Episode: 96
Title: Norman Farrar Introduces Sajag Agarwal, an Entrepreneur, and the CEO and Founder of Movley.
Subtitle: Inspections Are An Iterative Process.
Final Show Link: https://lunchwithnorm.com/episodes/episode-96-are-product-inspections-worth-it-w-sajag-agarwal/
In this episode of Lunch With Norm…, Norman Farrar introduces Sajag Agarwal, an Entrepreneur, and the CEO and Founder of Movley.
Sajag has always had a passion for entrepreneurship. At 12 years old, he ventured into an online gaming community. In this episode, he is going to talk in depth about product inspections and the bribery happening within the system.
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Norman 0:02
Hey everyone, it’s Norman Farrar a.k.a The Beard Guy here and welcome to another Lunch with Norm, The Rise of the Micro Brands.
Norman 0:20
Okay, so today we have CEO and Founder of Movley, Sajag Agarwal, and we’re going to be talking about product inspections. So some people think product inspections are super easy. Some people have no idea what they are. We got to dive deep into it and find out why this is your biggest insurance policy. Oh my gosh, we’re gonna come into some horror stories, we’ll tell you about some success stories. But anyways, before we do that, where are you Kelsey?
Kelsey 0:54
Hello. Hello. Happy Friday. Welcome everyone.
Norman 0:57
There you are. I almost missed this. I was on a call. I just hung up.
Kelsey 1:03
Yeah. I noticed.
Norman 1:05
A guy came and I said, I gotta grab a coffee. See ya. So sorry, everybody for being a bit late. I don’t want to say that’s how I roll.
Kelsey 1:18
Welcome Marina, Radd, Tom. Andrew, he’s in Korea.
Norman 1:25
Andrew’s in Korea. Okay.
Kelsey 1:27
Alright and then we got a Facebook user, I’ll figure out who you are just a second. But yeah, just a few little housekeeping things we saw in the group that you guys are wanting a short intro. So this one will be a little longer. But maybe next week, we’ll start doing the shorter intros. Keep it to like two minutes max, but just kind of hit the main points. Clubhouse, we also saw that you guys are looking. More people are wanting a weekday Clubhouse for Lunch with Norm. That’s still very new. We haven’t started a date yet. We haven’t made it official. But it’s something we’re going to be looking into probably the week, next week or the week after. Yeah, smash those like buttons, share this episode. We’ve got a prize today. It’s a pretty, pretty big prize, it’s going to be great, especially if you’re looking into product inspections and enjoy the show.
Norman 2:22
Why don’t we talk about the prize right now? We’ll talk about it a bit later. But let’s get the people who are interested in it already registered.
Kelsey 2:30
Yeah. So if you guys are interested, it’s going to be $100 off of product inspection with Movley. So if you guys are interested, you just need to put #WeloveSajag in the comment section and you’ll be entered in a prize. So Sajag will, I’m sure, explain exactly what’s all available exactly. But yeah, that’s the prize for today. So #WeloveSajag and yeah, it should be good.
Norman 3:01
Alright, very good. Okay, so let’s get into it. Sit back, relax, grab a cup of coffee and enjoy the show. Hello, sir. How are you?
Sajag 3:12
Hey Norm. Thanks so much for having me on.
Norman 3:14
Hey, it’s our pleasure. I got stuck on a call and by the time I looked up, it was already noon. So sorry for keeping you waiting.
Sajag 3:29
No worries.
Norman 3:30
Anyways, we’ve got a bunch of people on here and look, guys, this is one that I think if you can bring other people into the podcast, go out and get them ping them, grab them, get them in here, because this is something that’s not talked about too often, or in detail. So first thing, why do people need inspections?
Sajag 3:52
That’s a good question. So when it comes down to manufacturing, whether you’re manufacturing in China, the United States, wherever your Fortune 500, or your small business, everybody should be doing an inspection at least one time at the end of their order. Just to verify that, Hey the problems are fixed. There’s no problems with my products, things like that. Because essentially, the goal of inspections is catching problems before your customers do. So if you have like a one to 2% defect rate, and then you go sell your products online, you have a one to 2% review rate and you have 2% defect rate, it’s almost like product suicide. So especially if you’re selling online, if you’re selling in brick and mortar, it’s not as big of a deal, because you have a couple defect points, it’s not a big deal. You go return your products, you go take them to the store, you get a new product, it’s probably going to be working so it’s not that big of a deal. But with Amazon, you have 4x higher return rates, and you also have no warranty claims you have negative reviews, so it becomes a lot more risky.
Norman 4:52
Right now, one of the things I forgot to mention at the very beginning, why don’t we talk a little bit about you, your company and what it’s all about?
Sajag 5:02
Yeah, definitely so little backstory about me. So I went through a lot of pain to get here. So I started off selling products on eBay, and just flipping stuff, buying stuff wholesale, from like AliExpress, Alibaba, reselling on eBay and that’s kind of how I got my start and I was like, Wow, I’m selling all this junk, I could definitely be doing much better, I could have my own brand and sell this stuff on Amazon. So I actually went ahead and started my own Amazon brand, and grew that to about 2 million a year by the time I hit. Like, by the time it was like 2017. So it was kind of early on with Amazon and so it’s pretty, pretty quick and what ended up happening is that as we started growing year two, year three, we started getting really, really lucky with some of our suppliers initially, but some of our suppliers into year two and into year three, we stopped getting as lucky. So we started seeing quality control problems, we had suppliers we were working with for two and a half years and all of a sudden, boom, we start having quality control problems and the funny thing about that was we were doing inspections on all of our orders and we were going to the factory, we’re checking our products, we’re getting past inspections, and then still getting all these returns, all these warranty claims, these negative reviews. So back in 2017, I ended up actually moving to China, and I lived there for six months in Shenzhen basically do my own inspections, working 7 days a week, 12 to 16 hour days at the factory, learning how my products were produced, what was going on things like that and that’s actually when I had the idea to start Movley and so with Movley, we do inspections a little bit differently. So our approach is that you can have the best inspector that goes to the ground, go checks your products, but they don’t understand your products or know what to inspect, even the best inspector can pass a bad batch of products and a lot of people have this misconception that your inspection companies like this God. They’re gonna be your last line of defense, they know exactly what you’re looking for and that’s not really true. Because every product has unique differentiating characteristics and unique elements that need to be checked needs to be inspected. So like our tagline at Movley, we give you a quality control team for the price of an inspection. So we actually assign service pods of five people to every single client that you work with, for every single inspection. They’re familiar with your products, familiar with your business, they actually work hand in hand with the inspectors every inspection to make sure that they understand the products they know what to inspect, and that the inspection is done right every single time. So we take a little bit of a different approach when it comes to inspections.
