Bill Jacoby is a former importer of children’s products – a category with some of the most rigid product compliance regulations. Today, Bill is the founder and CEO of Jacoby Solutions – a brand protection firm for eCommerce sellers. The Jacoby Solutions team is also behind the development of Comply Pro+ – a software designed to simplify the product compliance process.
Bill joined Amy Wees and Andy Arnott a few months ago at the Seller Roundtable for a quick chat focused on Bill’s expertise. Learn more about safety certifications, quality control, and other related topics in the video below:
Is Your Product Safe to Market? Here are a Few Things to Consider:
Launching and selling your product to a specific market is more than a way to make money. Remember that being an entrepreneur and product manufacturer is also a responsibility. You are responsible for putting out a product that does what it says it will do – and will do it without directly posing any risks to anyone’s safety, health, or well-being. This is why product compliance is a major step in the product development process. In fact, big brands and manufacturers dedicate an entire department to product compliance. Their job is to ensure that all the gaps are covered, no potential issues might arise, and that the brand will not be on the receiving end of any lawsuit or a hefty fine.
That said, here are some notes from Bill on product compliance regulations:
- Remember that each product is unique. This means a set of standards for one product may not be applicable to another. Even products that are almost the same may have varying sets of standards.
- It’s the brand owner’s responsibility to do due diligence in determining which standards the product must meet to be considered compliant and safe to market.
- There are various regulating bodies that implement tests or certifications for products applying for certain claims. As a brand owner, again, it is your responsibility to determine which regulating body your product should be under.
- Implementing a compliance program at the beginning of product development will save you thousands of dollars in fees and headaches. Be proactive and avoid being trapped in penalties that could cause the closure of your business.
- Documentation is key. Keep track of changes down to the batch level. Tracking protects you from blown-up damages that could have originated from minor flaws in the process.
Are You a Responsible Brand Owner?
Bill said it best in the video: “You should only sell products that you’re intimate with. If you understand what you’re selling then you’ll know everything about them.”
Many passionate brand owners will liken owning a brand to having a baby. All of a sudden you’ve built something out of nothing – and now you’re responsible for this thing with a life of its own – that grows and evolves according to the environment surrounding them. Your brand is your baby. And you should know everything about your brand. Every. Single. Thing. – down to the smallest element used in its product composition – the quality of the ink used in the labeling – the zippers, metals, chemicals, fabric, and every piece of thread used to bring all the parts together. You should know all of these by heart.
From 100% awareness of your product composition and manufacturing process follows the questions: what benefit does my product deliver? What kind of claims am I allowed to make and how can I claim them? Is my product safe to be used by the general public? Are there certain risks for certain groups of people that the public should know about? Am I risking giving my brand a bad name if I choose not to declare these risks in my packaging, label, or other marketing promotions?
This is what product compliance is all about. It’s about taking care of your brand name and ensuring your product delivers the benefits it’s supposed to deliver. It’s about having a great relationship between your brand and your market by not breaking their trust and not posing risks to their safety.
Don’t get us wrong – we don’t mean to put pressure on you to know all the ins and outs of product compliance – especially those related to your brand. It’s totally forgivable – and normal – if you don’t. You don’t have to be the expert. You do, however, have to be responsible enough to go to the experts and make sure product compliance is taken care of – down to the smallest denominator. Every little thing is a safety risk – until the relevant 3rd party regulating body certifies it isn’t.
True story: Bill recalls a clothing brand that changed zipper suppliers without testing and documenting the material change. Little did they know that the new zippers had traces of lead in them – an element that’s considered toxic in clothing products. The lead fiasco resulted in thousands of dollars worth of material recalls, fines, extra storage charges, and more – arriving at a grand total of $400,000 in damages.
There are loads of scarier stories where that came from – Bill talks about them in the interview. Don’t be part of that statistic. Get serious about product compliance – get in touch with Jacoby Solutions now.
Bill Jacoby: Understand those protocols what they would be. So what we’re seeing now, and going forward is going to be a consolidation. And what before was not important when you have you look online and see commodity type products where there’s eight or 10 of the same type of items, the companies that have compliance and say products will be the products left standing. And if you don’t have it, you’re not gonna be able to protect your brand, you’re not going to be approved or compliance, that will whittle down the competitors. So there’s going to be a thinning out, naturally occurring because of the risk that’s coming from the government. And because people will have never looked at if you look at a clock, and you’re looking at the product in a center, if you look at 12 o’clock, it’s the regulatory toward Amazon, Amazon, or 12 o’clock is Amazon, three o’clock is regulatory. Nine O’Clock could be major retailers, and Europe could be six o’clock, everybody has been looking to 12 o’clock to Amazon only but disregarding what’s necessary for government regulation. So Amazon in the past to send you a link, go to the CPSC website, look up your products, it’s on you, as an importer of record to bear the burden to show to exercise due care, and they don’t really help you with that. So that’s why there’s this big disconnect of people what they talk about compliance, never having go through that because there’s never a formal path for them to go to.
