Why You Should Use Inspection Services When Importing From China - With Sajag Agarwal from Movley

Hey everyone. Very, very warm welcome to this video. So this week I'm very proud to announce I have Saja from Movly, an inspection service based in Chicago. And today we're going to be talking about all things inspection. So why should you inspect products before getting them shipped from China and sent into Amazon? Why is it important? And you'll hear from Sajag's story as how he had some issues with this, which really motivated him to build his company and to solve the problems that a lot of new Amazon sellers experience with stock that arrives broken due to bad inspection services. So, Sajag, how are you doing, man?

I'm doing good, how about you?

Not too bad at all. Yeah. Enjoying the ever darkness that we're starting to get as we move into the. Into the winter as we were just talking about. So time to adjust to the Swedish never ending night. So let's start with, let's start with your Amazon experience, man, because you're telling me you had a really impressive Amazon business. So walk me through how it started. Maybe tell me what made you want to sell on Amazon back in the beginning.

Yeah, it's a really good question. So I actually started selling on Amazon about five years ago, and before selling on Amazon, I sold on ebay. So the good old ebay. So actually at one point I went on ebay and I was just browsing and I saw that I could buy like a bulk of like 100 units of this product that was selling for like 5 to $10 each for like 100 bucks or 200 bucks. So I actually went ahead and bought like a whole bulk package of units on ebay and then took them and then sold them individually on ebay. And that was really successful. So that first stock that I bought, I flipped it and within a week I had the entire stock sold. And then I was buying another one, another one, another one. And it just kept kind of growing and I started doing that for a lot of different products and a lot of different industries, specifically electronics. That was really the best industry for me for that kind of stuff. But just started buying and selling units on ebay and it worked really well. And I was just shipping them out from my home, so I was going to my garage every night putting out 20 to 30, maybe 50 shipments in a day. USPS lady, she was pretty happy. So USPS, they get paid per package when they pick up. So she was pretty happy about all those packages. But yeah, so that's how it kind of started. And then, you know, we sold, you know, it was ebay. So we sold, you know, kind of cheap junk for the most part. No one really was expecting anything better. And I was really thinking about it and I was like, wow, you know, like, I bet I could manufacture something a lot better than this for, you know, just a few bucks more. And I think people would buy it. So I took one of my best selling products, which was like in the electronics industry, and I ended up starting to talk with manufacturers in China. And, and I asked them, okay, hey.

You know, what can I, you know.

How do I build this product? How do I, you know, manufacture it? And I started bringing in engineers, I brought in an industrial designer, and we actually built out a whole product from scratch. And when I was going to sell it, I was looking into ebay and things like that. But even at ebay, you know, I was selling this pretty popular product and I was only selling maybe 30 to 50 a day. And I was like in the top one or two sometimes in the top five rankings. Most of the times in the top five rankings for my product, we were only selling like 30 to 50 units a day. Whereas I was doing some research. And on Amazon, the top five products for this kind of industry were selling hundreds and thousands a day. So the volume was really just missing on ebay. It wasn't really there.

So I got the idea, okay, hey.

If I'm going to sell this product, I'm going to make my own brand out of this.

I have to have more volume, I.

Need to have more people buy this. And Amazon was actually key to that. So that's how I got into Amazon. Originally. I registered my Amazon account and then I posted those first products. I had my first order. It was just 1000 units. I think I spent maybe 4 or 5k on the whole inventory order in total, maybe it was like 5.5 at the most. And I had that entire product shipped over and I had that batch, actually it shipped it out of my home. So I had 200 at a time going to Amazon and we started just selling. So I put it up one day and within it was like back in the day, like five years ago, when I could almost list anything on Amazon it would start selling. So we listed up on Amazon and we started selling units within a few days. And I was just like, I remember I was at line one time for this signing. It was like some artist singer was in town and I was there for his signing and I was just getting an email, hey, you sold an item on Amazon, and then another hour later you sold another item. On Amazon. And I was like, wow, okay. And it just started scaling up. So I started putting ads, I started looking at all the different ranking solutions and things like that and it just started scaling up really fast. So our first year we did about 40k in revenue. And our second year we did about a million in revenue. And on our third year we were on track to do about 2 million a year in revenue. And we were selling not only on Amazon, but we were also selling on ebay, although ebay was a very small portion, maybe like 2 to 3% of our revenue. And we were also selling a brick and mortar, so just like local stores around the region. And we also had, when I was selling on ebay, we actually had a lot of people message me in when I was flipping stuff on ebay and they would say, hey, I want a bulk order, I want 100 units. And they sold it in their gas stations or in their stores. So at one point I think my brand was stocked at 20 or 30 Metro PCs stores in Texas. So it was just kind of ballooned and it just started growing. People were really happy with the quality, really happy with the product, product. So they just kept stocking it and buying in more and it just kept growing.

