, you can go for the product if, say, you are a seller who has been established in the business for several years or things are going well and you have multiple product lines. So yeah, you can balance the cost in your business. Perhaps you're losing in one product, but you are making money in the other one. Then you can balance it out. Then it's fine.
Ryan Cramer: Absolutely. Great. And that's what I've always tried to understand inaudible recently I noticed that Amazon's putting certifications on product listings, and you can start to say, " Eco- friendly," or you can start to say... Basically, any time that there's a claim can be involved, if people try to stay away from" Loses weight" or" Grows back hair," things like that, which are really hard to measure. But ultimately at the end of the day, Amazon has this form. If you're in a specific category, you have to submit all this documentation that shows safety, security. Is that still true, or is there a process that takes a long time for them to accept all those materials, or is it pretty quick? Certifications. But it's not just Amazon, it's just customs in general. Getting your products into a country. What's that processes of getting goods into United States? What do we need to know? If I'm a first time seller that is going to make my first shipment hopefully here in the next few weeks because Q3 and Q4's coming, what do I need to know in terms of getting my product inspected, but then also rightfully set up, so I'm successful?
Rahul Chawla: The first thing that you need to understand and engrave on your head is, you are responsible for what you're selling. Okay? Perhaps you can get away with the things in the beginning. You might have got your products across the border and successfully placed in the warehouse, but anyone can check up on you at any time, and if you're caught with no testing reports at all, it's a nightmare. We've had cases, and we have successfully resolved them eventually, but there was one woman in Australia, and she was selling some children's products in the US market, and she had nothing. She could sell for one year, and suddenly the products were flagged, and she was asked to produce the reports within 10 days.
Ryan Cramer: Oh wow. crosstalk I was going to say, in theory she did the right thing. If she was working with a QIMA for example, she would have those documentations in a folder or digital file, and you would just send them off to Amazon or whomever that entity is, and you would be good to go. Is that... that would be best case scenario, in that regard?
Rahul Chawla: You know what, it was worse, because she had nothing. She'd never even tested the product at all.
Ryan Cramer: Oh no.
Rahul Chawla: So she literally had 10 days to test, to get the reports, and send it to Amazon.
Ryan Cramer: Is that a quick process... I guess my question is, I've never done a quality control or a lab test. To me that sounds like... I'm coming at from maybe a silly... you think about lab tests, blood work or anything like that, almost very intricate, you have to test every quality piece of material. But then also with products, you see for cars, for example. inaudible sell this online, but it would something where crash tests, you have certain handle- ability. Any type of moving part has to be tested and retested, and then those certifications are quote" set in place," then that's when you go to market with your product and goods. So you have all those different moving parts. Something breaks down, obviously then... there's a lot of moving parts in that capacity, but for someone who's selling inaudible, or for example this leather coaster. You want to make sure this leather, if it's organic, or if it's a type of material, if it's dyed any sort of way, you want to make sure the dye is tested, it doesn't cause any sort of harm or damage to skin or irritation. So your customer had 10 days to turn around... is that a lot of time, a short amount of time? Can you get that done crosstalk?
Rahul Chawla: Sure, so it really depends again on the product. In her case, it was a children's product, so we had to look at the physical safety in both the chemical safety. Now, chemical safety, let me just give you a quick example. In chemical safety we try to sample the chemicals from the product. We scrap off the coating and so on and we put it in a machine, and we see how much of the quantity is there of the restricted or the banned chemical, as per the regulation? So we scrap off materials from the sample, we put it in a big machine, which is there in the lab, and that machine takes let's say three to five days to analyze and tell, okay, this much of the quantity of chemical was there.
Ryan Cramer: Okay.
Rahul Chawla: So then we inaudible back to the regulation that, okay, how much is a permissible limit? And then we transmit the results in the report. Similarly, in physical compliance testing, we look at the physical things, like let's say small parts regulation. Now, small parts is for young children when they can gulp down something small, which could choke them and they can die. So we have a machine which replicates that real life scenario and tells whether this particular thing is too small to be gulped down or not. Okay? So in terms of when you asked me the turnaround time, it depends on the product details, based on which we decide what test have to be done and how much time each test can take. Now typically, it takes as less as three days, or it could go even 10 days, nine days, depending on the product details and the test that will be applicable.