Amy Wees: And I mean, that completely makes sense. Because I’ve seen so many clients that have baby products that have been successfully selling those products, even with some compliance in place like they had to get a child’s product certificate or which is actually just a certificate that as long as your product is tested by an approved lab, you can go to the CPSC website, and you can write up your own CPC, citing all the information. And that’s what you have to submit to Amazon. And so we have been doing that with our clients for a long time. But recently, Amazon now has come back to all of these people with baby products, and it has said no more. Now you have these additional things. It’s not just you need CPC. Now you need some people need FDA, some people need all these different requirements. So it’s a lot of it’s very confusing. So is it just baby products that people need to worry about who should be concerned with compliance in terms of salaries on Amazon and E commerce?
Bill: Well, you have to look at going back to the beginning of looking at your products and evaluating risk and risk of injury of misuse. It’s a consumer product. So the government’s always want to protect the consumer. And in Europe, what’s happened, they used to look at the consumer being responsible in the Amazon world for their own compliance. But as we know, people aren’t capable of understanding what what is required for children’s products. 12. And under, there’s a law CPSA, which people only think equate that to testing and or a certificate. But there’s other requirements. There’s these 1107 requirements or a periodic test plan, a material change policy, for example, undue influence training, you have to have incident reporting, we offer a whole module that walks you through that critical path of every item that you need. So you don’t run a foul just by having a CPC, and a test report. And outside of baby products, evaluating the risks by age grading lead for violations, certain products are looked at differently at the ports. So you have to look at your product as far as the risk goes, and you should get you can go to any test come test lab and say, I want to sell my products here. What are the regulations I need to test for, you know, prop 65 is good example. For California on several clients I’ve talked to are under this, it’s going out around Amazon that because you don’t have 1010 or less employees, you’re exempt from Prop 65. When when the fact is that Amazon is named as a co defendant if you’re fined for Prop 65, it’s environmental law. So these these cases, it’s kind of legalized extortion. California shares in that fine. So if your product goes to a landfill, it doesn’t matter how many if it leaves a certain chemicals, you’re responsible for that. And if you’re not in a safe harbor, if your products aren’t in a predetermined case, class action, you have to either pay a fine which could be 30 to $40,000. So a test may be $60. When you’re doing a test for that, it behooves any seller to get that test if you’re selling in California that makes sure you’re compliant with that item.
Amy: I think everyone selling on Amazon does have to meet the prop 65 requirements because there’s no guarantee your products not going to be sold in California. So it is kind of a a I think a blanket requirement. So yeah, I think it’s so important to understand these things and to be able to be proactive about it. So speaking of being proactive, what is the easiest way to check if your product, what requirements your product has? So we’re just focusing on folks that are selling on Amazon and in E commerce, maybe in their own website, they’re not ready for Walmart and big retail yet, you know, they’re just getting started. What’s the easiest way? Like, okay, I’m getting I’m getting ready to sell dental floss, right? I’m gonna sell dental floss, what is the easiest way to check? You mentioned a lab? How do I find this lab? Like, what’s the steps I should go through? When I’m considering selling a product? I’ve chosen the product, it looks good. I’m about to go source it, what should I do?
Bill: So you can look at any accredited gonna CPSC website, there’s a list of accredited laboratories. And depending on your product, you can look, you can look online and see for dental floss, you can find the standard like in a typical product as an ASTM standard, for example, you have a physical mechanical part of it. And then you have a chemical chemical component and you have the regulatory stuff. You go to the website and find out what your standard would be. But then you go list the CPSC and find a lab that that’s accredited for that standard. And there’s a list on the CPSC website, call them up and say, Hey, I have these products I want to sell in the US, Canada and maybe Europe. And they will give you a quote for telling you what you should test for us. Now, keep in mind that they sell tests. So it may be more than you may need. But at least you’ll get an understanding of baseline of what your product requires. Because things are happening very quickly used to be just had to worry about the federal standards. But for children’s products and other items, you have states that there are limits and counties like in New York, that they’re setting limits that are more stricter than the federal level. So I just saw a thing from Wayfair. For clients that put out asking sellers by March 27, if they don’t click these five items, that they can prove that their products don’t have these chemicals in it, they’re going to be delisted. So the bottom line is you need to know your products, you can’t just have a guy who has a guy and gets products. And thanks, this is easy, I don’t need it. anybody’s going to be in business a long time it’s been successful, takes a passion of what they do and understands the products are selling. And so you just can’t put products up as commodities. And think if I get caught, I just want to walk away from it. I mean, good sellers are good, solid, good business people. And if you’re going to build a business, you want to build a foundation for your business to last to protect your wealth, protect your brand. And quality is the inverse of compliance. So if you’re selling good quality products, you’re gonna have less compliance issues. And and that’s always been true, because in traditional retailers chargebacks, which used to be babies or us or target, don’t take products back from anybody because they’ll give you a refund to spend in a store. But they just charge that retailer back and it’s thrown in the trash and you get a bill off of the money they owe you. So you need to have good zippers, if you’re doing retails that don’t