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Sharing my lifetime experience in export/import. Product sourcing specialist.

Walter Hay

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I was working on shipping terms with a manufacturer and he said that if I wanted to do a bank transfer that the shipment could only leave the country on a boat (no air freight). Is this some kind of limitation placed on some manufacturers? Can you clarify if this is legit?
Any person exporting goods from China can choose either air, sea or road freight. He obviously does not want payment via bank transfer! I expect that his next move will be to ask you to pay via WU.

There is no conceivable legitimate reason for his statement. I suspect that he is probably not really a manufacturer, and I think there is a high risk that he might scam you.
 
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Walter Hay

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Great thread!!
About your book... When is the last time you updated it?

Is it still version 14.1?
No there is a second revision for 2014, so the current one is 14.2. I usually revise it twice a year to ensure that it is always up to date.

I am currently reviewing it and expect to release a new edition in early 2015. All book buyers have free access to updated versions whenever they become available.

Walter
 

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Thanks for the info Walter. But I'm afraid I can't access the site :)
Hope you can help .

No there is a second revision for 2014, so the current one is 14.2. I usually revise it twice a year to ensure that it is always up to date.

I am currently reviewing it and expect to release a new edition in early 2015. All book buyers have free access to updated versions whenever they become available.

Walter
 
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Walter Hay

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Thanks for the info Walter. But I'm afraid I can't access the site :)
Hope you can help .
@raynoldcj, I hope your question doesn't get me into trouble, but if clicking on the link in my signature doesn't work, just start a conversation and I will give you another live link.

Walter
 

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Walter,

Thanks for contributing some great value to this forum.

When you source a technical product from a supplier, for examples sake let's say I source colour changing LED flood lights, do you try to get the suppliers 1 year warranty in writing?

How would you go about this to ensure you have the best chance of receiving a replacement item if your customers item turns faulty?

Or alternately do you just stand no chance getting a replacement? I realise it will vary greatly depending on the manufacturer as well as other points to consider, but I just wanted your opinion on the matter.

Thanks.
 

Walter Hay

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Walter,

Thanks for contributing some great value to this forum.

When you source a technical product from a supplier, for examples sake let's say I source colour changing LED flood lights, do you try to get the suppliers 1 year warranty in writing?

How would you go about this to ensure you have the best chance of receiving a replacement item if your customers item turns faulty?

Or alternately do you just stand no chance getting a replacement? I realise it will vary greatly depending on the manufacturer as well as other points to consider, but I just wanted your opinion on the matter.

Thanks.
Unfortunately there is not much point in getting such a warranty in writing, although as a formality it may have some value. Contracts (and a warranty is a contract) are extremely difficult to enforce in China.

Even if a business in China were to agree to a contract with a clause making it enforceable in a court of law in your local jurisdiction, there is no way you could force an unwilling party to abide by such a clause.

Your best warranty is a good relationship. Chinese people put a lot of value on their word and if you have established a good relationship so that they will also be satisfied that they can rely on your word, you will find that warranty issues will be handled without any problem.

It is worth telling any prospective supplier at the beginning of your communication with them that quality is important to you. This will not necessarily result in you paying more, although sometimes it will, but it will often weed out those suppliers who do not stand by their products.

There are many factories that manufacture to two different quality standards. I have been in factories where one production line puts out trash quality to satisfy the extremely low cost demanded by some customers, (often big retailers,) and high quality for those who want repeat customers. It would surprise most people to know how small the price difference can be, but if a big retailer is buying a million items that they are paying maybe $2 for, 10c = $100,000.

During the time I ran my importing business I developed those good relationships that I recommend building, and before long, warranty issues were resolved by my word about a problem, sometimes backed up with photographs. Rarely did I or my franchisees have to return any items to China.

Until you have built that relationship, and indeed as part of that building process, you wear the problem, but you do mention it politely. If you don't adopt a demanding attitude a supplier may well volunteer some compensation, usually by way of a small discount on the next order. If they can see that you are not trying to take advantage of them, they will chalk that up as a point in your favor.

It is easier for you to accept some losses due to warranty issues if you buy at the right price, but that is another story.

