As we all know, when dealing with suppliers from China we can find a huge range of products at low prices. What a lot traders do not realize getting started is the number of faulty product issues and returns they will be faced with.
Some times depending on the manufactures your products are coming from and the shipping methods you are using, the number of faulty products can kill your trading experience if precautions are not put into place.
Before commencing business with a new supplier, i personally always order a sample to make sure i am happy with the quality of the products, that they stick within the order processing time frames and they deliver products with no supplier information on the parcel.
Due to the recent high number of faulty products I would like to take the time to say to traders - put a system in place to protect your self with up front costs.
I get constantly get emails from traders that say i am in trouble because " i have have refunds and have to pay to send items back". We all know the excitement of making your first few sales dropshipping and selling products, but without saving your profits to help in any future issues, you are steering yourself to disaster.
I have a important rule set in stone when looking at Product vs Profit which should strongly be taken into consideration when drop-shipping especially.
The profits you are making having to cover the estimated costs involved in returning the item just in case of a problem. I know alot of people say the Ebay is very competitive but there is absolutely no point in chopping all your profit out to make a sale.
Eg: 12" LCD Monitor $135 USD + 90USD Shipping due to its weight. 5.5KG
A lot of traders are dipping there prices to be cheaper and not taking into consideration the cost of returning the items if faulty and only making $40 + in profit "THIS IS CRAZY" If you can not cover the cost to return the item from profit - do not sell it if market is too competitive.
I do however have great news in getting back the money you are spending to return all the faulty stock to your suppliers.
You are probably thinking well my suppliers have return policies in and i am borne the cost's in returning faulty items. Well this maybe true but you don't have to accept it.
No matter what suppliers have stated to you in there return policies with who is borne the costs of returning faulty items, you have the Legal right to compensation or reimbursement to a negotiable term you are satisfied with.
After dealing in current and previous circumstances where the amount of faulty and incorrectly supplied products have been issued, we have come across a legal obligation between us and our suppliers that you should copy from this post and keep in a safe place.
BELOW IS WHAT IS REQUIRED BY CHINESE COMPANIES BY LAW!
A.According to China Contract Law of the People`s Republic of China Article 111 If the quality fails to meet the agreed requirements, liability for breach of contract shall be borne in accordance with the agreement between the parties ,If the liability for breach of contract is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of the Law, the party suffering the loss may, with reference to the nature of the targeted matter and the degree of the loss, choose in a reasonable manner to demand that the other party bear the liability for breach of contract in such form as repair, replacement, redoing, return of the targeted matter, discount in payment or remuneration .
B.According to China Contract Law of the People`s Republic of China Article 113 Calculation of Damages; Damages to Consumer
Where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, the amount of damages payable shall be equivalent to the other party's loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.
For all of us who do not understand legal jargon quite well:
So, according to the provisions above , the suppliers should replace the products and compensate for your loss.
The above contract can between the supplier and the trader can also be recognized as the purchase invoice and or agreement, Every time you place an order, keep those PayPal requests, Paypal payments and other payment method receipts in a safe place.
Hope this helps every to lower cost involved with faulty product within your business )