break because the quality issues are going to be compliance related issues. One of the containers that we’re fighting now that was released, there was a $90 material change in zippers on a container of bags that had the Chinese zipper versus a US zipper. There’s no way of telling the company didn’t have a material change policies for the company, the factory to let them know that they made the change. The CPSC scanned it for LED, found have lead levels in it three times the limit, and they impounded the container. They wouldn’t allow me to do a reworked product because it wasn’t in the products themselves. Were not not compliant. It was just a case that was holding them. And we have a court date ahead of time, but we’re going to get the container back. There’s $105,000 fine on top of the was a $48,000 container 12,000 hours of storage charges. It’s been two months, and the earrings not to April 5. So if we get that back, there was a $400,000 swing in money’s there for $90 A zippers, oh my goodness, this, this could have been taken care of by having an inspection of pre ind COVID Since people can’t go to the factories which they used to go to having an inspection company have a protocol a test before you leave. So you don’t have to worry about that because you spend $7. And and I can tell you, the government just asked for a $55 million increase in Port surveillance this year. And the CPSC budget is only $135 million. So you’re going to see container stopped. That’s why we’re gearing up with people I just hired an extra CPSC person, they’re going to be stopping things for CPCs. For lead violations, projectiles, balloons, you name it, because people not taking care of that. That’s the way they’re going to, they’re going to throw people at it on on the ports.
Amy: Right. And if we have a compliance program, and we are looking at these things ahead of time, and we built it into our inspections, and we know what we’re supposed to be testing for, we can spend a few $100
insurance through and not have peace of mind, not worry. I mean,
yeah. And I really says being reactive and have like you just talked about, you know, so much money. So speaking of compliance programs, what should I do, we’ve kind of laid it out. But if we can lay out like brand new, for I’m brand new to the CPG industry, I’m just starting my brand I’m selling on Amazon and my own website. What does it look like for me to put a compliance program in place? What does that
compliance firm give me in virtual companies is different with companies that interact with people. But first and foremost, you have to name a person in charge of compliance, you know, in the government, if you look at the Justice Department, and I have to say, if you have a compliance program in place your look more favorably if you do get stopped at the border. If your containers are stopped, we were in a process of putting a compliance program in place and I was able to free up three containers based on working with me because my reputation, they know the work that I’m not going to sign off on them. Keep in mind that if you’re stopped by the CPSC, for one bad import, you’re on a list and they don’t give you the algorithm but you made you’re going to be stopped for the next five to six times. So if you don’t have a compliance program in place, if you’ve run out of stoppage, you’re on that list that factories subsidiaries on that list, the government knows all the aliases your factory that knows how they import products. So if you tried door number one, they trying to bring in a door number two, the government knows those subsidiary companies, and it’s just like CIA spy stuff. But they know all those tentacles of those factories that may have Chinese companies have factories in Vietnam. So that will stop you and you have to have at least five clean imports before you get off. So by building that compliance program, you’re putting processes in place that ensure that you can start by building it into your vendor guides or into your POS, to have the CPSC calls it exercising due care. So you have a responsibility as an importer of record, to put products into this market, to consumers. And this will also help you with liability insurance. Because having an appliance program is like having driver’s training on your insurance, it will show the insurance company that you know what you’re doing. And it will lessen your risk to them because you have the process in place and understand what to do versus someone who’s just not even following the laws. But you go forward and name that compliance person. Documentation is key, if you’re doing children’s products, you have a five year requirement for documents, everything related to that, that test reports design documents, if you’re in Canada, six years, if you’re in New York, there’s a 10 year requirement. So you have to understand the documentation requirements, because your IT systems how you store your files, not just now but you have that failover if you lay at legacy 123 or switch to another program, you have to account for that or that documentation is going to be because you may be asked to produce that information. For liability things may come up and for four to five years. So you have to build that compliance program into the how you document you how do you build technical files. So how you build your files is paramount. If you want to sell in Europe, a technical file is required versus the US and that is more inclusive than what you need for proof of compliance United States. So you have to learn how to build your documentation, your your interaction with the factories, your corrective action plans that if you change the design the product and make another iteration, it’s important that you keep track of those changes. So you can understand that and most importantly, is the material change, having detailed enough tracking down to the batch level. So if you do have one bad product and we just pass Chinese New Year, but in selling products in China, traditionally 60% of employees leave their jobs and go find another job somewhere else. So the quality is very bad for the first three months after Chinese New Year. That’s why it’s a rush to get stuff out before it ends. So your incidents of bad products is going to happen like from after that time period. So it’s important that you can trace your your batches down to the smallest anomaly later. So if you have tracking labels for batch, so if you had one bad batch, you wouldn’t have to recall hundreds or 1000s of products. You could say this is one bad container and prove to the government that I have enough detailed documentation to say this risk is only limited to this container.
