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

[francois.eckard]

Thank Walter. Much appreciated. Where can I get a copy of your book as I actually have a subscription box company as well and need the know how on best practise for sourcing wholesale. I am now. Looking for dome silver tip badger hair shaving brushes, but I am having a hard time finding decent suppliers.


Regards

 

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[Walter Hay]

Thank Walter. Much appreciated. Where can I get a copy of your book as I actually have a subscription box company as well and need the know how on best practise for sourcing wholesale. I am now. Looking for dome silver tip badger hair shaving brushes, but I am having a hard time finding decent suppliers.


Regards

These are expensive items, but they are the best! I will in a minute or two PM you with the manufacturer's contact details because you won't find them through the usual B2B channels.

You can find my book at Proven Global Sourcing - Proven Global Sourcing.
Regards,
Walter

 

[francois.eckard]

Thanks Walter. Even normal badger hair brushes will do. And then, I you have a link to your book I would not mind purchasing one.


Regards

 

[Walter Hay]

Thanks Walter. Even normal badger hair brushes will do. And then, I you have a link to your book I would not mind purchasing one.


Regards

One of the links that I PM'd you is for a manufacturer who has a big range of badger hair brushes from ordinary to top of the range.

For my book, see live link in my signature.

 

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[francois.eckard]

Thanks Walter


Regards

 

[Chantal]

Hi, Walter
Do you have any tips on approaching and building relationships with European manufacturers?

 

[Walter Hay]

Hi, Walter
Do you have any tips on approaching and building relationships with European manufacturers?

In some ways they can be more difficult to deal with than Chinese suppliers, but overall most people would find the experience easier.

My approach would be the same as the way I would approach suppliers in Asia. - Slowly, slowly.

European suppliers will be looking for a result a lot quicker than Chinese suppliers do, but rushing them can make them uneasy. In many cases you will find that they have distribution networks in place, and they would expect you to work through their distributors. If that is the case you must appreciate that a substantial part of your profit potential will be gone.

Finding smaller manufacturers rather than the large ones is probably the key to success.

 

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[Walter Hay]

@Vigilante has posted an extremely important comment about shipping direct to Amazon. I have previously stated my strong opinion in this thread, but I know the respect in which Vigilante is held, so I would like everyone to read what he says.
Newbie Importing and Selling on Amazon

 

[10lapsdown]

In some ways they can be more difficult to deal with than Chinese suppliers, but overall most people would find the experience easier.

My approach would be the same as the way I would approach suppliers in Asia. - Slowly, slowly.

European suppliers will be looking for a result a lot quicker than Chinese suppliers do, but rushing them can make them uneasy. In many cases you will find that they have distribution networks in place, and they would expect you to work through their distributors. If that is the case you must appreciate that a substantial part of your profit potential will be gone.

Finding smaller manufacturers rather than the large ones is probably the key to success.

Hi Walter,
Do you have any insight into shipping costs from Europe? Have you found that generally the manufacturers have one or two channels that they will use and you just have to accept their costs? Can you specify your own channels? If you have several smaller manufacturers you'd like to purchase from is there a way to combine them at a third party forwarding service to reduce per unit costs?

Cheers
Ben

 

[Walter Hay]

Hi Walter,
Do you have any insight into shipping costs from Europe? Have you found that generally the manufacturers have one or two channels that they will use and you just have to accept their costs? Can you specify your own channels? If you have several smaller manufacturers you'd like to purchase from is there a way to combine them at a third party forwarding service to reduce per unit costs?

Cheers
Ben

Hi Ben,

You do not need to accept the carrier specified by any supplier. If your suppliers quote excessive rates for freight, see what you can negotiate with any of the courier services if the packages are small, or contact a freight forwarder for larger consignments. Get all your quotes in writing!

Freight forwarders will usually handle shipment consolidation for you, but you may need to shop around to find one willing to do it at a reasonable rate. They will usually be interested only if the freight component will cost over Euros 200.

For small shipments there are mail forwarding services such as http://www.shiptronite.com/ that will consolidate smaller packages into more economical larger ones. Many such services are aimed at online shoppers, but there are some that work with commercial shipments. They will probably have better freight rates.

Regards,
Walter

 

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[Walter Hay]

Big Money In Counterfeits?

A question that often arises is why not buy those big brand items dirt cheap and make a killing on them? Apart from the ethical question of basing your business on doing something illegal, another consideration is that if you try it on Amazon or eBay you will be banned.

If you find any suppliers in China that offer well-known brands for sale, you should run the other way. Most big brand goods being offered are counterfeits, but even if they are genuine, the problems are much the same.

