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What Do You Mean by "Due Diligence"?

by Importexport
21 replies
Those two words are to be found in countless posts on WF, but what do people mean by that expression?

To a lot of people it seems sufficient due diligence to seek opinions and recommendations on forums, or simply checking feedback.

To others it obviously means to use a B2B site's rating system to assess reliability and trustworthiness.

The value of due diligence is stated in Wikipedia as: "The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making....."

The definitions in business dictionaries don't provide much help to the little guy looking to buy goods or services, particularly on the internet.

So, what do Warriors mean when they talk about Due Diligence? (DD) The need to "contribute significantly to informed decision making" should surely be the major consideration.
#alibaba #b2b #due diligence #sourcing
  • Profile picture of the author Sid Hale
    Hi,

    So, what do Warriors mean when they talk about Due Diligence? (DD) The need to "contribute significantly to informed decision making" should surely be the major consideration.
    ...and that's what Warriors (or anyone else for that matter) should mean when they use that phrase.

    The level of diligence you employ might vary widely depending on :
    1. your aversion to risk
    2. tne level of any related financial outlay that might be required
    3. the potential gains that might be experienced from your decision
    4. whether there are potential physical (i.e. health) consequences

    In short, do sufficient research to satisfy yourself that you are making a sound decision - weighing all of the pros and cons
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    • Profile picture of the author Importexport
      Originally Posted by Sid Hale View Post

      Hi,
      ...and that's what Warriors (or anyone else for that matter) should mean when they use that phrase.

      The level of diligence you employ might vary widely depending on :
      1. your aversion to risk
      2. tne level of any related financial outlay that might be required
      3. the potential gains that might be experienced from your decision
      4. whether there are potential physical (i.e. health) consequences

      In short, do sufficient research to satisfy yourself that you are making a sound decision - weighing all of the pros and cons
      Thanks @Sid Hale, but it would be great if warriors would post what specific due diligence they think is necessary for example when sourcing products on B2B sites for resale.

      They are buying from someone who might be on the other side of the world. It is just a name they are dealing with, and it is not a name like Macy's or WalMart. It's as good as anonymous.

      I have an interest in this because I am constantly dealing with newbies who think they have done DD, but finish up being scammed or otherwise severely disappointed.
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author Sid Hale
        Originally Posted by Importexport View Post

        Thanks @Sid Hale, but it would be great if warriors would post what specific due diligence they think is necessary for example when sourcing products on B2B sites for resale.

        <snip>

        I have an interest in this because I am constantly dealing with newbies who think they have done DD, but finish up being scammed or otherwise severely disappointed.
        Shouldn't you already have that figured out?

        From the page on your sig...

        Since 1987 I've Been Successfully Importing Products From China & The Rest of The World. Put My Decades of Experience To Work For You As I Make The Entire Process As Simple AS Possible.
        As I, and most of the other responders here, have said... the level of diligence with which you research a supplier, a product, etc. is based on the level of risk involved, and your own ability to absorb the loss in the worst case scenario.

        I could be wrong, but I think you should already have those answers, and should be supplying those answers to the newbies you referred to above (preferably in the product/service you provide from your sig)
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  • Profile picture of the author J Thornhill
    In short, it means do not take another person's word for anything you seek online. You should always do the research yourself and you will find out it is for you. Just because something works for them does not mean it will work the same for you and results will vary.
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  • Profile picture of the author Raydal
    It means don't just accept what me or anyone else is saying, investigate
    for yourself. How to perform that investigation may be what you are
    asking.

    -Ray Edwards
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    • Profile picture of the author Importexport
      Originally Posted by Raydal View Post

      It means don't just accept what me or anyone else is saying, investigate
      for yourself. How to perform that investigation may be what you are
      asking.

      -Ray Edwards
      Thanks. Yes that is why I wrote in my second post; "..... but it would be great if warriors would post what specific due diligence they think is necessary for example when sourcing products on B2B sites for resale."
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author webmarketer
        Due diligence for me is to do your homework yourself so you don't get screwed.
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      • Profile picture of the author The Cypher
        Originally Posted by Importexport View Post

        Thanks. Yes that is why I wrote in my second post; "..... but it would be great if warriors would post what specific due diligence they think is necessary for example when sourcing products on B2B sites for resale."
        DD is all about averting risk.

        My risk threshold may be bigger or smaller than yours so at the end of the day, its your responsibility to perform your own reasonable level of DD.

        It should not be someone else's responsibility to inform you what you should do to mitigate your risk.
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      • Profile picture of the author Steve B
        Originally Posted by Importexport View Post

        but it would be great if warriors would post what specific due diligence they think is necessary for example when sourcing products on B2B sites for resale."

        Importexport,

        You're missing the point. Due diligence is something that is personal to you based on your acceptable risk level. What research and investigation I would do in "sourcing products on B2B sites for resale" is almost certainly different than what you would do, or what anyone else would do.

        There is not a standard formula for what people call "due diligence." Checking a few web sites might satisfy some people. Others may go further and contact the BBB for info on product sourcing companies. Other still will want to contact clients of sourcing companies to get their experience in working with the company in question.

        This is not one-size-fits-all like you're trying to treat it. Every person is different, every business is different, every business owner has a different tolerance for risk and potential loss.

        People on this public forum can tell you what due diligence means to them . . . but it won't necessarily be transferable to you or me. Not only that, IMO, the greater the potential loss, the more due diligence I'm going to perform.

        Steve
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  • Profile picture of the author laurencewins
    You have given an example of what you want to know but it is too vague.

    Due diligence means not believing anybody without doing your own research and satisfying yourself that buying or doing whatever you're researching about is worth it. This means in terms of money but also of time and effectiveness of what you're going to do.