Bill, that’s, that’s some great insight. Something else I would love to know is, are there any, what are regulators looking for when they flag a shipment? Is it random? Is there are there things that you can do to kind of preempt, you know, getting flagged, I’m super interested to to look behind the curtain in terms of what they’re looking for.
Just like you hear sometimes the news about sources and methods for the government, they don’t disclose that. But I can say, traditionally, and historically, it’s been looking at the ports, we have scanned, you know, we have the X ray scanners and everything else for radiation. I was just on a call. Yesterday, client had radiation in pillows. And it was because of stuffing was recycled. And it showed up as radiation which which is crazy, crazy and of itself. But now the CPSC is looking online at Amazon, for example, and looking at classes of products that they deem to be risky. And they’ll look at the sellers. And they check the manifests because customs border patrols, all the government departments work together. So they have the information available to them. So they can have you on the lookout for that. Or if you had a prior. And you say you can’t switch gears can’t end the company and go start another company who’s had a violation, they follow that trail. And you may not think they know that but they can look at it that way they can look at it for for products on a manifest paints like yellows and reds and blacks that inks may have led them because of packaging, for example. They could they have their own ways of looking at it, that’s different from what you and I were looking at that product for interesting, obviously around risk.
So in terms of that, you know, there’s I feel like not only with Amazon, but with the you know, government regulations, things like that stuff is changing so quickly. You know, if you’re a small mom and pop, you know, somebody who’s like moonlighting as an Amazon seller, it’s getting harder by the day, you know, how are those types of sellers? You know, how can they keep up with all these changes in regulations and what’s needed what’s not needed?
Well, that’s the thing is if you should sell products that you’re intimate with, and understand what you’re selling, and take a passion to, because the most successful people and in 10 years I’ve been doing this, the people the most successful love the products are selling know everything about it. And they know what’s inside of them, they you know, the client the other day as for, you can’t understand chemical compliance unless you know, the MSDS. It’s like the recipes for food, you have to know which chemicals are in your product. So you have to understand the basic building blocks of what the Ask your factories and suppliers, because if you don’t set a bar threshold for what you’re expecting, you’re going to get the least if you set the bar very high, if the factory is no, you’re looking for this, this is not the first year that that they’ve sold into US market. So they’re going to they’re going to, they’re going to kind of blend their operations to what you’re asking for. So it’s better to know what to ask for. But it’s also having your selling strategy of where you’re going to sell. You know, if you’re planning on selling a product, and you have a unique product, it’s not just a commodity, that could end up in retail, you want to develop a protocol for your products. So you know what, where to sell. So when you test efficiently, you don’t have to test. So you have 2025 products, you can test on a component level, you can test all the elements of paints, and then test it standard once for put together and take that testing cost across 20 items. Yeah, I’m working with the company for the last four months as 23 other products on Amazon. And it’s what we’re working on a master protocol for all these products that we can get down to 16 protocols, that they can ensure they meet prop 65 and Europe they sell in Europe that they can sell worldwide. And understanding your products will enable you to map out where your sales channels would be because if you were to go to retail from Amazon, you’re going to be in a rude awakening if you’ve never done any of this. But if you plan for it from the beginning, it’s an easy transition because you just have to tweak a few things. You may have some extra risk. You know, I mentioned some of the major retailers have quality items like why KK zippers because they know the zipper is going to break and they don’t want to return them back so they have quality testing as well as compliance testing.
So that that’s super interesting. The other thing I’m really curious about is a are, you know, air shipments Express shipments? Are they treated the same way? Because it seems like the government puts a lot more onus on those carriers to kind of regulate a little bit more. It’s almost like they’re contracting with them. Do you see the same type of issues with air shipments? And if not wise, why is that?
Traditionally, the big carriers like FedEx did not want to provide CPCs for each item. But where we’re headed, is that that is going to be requirement going forward, because that is where the bulk of the products are coming in one by one, they’re not being able to be scanned, because the 1000s, hundreds of 1000s of packages coming in every day. But in meetings I’ve been with government officials, they’re looking at that, because why should someone have a favorable way of bypassing the rules and regulations laws, when everybody else is doing the right thing. So you know, the level the playing field, if you sell in Europe, there’s a new European surveillance law that went into effect, it goes in effect, actually July 16. But it basically, it took the onus from the Amazon is now responsible. But if your product is not compliant at one European country, it will not be sold in any. And so what that means is, if you have docx, or C markings, you have to understand your products, your technical files at the bill. And you have to have an authorized representative person to represent you in Europe, because they did this law to level the playing field to protect jobs in Europe, because it was devastating a lot of mom and pop sellers, and people from warehouses or people over here, were just taking jobs. So now you have to have people in Europe, to oversee the compliance related items. But you really have to understand and plan for that. So if you’re going to map out where you’re going, going to go, if you know your product route, I mean having that vision, you’re going to be better off by by starting from square one thinking big instead of reacting to the latest person who wants to talk to you.