Ryan Cramer: So you're definitely correct that this should absolutely be done in the pre- product development phase, and before crosstalk launch the product. Because of the time. That 10 days is a long time in the world of eCommerce, where a week and a half of sales, if your product is flagged for example, like in this case, I'm assuming if that happens at an inopportune time, let's call it Q4, and your product is a child's toy or anything like that, you have instantly just torpedoed your business for a week and a half of losing money every single day that you could be earning. But then also, that 10 day turnaround time, I'm assuming that Amazon would just... or wherever platform they were on, you're just like, " All right, you're permanently removed, because you don't have those forms." And it may be completely difficult to get back on to any sort of... you said they were on for a year, I'm assuming do fairly well. They might get a whole nother year before they're back up to that place where they were at. So, very important.
Rahul Chawla: Imagine your inventory is lying there, but you really cannot sell it. You're losing your customers. Perhaps there are repeat customers, perhaps your product is a thing that you have a whole ecosystem built around it of different other products. You lose everything. And definitely your brand. And by the way, it's not just Amazon or Walmart or the eCommerce platform who can come after you. It could be anyone. An NGO, a law firm, consumer himself. Can be anybody. And by the way, there are cases, you can go on CPSC. gov and there are recall lists there, so you can actually see the real life examples, what products are recalled. God forbid you get on that list, you're done for in business.
Ryan Cramer: Right, absolutely. So yeah, I would say this should shape in the product development phase, I would think crosstalk details, which is very important, why knowing and having this conversation with you is so important Rahul. I would think I would want to know as a seller, if I'm developing and utilizing and coming up with different ideas I want to invest my hard earned money into as an entrepreneur you want to go with, I want to stand out, but I want to be unique and I want to be different, but I also want to know it's going to work monetarily wise. The big thing, I think, that you're trying to avoid here also, not just safety, but in terms of recalls or bad reviews. " Product breaks too easily, the materials are cheap." So on and so forth, right? No one wants to have a terrible feel of a product. You want something that lasts very long. crosstalk warrantees you can do that with, to help people ease of mind, but do you see certain categories in terms of products get recalled more because of its complexities, or I guess I'm trying to help the consumer inaudible, " Maybe we shouldn't look into that product area a little bit too much, because of the difficult natures of reviews could be poorly done, there's competition clearly, but we're talking about just logistical nightmares in terms of breakage or even recalls on products and safety."
Rahul Chawla: Yeah.
Ryan Cramer: Is there anything that you've seen personally that would help people out?
Rahul Chawla: Yes. The biggest categories which really face recalls would be electronics, children's items, skincare products. Those are the biggest which face recalls. And speaking of how you take this approach from the beginning is, one thing which is really important and really matters here is, how serious is the business? How serious the seller is. Are they trying to just sell on the side, or they're really looking forward to take their whole career into it, and they have a long term vision about their business? That's really, really important, because if you're a long term player, of course you'll have to do things from the ground up. So how people really approach in this way is... QIMA has a service wherein we help the client at the development stage. So if you are creating a completely new product, which is common in the eCommerce industry, you want to rank higher, so you have to be a very unique product. So we can help at that particular stage that, " Okay, I have this product. What do I do? Does it really comply, or should I change the design?" So we also do design consultation from the compliance perspective. That's number one. The second thing, which is quite common, especially with the bigger companies, bigger brands, is they do material testing, or pre- production testing, but if you talk of eCommerce, we understand that sometimes the margins are not really well, and there's tough competition. The bare minimum that a seller should do is test at the very, very early stage of the production, let's say under five percent. It's very easy, because of course, you have done your budgeting at the product research. You asked us for a free quotation of the lab testing. Based on that, you budgeted, and then you chose the product which you should go forward with. Fair. Then when you have raised the PO to the supplier, and the supplier has started producing, at that time, the first few pieces, you send it to us. At that time we test. If things are going the wrong way, if the report fails, then you ask the supplier to redo the things and send the product again to us with better materials, which would eventually pass. Unlike doing things at the end, or doing things one year after you have already been selling and then you got really flagged.
Ryan Cramer: Gotcha. That all makes sense, and laboratory testing to me is very... there's so much detail that needs to be super important, and again in that processes, there's different countries that you guys operate in. You guys are based in China, but it's not just in China that this has to happen, it could be any factory or location. I'm assuming operations, what, in India, Mexico? very high supplier and manufacturing countries that are creating products. Are you guys pretty much all those major countries where they're operating?