    I know others have given some info here too. Now YOU have to do your own due diligence to ensure you're happy with the responses you have received.

    If you're still lost, pm me and I will try to explain further.
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  • Profile picture of the author nick77jq
    When I use the phrase I just mean researching things. "Due diligence" is almost interchangeable with research. But I think there's also an element of judgement on the part of the party involved. You can have all the information in the world at your fingertips, but if you can't filter the good information from the bad information, it's useless to you.

    I should note that I only know this phrase from working in real estate. It is used incorrectly in the colloquial sense, so that is how I think most people mean to use it, and how I use it when I say it in conversational tone.

    That's just my take on it.
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  • Profile picture of the author Lurk
    There is no majic bullet for due diligence...it means investigative research. If a corporation or someone highly motivated does due diligence it might mean travelling to countries internationally to dig into "what competitors and or the marketplace" for their given niche is doing. Prime examples are McDonalds and Walmart. Before they build a new location they have a site locator travel to the geographical location to see if the site is possibly worthy of being their next place of business.

    You might be thinking those are billion dollar companies. Ok but Sam Walton used to meet face to face with companies city to city before he hit the big time. He would squeeze every ounce of knowledge out of competitors until he understood how to improve his little business.

    Now that's due diligence at the highest level. Chasing every lead down the rabbit hole until you get to the bottom of something.

    Think of due diligence like what CIA or any other alphabet agency does. They track every lead, find out who was involved, interview 100's and 1000's of people and spend 1000's of man hours to get to the bottom of something. That kind of due diligence could take years in some cases.

    Again due diligence is really just deep research.
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  • Profile picture of the author leilani
    My definition for due diligence is to do your research on any person, place or thing that you are not knowledgeable about. To make an informed decision before taking any type of action.

    Does it mean you will have all the information? Maybe not, but it gives you confidence if you decide to move forward. Just as long as you know that ultimately any decision you make is yours and not anyone else's. Buck starts and stops with you.

    Leilani
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  • Profile picture of the author Randall Magwood
    It means don't believe anybody, and do it or find the answer yourself. Now the diligence is due.

    Once you do that, then your diligence will have been done.
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    • Profile picture of the author Importexport
      A big thank you to all who have replied. I do know exactly what is required in performing due diligence when product sourcing and I do teach it to all those who buy my book.

      The purpose of my post was to see what others regard as due diligence, and preferably get specific answers rather than definitions.

      A lot of the replies have included reference to some specific area of research for DD purposes, and that may help some readers of this thread.

      Nobody has provided a list of things they check out, and that is the real problem. I continually see posts casually saying "Do your due diligence", as though everyone knows exactly what to research.

      Occasionally someone will say things like "Only deal with Gold Suppliers' or "Check the supplier's feedback".

      I see the consequences of that casual response being accepted by newbies. They go to B2B sites and do what they think is DD, and end up being scammed.

      I believe it would be far better if the advice given in posts was either specific to the inquiry, or was along the lines of "Warrior XYZ teaches due diligence." No I am not asking people to recommend me, because there are surely others who understand DD in relation to product sourcing and can provide effective and experience based advice on what works.

      As an overall observation, I would add that forums are full of misguided advice on a multitude of subjects. Examples available if anyone is interested.
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author JohnMcCabe
        How would I do due diligence on sourcing products (specifically physical products)?

        There are two main considerations, the product itself and the supplier.

        For the product, I would want samples for my own testing. Copies of any lab certifications that may be necessary so I can check out the cert and lab used. If a MSDS is required, I want copies.

        For the supplier, I'd want to know (independently verified) if they have a history of on-time and as-specified deliveries. I'd want references I can check. For sources outside the USA, I'd check with the foreign trade office for any complaints or problems.

        If everything checks out, the supplier will probably get a trial order.

        Yes, I've been burned on trial orders, but the loss is at the level of "cost of doing due diligence" rather than "oh, shit, now what?"
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        • Profile picture of the author Importexport
          Originally Posted by JohnMcCabe View Post

          How would I do due diligence on sourcing products (specifically physical products)?

          There are two main considerations, the product itself and the supplier.

          For the product, I would want samples for my own testing. Copies of any lab certifications that may be necessary so I can check out the cert and lab used. If a MSDS is required, I want copies.

          For the supplier, I'd want to know (independently verified) if they have a history of on-time and as-specified deliveries. I'd want references I can check. For sources outside the USA, I'd check with the foreign trade office for any complaints or problems.

          If everything checks out, the supplier will probably get a trial order.

          Yes, I've been burned on trial orders, but the loss is at the level of "cost of doing due diligence" rather than "oh, shit, now what?"
          Thanks John,
          Your practical advice could help some newbies. Foreign trade offices are a very under-utilized resource.
          Signature
          Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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  • Profile picture of the author laurencewins
    To offer specifics, you really need to let us know what specifics you want. DD means different things to each person.
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    Cheers, Laurence.
    Writer/Editor/Proofreader.

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    • Profile picture of the author Importexport
      Originally Posted by laurencewins View Post

      To offer specifics, you really need to let us know what specifics you want. DD means different things to each person.
      Thanks Laurence,
      That is the point of concern to me. I see newbies seeking advice on the forum about how to find suppliers, and how to avoid being scammed.

      Time and time again I read replies that read: "Do your Due Diligence", but not often does the post contain specific advice.

      The result is that the newbie goes to a sourcing platform and trusts the system the platform uses, often with disastrous results.

      I know what due diligence is required and I do teach it, but the vast majority will never read my book, and they rely on forum advice. I can't post pages from my book, and that is why when warriors reply to such questions, I would like to at least see helpful advice given rather than the minimalist responses usually seen.
      Signature
      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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