So impressive, man. There's some really explosive growth from 40k to a million and then to 2 million. That's pretty incredible. So it was an electronic. So here's the thing, right? So I work with a lot of people who sell on Amazon and one of the first things I say to them is stay away from electronics, right? Because it can just be such a nightmare. So did you like, experience, was it difficult selling that volume of electronics?

Yeah, it was really difficult. So with electronics, it's a very low margin industry. So you sell one and you want to be done with that sale. There's a pretty good margin though. I wouldn't say it's low margin, it's low dollar margins, but percentage is pretty high. Especially if you're able to find good suppliers, you're doing decent volumes. So our gross margins were about 55% or something, 40 to 55%. So they're pretty high. And some of our products, you sold one product and we made a margin, enough to buy two more units back. So it was pretty good in terms of margins, but it was very difficult to sell. Advertising was extremely expensive, so there was no way to profitably sell and use ads. So we always had to look at it from a total sales standpoint. You know, just, you know, finding manufacturers for it and, you know, quality Control, testing, things like that. Everything was kind of a nightmare. And that's actually what led into a lot of the issues that led me into founding Lovely was because of those quality control problems and because of the hard parts of, like the supply chain. And obviously that was electronics. But, you know, it's a lot of those issues we faced, you know, in other products we sold as well. So that brand not only sold electronics, we also sold, like, other products. We had a Velcro product, which was just. It's not called Velcro. You can't use that. It's a trademark. But it's called hook and loop. But we had a hook and loop product and we had a lot of other products, just plastic and metal products, durable goods. So we sold pretty much products from all around. Accessories, phone accessories, all the way down to electronic products. So a lot of different products and a lot of different SKUs.

So you grew, the business exploded, and then you had some issues with suppliers and some issues with the quality of the goods. So tell me what happened.

Yeah, so in the initial time, when we started sourcing in China, like our first year, our second year, we got pretty lucky. So we were doing inspections on all of our orders, always from day one, but we always got past inspections. We obviously had some failed inspections from time to time, but they were over some really, really minor details. Like, hey, there's too many units with some scratches on them. And that's not really something that our customers care about. That's not something we care about. One scratch on the unit, okay, that's fine. But what we do care about is that, hey, the product is working when it arrives, product still works and is doing what it's supposed to do, the function as intended. 3, 4, 5 months down the line. Because electronics industry, one of the hardest things, is very competitive because they give long warranties. So some of our products had lifetime warranties and other products had one, two, three year warranties. So customers were expecting these products to last, and these were durable products. So there was no reason it should not last. But initially our first orders are fine, but we ordered every three months so into year two. So we're talking on the third, fourth, fifth order. We started having a lot of quality control problems from our original suppliers in the reorder. So it was quality fade. Essentially, our supplier started cutting back on the raw materials or whatnot to create lower quality products and save some costs. And at the same point in time, what ended up happening is that we started launching new SKUs, we started working with new suppliers and we weren't that lucky from the get go. Our luck didn't really scale with us. So at one point at end of year two, we were seeing almost 5 to 10% defect rates across all of our SKUs. And so these were products that were just coming in. We were getting returns because they were broken, they were not working, whatever. And I call the defect on arrival, when it's returned or we have a complaint within the first 30 days. And then on top of that, we started seeing in some of our SKUs actually 100% of the products just breaking apart after a few months of use. And these were products, just metal products or plastic products all the way to electronic products. And these are products that should have worked. You get something from Walmart for couple bucks, that product is going to work for a pretty decent amount of time. And these were our products. Higher quality, higher price, breaking apart in just a few months. And especially like plastic products, metal products, like sometimes it snaps together and then just some piece falls out, maybe it's built cheaply and it just, the whole thing breaks apart. So that was like a huge issue. And we started seeing 100% on some units and some SKUs. And so those were kind of the quality control problems we started having. And despite having past inspections and a lot of our suppliers working with our competitors who had proper quality and good reviews on Amazon, we still had a lot of quality control problems.