Norman 7:25
If I had a plastic shoe stretcher, if I had a garden gnome and if I had some wooden product, do I just call up your company and say, Hey, I got a product inspection go and do it? Or do you need details to really do a thorough product inspection?
Sajag 7:41
Yeah, that’s a really good question. We get a little bit of crap sometimes from customers, because we send them like a 10 page form every time they want an inspection and we collect a lot of information on their products. So we asked them about sizes, details, things like that and so it’s a lot that goes into it and we actually also need to work with you as a customer to actually understand your products. So one of the things our service pods to do is we spent three days just going back and forth with you before any inspection of any new product, just trying to understand what you want checked, what your differentiating factors are, what you’re looking for specifically, we’ll go pull tests and recommendations from our database. We have other customers with similar products and we just keep on combining and combining all that data to create a bigger and bigger ecosystem to be able to get better and better with inspections. But we literally spend three, four days just learning your products before we even go do that inspection.
Norman 8:38
Not every inspection is the same. So do you want to talk about the different types of inspections there are?
Sajag 8:45
So there’s really like when it comes to inspections, there are different types of inspections in the sense of the stage. There can be mid production inspections, there can be a pre shipment inspection and every inspection also has a different test, different procedures. So there’s like a different process depending on the product. So we like to say when it comes to product tests, that’s kind of our word of saying custom instructions. So like what are you specifically checking on your products? So generally, we separate that out into function, safety and wear and tear tests. So you can actually say, Okay, function tests or tests that I should be doing on every single product. This just makes sure my product works. So even for a wooden shelf. What’s the goal of a wooden shelf, hold things right? So make sure that the wooden shelf holds like 40 pounds before for 30 minutes. That’s an example of a function test. A wear and tear test, on the other hand might be something like Hey, put 150 pounds or 200 pounds on the shelf, and then keep adding weight until it breaks because you want to know what that breaking point is exactly. So that’s an example of a wear and tear test. Mid production inspections are done between 20 to 80% of production completion and pre shipment inspections are generally done at 100% production complete So if you’re a brand new manufacturing, you’ll want to do the pre shipment inspection, that’s kind of your last line of defense before it gets to your customers, that’s what’s going to catch your bad products before your customers do, and then your mid production inspection essentially, that is something you can opt to do, it’s more optional. But if you have a lower risk tolerance, or you have a product that’s more expensive, you might opt to do that on every shipment, or maybe just your first shipment, because you want to catch your problems that maybe 20 or 30% production, reproducing 20% of the products is much, much cheaper than reproducing 100% of the products.
Norman 10:33
Now, are you responsible for everything outer package, inner package, the product itself? When your inspectors are there, what are they looking for?
Sajag 10:45
Yes, there’s a lot that goes into it. So obviously, the product is very important. So in the mid production inspections especially, it’s mainly just the product. Mid production inspections, we also look at the production line, just because we’re already there, if it’s in production is good details to get the production line information like what’s going on? What are the steps? Actually, I had a personal experience where my supplier cut one of our production steps, actually two or three of our quality control steps after our second or third order. So we were able to catch that in the mid production inspection and be able to say, Hey the one from 10 steps to seven steps. So maybe there is a little bit of a couple corners being cut here. So that’s kind of one key piece. But with the pre shipment inspection, the other parts to kind of look at is packaging, shipping cartons, making sure the labels are put properly. One thing that actually goes really underestimated is actually the carton drop test. So I don’t know, Norman, have you heard of what a carton drop test is?
Norman 11:47
Sure. three feet.
Sajag 11:48
Yeah, so it’s three feet. But it can also go higher and it’s done a couple of times, it depends on the weight and the dimensions of the box. So we actually do a carton drop test standard on all of our pre shipment inspections, it’s something your factory can opt out of, it’s something you can opt out of course, but a lot of people with their factories, they refuse carton drop tests, and they’re just like, Yeah whatever. But the thing is that if you refuse that carton drop test, and the product drops, and it’s not able to sustain a three foot drop, just imagine what happens on the way here on the here, if you’re sending it over plane, for example. They just throw your bags like 10 feet onto a conveyor belt, how’s it gonna last on a DHL conveyor belt. So it makes a big, big difference and makes a big impact. So really kind of everything pretty much and it’s modular. So if you have a risk tolerance, your risk is more so on the packaging, your risk is more so on the product, you can focus more there. But in a general sense, you want to just do a quick check to check everything because if you have something you’re not familiar with, if you have a problem that you’re not usually having, you still want to check that just to make sure that problem doesn’t exist, because you might have that problem in the future.
Norman 12:56
That’s part of FDA compliance anyways. So if you’ve got a cardstock, and you’ve got a three pound bottle, and you drop it in and it smashes, it gets to Amazon, and it’s still surviving and they try it, they’re not gonna keep it in their stock. So I believe they have the three foot drop test and if it fails, you fail. Alright, so I’ve got a bit of a horror story just to tell you, and this is about doing something wrong, really wrong and that is getting our manufacturer, I used to be young, I used to have hair actually. But during that time, we learned the hard way, and we let our manufacturer find the inspector.
Sajag 13:49
Oh. Tough one.
Norman 13:51
Guys, if you’re going off of an Alibaba or you’re finding a place where you’re using your manufacturer, and they’re finding an inspection company for you, that could be problems and this is just the type of problem was we did this for years. We were bringing in, we had a contract with Home Depot, and the foam, EVA foam jigsaw puzzles for your garage. So they were coming in tons. They were ordering tons of them container after container. Well guess what? The inspection was inferior foam and I think there were seven containers that we had to eat. Seven and I’ve had other horror stories where guys have been bought off. So let’s talk about that. I’ve heard horror stories. I’ve experienced horror stories. What about bribery?