Rahul Chawla: Yes, we are very much there. In terms of inspections, we are in more than 85 countries. If you talk of our lab services, we are serving of course in China, Hong Kong, US also. We have a lab in upstate New York. France, Mexico, Germany, India, Vietnam, Bangladesh, and so on. So we are everywhere you may need us.
Ryan Cramer: I guess maybe this is a clarifying question for myself. inaudible a lab test, am I sending the materials to the market that I want to be selling in? For example, if I'm going to be selling in the United States, do I need to have the lab testing done in the origin country of where I'm making that product, or do I need to send it to a lab in that market, that needs to-
Rahul Chawla: Okay, glad you asked me, because this is a very, very common confusion we come across. It's not necessary to test it in the US, you can very well test it in China or Hong Kong or India, where we are sourcing from. crosstalk if your products are already there in the US, and you don't have anything with the supplier, yeah, we can help you in the US if you need.
Ryan Cramer: Gotcha. That's good to know, because I feel like for compliance reasons they're accepting of different forms and regulations forms and documentation in that regards too. Is there a basis of... We're talking about lab testing. How often am I lab testing my products? Is that something that needs to be done simply just every iteration of the product, whether it be a new color or a new material, or is that something I should do ongoing, no matter what, if nothing changes?
Rahul Chawla: If you're changing the color or any design aspect, basically you are changing the material or adding new materials. That definitely needs to be tested. If it's just a matter of shape or size, that's fine. And speaking of how often you should do it, we suggest you should do at least once a year, because of course there's a lot of turnaround in the factories, things change. So one year is a sweet spot.
Ryan Cramer: Because of turnaround time, I'm curious too, that would make sense for inspections, but could the quality of material actually change, even though you've made no drastic changes, but because of that turnaround, or just over the course of time, there's all those little nuances that could actually affect the product itself, the... I call it genesis of the product.
Rahul Chawla: So, one is, these regulations get upgraded from time to time. It could be updated maybe in two years or one year or six months. There could be updates to it. Of course we assist our clients, so we publish regulatory updates on QIMA.com, and we send these updates on emails to make sure that the clients are aware of what is coming up. But it's good to check with the lab, and if there is an update you test it again. Another reason why I said one year is because, especially during Chinese New Year, the factory staff changes, the factory itself might change, you don't know. And especially with the chemical compliance, things can go haywire even based on the atmosphere the product is being produced in. Let's say leather products. Now, there are certain chemicals in leather which, they behavior change based on the environment they are in. So I'm talking very high level on a macro basis, but things change, and like I said, you are more than welcome to check with us if you need to renew or not, so we are happy to help you on that part.
Ryan Cramer: Absolutely. That makes sense, I appreciate that. With that being said, the questions I have, there's so many different things swirling in my head, so bear with me for a second. So with the kinds of goods we're talking about, we touched on a couple different things. We talked about materials and whatnot, more soft goods I would say. But then you have your hard goods, your toys, your stuff that can be materials of jewelry or toys, more physical natured materials. What we don't talk about a lot is the food concept, so consumables. Someone's always said it's important to understand and know the compliance of topical or ingestible, so if it's going on you or in you, you need to know. You need to have those regulations to a T, tied up in a nice bow, because that is where you can get... consumable, just like with medicines, with crosstalk supplements, just any kind of food in general, to me that would be the most scary, I would say, products to get into in that regard. If I'm in the industry of I want to sell something consumable, what do you suggest? Good thing, bad thing? Is it just more difficult to pass all these regulations and stringencies?
Rahul Chawla: Again, going to the first thing which I told when we started the session is, you're really looking at something which you can really imagine of immediate hazard. You know?
Ryan Cramer: Right.
Rahul Chawla: At the same time, yes, it can get inaudible hazard. So I would suggest if someone is really beginning with his journey, try to avoid that. Imagine if someone dies having a protein supplement. Big problem.
Ryan Cramer: Gotcha. With that said, with all these reports and whatnot I'm getting back from my supplier, whatnot, who's going to be sending me these reports? Is this QIMA, is this the supplier? What reports from a supplier need to be... for a seller to be accepted? Does that makes sense crosstalk question?