Right. And so I'm assuming, did this cause problems with Amazon? Like did they start suspending your ASINs and giving you like, trouble?

So we didn't really, luckily, unfortunately, we didn't really face any suspension issues, so we didn't really have those problems. But we did have a lot of negative reviews coming in. So we had to like, literally like, you know, we were sending out, you know, as many emails as we can. I think, you know, the new policies weren't in place by then, so we were sending out sometimes three emails per order. Really fielding hard for positive reviews because our, you know, we previously didn't have to field anything for reviews. People were just so happy with the product on the first few orders that they would come in and review the product and write great reviews, include photos, videos.

People just loved it.

We had a kid in high school post something on his YouTube channel and they got exploded on one of our products. And people were just doing this naturally because they loved the product so much. And then when we started having negative reviews, even after sending three emails really soliciting hard for positive reviews, we were still seeing our review Ranking drop. So our best selling product went from 4.7 out of 5 or like 4.8 out of 5 to 4.7 to 4.6 to 4.5 to 4.4 to 4.3. And it just kept going down like 1.1 point every one or two months. So, you know, and that's with heavy fielding and positive reviews, which I don't.

Even believe is possible anymore.

Yeah, it's definitely, it's like kind of like pulling teeth these days getting reviews. It's getting harder. It often means you get more sort of genuine reviews though. So it's not always so bad. So yeah, that must be annoying, man, seeing the reviews keep going down. So it seems to me. So you had one supplier where the stock was very good and then was it when you switched suppliers that when the stock started to fall in quality or was it because you switched inspection service? What was it that made the difference?

So the inspection services, we tried a lot of inspection services and when we started having quality control problems, we talked with suppliers, we were like, hey, these are our problems. Inspection, these are our problems and we need you to do this, we need you to fix this. And nothing really changed. So we did like two or three orders after that, nothing changed and we changed suppliers and the quality just stayed the same or it got worse. And sometimes when we change suppliers, the first one or two order, the quality would get better and then the third order would get worse again. So it wasn't really just switching suppliers. In fact, switching suppliers for a very short period of time made our quality a little bit better because they were like, hey, we want to impress you. But really what happened is our current suppliers, on the first order it was fine, second order was fine. And then from there I guess just it went up, it was good, it was steady. And then it just started teetering down every order. So it was really just our current suppliers, which we had relationships with, just cutting down on costs to maximize the profit. So at one point, one of our products, I actually remember just saying, hey, this product was unacceptably built this recent po. And then they did an analysis to find out that basically two major QC steps were removed from the production line to save some costs. And they told me, oh, it was a mistake, but obviously that's not a mistake, that was just to save some costs. But they actually self admittedly admitted to, you know, say to lowering our quality, that order. So, you know, that's something that, you know, was repetitive. And you know, we started seeing that with a lot of our Suppliers, you know, just a general quality fade after a couple of orders.

Wow. So this is. This can be a big issue, especially because, you know, every business is trying to cut costs at the end of the day. Like, you know, it's just. It's a good thing to do. Obviously, it's very annoying when it means that the end product doesn't do what it's supposed to do. Right. I mean, so carry on.

Yeah.

Yes.

I was just gonna add in. It's like game theory. So, you know, when. When you have a supplier, they're incentivized to make the least. The lowest quality product possible that you will buy because you will get the same price. They'll get the same price for every product. So if they want to maximize their utility, they send you the cheapest product they can make that you buy. And if you're buying all the products and they're not connected or seeing anything happening on the customer side and they don't see what you're dealing with, the warranty claims, returns, the negative reviews, etcetera, they have no visibility into that. And even if they do, they don't know what the impact is on a utility standpoint. They will constantly, you know, be incentivized to. Okay, you bought, you know, bad quality order number one. Let's lower it a little bit more. Oh, you still bought it. Let's lower it a little bit more. You still bought it. Let's lower it a little bit more. And it just keeps going down. And on your side, you want to maximize your utility for quality, you want the highest quality possible because that's going to maximize your margins. So it ends up kind of being this competing force, and the supplier always wants to, you know, lower it and to push it down as much as possible in a general sense.

So they're, like, trying to see what they can get away with bit by bit with every single time you place an order, because it just saves them more and more money every time they do it. That's so interesting. So this motivated you to create your own inspections company. So tell me, tell me when you started that and when did you decide? I'm going to just create one myself?