Right, being proactive? Are certain countries scrutinized more than others? In other words, if you know, our our shipments from China treated differently than from the UK or from Brazil or from Vietnam, you know, in the government’s eyes,
not not it’s it’s published or known, I mean, certain classes of products, you have to understand that the shipping documents and manifests are filed days in advance of Shippings. So they have bots, and they have scanners looking at looking at items, things in my experience that can trip that up. Or if it’s a factory that you you don’t know anything about, but they’ve been on that list, you have to ask your suppliers, have you ever had any stoppages for products in the last year or two, because of you unknowingly have products, why they’re on a list selling and stopping being stopped, your products are more likely to be stopped. So that’s a big indicator and tell but they don’t discriminate from one country to another, it’s more or less types of products on the manifest in advance of the shipping.
So it’s mostly AI driven machine learning, which means that those algorithms are just going to get better and better and better, which means that compliance is going to be a necessity moving forward. Because those machine learning algorithms, you know, the more data they can crunch on, the more data you unleash on them, the better they’re gonna get at catching these things.
We’re already seeing this, Amazon actually has more AI, the government is always lagging technology. So the government, unfortunately, is still it’s giving time to people that are getting away with not having blindness right now. But you’re starting to see, like I have a template for Amazon was provided. That’s for CPCs, that’s written for bots to read, which wouldn’t have been the norm A couple years ago. But now it’s creating data. So the bots and artificial AI can read it. So I would imagine that’s why you’re seeing the crackdown, the Amazon wants to continue to be favorable, because they have to walk this fine line of everybody selling on them, but that they can’t upset all these governments. So the harmonization, they’re working more and more towards aligning with, with what what is needed from a regulatory standpoint.
It’s interesting, I’m a data, you know, software guy, so that’s what really interests me a lot is, you know, I’m gonna go off kind of on a tangent here, but what people don’t realize is, you know, the next, you know, as little as five years, you know, could take 10 years, but so, many of these things are going to be picked up by this machine learning, you know, the, the, the way that they can, you know, if anybody’s looked at some of the machine learning algorithms and played with any of them, I mean, the, the ability for those those machine learning algorithms to, to catch things to learn, are there at the end In the end, they’re going to be better than humans. So it’s going to be an amazing sight and also a terrifying sight when a lot of these things come into play. And like you said, it’s better to start working on that now rather than later. It’s kind of like, you know, importing from China. You know, there’s a lot of talk now about, you know, tensions rising with China and Taiwan and things like that, and people sourcing products only in China. You know, if we end up, you know, having some kind of conflict there, you want to talk about, you know, Nas interruption of supply chain, it’ll be catastrophic, especially for those of you know, those are those sellers who are completely 100% sourcing from China. So that, you know, that’s a whole nother we’ve done a lot, a lot of episodes on that, getting back to what you’re doing in terms of compliance. You know, what are some common mistakes that people make in terms of just the shipments itself? So like made in China on the box, you know, what other things are some common mistakes that sellers are making when they’re when they’re sending these shipments? You know, when the factories are sending the shipments over to the US?
Well, if you’re building a brand and in this for the long run me having a vendor guide, or standardizing the way from product to product, having a company format of the metric, and Imperial measurements, barcodes because of stacking and sometimes use third party providers with barcodes and labeling on each side of the box. The beginner doesn’t really understand you get fined if the packages and boxes don’t arrive in the warehouse the correct way or they can’t find it. They can get lost for weeks and you have to build your infrastructure from understanding how best to package your products and you know, look at your product for package testing and Amazon. If it’s shipping his own package, are you doing drop testing with FedEx and UPS? Amazon has helped help spurn is one day delivery phenomena which when I was importing baby products, we had to do cardboard testings structurally. So a stroller could via it could survive six hops from California to New York, because there would be six FedEx trucks dropping off and Hailey it. And now with distribution centers, you can send it two or three and have a closer there’s less wear and tear on that product. You don’t need an outer box, for example. So it goes back to understanding of products, how are you going to ship it, what damages what returns looking, you know, you may go cheap the first time around and have a ton of returns because the box cardboard is not strong enough and it’s been pierced and something’s bent or something’s broken. So you have to really look at things from literally A to Z on designing your products, your packaging, your labeling requirements to make sure you meet everything and looking forward if you’re going to sell in North America for packages if you’re gonna sell in Canada, you have to have the French with us and I always tell companies is put Spanish on there also, because a huge mark market is Spanish speaking so why not make it ready for the whole whole continent that have all three languages?
