Most businesses know that product quality needs to be addressed, and this module will give you an idea of where you should start in addressing quality issues.  

 

If you already have a solid idea of how to address product quality, then you may be ready to focus on product branding and customization, which we explore in our next module.

What We Are Going to Cover

  • Why is improving product quality important?
  • Why is product quality a common problem in dropshipping?
  • Common quality issues and identifying them correctly.
  • Work with your 3PL to enhance product quality.

Why Improving Product Quality Is Important

Product quality directly impacts your bottom line, especially if there there are known issues that can be improved

  • Improving quality leaves more margin in your pockets by reducing refunds
    • Every refund, every chargeback means a direct loss, deducting from your gross revenue
    • There’s no way you can really recoup the total cost of a refund
      • Even if your supplier offers you a refund, it will be on the costs you paid, not the full retail value
      • Plus Facebook, Google, and other platforms aren’t going to refund you on your ad costs. In fact, they’ll punish you even more if you have high rates of negative customer feedback
    • Even small improvements can have big impacts (for example, reducing your refund rate by even 0.5% can add up to a huge amount over the long run) 
  • Having a high quality product, especially one that is notably better than generic competitors, can boost your revenues as well
    • Big brands really start making money on the backend through repeat purchases and recommendations of a brand or product (which doesn’t happen unless products are genuinely good)
  • High-quality products can help keep operational costs low 
    • Time is money, whether it’s your own time or what you pay for your customer service
      • Even if you can convince the customer to not request a refund, or if you get your supplier to resend a product for free, all that time to manage the process still adds, and should be considered as an operational cost

Why Product Quality Is a Common Problem in Ecommerce

Many generic products on Aliexpress, dropshipping platforms, and other common sources of generic ecommerce products may have quality issues, especially if they are new​er on the market 

  • Persistent low quality tends to be driven by low-cost production and high pressure from clients and suppliers to make products as cheap as possible
    • Example: Some products cost just a few dollars shipped from Aliexpress. In that case, it’s unlikely that the actual COGS are more than 10s of cents
    • Sometimes because of this pressure, factories might actually take regular versions of the product and  make them even cheaper. They can do this by using cheaper materials, lower quality processes, or other techniques 
  • Limited feedback loop or lack of pressure to improve can also drive persistent low quality
    • Brands buying generic products don’t usually manage factories directly
    • AliExpress and factories don’t tend to work with clients very long or handle much fulfillment volume, which removes the incentive to improve products (and can hamper how much feedback they actually get)

Common Quality Issues and Identifying Them Correctly

This list is not all-inclusive, but here are some common quality issues for ecommerce products:

  • Cheap quality materials: For example, using a cheaper fabric that still looks nice on pictures but is noticeably lower quality in-person
  • Shoddy construction:  This can be pieces put together or sewn together poorly so they easily fall apart
  • Poor tolerance tooling: Pieces that are made so poorly they can’t be put together or can’t be held together well
  • Low quality electronics components: A common example of this is cheap, underperforming batteries

In a typical production run, many of these issues are caught due to established quality control (QC). However, lack of a good QC process at the end of production can be common with lower cost factories (though this can be an issue when factories are too rushed, too)

  • Any legitimate production NEEDS to have a QC cycle at the end of production and also staff QC staff accordingly, before it even gets sent out
  • Likewise, there needs to be a QC process at your supplier / agent as well (something that many smaller agents tend to skip or don’t resource appropriately)

Certain quality issues will only occur with customer use and might not be fully obvious even through normal QC from factory and suppliers ​

  • For example, a product is perfect otherwise, however has major battery issues after a few uses
  • Make sure to collect as much customer feedback as possible on product issues
    • It’s good practice to use some kind of spreadsheet to document all of the issues
    • Identify if there are patterns in specific issues
      • (if one out of a thousand products just stopped working, but you don’t see it again, might just be pure randomness, which isn’t indicative of a production or design issue)
    • Be aware and account for % of defect rate per type of issue. Understand that some low % of defects is likely always going to exist (and unless there’s a clear pattern of failure, these issues can’t be fixed)
      • Ex: even Walmart allows for up to 2% defect rate over rolling 90 days

Work with Factories, 3PLs, or Supply Chain Partners to Resolve Issue

You should work with all members of your supply chain to attempt to prevent, identify, and resolve production issues. 

  • Try to avoid quality issues at the start during the sourcing process​
    • Have your supply chain partners source from established large factories​
    • Have them make sure that the factories have a good QC process​
    • Try get a sample, especially if there might be known issues with the products
      • If you’re in a rush, at least have your agent get one first to evaluate quality
  • This could be hard to implement if your sourcing agent is a small operation
  • We recommend to work with an agent that 
    • Is relatively big in scale and can handle high order volume with factories
    • Has good relationships with factories
  • Don’t assume product quality isn’t fixable!
    • Pretty much everything is fixable, it’s usually a matter of cost or effort needed
    • Talk to your supply chain partners about the quality issues discovered from customer feedback, pinpoint exactly what the issues are, including relevant images and customer descriptions
      • Efficiency is important, because it makes fixing problems more cost efficient
    • Your supply chain partners should communicate and provide the feedback to the factory and work with them to help improve the products
      • Factories can be happy to improve their products to retain clients. They just don’t do it as often because many short-term ecommerce clients don’t really give them feedback or push them for improvements
      • Depending on the actual quality issue, there MIGHT be an MOQ or additional cost
  • Ask your supply chain partners to incorporate this issue in their QC process
    • Identify exactly what they should be looking for, especially if the issue is not visibly apparent
      • E.g. don’t just say make sure check for QC, specify that you’ve had specific issues with X or Y happens and specifically look out for those
  • Keep track of batches of products that were supposed to have been “fixed”, and track to see if the issues have been improved or resolved
    • Repeat this process until product quality is stable​
  • Consider switching supply chain partners if they won’t commit to implementing changes and managing factories to help improve your product
    • It’s not practical to fix everything, but sourcing agents should at least be making an effort and providing a logical reasons why it might not be doable (or maybe it is fixable but requires product improvements that can be too costly)

EcommOps and Quality Checks

If you’re concerned about the quality of your products, EcommOps can assist with quality control checks of inventory we receive. We can find issues before products are sent to customers to make it easier to hold factories accountable to quality standards.