Finally, don't forget that trust works two ways.

Walter
 
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Walter Hay

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Alibaba and the 2236 thieves.
There is so much about Alibaba that has been published but is not known to most people unless they read financial news, so I thought I would add a link to a news item from the Economist headed: Alibaba and the 2236 thieves. See the link below.

I know that this news item is now a few years old, but the Gold Supplier system is unchanged, so I believe the report still has value to those who have not seen it before.

For those who don't want to read the whole article, here is a small extract:

"Alibaba, China's leading e-commerce platform, faces the same challenge, but more so. It operates in a country where fraud is rife. And it has grown at a dizzying pace: 56m people use its business-to-business website, it claims, and 370m use Taobao, its online mall. This week it ran into trouble. On February 21st, in a filing with the Hong Kong Stock Exchange, Alibaba admitted that it had granted “gold” status (a mark of supposed integrity) to 2,236 dealers who it says subsequently defrauded buyers."

Two of Alibaba's senior executives at the time resigned in the usual Asian way of "accepting responsibility” which is in effect an attempt at taking the heat off the company.

In my opinion the situation was made worse when Alibaba discounted their Gold Supplier fee from $2990 to $299 for most of last year. This resulted in a flood of new Gold Suppliers on the site, but readers should realize that Gold Supplier status has always been bought, not earned.

It is worth noting the Economist's comment about Gold Supplier status: "(a mark of supposed integrity)" In emails that I have received from Alibaba they state that one of the reasons for becoming registered as a Gold Supplier is:

“6. Buyers trust you because your company is verified by the credit agency.” That credit agency verification is performed as part of the “Onsite Check” which happens to be identical to the onsite check for ordinary Verified Suppliers and is almost identical to the A&V check. Here is a cut and paste from Alibaba’s site regarding that process:

“Onsite Check is a verification process for China Gold Suppliers. The supplier’s company’s premises are checked by Alibaba.com’s staff to ensure onsite operations exist there. The suppliers’ legal status and other related information are then confirmed by a third-party verification agency.” What this all amounts to is that regardless of the badges displayed the only thing you can be sure of is that the business actually exists and at least has an office that they may have rented for the day. Does that reassure you?

There is an exception and it is the Supplier Assessment which is identified by a red tick in a blue circle. The report is lengthy and should be read in its entirety if you want to know if the supplier really is a manufacturer.

Here is the link to the news item: http://www.economist.com/node/18233750

Please don't think I am just knocking Alibaba. Almost all of the major B2B sourcing sites use a similar system.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:

Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.
Traveling to China to visit factories.
■ Do your suppliers use child labor or slave labor?

Q & A 1
 
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tak

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This is an amazing read. My issue is actually finding legitimate suppliers on Alibaba. One of the things that I've read, is to read their company profile and go for those who have your desired product in their name, and are listed as manufacture in the business profile. Like " Hengxing Speakers Aung Co., Ltd. "

Do you find that this holds true?

Another thing is, I've found many suppliers who are listed as a "Manufacturer, Trading Company" Which leads me to believe they don't make the products they claim to say they do. I'd assume that real manufacturers would just be listed as "Manufacturer"

Also someone once said that if they claim to make other types products then they are not a manufacturer. Example) you look for a company to produce portable speakers, and you see that they make tablets, cell phone cases, key chains, and usb cords.
--
I feel like I may have been dealing with traders this entire time..their MOQ is usually pretty high, around 100-200. Their response " Due to high demand, we are not able to provide less than our MOQ" One said they accept an moq as low as 24, which is extremely doable. Any thoughts on this?

So far it seems like to make sure that they are a legit Manufacturer is to
1) make sure they have the Supplier Assessment icon next to their name
2) Forget about the gold status and just read the assessment reports
Any key traits or points of interest we should be looking into on the assessment report. I've read it, but part of me doesn't fully understand what am I looking for.
--

As of right now, I've narrowed down the list to a few companies that Im planning on doing business with, but in the back of my head I still can't shake the feeling that im dealing with a trader. Whats a B2B source you'd recommend besides Alibaba? I've found a site called www.hktdc.com whats your take on that?