Sajag 14:48
Yeah, no definitely. I’ve experienced those horror stories too. So actually, we used to have an office in Shenzhen and we had full time staff there and one of the reasons actually for Movley was before, when we were doing some of our own inspections, even in house, we had some of our inspectors actually getting bought off by the factory. So it was definitely a big, big, big issue. So that’s one of the reasons we started Movley because we wanted economies of scale to actually prevent that from happening. So there’s a couple of different things that go into it. First of all, when it comes to fraud and bribery, a lot of people have this misconception that it’s like either like a zero or one game. So either your inspection is going to pass by a milestone if it gets bribed, or it’s going to fail if they don’t get bribed and that’s not really the case. So corruption is not like black and white. It’s kind of like this weird gray area. So if an inspector goes to the factory and says they find 25 defects, and they get bribed by the factory, they’re not going to go report back five defects, or 10 defects or zero defects, they’re probably going to reduce 25 to maybe 15, or 20. So they’re not going to completely remove all the defects that are there and they might omit some of the bigger ones, but they’re trying to keep a couple of defects there. So first of all, it’s not black and white. So there’s definitely like this gray area when it comes to corruption. But I think one of the biggest things when it comes to fraud and bribery, as well as just making sure that the inspectors are actually aligned with your brand and what you want to do. So I’ll give you a story that happened to me in real life. So I went to a foot doctor. So I have flat feet. I knew this. So I went to this foot Doctor, I needed some orthotics. So this is the first time I met this man in Chicago, downtown, and went out, met this guy, and we had a really good appointment, talked for 15-30 minutes. I just kind of talked about my feet talking about what I do and he was like, Oh that’s super cool. Like you’re doing really cool things. We had a really chill conversation. I liked him. He liked me. So it was just like, Alright, cool and then when I went out after that, he was like, Hey you need some orthotics and I was like, Okay, cool. So he went to the back, got a $50 pair of orthotics, brought it back and gave me that $50 pair. He’s like, Try these on. I said, Okay, sounds good. I put them on my shoes. He’s like, Alright, can you walk around this way? Can you do this to make sure it all fits? Well. I was like, Yeah, sure and I did that. He was like, Okay, you sound good and then I was like, Alright, how much do these costs? Like, I’ll go ahead and buy them. He says, Hey you’re a cool guy. I’m gonna go ahead and give it to you for free and I was like, Wait what? Like, you’re gonna give it to me for free? He was like, Yeah, don’t worry about it and I was like, Okay thank you. Two minutes later, he goes out, and he comes back with a nurse to check me out and he’s like, Alright, so this is my nurse on so I want you to follow her outside, she’s gonna take you out the back entrance and I was like, Oh, why is that? It’s like, Well, they don’t really like me giving away a shoe for free. I was like, Oh it’s not that big of a deal. Like, I’ll pay 50 bucks and it’s not the end of the world. I was kind of expected to buy orthotics anyways and he says, No, I insist. You’re not going to leave here without getting these from me for free and go ahead and just follow the nurse out the back and she’ll take care of you. What’s an extra $50 to this billion dollar company and that’s kind of his attitude and that’s kind of the attitude that also happens with inspectors and fraud and bribery when it comes to things like this and China. So inspectors are not necessarily bad actors, they kind of consider themselves almost like honest thieves. So if you go to the factory, you’re an inspector, you go talk with the factory manager. Factory manager is super nice. A very nice guy says, Hey here’s my five year old kid, he’s at the factory to meet him. We’re just kind of enjoying ourselves. But here’s the deal. Like we’ll get you lunch, we’ll get you anything. Just make sure to make yourself at home, we want to help you do a good inspection. Inspector goes down the entire inspection and at the end, he says Hey we found like a 10% defect rate. Factory manager says hey, I hate to break it to you. But if we get this inspection pass I’m gonna lose my job. My five year old kid is not gonna have any food to eat. Like, this is our last order, like this is a big thing. Like, is there anything we can do for you? Like whatever and the inspector it’s a human, a human element. So they say, on the other end of the spectrum, you have this billion dollar American company, what’s the big deal with an extra 3% defect rate to this billion dollar American company and so they say, Okay, that sounds good and they’ll go ahead and say, okay, Hey, you know what we’ll take a bribe, or you may not even need money, we’ll just go ahead and pass this inspection. We’ll lower the defect rate by 3%. So that’s kind of what happens. It’s not this, like black and white type Hey, we give you money, you’re gonna take a bribe and because inspectors also they take integrity in the work, they take honor, there’s an honor element and finding a bad actor that doesn’t take honor and the work is very, very rare. So to kind of take that honor, that’s kind of what happens when it comes to like fraud and bribery in China. So kind of a way to combat that, that I’ve seen that work really, really effectively is first of all, you want to put in praise, obviously accountability procedures. So you want to rotate the inspectors, which is one of the reasons we have service pods, you want to make sure that you’re putting a different inspector every now and then making sure the inspectors are doing their job, one of the things we’re looking at doing is putting body cameras on inspectors too in the future. So that’s something we want to do. But even then, on a more of a cultural standpoint, we actually like to educate those inspectors. So we like to say, Hey a lot of the clients that we work with are small businesses, they’re people just like me, and you, who’s took all this money, saved up money for five years, put all this money into their business and this is their life savings, they’re operating their business out of their life savings. They might have borrowed money from their friends, their family, family is a big thing in China when you borrow money from friends and family friends, it’s like Hey, that money better get paid back. It’s a cultural thing. So we emphasize that as well and say Hey, they’ve sometimes borrowed money from their friends, their family, these are not billion dollar American companies, they’re small businesses run by everyday people. So when you pass an inspection, even by 2% 3%, of a defect rate, that essentially means that’s sometimes enough just to pass that threshold where that order can’t be sold to Home Depot, maybe it’s in your contract, or it can’t be sold on Amazon, because your listing gets suspended, or you have too many negative reviews could be right past that threshold, and you don’t know that as an inspector. So that’s kind of what we like to tell inspectors and say Hey, they’re trusting you as kind of their last line of defense. So kind of keep that in mind and it’s not a black and white situation. If you pass this inspection illegitimately, and you don’t find the problems that they’re paying you to find, then at the end of the day, you might be responsible for somebody not being able to put food on their table, and their employees’ tables next week. It’s not such a black and white type thing and we’ve seen that dramatically increase it, not only I imagine reducing fraud and bribery, but also increased performance, because now inspectors are like, Okay, we’re this last line of defense, we’re here, we’re at the factory. These small businesses, these brands are trusting us to actually do these inspections and do them right and it dramatically increases the confidence and the ability, the pride, the honor that they take in their work and we already hire inspectors that are prideful. But that significantly increases the integrity level that we’ve seen with inspectors.
