Suggestion: Watch the 10 minute video tutorial before reading this article
Lanna Watches AB (Sweden) contacted Chinaimportal.com in October 2016. In this Case Study, you will learn how they used the Starter Package 2017 to develop and launch their first product.
All the features and functions mentioned in this Case Study are included in the Starter Package.
|Note: The process in this case study can be applied to any product category, not only watches.
All companies and names mentioned in this case study have been altered. The case study is based on email records, images and protocols.
1. Prepare Product Specification
Before even sending a first email to a supplier, the customer created a product specification. This exact process is outlined in Part 1: Create Product Specifications of the Starter Package.
a. Download template and create spec sheet
As all suppliers make products according to the specifications, John (co-founder of Lanna Watches) had to be sure that all technical details were covered. To make sure that they get their specification right, they followed the process in Part 1: Create Product Specification (Above).
To speed up the process, they used Template 1A: Product Specification Sheet, to list all technical details and quality requirements.
b. Research all applicable product regulations (using Module 7 of the Starter Package)
As Lanna Watches AB is based in the European Union, which is also their primary market, compliance with all applicable product regulations is crucial.
Failing to ensure compliance can result in the goods being seized by the customs authorities, something that would be disastrous to a small startup like Lanna Watches.
The problem, for John and his partner, was that they have no clue which regulations apply to Watches in the EU. Luckily for them, the Starter Package includes an entire module for product regulations, in the EU and US, for all the products we cover.
The two partners followed the interactive task lists in Part 7: Safety Standards and Labeling, to confirm all applicable substance regulations, document requirements and labeling requirements.
c. Create label files using downloadable template files
As part of the product specification, the two partners created the following label files:
- Logo (Clock face)
- Backplate engraving
- Logo file (Crown)
As there are mandatory labeling requirements in the EU for Watches, the customer used the ready made label file download (Included in the Starter Package), which include mandatory compliance marks.
2. Supplier Sourcing / Price Research
At this stage, Lanna Watches had all the files they needed, to start the supplier sourcing process.
a. Order Sourcing Report (PDF) via the Dashboard
Finding suppliers is easy, but finding one that is qualified is less so. Hence, Lanna Watches ordered a Supplier Sourcing Report (PDF), directly from the Starter Package Dashboard:
The customer fills in a form on the website, sharing a few basic details about the product. In this case, the customer was looking for suppliers matching the following criteria:
- Main Product: Stainless Steel Watches
- Other: Must be able to make products for the EU market
Within 3 working days, the customer received a Sourcing Report (PDF):
The Sourcing Report (above) normally includes 3 to 5 shortlisted suppliers. It includes the following details:
- Supplier name
- Registered capital
- Product certification status
- Quality management system (QMS) status
- Corporate social responsibility (CSR) status
- Main products
- Product catalog link
The Sourcing Report provides the basis for the customers supplier selection
Note: The information above can also be found on Alibaba.com and Globalsources.com, as they provide verified information about all listed suppliers. This data (i.e., the registered capital) is the basis for the supplier selection.
b. Use Part 2: Supplier Research to manage the suppliers
After receiving the Sourcing Report, the customer contacted the suppliers directly. We provide step by step instructions, for how to manage the suppliers and receiving accurate quotations, in Part 2: Supplier Research.
After submitting the product specifications, the customer received quotations from 3 out of 4 suppliers:
|SZ C Watch||SZ Sanobi||
|$20.45 (High)||No quote provided||
Note: While SZ Reik did not quote the lowest bid, the customer also took the suppliers claimed product compliance, quality management system and CSR status into consideration. Choosing supplier only based on the price is never a wise decision.
Further, 1 supplier decided not to offer a quotation, as they considered the customer’s business to be too small at this stage. While we can list suppliers based on ‘hard data’ in a Sourcing Report, we cannot guarantee that they are actually interested in the customer’s business.
c. The Customer ordered a Factory Audit via the Dashboard
After receiving quotations from 3 of 4 suppliers, the customer narrowed it down to only 1 candidate supplier (Supplier A: Shenzhen Reik Watch Co., Ltd).
That said, there is only so much data you can get from a Sourcing Report, so the customer decided to book a Factory Audit, to ensure that the supplier had the capabilities they advertised.
The Factory Audit was ordered directly from the Dashboard for only $279. The report (PDF) and image file package were delivered 24 hours after the inspection taking place, in Shenzhen.
The supplier passed the Factory Audit. As a result, the customer decided to take the next step and place a sample order.
That said, ordering a Factory Audit is not mandatory. Most of our customers do not, but it gives you additional insights about a candidate supplier that can only be obtained from an on site inspection.
3. Product Sample Development
With a candidate supplier at hand, the customer was at this stage ready to begin tooling and sample production.
a. Download template and prepare sample order sheet
Before paying the supplier, the customer used to Template 3A: Sample Order Sheet, which covers IP ownership, payment terms, production time, compliance requirements, design files and all other sample requirements.