--

I know it s a lot but thanks a ton for this useful information. Its gonna help save us time, and a whole lot of $$ in the long run.
 
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Walter Hay

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This is an amazing read. My issue is actually finding legitimate suppliers on Alibaba. One of the things that I've read, is to read their company profile and go for those who have your desired product in their name, and are listed as manufacture in the business profile. Like " Hengxing Speakers Aung Co., Ltd. "

1.Do you find that this holds true?

2. Another thing is, I've found many suppliers who are listed as a "Manufacturer, Trading Company" Which leads me to believe they don't make the products they claim to say they do. I'd assume that real manufacturers would just be listed as "Manufacturer"

3. Also someone once said that if they claim to make other types products then they are not a manufacturer. Example) you look for a company to produce portable speakers, and you see that they make tablets, cell phone cases, key chains, and usb cords.
--
4. I feel like I may have been dealing with traders this entire time..their MOQ is usually pretty high, around 100-200. Their response " Due to high demand, we are not able to provide less than our MOQ" One said they accept an moq as low as 24, which is extremely doable. Any thoughts on this?

5. So far it seems like to make sure that they are a legit Manufacturer is to
1) make sure they have the Supplier Assessment icon next to their name
2) Forget about the gold status and just read the assessment reports
Any key traits or points of interest we should be looking into on the assessment report. I've read it, but part of me doesn't fully understand what am I looking for.

6. As of right now, I've narrowed down the list to a few companies that Im planning on doing business with, but in the back of my head I still can't shake the feeling that im dealing with a trader. Whats a B2B source you'd recommend besides Alibaba? I've found a site called www.hktdc.com whats your take on that?

I know it s a lot but thanks a ton for this useful information. Its gonna help save us time, and a whole lot of $$ in the long run.
I have numbered the points you raise so that it is easier to follow my answers.

1. No. The fact that they are listed as manufacturers means nothing. Almost all suppliers on Alibaba are listed as manufacturers, but in the majority of cases that is false.

2. Some manufacturers are also trading companies, and that applies in particular to state owned businesses, but as a general rule if they have the word trading in their name, or if they identify themselves as traders, I would not bother with them.

3. That is true. Genuine manufacturers tend to specialize. That is part of the Chinese culture, where certain cites are almost entirely devoted to manufacturing one type of product.

4. Traders and wholesalers tend to require large MOQs and they are usually inflexible about reducing the number. One reason is that they want to make a killing on the first order because people often find that they can buy cheaper elsewhere. Another reason is that they often do not have a formal agreement with the actual manufacturer. They use images from the manufacturer's website or catalog, make a sale, take a deposit, and then hope to get the manufacturer to supply them at a price that will give them a profit. The bigger the order, the better chance they have of getting the manufacturer to supply them. If they won't, they will usually refund your deposit but that often takes a long time.

5. 1) Yes, but you must read the report, because not all who have supplier assessments are manufacturers and that will be stated in the report. The reports can be 10 - 15 pages, but if they are manufacturers their capacity will be stated, so it is worth reading.
2) Gold status is worth almost nothing in relation to their capability, reliability, or trustworthiness.

6. I recommend a small number of safe sites, including HKTDC, which is a relatively small site, but you also need to follow safe sourcing practice. It takes me 83 pages to teach that. That is why I don't just publish my recommended sites.

Walter
 

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thanks for the info. Pretty much confirmed my suspicions that I've been dealing with traders. Would it be safe and sound to ask for the ICP number via email?

On one site, they had a hk domain. Site itself looks pretty professional and legit, though I do not see anywhere on the site that number.
 

Walter Hay

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thanks for the info. Pretty much confirmed my suspicions that I've been dealing with traders. Would it be safe and sound to ask for the ICP number via email?

On one site, they had a hk domain. Site itself looks pretty professional and legit, though I do not see anywhere on the site that number.
If they have a .cn website and do not clearly display an Internet Content Provider (ICP) number they are breaking the law and that in itself is usually sufficient for me to say keep away. If you ask for a number and they send it to you via email, that is no guarantee that it is legit. They would not dare publish a fake number online but in an email to you they would not care.