Rahul Chawla: Okay. Yeah yeah yeah, I understand. Let me give you one recent thing which we got two days ago from Amazon. By the way, we are Amazon approved, so we get details and things directly from them also.
Ryan Cramer: You're working nicely with Amazon, that's a good thing. That's a check in a lot of people's boxes.
Rahul Chawla: Yes, yes. We are approved by Amazon, you can easily find us in the suppliers SPN. What I was saying was, two days ago we receive an email from Amazon, and they say, " Oh, this is the report we got in one of the sellers' account. Is that real? Is it really your report?" And what we actually found was, that report was edited PDF.
Ryan Cramer: So someone took a template or a document that they did, and they forged it, and they sent it over to Amazon?
Rahul Chawla: Yes. Yes sir.
Ryan Cramer: Oh my gosh. Okay.
Rahul Chawla: So that gives you enough idea what really happened then. What people do is, they really rely too much on the supplier or the factory, and like I said earlier, you are responsible for what you are selling. You are the one who is answerable to Amazon, to Walmart, to the regulatory body, to a law firm. All of those people. Not that factory in China or India. They sold the goods to you, they're done with their business with you. They don't care if you get a lawsuit.
Ryan Cramer: Right, there's nothing on their end because the business is between you and them. Like, " I'm buying pens from you, no one else." But in theory, what's what private label is, right? You're buying products at cost or whatever that might be, and then reselling them for a profit on a different marketplace or platform. So that is very fascinating. People, fraudulent activity could be something that... was that the seller that sent that through, or was that the supplier that sent that through?
Rahul Chawla: It was actually the supplier who was playing the trick. And that's even worse. You don't even know what really happened, and it just happened, and you get the notice suddenly that oh, you goofed up. So like I said, you are responsible. You have to take full charge of what you're doing in your business. You need to understand what it is and what, really, it can entail to good or bad. In our suggestion, on a daily basis what we give to clients is, " Do not rely on what supplier is giving you." Number one it could be fake, like I told you the example. It could be a forged report. And suppliers sometimes do this. You go to inaudible, I've been to inaudible, and they put nice logos on their stalls. " I have this approval, that approval." They don't have anything. Or maybe it's a report like five years old, and they edit the PDF and gave you from the recent date. So it's important that you take full charge of it. The supplier's only job should be to send a sample to the lab. The rest, you should manage directly with the lab, you should get the report directly from the lab. And the other reason is, people say, " Oh no, I got the report from the supplier, it's as good." No, it is not. Because perhaps that test, which was done on a sample, was not the sample from your production.
Ryan Cramer: Right. It could have been...
Rahul Chawla: You have to get the sample... Yeah.
Ryan Cramer: crosstalk what else they were creating, right? It could have been similar material, but it doesn't crosstalk your product. It could be something else that they're making.
Rahul Chawla: Yeah. And let's say example of pens, as you said. Maybe you are procuring 500 pens, but you need to get two pens out of those 500 pens, not other 500 pens, so that you are sure that, " Okay, this is my lot, which has been tested." You know?
Ryan Cramer: Right. So I want to avoid this at all costs, clearly. I don't want... On my behalf, I'm hearing, " You have to work with your supplier." The supplier is very important, right? We're not mitigating the relationship, you need to have a supplier. But in terms of documentation, clearly, it's on you as a seller, it's important for you to not just rely on them to send documentation to Amazon, which I don't even know if that's even possible to on your behalf. But in terms of making a third party such as a QIMA work and look at everything, no one's in favor, I'm not favoring the supplier, I'm not favoring the seller in this case. I want to know and do my job, and we have all these requirements we have to insure by, and then your name's on the line in terms of just the inspection or the laboratory you're doing. And ultimately, both sides have to agree to either move forward with that product in creation, or you don't. So everyone kind of wins in that regards. Is that our advice we're telling sellers who are listening to this?
Rahul Chawla: Yes. Yes, yes. And before I go to the actual tip regarding this, there's one more thing I want to touch upon is, there would be also cases when the supplier gets a report which is not from a legitimate laboratory. It could be a small time lab with no proper accreditation or approvals, and that's not actually accepted by the bodies in the US or UK, the regulatory bodies. So you have to make sure that the lab is properly approved and got the licenses and proper accreditations to do the business. A lab has to have ISO 17025. That's a basic, basic accreditation that any lab should have. If you are testing for the US market, it should be on the CPSC approved list. You can actually go on CPSC.gov and look for the approved list labs. You'll find us also there. So this is quite important, and people don't realize there are lots of suppliers who just get a report from a neighboring Chinese small lab which has nothing. Perhaps they have the machines, but they're not approved, so there is a proper channel in place, you have to go through that.