Norman 22:19
Alright, so for the inspection, when you send over a PO, you should probably put on, I’ll put everything into a pro forma when it comes in, but it has to do with the amount of the inspection like if it doesn’t pass the inspection, how much defect rate, what is just all the details of it and so what happens? So let’s say that you give a 1% tolerance. Okay and it goes to 2%? Does the manufacturer eat it? Does he have to go and do everything all over again? How does that work?
Sajag 22:57
Yeah, definitely. So I’m in this little bit of a different zone, where I think that putting as much information into a contract is sometimes a little bit counterintuitive. Because it kind of puts you in a position where it locks you in a box, where you’re like, Hey we agreed to a level two inspection or we agreed to a level three inspection. It’s like, what if we want to do 100% inspection, and they signed the contract and they say, Hey in the contract you said level three, like we didn’t agree to 100%. So generally, I like to keep it more on the vague side, obviously, there are manufacturing defects and things like that that are expected. But specifying tolerances, things like that, it works a lot of cases and you do want to do that. But I also try to be careful where I don’t want to get over specific, and I don’t want to specify too much information. So for example, with inspections, I might add a line on my PL that says, Hey, we reserve the right to check all of the products, if needed at every order and then I just tell them informally, Hey, we’re going to be doing an inspection on randomly sampled units at the end of the order. So that’s kind of my approach to that and then when an inspection fails, really inspection failure is kind of up to you. It’s not really up to the factory. So there’s always that kind of subjective piece. So I try not to get that in the contract. So I don’t want anything in the contract that is remotely subjective. So if it’s not in the contract, then as long as it’s informally kind of provided to the factory, maybe over just writing a general email, things like that, like Hey, we’re looking for these defects, we’re not going to accept these kind of problems, then when an issue like that arises and an inspection fails, or there’s a high defect rate, then at that point, you can just go in and tell the factory, Hey please recheck all the units and we’ll do a re inspection to make sure everything’s fixed.
Norman 24:40
This is gonna sound I don’t know, you probably get this question, but let’s say that the inspector didn’t hit the right boxes. Okay, so they did a random inspection. It passed. It goes to Amazon, all of a sudden you’ve got a 4% defect rate or 5% defect. What do you do at that point? It’s past the inspection. But obviously, it failed. Is there anything that an Amazon seller can do now? I like I’ll put in my contracts that if we do get returns that we get a credit back on the next order, but what happens from your end? What do you see? What do you advise people to do?
Sajag 25:24
Yeah, so that’s really, really key and one thing to kind of keep in mind is inspections are an iterative process. So if you’re not checking the right boxes, then things like that can happen and that’s why it’s really important to actually check for problems that you’re not expecting to have as well. Because when you have those problems, and it hits you, a couple of different things. So when problems like that happen, first of all, you want to log those problems. So I’m in big favor of what I like to call a feedback loop and a feedback loop can be as simple as just like an Excel sheet that you track all of your returns on for every SKU, and all of your warranty claims all of your negative reviews and cite a reason for that. So if you have an Excel sheet for the month of January, and you have 100 sales, and you have 10 returns for this problem, and five defects for this problem, and five defects for this problem, you have a tracking sheet, so you can say, Okay, these are the problems that we have. The next thing you want to do is you want to actually talk with your factory and say, Okay Hey, these are the problems we’re having. How do you guys check for it in the production line? Are there machineries? Machinery items that can check for this? Maybe it’s an accelerated wear and tear machine? Like there’s a salt spray machine for some products, for example. So, what are some checks? What are some ways that we can check for these problems. The next thing you can do is actually talk with their inspections company. So one of our things like our service pods do is we leverage that central database. So talk with your inspections company and say, Hey why are we having these issues? What are some ways that we can test for these problems, and look into the testing criteria. So one of the really cool things about having that, like a central database is that you can actually use data from your competitors. So if you have a problem, say like with your product, and you have a high return rate, you’ve talked to your service pod about that, our service pods actually talk to other service pods, we have that central database. So if you have an issue, all the other customers that have similar products, next time they book an inspection, they get a notification from their service spot. Hey, we had customers with this problem, we recommend adding this test to your inspection. So it’s a little bit of an iterative process. So that’s what I always like to say, your first inspection, sometimes you might hit all the boxes, but especially if there’s like checks that are a little bit more complex, or your product has parts or issues that you didn’t expect. That’s really when you want to get into the iterative feedback loops, things like that and if tests get super, super complex, that’s where you might need to bring in a QA engineer, talk to them about how to check your products, and then add those tests to the inspection procedure, or talk with other factories potentially as well, that you’re talking about sourcing from and ask them how they deal with those problems, and then just use them for data and put that into your inspection process as well.
Norman 28:00
You just went over very quickly, level one, level two, level three. Can you just quickly explain that?