.hk domains come under a much more liberal jurisdiction and no such number is required. The more liberal rules and regulations in HK are a major reason why huge numbers of Chinese businesses have an office in HK. They will usually transact all their business there.
 
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Walter Hay

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Sourcing From Countries Other Than China. Is it Worth It?

Rising living standards in China are making Chinese products less competitive.

I have a friend who imports vinyl fencing products and has built a big business out of it, although he now finds local manufacturers are giving him some stiff competition. This is one reason I recommend that would-be importers consider countries other than China. Government labor regulations there are increasing costs and as a result many Chinese companies are moving offshore!

Does that sound familiar? It is part of the cycle of chasing low labor costs. Japan was once the cheap source, then Korea, then Taiwan, then mainland China, and now Chinese companies are setting up in lower cost Asian and African countries.

I am a retired importer but I still maintain my contacts. One of my long time contacts in China reports that his factories are now compelled to provide ever increasing perks to his 6,000 employees as well as higher wages and shorter hours. He says his labor costs have risen 40% in the past 3 years and he is planning on expanding offshore, although he won’t close his factories in China.

As evidence of this changing scene, a number of US companies are now returning their manufacturing to the US.


So where does this leave people looking for cheap products to resell? Well there are still plenty of them available in China.

Those looking to source products there should be aware that many factories turn out two quality standards of the same product. One is made to meet a price demand and the other is made to meet a quality demand. The interesting thing is that the price difference is often very small.

I have directed many people to other countries where they have been able to obtain better quality at the same price as in China, or sometimes they have bought similar quality but at a lower price. In some cases they have found unique products not produced in China.

Sourcing from China is easy, although many people get burnt for that very reason. They think it is so easy that they can be careless about sourcing. They treat it as casually as buying from their local store and they blindly accept everything they read on B2B sourcing sites.

Sourcing from other countries will require greater expertise, but I have taught many people how to do it. Those who do begin sourcing in other countries may well be one step ahead of the competition in a few years’ time.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.
Traveling to China to visit factories.
■ Do your suppliers use child labor or slave labor?

■ Q & A 1
■ Alibaba and the 2236 thieves.
 
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Walter Hay

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Q & A 2.

Q:
I would like to know approx. how much cash one needs to begin buying products from overseas?

A: It is possible to start with a few hundred dollars, but that is doing it the hard way. It is critically important to first do your homework on product selection. I am not an expert in that area but there are others on the forum that can help in that regard.

If you have selected a product that you are very confident will sell, and you know the price that it will most likely sell at, as well as your selling costs such as postage to your customer, eBay, Amazon, and PayPal fees, that will tell you the maximum landed price you can afford to spend on buying the product.

To work out the landed cost you should first get the total of the unit price + freight. Then add the duty calculated on that total. Remember that in most countries there will be duty exemptions for shipments below a certain value. It varies from country to country. After adding duty, then add Sales Tax. This final total is your landed cost.

If the final figure is at or below what you have worked out as the maximum landed cost, you can then proceed to check out a sample or multiple samples. If you have thoroughly researched the manufacturer, you might choose to import a small quantity as a sample shipment in order to reduce the freight cost per unit. Freight on single samples can cost almost as much as freight on 10, 20, or 50 items.

You start selling after checking the goods, and assuming you have done your homework properly you should be getting profitable sales. You need to put aside all the sale proceeds ready to place another order. If sales continue to be good, you rinse and repeat until you have built up your business to the point where you can a) take out some profit and b) order some other product/s.

I have had quite a few people tell me about their success stories after starting off with only $300 or $500, but If I was starting off again, I would like to have at least $1,000 to spend on inventory.
 

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Hey Walter!

Great thread so far! I'm pretty damn new to importing as I only just started in August (but got a jumpstart on how to do it well from a course I'm taking) and I've been having pretty decent results with Alibaba. At the moment I'm still searching for a great product with good margins and decent volume.. but I'm in the green with what I have so far - so I can't complain. I think I'm going to pick up your book in a few days anyway when I have some time to sit and read it, just to get a different perspective on the importing game (and find out what those SNEAKY more-reliable websites are you keep mentioning.)