• Suppliers of counterfeit products are notorious for scamming. Often, buyers of counterfeits receive nothing, other times they get a product that will work for a very short time, and sometimes, if it is electronics, they even get an empty shell.
  
• Almost every big brand item offered for sale in China is not genuine.
• Customs will usually confiscate the branded goods (genuine or counterfeit) on arrival. There goes your hard earned cash.
• Depending on the quantity and value, Customs may prosecute, with the possibility of heavy fines and/or imprisonment.
• Once you are detected importing counterfeits, or illegal genuine big brands, your name and address will be flagged by Customs. This means every shipment ever after will be delayed while they do a thorough inspection.
• No warranty, regardless of what the supplier might say, so you carry the cost of replacements when your customers discover how shoddy the products are.
• There have been numerous cases of the brand owners suing and getting such big compensation payments that the illegal importer is bankrupted.

All this means that unless you are willing to sell branded items purchased at high prices (giving you very low margins) from authorized local distributors, you should consider importing generic products, but all is not lost. You can private label almost any product, and you don't need to buy large quantities to do this.

 

[Walter Hay]

Gurus-In-Training

Well here I am having my first rant!

I was recently sent a link to an importing "expert's" blog where I saw a question from a trusting enquirer who asked a question about how to handle the process of shipping a container by sea. The answer was so vague, unhelpful and plain wrong that if the enquirer followed the advice given he/she could have incurred massive unexpected costs, possibly running into the thousands.

I have written before about the misinformation that is so often published by people who call themselves experts on importing, but this latest misinformation is among the worst I have seen and could send the intending importer broke. The information was free and I suppose the enquirer got his/her money's worth,(zero) but is it fair or ethical?

The problem I see is that most who set themselves up to sell expensive training courses on importing are actually highly experienced in online marketing, but know only what they have read about importing, or maybe they have blundered their way through the process of overseas sourcing and importing and because they eventually managed a few imports without disaster they think they know it all.

I can't name all the Gurus-In-Training that I have encountered, but there are many of them, and some of them are making a fortune out of selling their courses. If they would stick to the area where they have real expertise - online marketing, they would do a lot less damage.

 

[biggeemac]

If they would stick to the area where they have real expertise - online marketing, they would do a lot less damage.

Selling "crap" and making massive profits. Actually, it sounds like they ARE sticking to what they know, and making a killing. Sad.

 

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[Walter Hay]

Selling "crap" and making massive profits. Actually, it sounds like they ARE sticking to what they know, and making a killing. Sad.

You have hit the nail on the head. They are good marketers with very plausible stories, and that is how they are able to convince the gullible that they are experts in any field they nominate.

Yes it is sad. Only last week I had someone come to me who was floundering about sourcing and importing from China, after spending a total of over $3,000 on eBooks and courses by some of these Gurus-In-Training. He told me that they were all teaching the same methods, some of which had caused him serious losses. I hate to see that happen to people.

 

[10lapsdown]

Hi Michael,

I must warn you that exporting is many times more difficult than importing. I did it successfully because I manufactured my own products, I knew the market on a worldwide basis, and I had been involved in the shipping industry since I got my first job after college.

That does not mean you can't do it. You have some distinct advantages, in particular an understanding of the local language where you will source supplies, and a wife with highly appropriate experience.

• You need to know the product and the market. That is where your wife can help. As a department store manager she would be able to tell you which manufacturers give good reliable service, and have products that would be desirable in your target market.
  
• You will need to learn shipping terminology, in particular Incoterms. See: http://en.wikipedia.org/wiki/Incoterms There are other terms that you will have to learn such as Letter of Credit and Bill of Lading.
  
• Your biggest problem will be finding buyers. One way you can do that is register as a seller on Alibaba (I know I knock Alibaba, but that is for buyers. It is great for sellers.) You may have to pay their $699 fee to become a Gold Supplier. That is the current discounted rate on offer for the "Lite" version.There are other places where you can advertise for free, but that must be done in a manner that I will explain to you privately. Let me know when you are in need of that information.
  
• Your next biggest problem will be to establish good relationships with the manufacturers while acting as a a middleman, which they generally won't like.
• You will have to be prepared to carry a small sample inventory to be able to ship to buyers wanting to check out the quality. For this you will have to negotiate very low rates with air couriers. Don't agree to pay any more than 50% of their schedule rates, but even lower prices are common. Cultivate an association with a good freight forwarder for larger shipments.
  
• Check the garment sizing and make sure the manufacturer knows you are buying for women in western countries.

The Seoul Global Business Center will be able to help you with the business set up side of things, but probably won't be able to help much with other aspects of the business. I suggest you visit the World Trade Center which is quite close to the Seoul Global Business Center. They are more export-oriented and should be of much more help.