Ryan Cramer: crosstalk if a supplier said, " We have a lab we can work with," you shouldn't trust that specifically, you should say, " Hey, I'm going to make sure you're verified," and as a seller inaudible cross reference themselves on those regulatory websites, but then also knowing what's approved by Amazon as well, correct?
Rahul Chawla: Right. Right. Like I said, QIMA has got everything in place. We have ISO 17025, we are CSPC listed. Our reports are actually very much accepted in the Europe and UK regions also, so we have got all of those things.
Ryan Cramer: Excellent. Excellent, sorry about that. Taking a quick drink.
Rahul Chawla: Okay.
Ryan Cramer: We talked about laboratory testing, Rahul. I want to maybe shift a little bit towards inspections. I've had lots of great conversations with a couple different inspection companies, but I want to hear your take. The importance of it is by far and away... exceeds, I'm assuming, the costs. Why inspections are important. But that being said, what's an inspection like in terms of what QIMA does? What are they doing? If I'm a seller, I'm working with you, what are they going to do on my behalf to make sure that I'm secure, to make sure that my large batch of goods is going to come over and it's not all either faulty, they're all accurately created, whatnot? What does an inspection side of the business look like in terms of what QIMA does?
Rahul Chawla: Sure. Speaking of QIMA and what we do in inspections, we are available in more than 85 countries, and we can do inspections at any stage of the production. Now, speaking of eCommerce, of course, you have to make sure that the product quality is as you project in your listing. Okay? It should look exactly what is there in the listing. Of course, you should do the pre- shipping inspection, which is the final inspection before the goods move out of the factory. You have to be assured that the goods at factories finally shipping out are exactly what you told them to produce. And of course, if you can spend a bit more, the suggested good practice is also to do a during- production check. It's common logic. If you check early on, you find defects early on, you can tell the factory that, " Okay, this is the problem. You need to fix it so that the final goods are in good shape."
Ryan Cramer: My question to you, and I haven't asked this question before, is, who's responsible for faulty goods? Is that the supplier or is that the seller in that regard?
Rahul Chawla: So of course-
Ryan Cramer: If for example you found something wrong with the product, and then I go to my supplier and say, " Hey, report from QIMA that says my products are faulty." Who's on the hook for that?
Rahul Chawla: They, the supplier. They are the ones producing.
Ryan Cramer: Okay. So crosstalk that would be as simple as they're like, " Oh, that's our fault, we will make good on that." What's that process like, in that regards?
Rahul Chawla: Yeah. Of course, the genuine supplier would take this at a very good note, and they will try to mend the things, remove the problems and redo the goods. That's a ideal supplier. And speaking of that, it's very, also, important that early on, when you're signing the POs with the supplier, you put all these details there in the contract, that okay, you have to have this, X level of quality, " We'll be doing an inspection through a third party," like QIMA. " If something fails, you are responsible, and you are also responsible for the re- inspection of the goods if they fail," so that they're more serious about what they're doing. If you don't put this, they will assume that you are going to pay for re- inspection and they don't care. But when you put, " Re- inspection is on supplier," then they're like, " Oh, I should do a good job in the first go, otherwise I'll have to pay for that inspection."
Ryan Cramer: Exactly. No one wants to pay more money in that regards too. So with that being said, what's the... the process, you said pre- inspection, before the goods are finally shipped out. Maybe the first run or so, and then every so... how often are we doing inspections? Is it before every major shipment?
Rahul Chawla: Yes. Actually, every shipment, not just major shipment. Every single shipment an inspection should be done, because you never know. A good supplier can turn suddenly bad. You never know. And the ideal time is when more than 80% of the goods are ready and packed. inaudible the inspection should be done. And speaking of the day of the inspection, now this is something not many people pay attention to, is, the day of the inspection. It should be at least three working days before the shipment date. The reason is, you should have enough time to discuss the report with the supplier, and ask him to rework the goods if they need to be. And let me tell you, suppliers are really smart, they try to postpone the inspection so that there is just the 11th hour inspection, and crosstalk.