Yeah. So after we started having quality control problems and we were getting past inspections, I actually ended up moving to China. So in 2017, I actually lived in China, in Shenzhen, for about six months. And while I was there, I was basically going to suppliers every single day. So morning to night, I was at a factory watching production, talking with their factory reps, or visiting new suppliers. So Every day at one to three new factories, always checking out their production, learning the processes for my products in a bunch of factories, learning the quality control mechanisms. And my goal when I moved to China was just, hey, I need to find out what's happening.

You know, why, why are we having.

These quality control problems? Why are we having these, you know, things? Because I was new to the industry, right, Obviously I'm not an engineer, so I didn't know what was going on and I didn't really have means to check that. So, you know, and our engineers built the product so the product was built properly. But this was more manufacturing, which was, you know, fully contracted out. So I moved to China and I was basically living there, factory to factory in some workshop or the other, every single day, morning to night. And I was watching my production and I was doing my own inspections for my own products. And when I started doing my own inspections, I started noticing a lot more problems than what my inspections companies were telling me. So when I went to one of our suppliers that we were having quality control problems for, and we were getting past inspections and I ran some function tests which for that product was really simple. It was just use the product, make sure it works. When I ran the function test on like 120 units out of, let's say, 1,000 units, then I started noticing, okay, that 5 to 10% defect rate that our customers were talking about, we're also seeing that on the inspection because 5 to 10% of the units are not working and they're just not working as intended. So it's very clear that there was a function issue and that can be spotted right on the ground. And then at one point, actually I brought in a small team in China, in Shenzhen, and I started doing my own inspections in house and doing my own quality control and my own sourcing. I brought in the general manager, et cetera. But there is one distinct inspection that I remember doing and I did that myself. I went to the factory, it was for our bestselling product, and I did a whole inspection. Took me about nine hours to do the inspection. I went in super early in the morning, woke up like at 6 or 7am, got ready, left the house by 8, 9am, I'm at the factory and all the way till 6pm with maybe like a 30 minute break for lunch, basically just inspecting this product. And I went in, I plugged in all the units, made sure all the units worked and set the scene up, and did a full inspection on a subset of the products. And then I had my Inspections company. And I had the idea after that, let me have my inspections company come and do the same inspection that I did. And I called them and they came two days later. And when I went to the factory, so I went there again same time, 9am in the morning. I was there because they told me the inspector is supposed to get there between 9 and 10am So I got there at 9am and I'm just waiting for the inspector. And I waited for almost five hours to the inspector finally showed up. He showed up around 1 or 2pm like all the way in the afternoon. So this is five hours late to an eight hour inspection. And then after showing up five hours late instead of being apologetic or getting right to work, so he didn't know I was the client. So I told the factory specifically, hey, I'm just another employee. You don't know who I am and I don't want the inspector to know who I am. So factory didn't tell him anything. So instead of being apologetic, he showed up and the first thing he asked the factory was for lunch. He said, hey, if you don't give me lunch, I'm not going to start the inspection. And I was like, that's ridiculous. You're already five hours late. But the factory told me, hey, this is normal, this happens. And it was like 20 RMBS, 3 bucks. So they went ahead and bought him lunch. They didn't even charge me for it. The inspector took his despite showing up late and then after that proceeded to do the whole inspection that took me about nine hours to do because I knew my product. He did that whole inspection in about two to three hours, basically just visually looking at the products, not doing any tests on them, not making sure the products actually functioned, not making sure we had tests and instructions. Hey, I want you to do this on the product of all the units you test and make sure that it works. He didn't do that. He did that on maybe two to three units. So theoretically I could have had 1,000, let's say of my product and 950 of them could have been defective. And if he just took from maybe the box in the front because the factory left it there because he's not trained and he just tests three units, I could get a past inspection for a 95% defective batch. So that's what was so shocking to me. And lo and behold, when we got the report the next day passed inspection on a batch of goods that when I tested myself I had about a 6% defect rate and 100% failure. Rate on a wear and tear test, which is essentially when you break a product, you know, a few units of the product in the inspection to make sure it's actually built properly. So, like, for example, if you have like a nonstick pen, you scratch it up with some steel wool and you say, okay, hey, coating didn't come off and it didn't scratch up. So, like, that's an example of wear and tear test. And all of those tests failed when I did them. And when the inspector did them, you know, very lightly, didn't really, you know, put any passion into doing it. Inspection passed. And the whole, you know, the whole inspection passed, function tests, wear and tear tests, visual inspection, et cetera, when it should have really failed. So after that experience, that was like, towards the end of my six months in China, after that experience, I moved back to Chicago. And so I'm based out of Chicago, and Chicago is a hub for brick and mortar sellers. So I was going to meetups and conferences all around the place, talking with brick and mortar sellers. I also travel a ton, so I went to la, I was in Austin, I was in all these places, and I talked to a ton of sellers and asked them all, do you trust your inspections company? And they all told me. And I asked probably 100 people or more, and they all told me to shop for brick and mortar sellers. So I was going to meetups and conferences all around the place, talking with brick and mortar sellers. I also travel a ton, so I went to la. I was in Austin, I was in all these places, and I talked to a ton of sellers and asked them all, do you trust your inspections company? And they all told me. And I asked probably 100 people or more, and they all told me to the shockingly same words, which were to the tunes of, I don't trust my inspections company, but it's better than doing nothing. And I was just shocked. I was like, hey, inspections are an industry standard. Every company does it small to large on every single order. And this is something that is so unreliable that people have zero trust in it. And we have body cameras that we're giving to police. You know, what's the risk? There's like fraud, bribery, and a couple of other problems. And we can't mitigate against those risks with, like, all this technology, this innovation, all the software we have.