Sajag 28:08
Yeah, so I know, I’m moving pretty fast. So if you ever need me to repeat anything, just let me know, or dive into detail. So with inspection levels, there’s a spec called ISO 2859 and ISO essentially stands for International Organization of Standards, which is really funny because they’re ISO not iOS. So it just doesn’t really make sense. I thought they were like International Standards Organization, but no, they’re International Organization of Standards and they have two specs, they have a spec called 9001, which is for more of internal processes, things like that. Then they have a spec, which is ISO 2859 and ISO 2859 is essentially just a statistical model. That’s essentially what it is and they’ve essentially spent 10s of millions of dollars building out the statistical model to determine exactly what is the lowest number of units you can test when it comes to quality control inspections. This could be internal processes, it could be quality control products, physical products, there’s a lot of applications for this. But what’s the lowest number of units to test while still being statistically significant. So essentially what that is, is that there’s three levels on that system, there’s actually, there’s four more, there’s special levels, but those really don’t matter. Unless you’re doing specific tests. There’s core levels of level one, level two and level three. Now, if you’re selling to a Home Depot, Target, a lot of times they’ll ask you for a level two inspection report every single order. So that’s kind of the normal level. Level Three is kind of a more detailed inspection. That’s what we generally recommend for Amazon sellers, just because you have a higher risk of negative reviews, forex high return rates, things like that and a level one inspection is meant to be just a very light inspection. So just a very quick and dirty type of inspection. So those are the three levels per se and then the AQL part of it. So when you hear level three AQL. AQL stands for Acceptable Quality Limit, which is also part of the ISO 2859 spec and basically AQL uses a statistical model and let me go back real quick to the levels, levels are not percentages. So that’s a big misconception that people have is like, Hey level three 4000 units is, say 125 units, people think okay, that’s 12 and a half percent. So if I do 2000 units, it’s 250 units, if I do 500 units, it’s half of that and that’s not true. So the statistical model is based on a statistical table, it’s not correlated to percentages as at all. So if you have a small order, you’re just doing a few 100 units, it could be as high as 50%. If you have a much larger order, you’re doing a couple 10s of 1000s of units, it could be as low as point 5%. So it can, there’s a big variation to it. So don’t confuse the level system with the percentage system and also, when you do an inspection, you can have a core sample size, which is say for the visual inspection, opening up the products, checking the products and that’s a level three inspection, say, for example. But when you do individual product tests, you can do those product tests on different sample sizes. So if you have like a wear and tear product test, you might only do that on one to three units, you may not want to do that on all the products because they’ll break. So there are sample sizes for each individual test. So that’s why we recommend doing function tests on the exact same sample size, because you want to test for that function on all of the units and if you’re not doing that, like for example, doing an inspection from Alibaba, they just check 1 to 3 units for function, that’s not statistically significant and you can actually make sure that those results are dependable. So it’s really important to make sure that you’re inspecting the entire sample size, and you’re doing your entire inspection statistically significant, and not just the visual inspection part. So just a little bit of background.
Norman 31:54
Okay, very good. Just a sec here. Let’s get Kelsey back.
Kelsey 32:01
Yes?
Norman 32:02
See if he was listening or not. So Kelsey, why don’t we talk about there’s a lot of people that have joined about the giveaway today that we’re going to be doing at the end of the podcast.
Kelsey 32:13
Okay. Yeah. So there’s actually two things that you can do right now. So first one is enter our Wheel of Kelsey. It’s the #weloveSajag. It’s $100 off, one person is going to earn $100 off a Movley product inspection. So Sajag, I don’t know if you want to say anything more about that specifically?
Sajag 32:34
Yeah, definitely. It’s $100 credit. So it’ll go towards anything. So if you’re looking for a sample collection, reference sample comparison, the actual inspection cost is just $100 account credit. So pretty plain and simple.
Kelsey 32:48
Okay, and then the second one is just for everyone and so it’ right here, I tried to post it, I think across everywhere, but it’s a $25 credit and that’s for everyone to use, if you just follow this link here and you can also get a inspection guide, I believe right Sajag?
Sajag 33:05
Yeah. So we have this really awesome. It’s a couple of pages long, it’s a PDF and it’s essentially a list of questions to ask your suppliers. So when you’re talking to 10 to 15 different suppliers, you’re sourcing, some really awesome questions you can ask them about like, Okay, how do you do your quality control? How do you do your checks, things like that, that you want to do in the sourcing stage. So you can start, first of all, developing that quality control mindset and number two, pushing that mindset your suppliers, like Hey, we care about quality, quality first and we’ll give you some checks and some tests and also tell you how your factory uses their machines to do quality control, you can ask them those questions, and then add those tests to the actual inspection procedure. So we have a guide on that. It’s our Help me Prepare guide.
Norman 33:48
Oh, that’s great. Just having that type of reference is fantastic. So I’m going to be downloading that as well. But anyways, one of the things I just noticed that came up, but I was going to ask you price variations from different levels. I know it’s kind of like asking you about how long is a piece of string, but can you give kind of ballparks?
Sajag 34:14
Yeah, definitely. So a lot of people have this misconception that inspector labor in China is $3-5 an hour and that’s really not the case. So inspectors in China, when they’re well paid, paid with benefits and vacation time, things like that. They’re paid properly, they earn between 13 to $19 an hour. In some of the metropolitan areas, it gets sometimes even higher. So it really depends on experience. It depends on things like that, but 13 to $19 is an average inspectors wage. So if you have about eight hours of inspector time, you’re already spending about 100- $150 on the inspectors time and then you also have additional costs for travel for accommodations. Administrative costs are very, very important because you need to make sure the back office is running the inspection procedure, it knows what they’re doing. So when you calculate all those costs, you really can’t do a good inspection under $300, you have inspection companies that operate underneath that and that’s really what they end up doing is a couple of different things, either number one, they underpaid their inspectors, and then their inspectors try to make it up. It’s kind of like if you’ve ever gone to a country with a lot of bribes, if you go to India, for example, and you go talk to the cops, they’re like, We’re underpaid and that’s why we accept bribes, so they kind of justify it like that. So kind of a similar thing where you can underpay your inspectors, a lot of inspectors will still take the job, just because they don’t care and they’ll just make it up some other way. So that’s one piece. Second thing what a lot of inspection companies do is they put unreasonable time quotas on their inspectors. So you might ask them, Hey I have this eight hour inspection, they’ll say, Yeah, sounds good. They don’t actually calculate the time for the inspection, they don’t even know how long that inspection is going to take and then it’ll tell that Inspector, Hey, you have two or three inspections to do today. They’re all neighboring factories, whatever, deal with it, it’s your problem and if the inspector doesn’t want to work 20 hours a day, which they don’t, then they just make up results, they move really fast and they try to skip through little different areas, and they end up with unreliable results. So it really kind of comes down to that. So when it comes down to like inspection time, one of the things that’s really important is actually calculating out the time of the inspection and making sure that that inspector has enough time to do the inspection, not a huge amount of time, you don’t want to give them too much time where they’re just working super slow, but you want to make sure they have enough time to actually do the inspection properly. So it’s a huge time variance. So you can do the best inspection possible in a day, you can do a really good inspection for a lot of orders in about eight hours. Generally, you can do an in good inspection in less than three to four hours, that’s like kind of the minimum for the smallest of smallest orders like putting like 20-30 unit inspections, you still need a couple of hours to go to the factory, you need to make sure that everything checks out, check the shipping cartons, things like that. So generally, like five to six hours is kind of a minimum to do a good inspection. Eight hours, for some reasonably sized orders, you can do a pretty decent inspection. But generally budget at least $300 for your inspection process and if you’re doing like a 200 unit inspection, and you’re just doing visual inspections, it’s going to take a lot less time than if you’re doing 200 units, and you’re running a lot of tests on each unit.