Ryan Cramer: Yeah, exactly. Until your boat's about to take off, which is a whole nother nightmare, I'm assuming, that sellers are selling through.
Rahul Chawla: Yeah.
Ryan Cramer: That being said, it's important to have those established dates and timeframes of yeah, three days before, or at least it's super important to have that schedule first, and then maybe your shipment scheduled after the fact, that you have your inspections and whatnot, so you have that little flexibility, if not... Is three days enough? Is three days too much, too little?
Rahul Chawla: No, three days is quite good, because most of the things I've seen, the production cycles are let's say 30 to 60 days, so I think three days before shipment is good enough time. Of course, like I said earlier, if you do a during- production check, which people also call as inline inspection, that's also good thing to do early on, if you can spend extra more bucks on that.
Ryan Cramer: Right. So because of delays, you would not want any delays to happen, and then obviously that crosstalk your shipment, or it's impossible to move your shipment, so you miss literally the boat, figuratively and literally. So logistics in this side of the business is, I would assume, one of the more difficult places to be right now because of just all the nuances of backups, supply chain issues, and whatnot. That's not on QIMA, that's on, just in general, the volume that is going through everything, which I would think is hearkening to why it's so important that a company like yours exist, because the more orders are coming in to suppliers, they're trying to get it through as quickly as possible. If that's not the case, quality could drop, but then obviously, you don't want that as a customer, you want them to do quality work, but then get it through. That's not your fault. But what's the challenges on the day to day basis now that you and your team are experiencing?
Rahul Chawla: Well of course, the challenges are there. Because of the pandemic, and different issues in the supply chain. Things are always there. But then QIMA has been really inventive in its approach. I'm pretty proud of saying that QIMA is the only company that really has got ID systems engraved in the DNA of the company, and we really make use of the ID systems really, really well in terms of analytics, in terms of optimizing our operations, and so on. And that has been the key where how quickly we have grown as a company, and we really try to give maximum benefits to our clients. For inspections, we can be available at any site across the globe within two days of advance notice. So if you tell us now, " Okay, I want a inspection day after tomorrow," we are very much happy to do it. We have enough people and we have enough resources to arrange. So that's also there. And speaking of that, like I said, the eCommerce seller has to be really, really planned with his whole process of starting from the product research until the deliveries into the warehouse and so on, because you have so many aspects of the business which are tied together, and you really have to structure them in a nice way. So speaking of inspection, there's one thing I should tell you. The checklist is very important. The QC checklist. How eCommerce could really take it up to the next level to be more successful is, think yourself as the customer. If you are buying the same product from somebody else, what would you look into it? Put yourself in the customer's shoes. And I really ask, really take a pen and paper and try noting down all the points. So okay, let's take the example of the bottle I was talking about. Let's say it's a drinking bottle. I have to note down all the things. " Okay, the bottle, when I put it on the table, it should not be wobbling. The color should be nice. The label should be okay. The cap should be screwing really correctly. It should not be leaking," and so on. So you put down all these points on a paper and write down, " Okay, this is what I expect. This is what I would expect if I would have bought the same product from somebody else." That's exactly what someone else is expecting out of you. So you have to think at that level, that, " Okay, what my customer would expect." That's number one. Second thing, how you would really act to this, is, go to your competitors' reviews. Both good and bad. That also gives a lot of insight that, " Okay, how my competitors are standing for crosstalk."
Ryan Cramer: Right, like, " This fell apart," or, " This was cheap material," or something like that.
Rahul Chawla: Yeah. Yeah.
Ryan Cramer: You can insert that and say, " Make sure you're checking the durability of the handle," or whatever that might be.