And, you know, we can't apply that.

To this industry, which has not changed in 50 years. It was just shocking to me. So that's when I founded Mozly, was to actually improve that inspection process. By using tech, by, you know, fixing it and putting in better innovations, better process to actually make sure that, hey, you know, when we call and inspect at the factory, we can make sure the inspection is done properly and make sure it's set up properly. So that way we can get true results on whether the product quality is bad or good. Because especially for Amazon, it's huge. Because on Amazon, say you buy a product for 30 bucks on Walmart and the customer is not happy with it. The return rate, like in brick and mortar, it's about 8.9%. So it's just the product gets returned and it's story end. And if you get a $30 product and it breaks, you buy it at a gas station or you buy it somewhere else, you just forget about it. You're like, okay, whatever, it's $20, it's $30, it's been two months, three months, I'm just going to throw it away and you forget about it. You never think about it. But when it's on Amazon, filing a return is one click away. Contacting the seller is just one button. So you just scroll down the list like, oh, this order I bought six months ago, contact the seller, hey, my product broke, I need a replacement. And if you don't give a replacement or you don't file for that warranty claim and the seller doesn't respond well, or even if they don't even bother to contact you, they'll just leave a negative review. And then that negative review pushes down your listing. It makes everything more expensive. It lowers your sales, it lowers your conversion rate. And then at some point you have to sometimes even re rank your entire product or replace the entire listing and it just becomes extremely expensive. And returns on Amazon, in general e commerce returns are already about four times higher than brick and mortar, so about like 30%. And in Amazon, my hunch is it's even higher because it's so easy to return products on Amazon versus a general e commerce website. So that's what's really kind of shocking to me when it comes to, you know, the general sense around that. And it was just. And that's kind of what led me to founding Lovely.

Wow. So you had hands on experience by actually going to China, seeing the inspection services take place with your very own eyes, meeting some of the people and then realizing that there's just kind of subpar, and then also speaking to a lot of brick and mortar sellers in Chicago and finding that they agreed with you as well and they all basically had the same experience. So what does motively do differently? So what did you guys decide to change with inspections and how did you, how did you implement it?