Maybe I scrolled over it and you've already answered this question - and if so, my apologies - but why don't you like to use trading companies at all? If I can find a good trading company with great customer service offering a product that I can definitely make a profit on - then why not go with them? Is it because they could possibly run out of stock? Because the prices are a bit higher? Do you just think that trading companies smell bad?:D

Thanks in advance for the response and like I said - great thread, keep it up!
 
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Walter Hay

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Hey Walter!

Great thread so far! I'm pretty damn new to importing as I only just started in August (but got a jumpstart on how to do it well from a course I'm taking) and I've been having pretty decent results with Alibaba. At the moment I'm still searching for a great product with good margins and decent volume.. but I'm in the green with what I have so far - so I can't complain. I think I'm going to pick up your book in a few days anyway when I have some time to sit and read it, just to get a different perspective on the importing game (and find out what those SNEAKY more-reliable websites are you keep mentioning.)

Maybe I scrolled over it and you've already answered this question - and if so, my apologies - but why don't you like to use trading companies at all? If I can find a good trading company with great customer service offering a product that I can definitely make a profit on - then why not go with them? Is it because they could possibly run out of stock? Because the prices are a bit higher? Do you just think that trading companies smell bad?:D

Thanks in advance for the response and like I said - great thread, keep it up!
A major difference between dealing with a manufacturer and a trading company is profit. Their prices are not just "a bit higher" they are usually substantially higher. I received a message from one of my book buyers in the UK who had previously bought from traders and he was over the moon. He wrote: " I bought a product in China for £1 ($1.60) and after spending another £1 on packaging, I sold it for £25 ($40)." He went on to report that he had never thought that traders were making so much off him.

That case may have been exceptional, but I have had similar experience. In the early days of my importing business I dealt with the one and only trader I ever used. It was because I knew him from the days when I was exporting to China and I knew he was technically brilliant in the product field I was interested in. It worked well, but before long he set up his own manufacturing and that is when his prices to me dropped substantially. He now employs 6,000 people and my former franchisees still buy from him.

Another problem in dealing with traders is that many are opportunists who don't carry inventory, and often don't even have an agreement with a manufacturer. They use pirated images from a manufacturer's website or catalog. quote big MOQs and advertise as a manufacturer. When they get a sale they take a deposit then try to get the manufacturer to supply them at a price that gives them a profit. If the manufacturer won't or can't supply, they have to give a refund, but that is a slow process and sets you back in getting a product to market.

Traders are usually inflexible with big MOQs because they need them to impress the manufacturer.
 

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Have you imported from non-Chinese websites before? If you have, do you know if they also take PayPal like the Chinese sites?

Btw, thanks for making that eBook. Great resource.
 

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Have you imported from non-Chinese websites before? If you have, do you know if they also take PayPal like the Chinese sites?

Btw, thanks for making that eBook. Great resource.
Yes, my former franchisees and I have imported from Vietnam, Malaysia, Brazil, Italy, South Korea, Taiwan and Turkey, as well as mainland China.

The sad fact is that it is very unusual to find a genuine manufacturer that will accept PayPal.
 
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A major difference between dealing with a manufacturer and a trading company is profit. Their prices are not just "a bit higher" they are usually substantially higher. I received a message from one of my book buyers in the UK who had previously bought from traders and he was over the moon. He wrote: " I bought a product in China for £1 ($1.60) and after spending another £1 on packaging, I sold it for £25 ($40)." He went on to report that he had never thought that traders were making so much off him.

That case may have been exceptional, but I have had similar experience. In the early days of my importing business I dealt with the one and only trader I ever used. It was because I knew him from the days when I was exporting to China and I knew he was technically brilliant in the product field I was interested in. It worked well, but before long he set up his own manufacturing and that is when his prices to me dropped substantially. He now employs 6,000 people and my former franchisees still buy from him.

Another problem in dealing with traders is that many are opportunists who don't carry inventory, and often don't even have an agreement with a manufacturer. They use pirated images from a manufacturer's website or catalog. quote big MOQs and advertise as a manufacturer. When they get a sale they take a deposit then try to get the manufacturer to supply them at a price that gives them a profit. If the manufacturer won't or can't supply, they have to give a refund, but that is a slow process and sets you back in getting a product to market.