Yeah, that’s, that’s super interesting in the in the fact that, like I said, if you’re not, if you’re not planning ahead for this stuff, then you’re going to be caught flat footed, right. And the part of the problem is you get these major companies, you know, like Nike, for example, we’ll just throw that out there that have these huge compliance teams, right but for the for the mom and pop business. You know, a lot of you we have so many other things to worry about, you know, it’s hard to even keep up with just the basics. So you know, trying to try to work this into your day your week to try to get this some some of this compliance in play I think is pretty essential. On that note, you know, what if somebody you know, somebody is new on Amazon, they just ordered you know, an air shipment of 1000 units of X product, it comes in, they get it they send half to Amazon, they keep half in their garage, their warehouse, whatever. And then after they they send that stuff in Amazon, they go and do a test a lab test and they find out that you know, you said lead there’s lead, you know, in the packaging or or in the product. You know, is there anything that they as a seller, can you self report? Can you would you recall those products immediately from Amazon? I mean, how would you handle that situation?
Well, the great thing we deal with Amazon is in traditional recalls with major retailers used to have the size in the stores it was very normal rate of recall is like if you get to 10% You were lucky with Amazon I did a recall with a company that we only had we got stopped at 400 and we know all 400 buyers so the great thing about Amazon is you know where every everyone when the bad thing is with Amazon is you don’t have that data you have to report to them decision to get the data or go afoul of the regulatory rules. So if the product if you have also have a 48 hour window if if you’re notified of the injury every accident or death using your product, so that doesn’t always result in a recall. But you have that duty report, and you have to have systems in place to understand what that it’s going to 15 B report, what you would need to do to do that. So in that case, I mean, you have product and both Amazon will always just stop sale the product, they’re still charging rent, it’s not their problem, they have so many 1000s of products. This is why it’s like getting insurance for driving and drivers training is the compliance program, you have to understand, if you’re going to get invest and get down go down this road, you build it from the start. So you’re there’s a lot of talk on Amazon now of companies getting their companies ready to sell to other companies. And we’ve been providing due diligence to companies on both sides, because buyers want to know, if they’re they don’t have any risk out there. You know, traditionally a government, you come in when the CPSC comes to your place, they can do a search on your emails, or databases for injuries, access for emails. And if they find that you didn’t, you’re notified of an issue, but never really paid attention to this, that you’re going to get a huge fine, and you could have a civil civil judgment against you. So it’s important that when you have this compliance program in place, you’re going to prevent all those issues down the line.
Yeah, I think it’s so important to I think we’ve highlighted this today and that it doesn’t have to be super expensive. It doesn’t have to be hard. It’s kind of like baking in security into software. Right? If you do it from the start, it’s going to be a lot easier than the headache of doing it later. I went to the CPSC website, the Consumer Product Safety Commission website, and there is so many resources. As you mentioned, Bill, there are resources for small business, there’s a regulatory robot where you can put in your product and find out the information. There’s labeling requirements, I’m always getting questions on labels. So I posted that link here in the chat for everyone here. But also, we’ll post that on on the seller roundtable website. But the thing is, get out there you guys go to that CPSC. website. And what about products that are sourced in the US or have a product that’s made in the US, people shouldn’t just assume that just because they’re getting it in the US that it’s safe, right?
Exactly. You can buy from distributors in the US or importers records, but you still have to prove compliance. So manufactured here, there, you still have, if it’s a product covered by a standard, whether it’s voluntary, or you know, your products go to the to the CPSC. And read regulated products like children’s products, you have a window 18 months ahead, you can see what what regulations are going to be changing. So people that are looking at, we used to be on 18 standards committees for clients and informing them of where this is heading. If they’re in this, if they’re selling strollers or baby carriers, certain things are going to be regulated out in 18 months or 12 months. So you don’t want to be ordering a whole container of items. And you only have two months to sell them before they’re not allowed to be sold. So this goes back to understanding the products that you’re you’re going to get into don’t look at it as this is an easy sell. If it’s easy, that means everybody’s doing it. And that means that you’re one of 10 people, when you look on Amazon, you see all those products with different prices together right next to each other, that those are the problem type items and subject to a lot of these issues. So you’re getting back to data data stuff. One thing I’m working on working on for five years, because I had a precursor and a software business of CPSI. Ready. But I’m working on a cloud based compliance program from mom and pops through API connectivity, from enterprise ERP systems to bring in data and I’m hoping to have that later this year, which will encompass and built be able to put your data in once and have it bring the API’s from Amazon products right in. So your products data is dynamically put in, you can plug as a dashboard, your incident notifications into that dashboard, your testing renewal dates, your documentation for training, you know, your compliance, program, escalation, all that information. So it’s quite exciting and we’re working on for five years. And because Amazon now is built on Cloud is our third iteration of it because for seller POC, I was building it to the bigger good of the be all end all for enterprise level, but COVID changed everything. So I’m narrowing the scope to make it for Amazon sellers to automate and bring that data available and build it around it. So you put it in once and then you all your documentation will be around that data.