That's a really, really good question. So implementation is difficult. It is hard, hard, hard. So we've really been digging into that and we're constantly iterating, innovating and improving the process. So in a general sense, I wouldn't say Malvi does inspections perfectly like any other inspections company. There are fail points, there are pros and cons. But I would say in a general sense, we're about two to three times better than the industry average for inspections. And I would say at least 1 to 2 times 151.5 to 2x better than our nearest competitor. So just the way we do process is the way we handle fraud and bribery right now. And when it comes to kind of where we're trying to get to, we're trying to get to like that 10x number because the bar has already been set so low. We're really trying to get to that 10x number and that 10x number. What kind of our vision is, is to actually build out a full tech platform for inspections. So we want to be able to collect things like real time data on the actual inspection. What's happening? So when the inspector goes to the factory, when do they mark a defect? When do they mark, you know, this unit passed? We want to be able to see that data, be able to see, okay, hey, did the inspector take a one hour break for lunch? And if they did take a one hour break for lunch, did they come back and change all the units and say, hey, you know, this is now no longer a defect? So we are working on building out like an inspector wizard, which gives the inspectors unlimited flexibility, but it gives us ability to track and audit all of that, which is really key because we can see, you know, does this inspection, you know, does this inspector have the habits of a bad actor, which is, you know, if there's a bribe or, you know, fraud involved, it happens a lot times during lunch or after the inspection is complete when the inspector has a little bit of leverage that, hey, you guys are getting a lot of bad products. So, you know, are we seeing like a 5% defect rate before lunch and then a 2% defect rate after lunch? We can scan that and look for that in the inspector wisdom. We're also looking at putting in like body cameras on inspectors and we're working on bringing all of that data and insights to you as the customer as well. So you can see how your inspection progressed. And have that data and those insights accessible to you. So that's kind of what our long term vision is, is to build out this whole inspection platform. And also right now what we already do is we apply data analytics to inspectors so we can see, you know, hey, does this inspector have a higher pass or fail rate than the industry average? And we can be able to gauge that. So, hey, if an inspector has a 90% pass rate and our average is 70% fail, clearly something is wrong with this inspector. So we need to randomly audit him more, we need to flag him, we need to train him better, whatever it might be, or there's fraud involved. We are able to see those insights on a general perspective. And in a general sense, what MOVDI does really differently is a lot of inspection companies will give you three to ten page reports, but you really don't have any idea if the inspection was done properly. So what we do at Mobley is that all of our reports average around 40 or more pages standard. And we always include hundreds of photos, we include videos, which is something that I don't very few inspection companies even do, especially to the extent we do it. I don't believe any other company does that. So we have videos of each product test that we do. We do a product overview video, standard, even have a factory overview video. And this is really cool. So one of the cool things that I learned when I was on a general perspective and in a general sense, what movie does really differently is a lot of inspection companies will give you three to ten page reports, but you really don't have any idea of the inspection, what's done properly. So what we do at Mobly is that all of our reports average around 40 or more pages standard. And we always include hundreds of photos, we include videos, which is something that very few inspection companies even do, especially to the extent we do it. I don't believe any other company does that. So we have videos of each product test that we do. We do a product overview video, standard, even have a factory overview video. And this is really cool. So one of the cool things that I learned when I was on the ground in China and working with our team of supply chain experts and manufacturers and engineers on the ground in China and working with our team of supply chain experts and manufacturers and engineers is, you know, obviously the supplier has a big portion to do with it. So some of the issues that we had in my business, for example, were because suppliers were like kind of shutting down, they're going into bankruptcy. And other times suppliers are growing really Fast. They had way too many orders. They were hiring people, and they're a mess. Obviously, the supplier has a big portion to do with it. So some of the issues that we had in my business, for example, were because suppliers were like, kind of shutting down. They're going into bankruptcy. And other times, suppliers were growing really fast. They had way too many orders, they were hiring people, and they're a mess. So one of the cool things we do is we have, like, a factory overview report inside the inspector. So one of the cool things we do is we have like a factory overview report inside the inspection standard. Now, it's not like a factory audit where it's like 50 pages long. It's maybe just one or two pages long. And it's the first, really the first page of a factory audit. And we collect things like the employee count breakdown by department. We look at the factory records when we go, we look at annual revenues, we look at the business license, make sure it's still active. We take some photos of the facility. And that, as I mentioned, that factory overview video, which is a walkthrough of the factory, so you can see, okay, hey, this is my factory. This is my facility. These are where my products are actually being made. And what's super cool about that is.

That you can gauge that between inspections because, you know, you might be doing a new order every two to three months. But if you're, you know, if you have factory audits in your process, that might be every six months or every year, and if you physically went to your factory, you're not going to do that every three months. So you can kind of get a gauge of your supplier and keep a pulse on them between all your orders. So in order number one, they had 100 employees. Order number two, that had 130 employees, and they grew 15% or 30% in two months. You can kind of gauge that. Or maybe they lost half their employees. Like, with one of my suppliers, they lost almost 80% of their employees because they were shutting down. So if you see that, hey, you know, month one, they had 100 employees, and in month three, they had 60 employees. You can gauge that and see that, hey, you know, this company shutting down or it's growing too fast. And that's in the inspection report. Now, it only takes the inspector, like, you know, 10, 15 minutes per inspection.

But. But that data, that.