Traders are usually inflexible with big MOQs because they need them to impress the manufacturer.

Very interesting.. I'm definitely glad that I haven't run into any problems yet! If the price is really that much different I'm going to go ahead and put in a little extra time to check the assessments and make sure I'm finding legitimate manufacturers.

As I said before - great job with this thread. BTW does your book go over any of the legal standpoints when it comes to importing or is that going to be something that I'd be better off just sitting down and talking to a lawyer about (obviously I should probably do this anyway sometime soon)?

The sad fact is that it is very unusual to find a genuine manufacturer that will accept PayPal.

So what do you recommend in this case? Escrow? Using WU or T/T is just asking to get scammed, isn't it?
 

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Very interesting.. I'm definitely glad that I haven't run into any problems yet! If the price is really that much different I'm going to go ahead and put in a little extra time to check the assessments and make sure I'm finding legitimate manufacturers.

As I said before - great job with this thread. BTW does your book go over any of the legal standpoints when it comes to importing or is that going to be something that I'd be better off just sitting down and talking to a lawyer about (obviously I should probably do this anyway sometime soon)?
Like all who give advice, I must declare that I do not give legal advice. Having said that, there are things in my book that do relate to legal issues, but they are there only as a record of my experience.

When you have time to read right through it you will find for example that I suggest ways to avoid breaking certain laws when importing some product categories. The people to contact are not always lawyers.
 

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Like all who give advice, I must declare that I do not give legal advice.
Can't say I blame you - was probably even a little silly for me to ask :woot:

The sad fact is that it is very unusual to find a genuine manufacturer that will accept PayPal.
So what do you recommend in this case? Escrow? Using WU or T/T is just asking to get scammed, isn't it?
 
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Walter Hay

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Can't say I blame you - was probably even a little silly for me to ask :woot:


So what do you recommend in this case? Escrow? Using WU or T/T is just asking to get scammed, isn't it?
Unfortunately few suppliers will accept Escrow, except many on Alibaba , but a lot of others there won't. The safest method and virtually foolproof is payment by Letter of Credit. (L/C)

This is almost identical to escrow, but is done through the major banks. Cost may be more than T/T but it is completely secure as long as you have been scrupulously careful in setting out the specifications and all order details. It is usually only economically viable for larger orders, but if you want maximum safety, that is the way to go. I can give more details on L/C if you like, (it may help other fastlaners) but I think you will find all you need to know when you read the relevant section in the book.

Payment by WU is an almost total no-no, with the exception being when you have established a good relationship with the supplier and have had a number of satisfactory transactions. There is still a very small risk because the cash can be collected almost anonymously.

Payment by T/T is very common and has a small degree of safety in that you will only pay to the supplier's business bank account. If you have done your due diligence, including following my advice about correlating post and telephone codes you should be satisfied that the vendor is genuine. Some of the B2B sourcing site reporting systems that I refer to in my book can give you a great deal of confidence and if you have read those reports on your chosen supplier I expect that you would not be worried about paying by T/T.
 
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Walter Hay

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Q & A 3.

This Q & A is very fresh, being from the thread “Caught in Alibaba Hell” but I include it because it shows the consequences of limiting your search to the one B2B site, and I think more people will benefit from my answer if I put it in my thread. I hope there is no rule against this.

Q. I have spent countless hours on Alibaba, searching, posting buying requests and responding to quotes. I think am being very clear in what I am sourcing and even including pictures and I still get replys for things which don't meet my needs or questions, that were already answered in the request. And then when I do find something I think will work, the cost for a sample is 2000% higher than the actual item. i.e a ball that cost 0.30, is 60.00 for a sample. Aliexpress hasn't proven much better.

I am sourcing SOLID (hollow is everywhere) rubber balls with a 1/2 hole in the middle, the size of a tennis ball, but smaller or larger will be needed in the future.