Norman 37:26
Yeah, you’re right there 300 units and you know what, what’s $300. It’s nothing and so many people miss the inspection process, because it’s $300. But, Hey look, if you’ve got a problem, it’s probably not going to be a small problem, it’ll be a big problem and anyways, I’ll do that all day long. One of the other things I just want to bring up. So something you might not think about when you’re doing an inspection, this is where if you got a great inspection company, you talk to them. So I’ll have soap, I don’t have my soap in China, but let’s just use this for an example. I have soap with different types of oils in it. I have soap that has natural essential oils in it, those essential oils can be replaced with fragrance, or it’s supposed to have 10% essential oils in it and that could be replaced with fragrance or a smaller amount of essential oils. So I could go to an inspection company and say, Look, this is what I was told is going to go and they can go out to a lab and get that information for me to verify that I actually have 10% oil in there and you can be very surprised at what the lab results come back with. So it’s not just going into the factory, you can actually get lab reports and this is what, like a good inspection company will help you out with. I don’t know if you wanted to add to that.
Sajag 38:58
No 100% definitely and lab tests sometimes are very, very important for a lot of different products. So it makes a big difference. There’s two types of labs generally. I guess, just to add any touch points, you have the labs that are more expensive that work with certifications, things like that, those are really awesome when you need certain levels of certification. So if you have an electronic product, you need ETL certification. But there’s other labs that may not be like super, super accurate, but they’re good enough for like everyday quality control that you can send your samples over to and we can actually do that for you can pick samples, send it over to a lab of your choice and then actually have that lab run results on it and as long as you got a general idea, that’s all you kind of need. You don’t really need anything crazy. You don’t need like certification, lab type results on every single order.
Norman 39:48
Right. So let’s talk a bit about the reporting for people that have not done inspections. They probably really will be overwhelmed with the type of report that you get. So let’s go through the reports. What can somebody expect in a report from an inspection company?
Sajag 40:07
That’s a good question. So there’s a pretty wide variants and reports. So you have inspection companies that give you like two or three page reports, and they have inspection companies like us that give you like 40, 50, 100, 200 page reports. So it really depends. But generally, what you can expect is, first of all photos, you want a lot of photos on your products, because you want to know exactly Okay, did the inspector find the right defects? Do I consider this a defect? For example if you get a minor defect, is that a major defect to me, like you don’t know, because the inspector can make that judgment call. So an inspector will make the best judgment call they can, and then you want that picture to support it . Hey this is the defect we found. So that way, you can say, Okay, I consider this a minor defect, or maybe I consider this a major defect, you can reclassify that defect. So that’s very, very important. The second thing is that obviously, you want it really well organized. So generally, you want to be able to figure out, do the barcode scan, UPC things like that, shipping cartons, you want a section on that, want a section on packaging, and then you want a section on product tests. So like those individual product tests, those custom instructions you do, those are really important and the product test section is separate from the workmanship section, which is workmanship is a fancy term for visual inspection, essentially. So, that’s where you bring in your AQL. That’s where you bring in your scratches or dents, those kind of small defects or visuals, you want a section that just talks about that. That’s generally what you can expect from an inspection report. We do a little bit more, though. So we also look at the factory, we have a factory overview on every single report,
Norman 41:46
Are you doing a factory audit?
Sajag 41:49
So we actually took the first two pages of a factory on it, and put it into every inspection report and the reason for that is like, we look at things like employee count breakdown by department, auditor staff, first of all, is different from inspection staff. So we’re not expecting inspectors to be able to do audits, but we do expect them to collect a decent amount of data from the factory. So we look at employee account breakdown by department, main production lines, we take a factory overview video and we also take a look at the business license, things like that and the reason for that is you might do a factory audit every six months, once a year, but you might be doing a production order every two months, every three months. So you want to keep a pulse on your supplier between those orders and be able to see Hey, did their employee count increase, like 20x? Did they decrease 30%? Are they shrinking? Are they crawling? So that’s something , would be nice to have on every single inspection report. The other part also we do is videos. So we actually have a pretty good subset of videos, every inspection report at least four or five and depending on how many tests you can go, 20-30 videos really just depends on how detailed you want. But we at least include a video on at least one unit for every test. So you can actually see how the inspector did the test to make sure that it was done right. So that we can make sure there was no interpretation problem or anything like that, because pictures are worth 1000 words and videos are worth 1000 pictures a little bit more actually. They’re worth quite a bit. ,
Norman 43:15
I had a friend of mine, we did an inspection and anyways, it came back. It was hilarious. So he does skateboards. I won’t get into specifics on the skateboard. But he does these really cool skateboards. So all the pictures came back and you got it all, then you got into the videos. This is hilarious. Because what you had was the inspector that had to ride the skateboard to make sure that it was straight. So here’s this guy who has never been on a skateboard his life, tried to balance himself going straight and then there was videos that he had to be able to turn left and turn right and I think the most hilarious one was it had to have a weight, you had to have like 400 pounds or whatever. So he had all the stacks on and then he was sitting on top of this stack and somebody was pushing him. I mean, but everything that they were doing was to help ensure that these products were done properly and the proof was right there and it was like you said it was hundreds of pages that came back. But anyways, I just wanted to say, I mean, it was kind of funny. What else can we talk about inspections? We’ve got a bunch of people here. I know we have a bunch of questions. But Sajag, is there anything else that we can cover today that you think is important?