Those insights are huge in making sure that, hey, you know, your supplier relationship, your quality of your products are protected. One of the other things we do is that. Which was one of the hardest things to kind of go off your point to implement was actually getting actual time codes for the actual inspection process. So what most inspection companies do is especially the cut rate ones, the ones that charge 100 to $150 an inspection. The average inspection cost for an inspector's time is about $13 to $19 an hour. After you've considered vacation time, HMO benefits, payroll taxes, China's Social Security taxes, things like that, it's about $13 to $19 an hour. So for one day of inspection, you're already paying for eight hours, about $100 to $150 just in the inspector's cost before you're taking into account transportation costs to the factory, which train tickets, whatever it might be. You know, if factories are in a rural area, the inspector has to drive or whatever it might be. You know, so factory transport times, meals, accommodations, the administrative costs, the cost for fraud, auditing and training the inspector, things like that, you know, you're already, you know, like the cost of your inspection is actually more than what you're paying. So what ends up happening is the cut rate companies put these really insane quotas, similar to kind of what Wells Fargo did a few years ago, where they'll tell their inspectors, hey, we need you to do two or three inspections today. And each inspection might be four to eight hours long. So as an inspector, you know, ends up happening is the cut rate companies put these really insane quota, similar to kind of what Wells Fargo. You have 20 hours worth of inspections to do in one day. You want to get home at the end of the night, you want to sleep, have a full eight hours of sleep, wake up in the morning, feel refreshed, and, you know, go back to home, you know, where you probably have, you know, your kids, you want to, you know, visit them yourself, spouse, et cetera. So what ends up happening is that this inspector goes to the factory, they're like, okay, hey, I have 20 hours worth of inspections to do. There's no way to do it. And they end up not checking the units, moving really fast, making up results. It's just a natural cause of fraud. So, you know, if you have eight hours worth of inspections to do, you'll go to the factory, you might spend two or three hours, kind of what they did in my case, and just scan through the units, not do all the function tests on all the units.

Maybe just do it on two to.

Three units, even though they say, you.

Know, we'll do it on all the.

Units and end up with, you know, report where you feel like, okay, the inspector did test all the products if you feel protected. But in reality, the inspector did not actually check all your products, did not open it, you know, they just scanned through it, et cetera. And a lot of the results are fraud or fake. So that's what ends up happening in most inspection companies. So what movly does is we actually calculate the time codes for the the inspection.

So if you have a very simple.

Inspection for a couple of products and a couple of units you want to test, and a few tests per unit, it's going to be a lot less expensive than if you have a more complex product like electronics, where you have.

A lot of tests, a lot of.

Products you want to test, and a lot of tests per product. You know, paper cups versus electronics is completely different cost to it. It's not a flat rate, one size.

Fits all for all products.

So what we do is we actually calculate the real estimated time for every inspection. So let's say we calculate the time as about two days based on industry averages. For this inspection, you're looking to do with these many units and these many tests. And that inspection takes one day. We actually credit that extra day back to your account so you can use it for another inspection. And if the inspection takes three days, we actually in most cases cover that extra day and then improve the time codes. So that way in the future inspections for that product. When you're doing ongoing inspections, every order the time is allocated properly so there's no overage and we bill you correctly.

Awesome. Cool.

Yeah.

And then one, one last thing, and really the coolest thing, which, you know, is my favorite kind of feature, kind of how we do it is we have a native English speaking back office. So, you know, we don't do operations in the US or in Europe. We actually do operations in the Philippines in terms of our administrative staff. And that's actually about six, six times cheaper than running a similar bilingual back office just out of China, which is super cool because we're able to give.

A better service for a lot better.

Price, the same or lower price. So we're able to give like recommendations on all inspections, things like that, that previously, you know, most inspection companies do not do.

Nice. Awesome, man. Cool. So, I mean, we certainly covered a lot of ground. But one thing I think a lot of people will be thinking, you know, yeah, inspection sounds good if I'm doing huge volumes, maybe it sounds important if I'm selling electronics, but what about for the seller who's just say, placing an order, maybe 500 units for their first product. They're just getting started on Amazon. They want to cut costs. Why should they think about getting an inspection service rather than just skipping it and rolling the dice?