Got it. And as far as I’m problems. So we’ve talked about some scary stories, but we love to tell scary stories here in the cellar roundtable. So give us your your scariest story of an Amazon seller that did not have a compliance program in place. And what what happened and and what costs were associated with that.
I have two story. One, one was not an Amazon seller, but not having a compliance program in place. And if you’re, you’ve had it a warning before, the CPSC literally has no sympathy for you. I mean, they’ll just take your container, they’ll find you. And you have no recourse if you if you want to show, you know that you’re on the right cat that you’ve learned and understood. The government like anyone else, no one likes to see people try to cut corners to get around the law, because you know, you’re selling consumer buys at the end of the day, and not checking you go, we go back to the quality inspections. We had a seller that ordered a whole container of sweaters. And they had four arms. And literally, how do we work it with with two arms on the side? And because there’s no quality inspection setup, you know, there’s ordering sight unseen. And literally, what do you do with that you really can’t rework it. I mean, it’s trash at that point. So So I guess the moral of story is, if you’re better prepared, it’s like being when the policeman stops, you produce your license agenda application and work with them. If you try to get out of it, I mean, they’ve seen us so much the the way the government is gone with this extra budget of 55 million, it’s gonna get a lot worse, you can see the storm clouds coming there, all the ports are going to have enhanced security, with technology, which is in the budget, and at 55, I have a letter from the commissioner stating where they want this money to be applied, and it’s going to be in pre checking, much like to do a customs when I knew who’s on each each plane, I gotta know which products are using that technology to have be better aware of what’s coming into the country.
Got it. So love to scary stories, I think that we can see that the costs that are associated with compliance are far less on the proactive side than the reactive side, you know, we’re looking at on the proactive side, we’re looking at, you know, maybe a couple of $100, by the time we get into, depending on what the product is, I’m sure, you know, some require a lot more testing and stuff than others. But we just have a general product that just has, you know, a few tests that we should test for we build that into our inspection, we’re looking at a few $100 to get that going and ensure smooth sailing through the ports, no problems, you know. And then some of the more if we have a more complicated product, then it could cost us a little bit more, but then the barriers to entry for other competitors are a little higher. So sometimes it can be worth it in that way. But what about I’m losing my thing, oh, products, specific products bill that you would recommend that people avoid? Like, are there any products you mentioned, some of them that are you know, really competitive, right, with prices all over the place and stuff like that. But in terms of I’m just getting into this, I’m discovering some niches are there things that you’re like, I never go into that category. Because of that,
right now, lithium batteries, button batteries with anything, you’ll see a lot of toys used to have batteries in them that don’t have them anymore, because there’s a huge crackdown because of the quality, the explosion starting fires on shipments and the light. So that you know anytime we deal with children’s minds why CPSA is more stringent is because children are held dear and dear to our hearts. And politicians don’t want to damage children are injured children. So that’s why you really have to set the bar really high for children’s products. But I’m amazed by people that want to do the least to get by. And at the end of the day if anybody has been an Amazon sellers come from a normal company. If you’re doing I have people tell me because Amazon I do seven figures eight, eight figures on Amazon because it’s a boast thing type thing. If you want to have a compliance company in any Fortune 5000 Come 2000 company, a compliance manager would cost you 40 To 80 to $100,000 a year depending on the complexity of products where you’re selling if you’re selling worldwide, for people to complain about five people do 1,000,002 million 10 million a year saying I don’t want to spend five to $10,000 and this is a one time by building the program and then spending money to maintain it, you’d have to be an idiot not to look at that, that’s your brand protection. I mean, it doesn’t make any sense, when you look at it in the real world of paying someone to stay around all the time, you’re putting a system in place that maps to how you do business. And in his post COVID world, everything’s been disrupted. So people that usually work in offices that had servers and documentation, you really have to build your product. Now, how you’re working today, not how you did a year ago. So taking a look at how you’re going to work for the future is most important for document retention. Because simple little things like that, for how you’re backing up your data, you know, that’s going to be important going for it.
I’m interested in sellers that have a really large catalogue, or one with a lot of diverse products, right, there’s a lot of Amazon, Amazon sellers that will go out and just find products that are trending or, you know, they’ll just, you know, throw throughout products and see what sticks. You know, I assume that you know, the compliance process is per product or maybe even per product type. How would that work? If they if they have a large very large catalog?