Right now, I am really not trying to purchase 500+ balls

A. I got a notice about a reply on this thread, so I came back to look. When I saw that you did not appear to have made much progress, I decided to do a quick search of one of my favorite B2B sourcing sites.

Within 3 minutes I found hard rubber balls, complete with hole, various sizes, can be made to your specs, with no mold charge, any Pantone color, MOQ 100 pcs. Unlike most manufacturers they will accept payment via PayPal.

Prices quoted are way below many of the prices you will find on Alibaba, and half the best price. Also on Alibaba the MOQ is 1,000 - 5,000. I suggest it would pay you to buy 100 @ 15c each, because the freight on them will be not a lot more than you have been quoted for a single sample.

If you like to start a conversation with me I will give you a link to the factory's website. They meet all my requirements for a safe business to deal with.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.
Traveling to China to visit factories.
■ Do your suppliers use child labor or slave labor?

Q & A 1,2,3
 
D

Deleted2BB3x9

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Hey Walther,

Nice post. I'm starting to see what you meant about alibaba and wholesalers...

I'm currently in a similar situation. I'd like to only place an order of 100 items and 100 accessories. I would also like to get branding to protect my amazon listing. However my manufacturer said they require a minimum of 3000 units for silk screening or 3000$ because of "company support for new client initial promotion" if I want to use their brand. Does this sound like I'm dealing with a manufacturer or wholesaler?
 
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Walter Hay

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Hey Walther,

Nice post. I'm starting to see what you meant about alibaba and wholesalers...

I'm currently in a similar situation. I'd like to only place an order of 100 items and 100 accessories. I would also like to get branding to protect my amazon listing. However my manufacturer said they require a minimum of 3000 units for silk screening or 3000$ because of "company support for new client initial promotion" if I want to use their brand. Does this sound like I'm dealing with a manufacturer or wholesaler?
It sounds a little strange to me. It would be rare for a supplier in China to do anything to provide any kind of support for new client initial promotion, except perhaps a small discount, and even that would be very rare. Using "their brand" does not necessarily indicate that they are the manufacturers. Also if it is their brand, the silk screens would already exist, and although moderately labor intensive a multi-color screen printing process should not cost you a dollar per item.

I think they are just trying to justify a high MOQ and such an approach would usually indicate that you are dealing with a wholesaler.

There are many ways of applying your own label/logo etc., and I have had a lot of experience in that field, so if you are willing to confidentially tell me the nature of the product, I may be able to suggest a more cost effective method.
 
D

Deleted2BB3x9

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Hey Walter,

Applying my own label is a good idea, however it wouldn't be possible. Their brand name is etched directly on the product, the only way to remove it is to order 3000 units. I want to make sure this is not a wholesaler as I don't want unnecessary labels and markups. Do most manufacturer's have a website for their brand? The name of the brand is different from the manufacturers name. I also find it weird that their label is etched and they want mine silk screened.

P.S. Do you have any tips on how to get a lower MOQ?
 

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Hey
Hey Walter,

Applying my own label is a good idea, however it wouldn't be possible. Their brand name is etched directly on the product, the only way to remove it is to order 3000 units. I want to make sure this is not a wholesaler as I don't want unnecessary labels and markups. Do most manufacturer's have a website for their brand? The name of the brand is different from the manufacturers name. I also find it weird that their label is etched and they want mine silk screened.

P.S. Do you have any tips on how to get a lower MOQ?
Ben,

If their brand is etched and they want to screen print yours, that means that it is not molded or manufactured by some other method with the name already there.

Etching can be done by various methods. If the item is metal, it can be laser engraved, or photo etched. In either case it would not be very costly to set up. I am guessing that it is probably not colored, in which case laser engraving of 100 items could be done quite economically in the US, or most western countries. Photo etching can also be done locally but the set up cost is substantially higher.

I suggest your best way to order a small quantity is to tell them you want to buy 100 pcs unbranded as a trial order. You can then have them engraved locally to test the market. If they won't agree to that, you are definitely dealing with a wholesaler.
 
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Hey Walter,

Awesome thread! Extremely helpful.