Yeah, that's a really good question. So that's something that I faced that same decision when I was starting out. My first brand, my first order with 1,000 units. And what I really find out when it comes to inspections is that whether you're a small seller or a big seller, it's equally important. Actually, it's more important if you're a smaller seller, because bigger sellers, if one order goes wrong, it's very expensive, it's catastrophic, and in fact, it doesn't make sense. That's why every major seller uses inspections on every single one of their orders, is because it's preventative maintenance. That one bad order is enough to pay for your inspection costs. Or multiple, multiple orders, like 10, 20, sometimes a couple of years worth of inspections. Now, with small sellers, when you've taken out credit card debt or you've taken out money to start your company, maybe it's every dollar you have in your bank account and you're depending and you're going all in on this product, and.

You don't do a simple check to make sure that, hey, your products are what you ordered. And this is actually, you know, the product that you're going to be selling to your customer, that product. And that product has an issue. Like, for example, at movly 60, like it's. I think it's like 68%, like almost 70% of our inspections fail, especially for first orders. Those are the worst violators. And a first order, it either goes great or it goes really bad. And it's, it's like in 60 to 70% of cases, it's just one or the other. And 30%, there's like a meter, I guess. But in a general sense, when you have all your eggs in one basket and you don't have a strong basket, those eggs can fall down at any time. So if you're going to be putting all your money, your life savings into one order and that order turns out to be bad, you've not only lost all your money, you've also lost that opportunity. And you're not going to be able to sell that stock. And if you are able to sell the stock, you're going to have warranty claims, you're going to have negative reviews, you're going to have returns. It's just going to be very expensive. You're not going to get much of your money back, if any. So that's where for small sellers it's extremely important to do an inspection because you have a lot more eggs in one basket and you want to make sure that one basket, which is the products that you're buying, that's what you're selling. You want to make sure those products are of good quality. And if they're not, essentially you don't have a basket to put your eggs in. So that's where inspections become super important. And it's not just really electronics. We've done inspections from everything from like paper cups, which are super simple products, all the way down to electronics. And it really depends on the complexity of the product.

Right.

So if you're doing electronic product, it's not going to be, if you're doing paper cups for example, it's not going to be anywhere as close or as expensive to doing a very comprehensive inspection on electronic product. So the cost is based on a meter. So depending on your product it's going to be a different cost. So it's not necessarily that you're going to need as the roman inspection. So at least doing a one day inspection, just checking your products, making sure it's good, that's something you really should be doing on every single one of your orders. Just as that preventative maintenance. Because whether you have 500 units, it's a two grand order. If you lose two grand, the cost of that $300 investment to making sure your products are good is meaningless. You've already paid off your inspection costs by a factor of almost eight or seven. So it really makes a big difference in the initial time. It might be a little expensive, but it's definitely worth it if you need that risk mitigation.

That makes sense. It could be a good idea to think of it as just an additional cost per unit because let's say you order 300 units, you pay the say $300 for the day of inspection. That's a dollar per unit, which isn't really too much. It doesn't really eat into your margins that much. And yeah, if it can prevent you getting a load of really bad reviews, it can be a great idea. So how do people, let's say someone was thinking about placing an order, they wanted to get it inspected. How do people reach out to Movly? And how do we find you?

Yeah, definitely. So you can find me on LinkedIn to connect with me personally, just search up my name and you can connect with me there or Facebook. But I'm not as active there in terms of connecting with movvly. If you're looking to do an inspection or you're looking to ask questions, things like that, I really recommend reaching out to us if you have any questions regarding inspections, if you're considering it, etc. You can reach out to us at movly m o v l e y dot com and you can also find us on Facebook. We also have a Facebook group called Supply Chain FBA which is super awesome. We're building it up right now. So I really recommend joining and we're going to try to provide more insights and answer your questions in regards to manufacturing in China once that group is a little bit more active. So working on that as well. But yeah, mauvy.com, m o v l e y.com awesome.

Cool. All right, man. Well, it's been really awesome having you on today. We've covered a lot of ground. That's really amazing hearing your story and hearing your expertise. So was there any final points or anything else you wanted to mention before the episode comes to a close?

Not really. I mean, in a general sense, inspections are just one component of the overall selling process. So weigh it, make sure that you consider it. You get your risk mitigation in place and aside from that, keep selling, keep growing and build an awesome business.

Love it. Awesome. All right, Sajay, well, thanks so much for your time today. Like I said, it's been really eye opening and interesting. I hope people go check out movly and hopefully people will find this interview really, really helpful.

Awesome. Thanks so much, Ollie for having me on and I really hope this episode was useful to anybody who watched.

Absolutely. Thanks a lot, man. We'll catch up soon.