Template 3A: Sample Order Sheet can be downloaded directly from the Dashboard
Note: Not every product can be design patented, and this was one such case. That said, the terms in the sample order sheet stated that the customer owns the logo and the molds / other tooling. The customer also registered a trademark in the European Union, to protect their brand.
b. Pay product samples
The Supplier printed, stamped and sent back the scan copies to the customer. With the documentation completed, Lanna Watches AB wired the sample and tooling cost, directly to the supplier’s bank account.
To save both time and money, they used the system of our payment partner, TransferMate – offering all our customers free international transfers for 1 year.
On this sample order payment alone, they saved almost $50 in bank fees.
c. Obtain 2D rendering design
The supplier got to work directly after receiving the payment from the customer. A few days later, they provided the customer with a sample rendering.
The customer requested a few revisions of the rendering, but eventually approved the next version the same week.
Note: The rendering only shows one of the watch designs ordered by Lanna Watches
d. Sample production and approval
More than 70 days after ordering the samples, the customer finally received the first batch of watch case samples and straps.
Upon receiving the samples, the customer found the following quality issues:
- Incorrect clock face logo position
- The supplier forgot to engrave the back plate with the customer’s logo
- The supplier did not use Sony batteries, as specified in the Sample Order Sheet
Yet, the customer decided to go ahead with mass production, given that all quality issues were relatively easy to solve.
The Customer approved the samples, despite the quality issues, and was now ready to start production.
a. Download template and prepare sales contract
Before placing an order, and paying the supplier, the customer made the wise decision to use Template 4A: Sales Contract.
Just like many other buyers, they were at first skeptical to whether a supplier would even honor a contract, but after following the process in Part 4, they understood that the Sales Contract is a vessel for communicating quality requirements and your quality assurance process.
The customer downloaded Template 4A, and tweaked it according to their own preferred terms, which cover the following:
- Product Specification Files
- List of Mandatory EU Regulations
- Payment Terms
- Shipping Terms
- Late Delivery Clause
- Quality Control / Lab testing Terms
The customer negotiated the contract directly with the supplier. After reaching common ground on all terms, the supplier printed, stamped and sent the 3 sets of original documents to the customer’s address.
b. Deposit payment
With the contract in hand, the customer signed and returned one copy. Following the process explained in Part 4, they wired the deposit of 30% to the supplier.
To ensure that they avoid payment frauds, the followed the payment checklist in Part 4.
Again, the customer used TransferMate to wire the deposit to the supplier ‘s bank account. By doing so, they saved more than $250 on the deposit payment and balance payment.
Note: The Starter Package includes 1 year of free international transfers as part of our partner offer.
c. Book quality inspection via the Dashboard
The supplier started production immediately after receiving the deposit payment. With a production time limit of 52 days, John and his partner at Lanna Watches AB had plenty of time to prepare for the quality inspection.
From the Dashboard, they booked a quality inspection.
The inspection agency contacted the customer the day after the booking, to request additional information and complete the booking. The customer had to share the following information:
- Supplier contact details
- Estimated completion date
- Product list
- Product Spec Sheet
- Sample images / 2D rendering
Once the information above is submitted, the inspection agency takes care of the rest, including coordinating the inspection directly with the supplier.
Quality inspections can be booked directly from the Dashboard, starting from only $299.
Note: Quality inspections are not mandatory, but highly recommended.
d. Quality inspection
The quality inspection took place just one day after the production was completed. The day after the inspection, the customer received a Quality Inspection Report (PDF).
In total, the inspection agency checked 120 pcs (of 600 pcs). The statistics came out as follows:
- Minor defects: 4 pcs (Dust, minor marks)
- Major defects: 1 pc (Malfunctioning movement)
- Critical defect: None
The customer had already agreed to a 1.5% major / critical defect rate, in the sales contract. As the estimated major / critical defect rate was as low as 0.8%, the customer approved the quality inspection.
e. Book product lab test via the Dashboard
Before approving the order, and wiring the final 70%, the customer decided to order a compliance test. Via the Dashboard, the customer requested a free lab test quotation.
The compliance company requested batch samples directly from the supplier in Shenzhen. Exactly one week later, the customer received a test report with the following result:
- REACH: Passed
- RoHS: Passed
Hence, the customer could finally approve the batch, and wire the balance.
f. Balance payment
The customer wired the remaining 70%, using TransferMate. After only 2 days, the supplier received the money, and started processing the shipment via DHL.
Given the small size of this delivery (54 kgs), the customer requested an air shipment, to save time and money.
The customer followed the process outlined in Module 5: Shipping, Taxes & Customs.
a. Book air freight via the Dashboard
The customer booked shipping directly via our freight partner, FLEET – who also offer a $55 discount on the first shipment to all Starter Package customers.
The forwarder contacted the supplier directly, and arranged for the pickup of the packed goods, and delivery to the customer’s address.
Note: You can request a free quote via our freight partner, who then assign a suitable forwarder to you.
You pay the forwarder via FLEETs online system, and use the provided discount code to get $55 off on your first shipment.
b. Follow the step by step checklist to complete the freight process
As this was an air cargo delivery, the customer only had to wait for the DHL tracking ID, which was provided directly by the forwarder.
The VAT and import duties where invoiced directly by DHL, upon delivery.