Hi Walter,

What if, like you, I am the manufacturer? Is it pretty much the same as above or are there other factors to consider?

 

[Walter Hay]

Hi Walter,

What if, like you, I am the manufacturer? Is it pretty much the same as above or are there other factors to consider?

There are a lot of things I mentioned above that you would have to learn, but exporting products that you have manufactured is a much easier proposition than exporting as a middle man.

First you must study the market in the target country or countries.

You may be lucky enough to get some free information from Austrade, but usually they will want to charge a fee. They do have the Export Market Development Grant (EMDG) Scheme, but the red tape is horrendous.

Although you are in Australia, it is quite possible that you could find more helpful information about your target market through the CIA!! Yes, the CIA. you won't find specifics, but at least they will tell you what industries are important. See https://www.cia.gov/library/publications/the-world-factbook/geos/us.html and search for the country of interest.

There are other ways to gather market information, such as through World Trade Centers, and Chambers of Commerce. If you have the funds, a visit to the country is a good way to find information relating to the use your particular type of product. If it is a consumer product you could simply advertise for an agent.

Finally only sell on L/C terms. Let me know if you need more help.

Walter

 

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[RP93]

Hi Walter,

Just wondering what your thoughts are on the site www.clothingregister.com?

Have you tested it at all? Doesn't seem to be the whole badges/6YR/assessed etc. concept that there is on Alibaba, but perhaps that's a good thing?

 

[Walter Hay]

Hi Walter,

Just wondering what your thoughts are on the site www.clothingregister.com?

Have you tested it at all? Doesn't seem to be the whole badges/6YR/assessed etc. concept that there is on Alibaba, but perhaps that's a good thing?

This site is new to me. I checked it out and can see that it would enable you to find manufacturers that you would struggle to locate otherwise. The only problem is the lack of verification, so due diligence will be a major issue.

This is no different to the situation on Alibaba where Gold Suppliers are not checked any more than verified suppliers whose only checking is that they exist.

 

[Walter Hay]

EMS or Speedpost rates ex China or Hong Kong

In answer to a question on another thread I posted a link to Hong Kong Post Office that shows their current Speedpost (EMS) rates worldwide. Here its is: http://www.hongkongpost.hk/doc/publications/notices/2014/20141204a/rate.pdf#page=2

It is important to note that HK Post and China Post rates are virtually identical. Unless you can read Chinese I would not attempt to work out what the China Post website is all about. A translation might give you some amusement, but would not be a good way to go if you really need to know the rates.

Prices quoted are in HK$, but you can find up to date exchange rates on http://www.xe.com/currencyconverter/# Bear in mind that exchange rates fluctuate and your supplier has to cover themselves with a margin, so they will usually quote you slightly more than what you see on the HK Post site.

 

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[Unknown]

Hey Walter, have you used Amazon's FBA global selling to sell in Europe yet? I'm trying to figure out if Amazon will handle all the taxes, or if I'll have to keep track of taxes for European countries. I couldn't find anything on their website that gave me a clear answer (maybe I just missed it).

If you have used it, is there anything else you can think of that I should know?

@Vigilante have you used this service yet?

 

[Walter Hay]

Hey Walter, have you used Amazon's FBA global selling to sell in Europe yet? I'm trying to figure out if Amazon will handle all the taxes, or if I'll have to keep track of taxes for European countries. I couldn't find anything on their website that gave me a clear answer (maybe I just missed it).

If you have used it, is there anything else you can think of that I should know?

@Vigilante have you used this service yet?

I am not the right person to answer you because I don't do any online selling.

I think maybe you are asking a question that needs to be answered by one of Fastlane's European marketing specialists. From my limited understanding it appears that eBay and Amazon collect VAT on all EU sales by their vendors. This probably means that they pay those taxes to the relevant authorities, but you should not rely on my guesswork.

 

[Vigilante]

I set it up but never activated it due to some supply chain issues, so we've never sold a unit (yet) in Europe. When you find the answer, please post it in this thread.

 

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[Vigilante]

Interestingly enough, this was posted on our Seller Central homepage today as an alert:

EU VAT Collection on Seller FeesApr 7, 2015

Under European Union ("EU") VAT rules, Amazon has begun calculating and collecting EU VAT on Selling on Amazon fees related to sales made by each seller on this website that does not have an EU VAT number and is a resident of an EU member state. Sales made to business sellers (i.e. sellers with EU VAT numbers) will not be subject to EU VAT collection. Amazon will charge the standard rate of VAT applicable to your EU member state of residence for any Selling on Amazon fees.