Sajag 44:41
Yeah, I think we should talk about reference samples and when to use them. Something not really talked about when it comes to the inspection process. But if you have products with specific textures, irregular shapes, how that process generally works and then when to use it. I think that could be really good.
Norman 44:57
Okay. Alright. Very good. Okay Kels. Now come back.
Kelsey 45:03
Alright, I’m back. Okay, so we had a couple of questions. So first off from Darwin and Fatiha, they’re asking, do you inspect only in China or do you do India?
Sajag 45:13
So right now we only do China. But we are working to expand to India, Vietnam and a number of other countries. So we’re hoping to have that sometime this year.
Kelsey 45:22
Okay and this is from Tony, we sometimes have the problem of smell, textiles products of a bad odor, how can the inspector look for that?
Sajag 45:33
So reference samples, that’s a great time to send a reference sample because you want a reference sample of like, Hey, this is a bad odor and this is not a bad odor. So it’s a little bit hard to gauge what is a bad odor. So if you can be specific, or send a reference sample that can really, really help for those kinds of things.
Kelsey 45:49
Okay, and I think there was one or two. So Faye was asking, my factories always refuse the carton drop test, how can I get them to agree on it?
Sajag 46:01
Yes, good question and it’s a tough question, too. So first of all, when it comes to a carton drop test, that’s something that first of all they need a packaging engineer for, so they need to make sure that your packaging is built up properly, your product packaging, then they need to make sure your carton packaging is done right. So sometimes, you’ll just have products inside one carton, and that’s what you ship and sometimes there’s inner cartons, so you have products and inner cartons, and then the inner cartons are master cartons. That’s the more standard approach, that’s probably the better approach, but it can be a little bit more expensive. So that’s something you should talk to them before you place your order and just talk to them about Hey, how are you doing your shipping? How are you doing your packaging? Because a carton drop test is a pretty standard procedure. There’s like a specification, I mixed up the letters, I’m not gonna say it but it’s there actually like a specification for it. So it’s a pretty standard check. So your factory should agree to it. But that’s something I would talk to them before you order and ask them how they’re doing their shipping cartons if they have a packaging engineer, because that’s a very critical thing, if you’re not getting your carton drop test to pass, and your products can pretty easily be damaged by the time they arrive.
Kelsey 47:13
Okay, and from Darwin. Do all your inspectors work for your company, or do you source inspectors depending on different situations?
Sajag 47:21
Yeah, so it’s a really good question. So we have a combination. So we have some in house inspectors, we also have some out of the house inspectors. But generally, the way we do it is we have our processes, our systems, our tech that everybody uses and it’s a very, very controlled process. So they go through training, our systems, things like that, whether it’s contracted or it’s our in house inspectors. So we just kind of use contracted inspectors from time to time to get to more remote areas. But either way, it’s pretty much the same.
Kelsey 47:52
Okay, and we got a couple more from Incut. How do you inspect electronic products to make sure there’s no flaws such as heating tests, PCB flaws, etc?
Sajag 48:03
Yeah, it’s a really good question. So when it comes to electronic products, they get a little bit more complex. So machinery is really, really important. So we actually use the factory machinery to do the tests that you might need to do like a heating test, PCB test, things like that. Those can be done. One of the things there for like PCB flaws, if you’re going into the PCB, stuff like that and again, very specific, those are unique kinds of need almost like an engineer to do those inspections for you. So that’s not something we can really help with. But when it comes down to like checking very specific details, as long as you’re very clear of like, Hey, this is what’s acceptable, this is what’s not acceptable and for example, in a PCB board, the inspector can check that. But you have to be very, very specific. If you’re just kind of being vague and you need more of an engineer than an inspector. So that’s one distinction. But when it comes to like heating tests, and those specific running tests, those are things that we work with the factory on. So if you say, Hey, we use this factory equipment, run these tests, and you give us instructions on that, you’ll get that video of how we did that test and also what the inspector will do is they’ll work with the factory engineers and the factory reps, run the test, supervie that, take a video of the whole process, and then do that on a large number of units. So that way, you can see in the video exactly how the test was done and then the factory reps are the ones using machines and actually running the tests.
Kelsey 49:23
Okay, and last one from Radd. Sajag, what about the instructions inside the box? Do you check the language as well?
Sajag 49:32
That’s a good question. So inspectors are bilingual so they speak English, they speak Chinese but there’s a lot of different languages in the world and even English is a little bit tough in China. So we don’t check language. We don’t check spelling. We don’t check things like that. But we do take pictures of the product and we can check against the artwork. So as long as you give us the artwork and you say Hey, this is what should be there. The inspector can look and just make sure it’s the same thing. But they’re not gonna read or check your grammar or anything like that.
Norman 50:02
Right or the QR code.
Sajag 50:04
Right. They’ll check the QR codes, they’ll scan them, look at your photos, and then they’ll see what’s on the box, but they’re not gonna know what to look for, especially with language.
Norman 50:14
Right. Okay, and that’s it for the questions Kels?
Kelsey 50:18
Yep, that’s it.
Norman 50:19
I saw a ton going back and forth earlier.
Kelsey 50:23
There was a conversation, it would be a little difficult to read it all.
Norman 50:28
Alright, it looks like a book. But anyways, that’s good. That’s good. I love engaging. Alright, so it looks like it’s time for that time Kels.
Kelsey 50:39
Okay, we got one just from Andrew. Do you inspect samples?
Sajag 50:43
It’s a good question, we actually get that quite a bit. So we don’t inspect samples, we only do on site factory inspections. We do have procedures for like sample collection where we pull samples from the factory, we’ll take maybe some quick photos if absolutely required, and then distribute them to your photographer, your lab, things like that, or you send us reference samples, and then we ship that over and to the inspector of the factory and have that for the inspection. So there is like a general process for samples. But we don’t do sample inspection specifically. It’s more so part of the inspection process.