Rahul Chawla: Yeah. And both good and bad. Some people might say, " Oh no, I really liked an extra ring at the base," or, " It was really sitting nicely on my table." Something like that, perhaps that could actually help you to improve your product or improve the actual quality. So take your own points, what you jotted down in the beginning. Take the points from the reviews. And then you have a checklist. Of course, QIMA is very much ready to help, so we have more than thousand different products checklist library, so we can help you with our checklist, we combine and we create a customized checklist for you. And then the most important part here is, you give this checklist to your supplier at the very beginning. Don't wait for the inspection. Because you need to understand, look, suppliers also have several customers. Every customer is different. Everyone has different expectation. Maybe I'm selling a very cheap bottle. Perhaps you're selling a high end, high quality bottle with good margins. So you would really be after the supplier for a top notch quality, while I'm like, " Okay, it's just a promotional bottle for me, I don't care, people will just drink two glasses of water and they will throw them away." The same supplier is producing for you and for me, and the expectations are entirely different. So unless you tell them in the beginning, it's hard for them. Imagine you don't give them the checklist, you don't set your expectations with them in the beginning itself correctly, of course they will be falling flat in the end.
Ryan Cramer: Right. It's like anything where you... It's a perceived notion, and then all of a sudden, you have three months in or a month in, of maybe even a job, and they're saying, " Oh, where's this?" And you're like, " Well, you never told me that I need to do this as part of this job." They're like, " Well, I assumed you would." And it's communication in that regards. What I've heard a lot too is, suppliers actually really do appreciate being upfront, being very detailed in terms of, " I need this kind of color, I need this kind of look. These are the specific nature of material I want." All these kinds of different things. And the more detailed you are upfront, the more apt they are to work with you, because they know for a fact that you know specifically what you want and need, and what it's going to look like. If it's just a, " I want a water bottle, I don't really care what color, and I want it to look nice," that would move you to the back of the line in that regard crosstalk.
Rahul Chawla: Yeah, yeah. Absolutely. And when you said the word communication, it hit my mind, it's also so important that you speak the language of the industry, and perhaps the language of the supplier. I'm not saying literally, like you start speaking Chinese tomorrow, but there's another really good tip which I like to give to people is, try to translate these expectations, these checklist, into the local language of the factory. Because what happens is, especially in China, perhaps the person you are communicating with is the owner of the factory, who might know English, or he's a salesperson. He's not the actual person on the production floor. The guy on the production floor, he needs to understand the product than anybody else. And perhaps that guy is not speaking English. He doesn't understand English crosstalk that well.
Ryan Cramer: I was going to say, does QIMA do that, or would it be best if I worked with, for example, YLT Translations, or a company that does translations? Should I say, " Hey, would it be okay if you translate my instructions, or the product dimensions and whatnot, into localized language to make more sense, so it's easy to communicate?" Is that what you would recommend, or?
Rahul Chawla: Yeah. Yeah, the latter option is better, because anyway, you will be getting your translation for other things, and you will be also setting up the contract in the beginning, so you have to give this thing with the contract or just right after contract, so you can ask one of those companies to help you for that.
Ryan Cramer: Amazing stuff. That being said Rahul, I know we're kind of butting up on time. What does the industry look like for you? You've been in it a long time, and you're an expert foremost in this space. What's this year been like, and where is it going to continue to go in the next year or so, that you're excited about maybe? Stuff a listener who's listening to this needs to be on the lookout for.
Rahul Chawla: Well, eCommerce is not dying, and people are actually really looking up for eCommerce, because Covid and other situations in the industry, they're going to have different effects on our lives, and this is not going away. So we have to really look forward to the business and make it better and better, because the whole scenario is changing. I mentioned about Amazon coming after sellers because they are also facing certain legal situations, Amazon itself, so they are also getting stricter with time. And there is also one thing which I see is, people say, " That guy did it, I can also do it." You can't just be a sheep and follow the herd blindly. You have to do what not everyone else is doing. You have to be unique and correct in the approach, not just follow the herd, and perhaps they are doing things wrong. Because the market is growing really competitive. While it's growing, it's also competitive, because even the traditional retailers, they're also going omnichannel retailers. There are companies who have been selling all this time in their brick and mortar stores, but now they're trying to get online, because they see people are not moving out of their houses to buy. They want to buy online. So the market is growing, but also so is the competition and the complexities around the business. And speaking of that, it's also important that you make sure that your suppliers, all the stakeholders are very well, like I said, structured. And speaking of suppliers, you can also ask to do an audit at the suppliers, at the factories, to make sure that you have chosen the correct factory. Because if you go on eCommerce B2B platforms like Alibaba and so on, you might find a supplier, but maybe the factory is in a dilapidated condition. You don't know. You are sitting in the West Coast while the factory is in North of China. You don't know what's really on the ground. So you might have given the PO, and they would have given really nice promises to you, but perhaps three months later you have nothing. You could also be reassuring yourself that, " Okay, I have chosen the factory, but is it the right one for me? crosstalk" Yes, we do that as well. We do factory audits to make sure that the capacity and capability is as you wanted to. And we also do ethical audits. By the way, this is also interesting, and as you say, how the industry's moving forward, the bigger brands and companies, of course they understand the bigger subjects like CSR and sustainability and environmental compliance and social compliance. And that's the thing, because yes, people are really rushing in here and there, but climate change and these topics are absolutely important for us to also take care of. So ethical audits is a good thing to do. You can have a factory which is ethically compliant, it has got all the things in place, they are not having child labor, they don't have forced labor, they're paying their workers on time. And it might surprise you, we actually did a study that the factories and suppliers who had high ethical audit scores were actually excelling nicely in productivity and quality also. crosstalk if the worker is happy, if he's being paid on time, he would be really working hard in a sincere way to produce that product. Simple, right?