A few questions,

1. What sourcing strategies and resources do you use when seeking a manufacturer outside of China?
2. Continuation from question 1....how have you sourced for quality manufacturers who are not on alibaba, khtdc, made-in-china, etc?
3. I know you mentioned your profit margin rate of 250% after landed costs. I've probably spent countless hours on product research and any generic product in any industry available on platforms like alibaba is literally impossible to resale at a rate of even 100%, let alone 250%. With my research, any generic product found on alibaba is already being imported and sold on platforms like ebay and amazon for 0-25% profit margins tops after all fees like shipping, taxes, duty, paypal, ebay/amazon, etc. The only way I would be able to see such margins is by creating a unique product and brand (which I'm in the process of doing). Other than such a method, as an experienced veteran, what tactics would you recommend to reach such margins?

Thanks!
 

Walter Hay

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Hey Walter,

Awesome thread! Extremely helpful.

A few questions,

1. What sourcing strategies and resources do you use when seeking a manufacturer outside of China?
2. Continuation from question 1....how have you sourced for quality manufacturers who are not on alibaba, khtdc, made-in-china, etc?
3. I know you mentioned your profit margin rate of 250% after landed costs. I've probably spent countless hours on product research and any generic product in any industry available on platforms like alibaba is literally impossible to resale at a rate of even 100%, let alone 250%. With my research, any generic product found on alibaba is already being imported and sold on platforms like ebay and amazon for 0-25% profit margins tops after all fees like shipping, taxes, duty, paypal, ebay/amazon, etc. The only way I would be able to see such margins is by creating a unique product and brand (which I'm in the process of doing). Other than such a method, as an experienced veteran, what tactics would you recommend to reach such margins?

Thanks!
Hey ddzc,
1. If you know what products are a specialty in certain countries, you will then need to find a B2B site relevant to that country, but if you just want to browse while looking for ideas, you will need to search websites for any country that has an export industry. Some of the sites that I recommend are annoying and not easy to use, particularly if you are just browsing, but once you take the time you can find some real gems in the form of unique products that are not already being sold in the US or, UK etc.

When browsing, it is best to start searching in product areas that are of interest to you, even if you may not have previously intended selling such products. At the same time you should keep your eyes open for other product categories that just might be worth looking through.

2. The sites you mention above do have some international businesses (including US companies) offering products, but they mostly have suppliers listed from China. There is another very big source that I have used extensively in the past, but I simply can't disclose online because my contacts there would not appreciate an huge influx of inquiries from newbies. It is a source that is generally only known to the big boys in importing and it was for a long time my main sourcing site. Of all the user unfriendly sites that I have encountered this one is the worst, and working your way through it is tedious, and will lead to many dead ends. I give step by step instructions in my book on how to use it, but I know that very few of my book readers actually persevere with it because it is so slow to get results.

3. A major stumbling block to getting high profit margins via Alibaba is that the vast majority of advertisers falsely claim to be manufacturers but are in fact traders or wholesalers. They add their margin to the manufacturer's price before they quote you, so away goes at least 25% of the possible margin. If you deal with real manufacturers you will get the best price, and I advise against haggling to get that best price.

The landed price I always worked on included door to door courier delivery or EMS. There were many times when the margins were way above cost X 250%. One of my franchisees once wrote to me (letter on file) "....it is nice to make that occasional $50,000 profit for 1/2 day's work." His landed cost on one such order was around $7,500, and his selling price to the single customer was just under $60,000. I can quote him because I can prove it to the FTC, but I can't quote my own figures without opening up my tax returns from my business that I sold a few years ago.

The main tactics are:
  • Find a product that is not already being sold in your country. You may need to look past the big advertisers and look for the small businesses. Or you may need to look in places other than China.
  • Communicate slowly, slowly, with a small manufacturer until you build a rapport.
  • Remember that you are an unknown quantity to them, just as they are to you. Build trust.
  • Avoid allowing price to be the main point of discussion in the early stages.
  • Don't ask MOQ. Wait until they tell you. Then request a quote on that quantity.
  • Tell them you would like to place a trial order for x amount. (X = MOQ ÷ 5 or 10) and request quote. Single samples may be necessary first if the unit price is high.

 

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