With the penetration of internet technologies world over, the growth of trade through internet remains embryonic. Though the internet penetration during past 2 years has grown more than 10 times, the trade through Net is even less than 5% of the total Global Trade.

Absences of reliable authorities who can guarantee quality of goods, inspection and provide remedy against possible legal disputes remain major issues that remain to be addressed.

The single foremost cause of slow growth in internet trade remains the buyer’s faith in the product being offered over the internet. Various concerns dissuade buyers such as:-

-Quality of product being offered on the net;

-Complete absence of physical delivery at the site of seller, fears of faulty goods being dispatched

-security of payments transacted through internet

-subsequent redressal of buyer’s complaints regarding short shipments, wrong deliveries, damaged deliveries etc.

-legal jurisdiction in case of disputes over transactions entered into over internet;

-absence of physical records to support transaction;

The buyers remain skeptical to enter transactions through internet. Widely reported frauds particularly failure of websites to deliver the promised goods, short deliveries, and non-adherence to delivery schedules, payment frauds leave the buyers to opt for traditional business options.

Despite these concerns, the internet trading maintains its typical advantages over traditional trades while eliminating the barriers of distance and location and employing the modern means of communication.

For the various problems that the importer may face, solutions are now emerging.

In majority of the b2b trade through internet, the main issue remains of the delivery and payments. Various agencies are now providing solutions to these with nominal charges. 

Final Shipment Inspection (FSI):-  Final shipment inspections take place after production is completed either at the production facility itself or much less frequently at the forwarder's warehouse. If the FSI is performed at the production facility, then problems can be more easily managed. However, if the FSI is conducted at the forwarder's warehouse, then a seller will generally be much less willing to resolve any quality issues.

In-Process Inspection (IPI)

In-Process inspections offer the greatest level of control to the buyer. Most all problems uncovered during actual production run inspections can be easily resolved prior to the seller incurring the entire production expense. Addressing these problems prior to the seller incurring the entire production cost makes it much more likely the seller will take the necessary steps to resolve any issues.

Complete Factory Audit (CFA)

Complete factory audits determine if representations made by the seller regarding factory size, capabilities, and product quality are accurate. The agency also verifies ownership of record, business and tax licenses, and provides plentiful photo documentation. This service puts you right on the factory floor! And agencies also audits non-manufacturing suppliers to confirm they are legally operating with reasonable assets.

Container Loading Supervision (CLS)

Container loading supervision assures the importer-buyer that the goods ordered are indeed the same goods to be placed on the container and the goods ordered are entirely placed in the container and in a way the buyer has stipulated the goods be loaded.

Various agencies providing such services, provide following specific services:

- All ground transportation, door-to-door

- Hourly/ Daily inspection /travel report

- Detailed AQL report with inspector's written comments

- Digital photos, highlighting defects, if any

- Written corrective action instructions to the Supplier

- Digital or faxed inspection approval certificate to seller

Customized Inspection Checklist

Pre-shipment inspections greatly help assure the product and product quality buyer receives from the supplier and should be consistent with the product and product quality the seller agreed to supply.

1. The customer would provide a detailed list of quality inspection points on which the inspector is to focus, and if possible, some digital reference photos of correctly or previously incorrectly manufactured product against which the shipment can be evaluated. The agency shall add expertise and customize the inspection checklist. The agencies offer three inspection services: (1) “Final Shipment” Inspections (FSI); (2) “In-Process” Inspections (IPI) and (3) Complete Factory Audits (CFA).

2- Inspector Inspects Product, Records Data, Takes Digital Photos. The client may appoint agency which uses AQL (Acceptance Quality Level) as set-forth by the ISO (International Organization of Standards). Agencies also offers a variety of very reasonably priced lab testing services such as tests for toxicity, microorganisms, flammability, safety, packaging strength/permeability, dishwasher compatibility, and many others.

Sometimes, the inspector may be able to inspect every piece in the shipment and in this case a sampling method is not used. The inspector records the raw inspection data and takes plentiful digital photos to document the entire process.

The agencies use AQL (Acceptance Quality Level) tables as promulgated by the ISO (International Organization of Standards). These standards clearly specify sampling quantities, definitions of minor, major and critical defects, as well as maximum allowable number of defectives. To this, client can add own specific inspection criteria to form a much more powerful AQL inspection protocol.

3- Inspection Report generated and Sent to customers. The inspector takes the raw inspection data and digital photos and creates a more easily understood inspection report which is sent by e-mail to the client for review. Then upon instructions from the client, an inspection approval certificate can also be sent to the factory, supplier, or designated exporting agency.

Normally such reports are available with in 24 to 48 hours of inspection. Agencies often offer a start-of-the-art, on-line inspection report retrieval system which allows for secure report downloading at anytime and from anywhere you choose. 

Apart from above, the dispute resolution procedure of the other party may be verified before entering into internet transaction.

Some Basic Cautions & Guidelines while entering b2b trade

Always investigate seller/factory's legal, financial, operating background. Try to have a written agreement to confirm mutual understanding.  Never pay the funds entirely in advance. Try not to seem overly eager to the seller.

Always negotiate for lowest down payment to reduce your risk. Try to use a Letter of Credit on high value transactions. Try not to yield control to the seller. Don't be afraid to say "NO"!

Always start with small volumes. Try to occasionally speak by phone with the seller. Never believe samples to be representative of the final mass production product. 

Always do business overseas in the same principled way you do business at home. Try to concisely present requests and in outline form. Never transfer funds to a personal bank account.

Always do a final pre-shipment inspection. Try to pay for samples & sample shipping expense.  

While above contentious issues remain restricting the growth of e-trade, many   service agencies are offering services at a nominal cost across the globe, especially in India, China, Bangkok region of Asia from where major b2b trade is happening. It would be advisable to consider hiring their services, considering the risk they are able to cover.