Ryan Cramer: Right. crosstalk I'm over here, I'm just absorbing everything, because if you're a listener and you can't see my face or you're not looking at my face, it all makes sense to me. This industry... I say industry. It's a spider web, right? Every part stems from manufacturer and distributor, right? No matter if you're selling a product online or if it's in retail, you have to understand that all these different things are going to be beneficial for you moving forward. It is an investment. It's not another fee associated with Amazon. It is something that you're truly doing to protect yourself, to be profitable moving forward. So it's almost like that upfront cost of, invest in your products and yourself and your inventory instead of trying to skate by with the bare minimum, because that is only going to set yourself up for failure in regards... Rahul, I know we surpassed our hour that I promised that I would have you only for. People are going to want to definitely reach out to you in this regards, because I know I'm fascinated by everything that we touched on today. How do we do that? How do we connect with you? Is it through email, is it through websites, is it through connection on social media? What does that look like?
Rahul Chawla: Very short and simple, just go to QIMA. com and you can reach us there. We have our Contact Us page, you can call us, email us, and send messages through the web page any time.
Ryan Cramer: That's super easy, and I'll even put it in the comments section, just so it's a little bit easier for people to find it as well. So QIMA. com, again, everyone is going to be right there on the page right there. Here we go, QIMA. com. Make sure that you go ahead and check that out, and look, we already have some fans. " Great episodes, Rahul." So look, you already got fans speaking. Just so much information, wealth of knowledge that you are in the space. I'm sure that there's so many different problems. This industry feels like a puzzle, constantly, that you're trying to put in certain pieces into. It's a new one every single day. That's why it's super fascinating, and I'm super appreciative of why you hopped on Crossover Commerce today. Thank you so much for your time, I know it's super late there, so rest well overnight, and we'll be in touch soon.
Rahul Chawla: Thank you.
Ryan Cramer: Thank you so much for your time today, Rahul.
Rahul Chawla: Thank you, pleasure is mine. Thank you for having me again.
Ryan Cramer: Awesome, no problem whatsoever. And again everyone, thank you so much for tuning in to Episode 143 of Crossover Commerce. This is, again, presented by PingPong Payments, helping cross- border payment solutions, saving more money, whether it's paying suppliers and manufacturers like we were talking about with Rahul or receiving remittance from different kinds of marketplaces worldwide. That being said, this episode will be available on the audio format here later on. Make sure you go ahead and check out. If you want to follow different episodes of Crossover Commerce, subscribe to our channels on social media, follow myself, and also make sure you give a shout out to our guests, let them know what you thought of the different kinds of topics we covered today as well. We'll catch you guys next time. Again tomorrow, I'm really excited, we're going to be talking with Kathleen Booth of clean. io, how coupon extensions interfere with eCommerce revenue. I hope you guys understand how excited I am to talk about this, because I used to work in affiliate marketing on the coupon side of things, and I love talking about this topic, it's super fascinating, it helps with marketing, but actually it affects your budget in terms of margins, why it's important to know about this topic, we're going to be covering that again tomorrow. That being said, thank you again Rahul and QIMA for hopping on today. We'll catch you guys next time on Crossover Commerce. Take care.
Ryan Cramer of Crossover Commerce talks with Rahul Chawla of Qima about quality control & product compliance - the two important pillars of successful eCommerce businesses.
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