Norman 51:17
I’m just saying hi to Melissa.
Kelsey 51:21
Alright, so is it time for the wheel?
Norman 51:23
I wanted to add a little bit to that. So if you are again, looking for samples, you can work either with, I always suggest samples from multiple factories. But if you are working with a sourcing agent, a lot of the time, they’ll have the ability to to get it over to you, the agent will make notes and then send it over to you. Sometimes, if that’s not available, and you’re going through an Alibaba, you can consolidate your samples maybe with your freight forwarder, whoever. You have to make arrangements, but it’s always good to consolidate them. So you don’t have a huge bill. So anyway, I just wanted to add that because there’s hundreds and hundreds of dollars wasted on just sending over multiple samples. Alright.
Sajag 52:12
100%.
Norman 52:13
Now it’s time for Wheel of Kelsey.
Kelsey 52:13
Alright, so let’s do this. I’m just gonna share my screen for a second. Okay, I even added a little logo too.
Norman 52:23
Wow, look at that.
Kelsey 52:25
I know, color coordinated. Okay, we got about nine people entered for this. So this is for the $100 of credit for Movley, so I’ll go ahead and spin the wheel. So 321
Kelsey 52:49
Alright, congratulations and for everyone else that didn’t win, we have the $25 credit for Movley. It’s in the comments section. So just scroll through the comments. I’ll also put it in the description boxes and in the group, as well. So that also includes the guide too, so you just fill out this form and you get the $25 credit, and then the guide for the questions.
Norman 53:14
Perfect. That’s great. Thank you Sajag. Also, I just saw Melissa, Simon’s comment that Yes, you are an approved Empowery vetted supplier partner for inspection. So if you are a part of Empowery, you can take advantage of price. What am I trying to say? Better pricing. Right? Because Empowery always gives a,
Sajag 53:44
Discount? Negotiated rates?
Norman 53:47
It’s getting late and I’m not even halfway through my day and I can’t even think. But anyways, yes, negotiated rates. If you want to know more about Empowery, check out their website, especially if you’re new to Amazon. There are incredible partners there, discounts, Facebook groups, check it out, myself with two of my companies and Sajag are part of that. So check it out. But now, thank you sir. I think that this is one of the underrated topics that people just don’t talk about and it’s so important about inspections that you overlook it. So I just really appreciate you coming on, sharing your time. You are a leader in the field when it comes to these inspections industries. I’ve got to get you to talk to Afolabi, by the way. So anyways, thanks a lot for coming on and your contact information.
Sajag 54:47
Yes. So Faye, the winner for the 100 bucks. Just DM me on Facebook, LinkedIn anywhere. You can also send me an email. My email is sajag@movley.com and we’ll go ahead and get that set up for you and if you’re ever looking to get in touch with Movley, first of all, if you fill out that form, you’ll get that inspection guide, we’ll also get you in our database. So you’ll start getting that email from us with the inspection guide. So you can always reply back to that and you can always find us at movley.com or reach out to me directly.
Norman 55:21
I’d love to have you back on. I hope we can get you back on talking about a few other topics that can help other listeners.
Sajag 55:28
Definitely and thanks so much for having me on and Kelsey, this has been amazing and I really enjoyed it.
Norman 55:35
Alright, we’ll see you later and again, thanks for coming on and I think Kelsey, that’s it for the podcast.
Kelsey 55:41
Alright. Thanks Sajag.
Sajag 55:42
Thanks so much.
Kelsey 55:45
So if you’re interested more about Movley, the links right here. Also Faye, if you’re still watching, we’ll get you in contact with Sajag. So yeah, that was a great episode. It was filled with a bunch of nuggets there, I think.
Norman 56:03
Yeah, it’s an important subject and hopefully we can fill up Sajag’s calendar with people that are not using Inspection Services, but we do for everything, everything, you have to do it. Okay, so I think that’s it for today’s show, we are at 2 o’clock, I’m going to be going over to Clubhouse, we have something called Serial Entrepreneurs. The room is run by Colin Campbell and we’re going to be talking about how to build businesses. Also, one of the really cool things that we’re doing now with our podcast is we’re inviting our guests to come on, and talk. So we have a chance to talk to Sajag today. But you have a chance to come on and ask your questions to three of our guests that have been on the podcast during the week. We’re starting this very shortly. I don’t know if it’ll be next week. But we’re trying to do this as soon as possible and also with I Know this Guy, we’re going to be bringing in our guests, just one at a time there. But to get people to just engage. It’s all about engagement and I think it’s going to be a really great forum just to sit down and you can hear me talk about it all day long. But now you have a chance to talk to the people that we have on the podcast and I think that’s about it. Unless you’re going to interrupt me as I close. You are gonna interrupt me
Kelsey 57:31
Yeah, that’s right. That’s what I’m good at. Yeah, for the Clubhouse. We haven’t decided on anything concrete yet. So if you’re freaking out, like you don’t know the name of the room or anything. We haven’t decided on it quite yet. But look for that in maybe the next week or two. Yeah, so we’ll get that going and we’ll post all that information in the group. Our group is Lunch with Norm Amazon FBA and eCommerce Collective. I highly recommend going over there and joining there. That’s where all the information is. That’s where we have our guests come on. We have advice, questions, that’s where all the community stuff is going on. So highly recommend going over there. We got 650 members I think, starting to hang out there. So yeah, it’s great and if you missed this episode, if you just caught the end of it, we are on YouTube for the full replays. You can just search Norman Farrar, Lunch with Norm. It should be able to come up but all the replays, all the highlights are there to check out and like the episode.
Norman 58:38
Okay and I think that’s it. I just see something that came in from Melissa. So we will post this in the comments about the Clubhouse meeting collaboration group on Tuesdays where Melissa, it’s all about Amazon. You got all sorts of Amazon experts talking. So yeah, check it out. But for now, join us every Monday, Wednesday, Friday noon, Eastern Standard Time. Thank you for watching. Thank you for being part of the community and all this engagement, just tons of engagement. Thank you, and enjoy the rest of your day.
Kelsey 59:14
Alright. Thank you, everyone.