If you are a resident of an EU member state and have an EU VAT ID number, please provide Amazon with that number, to avoid having EU VAT applied to your Amazon fees. To provide your EU VAT registration numbers, go to Seller Central, select Settings > Account Info, and click "Edit" in the VAT Information section.

Note: Amazon Payments, Checkout by Amazon, Fulfillment by Amazon, Webstore, and tax collection service fees are not affected by this change.

 

[Unknown]

I saw that too, but the EU member state part makes it sound like it doesn't apply to US sellers.

 

[Unknown]

This is the best info I could find on the subject. It sounds similar to collecting sales tax and filing it quarterly. This is not from Amazon or a lawyer or anything though.

http://tomfougerousse.com/how-vat-works/

 

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[throttleforward]

Walter - is it abnormal for a Chinese manufacturer to refuse to give you a volume discount?

The manufacturer appears to be legit according to everything I've seen/read on their made-in-china.com profile. They have been very responsive via email, and don't appear to me to be a middleman. My international competitors seem to use these people to create their branded products.

However, when I asked if I could get a volume discount (going from the price for my current 500pc order to a price quote for a 55,000 pc order) the person told me that the price I was quoted for at 500pc is the lowest they could go - and that even if I made a 10M pc order the price would remain the same.

Does this sound normal to you?

 

[Walter Hay]

This is the best info I could find on the subject. It sounds similar to collecting sales tax and filing it quarterly. This is not from Amazon or a lawyer or anything though.

http://tomfougerousse.com/how-vat-works/

That looks too complicated. As a non-resident you would find it a pain and extremely impractical to have to lodge returns. I will be very surprised if Amazon don't collect and pay it to HMRC.

 

[Walter Hay]

Walter - is it abnormal for a Chinese manufacturer to refuse to give you a volume discount?

The manufacturer appears to be legit according to everything I've seen/read on their made-in-china.com profile. They have been very responsive via email, and don't appear to me to be a middleman. My international competitors seem to use these people to create their branded products.

However, when I asked if I could get a volume discount (going from the price for my current 500pc order to a price quote for a 55,000 pc order) the person told me that the price I was quoted for at 500pc is the lowest they could go - and that even if I made a 10M pc order the price would remain the same.

Does this sound normal to you?

It may not be usual but it certainly does not surprise me. A couple of days ago one of my book users doubled the size of an order and got a whopping 5% discount.

In an article that I intend posting, I wrote about the myth of huge volume discounts. Here is one para: "Over 22 years of importing, I found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls."

To a large extent it depends on how much business the supplier is getting, but also it can depend on how much they sub-contract. Subcontractors are usually beaten down in price right from the start and have nowhere to move for larger volume.

 

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[throttleforward]

It may not be usual but it certainly does not surprise me. A couple of days ago one of my book users doubled the size of an order and got a whopping 5% discount.

In an article that I intend posting, I wrote about the myth of huge volume discounts. Here is one para: "Over 22 years of importing, I found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls."

To a large extent it depends on how much business the supplier is getting, but also it can depend on how much they sub-contract. Subcontractors are usually beaten down in price right from the start and have nowhere to move for larger volume.

It's comforting to know that this sort of thing should be expected.

Also can't thank you enough for your advice. People like you make this forum awesome!

 

[Walter Hay]

MINIMUM ORDER QUANTITIES (MOQS), HAGGLING, AND DISCOUNTS FOR BIG ORDERS.

While it is usually true that the larger the order the lower the price, the price differences for various order quantities can be surprisingly small.

Chinese manufacturers in many industries have been obliged to work on low margins. Consequently prices quoted for their MOQs will often be near to the lowest price possible from that supplier. If a person wishes to order less than the MOQ, a manufacturer may seize the opportunity to gain some extra profit, even if the order is small and the total profit still won’t amount to a lot.

If someone wishes to place a very small order, it is reasonable to expect that a higher price will be required to cover the cost of processing which will be approximately the same, regardless of order size.

If however an MOQ is 1,000 pcs @ $5/ pc., and a new customer wants to order 100 pcs, the price should not go up beyond say, $7. That allows $200 to compensate the manufacturer for handling the small order. While I advise against haggling, this situation will often require negotiation that resembles haggling. I define haggling as trying to beat down the price by making extremely low counter-offers. The best way to gain the manufacturer’s cooperation is for the buyer to describe the small order as a “sample order.”

The myth of big volume discounts. Those who think that volume means large discounts have never dealt with Asian manufacturers. Sure they give discounts for larger quantities, but those discounts are usually very small.

Over 22 years of importing, I found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and then you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls.

Warning: Haggling can result in extremely low prices, but that will invariably lead to reduced quality. Watch out for another post to come soon on Quality. It also harms the business relationship and the supplier may choose to no longer supply.