Well, you should using the labs lab quote is free from a lab. I mean, so looking research a product and say I want to put this type of product, what is the protocol for testing for this, look at the exposure, what is my risk? Is there a liability insurance, I could batteries exploding batteries, your liability insurance is going to be higher in traditional retail. And as important babies, babies Ross in Toys R Us, they set the bar very high, you needed a $10 million coverage with a $10 million writer umbrella policy. You know, some of the policies are so underfunded, that people have this not matter where they’re really that one container. And if it doesn’t work, then I’ll just get rid of it on eBay, and forget about it. And that that is changing as government’s trying to prevent you from doing that. Because they don’t want non compliant products in the marketplace anywhere. So if you get off of Amazon and start to crack down, eBay is right behind them, they’re going to be doing the same things. So having the ability to vet your products, and if you’re looking at 100 people, if it’s easy, and everybody’s doing it, how long can can that product lasts, if everybody’s doing it for the short term. I mean, if you’re going to build a product portfolio, just because you can doesn’t mean you should, you know, you have the money to do this, do something that either solves a problem, or it’s from a marketing standpoint, you can market your brand of products towards, you know, pet solutions, or household safety or whatever, go along the same theme, you’re gonna have a better viability with if you’re catering to mothers, building your brand awareness and not being seen as a commodity, but being as a brand.
Yeah, I was I was just about to say that’s kind of, you know, Amy and I have been talking about that a lot. The you know, the last year or more is that, you know, the days of, you know, throwing something up on Amazon or eBay, those days are over because you know, if you can do it, just like you said, somebody else will come in behind you, they can do the exact same thing, where the real value is now where when people are going to sell their businesses is, you know, when people have five, maybe 10 products, but they’re super specialized, they’re laser focused on their industry, they’re, you know, improving that that product or that line of products every single day. And you know, when you get to it, it’s like, I keep telling people about the one thing it’s like the book that I keep rereading over and over again, because I’m one of those people who’s got a scatterbrain and has new ideas all the time. So I had to bring myself back to focus. You know, that that’s where I think that’s the future is going especially on places like Amazon,
where you can build your list and opting in. If you have a website, which is not just Amazon, you then you can market and sign up for newsletters, you’re building your instead of Amazon holding all your data, you’re building a list of products. baby products is a good example where once you get mothers, you fall with child, you sell a product when when their newborn and then you have a two year old when they get to three, you have an reconcilable special offers, if you’re selling on your own Shopify site, you can mark reach out and market directly to those people recurring people because they know your brand, they’re happy with the products. That is a big strategy that’s happening right now because Amazon retains that data and power and if their data so you want to add to your own site also to be able to sell or build your brand site. So you maintain that autonomy, you can build your brand. So you’re building your marketing list. If you’re very good at that part of your business, then you’re you’re collecting that data and you’re following that, say a mother’s buying a product for over five years. If you develop your product line. You can offer discounts and market to those same people and I’ve seen clients over and over when it comes was a Cyber Monday and Christmas in July, two sales, even their company sites, they offer those and they’re selling containers of products because they’re marketing for those days for returning customers.
All right, Bill, we come down to the end. And this is where we, I would love to ask this question at the end because it, it gives us, you know, a little divergence from from the the subject matter, but what are you consuming right now, in terms of you know, as an entrepreneur, somebody owns your own business, you know, you’re always learning new tricks, you’re always, you know, trying to, you know, concentrate on a subject, or it could even be fiction, but what are you into right now, in terms of, you know, YouTube, podcasts, books, something like that, that people can get into?
Well, unfortunately, I’ve been so busy building, celebrate, see, I love technology. And I have behind the screen five websites, I’m building API connections between my CRM between my HubSpot lead generator, and being able to build technology bridges to to my FreshBooks accounting program. So I love technology. And since I’m building software, the future, I spend most of my time, you know, you always stay relevant and know where things are going. But by staying on top of technology, so for the last several months, it’s been you know, a lot of long days and present COVID In the month of February 70. back a month, but but I’m back and let me back to work and everything’s great. And looking forward to spring.
Awesome. Bill, let anybody listening or watching on the live stream, let people know how they can get a hold of you.
You can find us at Jacoby solutions.com. And as all the contact information there, but the you know, working with Amy moving forward with helping her in her building brands. She’s identified the need and if you want to have a business that last has lasting power and is built for the future, you know, have to have a compliance component.
Yeah, awesome. All right, Bill, thank you so much, everybody listening live. If on the on the various streaming services. If you haven’t yet, please join us live in the Zoom call. It’s really fun. If you guys stick around after we stopped recording and broadcasting, you can ask Bill questions you can ask me or I questions. You get that added bonus of being able to interact with us. If not, you can catch us on the podcast. So roundtable.com to subscribe and if you guys are review and rate us we’d really really appreciate that, as usual 1pm Pacific Time sell a roundtable.com and we will see you guys next time. Thank you. Thanks, Bill. Thank you
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