My initial blunders

[moop]

My first foray into business was import-export. It seemed simple: Buy item A and then sell it for a premium. As you can imagine, this was very faulty simplistic reasoning and a recipe for disaster.

When i was greeted with the opportunity of importing cheap imitation dual sim mobile phones from overseas, I was ecstatic. Sure, the screen had terrible resolution and they looked like cheap knockoffs, but they were cheap. More importantly, I could import them and then sell them for double the price. Let's have a look at where I went wrong:

Mistake 1: I was very close to importing a bulk quantity of product without determining market demand. When I did end up surveying potential customers, not a single person was interested in purchasing the phones. Suffice to say, I would have been seriously screwed if I hadn't done some last minute due diligence. I would forget this lesson later on and get burned by some worthless products :eusa_naughty:

Mistake 2: I literally assigned arbitrary values for the sale price of the products. Also, my definition of 'cheap' was subjectively biased. The lesson to be learned here is that you should investigate your product/service more carefully to determine it's true worth.

Mistake 3: I let emotions obscure my judgment. Although not entirely relevant to the mobile phones, I later started to import products that I thought were 'cool' or useful to me. The logic was: If I don't sell them, I'll just keep them.

In hindsight, these mistakes seem incredibly amateurish and unbelievable but so many people make similar mistakes. They venture out and import/create products or services that have no market or perceivable value. Although I eventually managed to import and sell products properly, I learned some very basic rules the hard way.

In the end, I might have lost my time and a bit of money but I learned a very important lesson: Identify market demand/value before jumping into any business!

I hope my blunders were a helpful learning experience

:cheers:

 

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[Anon3587x]

If you want to practice buying low and selling high you may want to play world of warcraft or some online rpg.
Just sit in the auction house all day.

I know guys who have turned 1gold into 10000 gold.
your dealing with real people and by doing research into upcoming content its possible to get a real good grasp of what someone might be willing to pay more for in the future.

ex. Iron Bars were cheap as hell, they did not make anything good so they sold for real cheap. In the next expansion iron bars were used to make all sorts of good stuff so what did I do?

Bought all the iron bars I could for REAL cheap and re-sold them after the expansion hit for 10x-15x more then I paid.

I was in jr High when I did this.

As a 7th-8th grader playing everquest I managed to make 900 dollars selling in-game armor and items for real life USD.

I remember some of my in game friends used to spend hours and hours mining ore and
picking plants to make there money.

I always said screw that and just searched the Auction house for someone who was selling something really cheap I knew I could profit off of.

There were times when I would buy every item listed on the auction house, and re-list them for my own ridiculous price. Anytime someone would post one of my items I'd buy and re-list my own price.

Basically owning the auction house but only in certain niches I guess.

The skills I learned at 12-14 playing video games are priceless lol

 

[moop]

Yep, you would be surprised how many people make money from mmorpg.

There are numerous websites such as usfine which make money this way.

About a year or two ago, I remember reading about some kid who made between 50-100k from buying and selling game currency.

 

[rod_lleyton]

The lesson I learnt when I dabbled in import/export was to always secure a buyer first.

Locate your distribution channels; chain stores or retail stores, etc. Have an order in place first.

Have sample items shipped to you, which you can take to your distribution channels, and sell sell sell! Once they're convinced, take their written order - make sure it's a firm ORDER, not just a letter of intent - you can THEN take this to a financing source where they'll be more receptive to lending for inventory.

Depending on how large the shipment is, you may need to secure a warehouse.

The advantage of doing this:
1. Buyer already in place, no need to worry about stock.
2. Finance sorted - less worry.
3. You have a sample of the products first, so you're aware of what you're likely to get.
4. Promotion would be by the stores, which saves you marketing.

Still, you'd have to watch out for:
1. QA - make sure you appoint a credible company to do your QA; presumably you'd be importing from the far east, where some of the workmanship is really shoddy. There are specialist companies that do this for you for a reasonable fee.
2. A lot of chain stores don't like to get tied up. Have incentives for them to order from you.
3. Returns - what to do with them? Do you absorb the costs, or do you have a clause in place with the manufacturer?
4. Tariffs and other import taxes/duties - make sure you have a competent Customs broker. Often experienced ones can minimise your costs, sometimes in ridiculous ways. For example, classifying your imports as something else (legally) and lowering your tariffs. Did you know what Pringles Crisps are not really potato chips, and as such, are in a different import category?
5. Do not attempt to cut out the retail chains by having a website. If you're found out, you're toast!

This was one of my first businesses, import/export (I have someone doing this for me now, and I earn passive income from this now) and I've learnt so much.

My mistakes? Pretty much everything opposite of what I wrote above LOL! It's where you made the most mistakes you learn the most I reckon!

 

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[Anon3587x]

2. A lot of chain stores don't like to get tied up. Have incentives for them to order from you.

I really love this information your sharing Rod and I thank you. If you wouldn't mind me asking. . .Could you explain the quote a little better what you mean by incentives?

 

[rod_lleyton]

Hi Bateati,

I guess by "incentives", I meant anything you'd be willing to do to clinch that deal with the chain stores, without jeopardising your own business. One question to ask is, "how important is this order going to be for me, in the long run?" And that's why long term planning is so important.

For example, my first successful import/export venture was importing home décor items from Asia. In order to secure that initial order, I had to provide samples (this is probably required anyway - how else would they be able to gauge the quality of your product?), volume discount (they probably would demand that anyway, given their size), exclusivity (this would depend on you product - obviously if they can source it as well, you're toast because they have volume and economies of scale) and I also paid for the cost of delivery. There were other quite rigid conditions I had to agree to as well - can't really recall what they were now (I think they were things to do with returns). I think at the beginning the margin was almost non-existent because I simply wanted to secure that particular chain's order.

Once you've established a relationship with them, you can introduce other, more profitable lines. You have to make sure that the product does sell though, otherwise they probably won't order from you again.

The decision-makers are usually pretty hard to locate, let alone securing a time for you, but just keep trying.

My first import/export was a total disaster, because I did everything wrong. I was so sure that some idiotic toy would sell that I decided to ship half a container-load of crap without securing a buyer first. It was before internet commerce was prevalent and I simply couldn't sell the crap (I recalled my best mate buying 40 units and throwing them in the bin LOL). In the end I had to head to the local flea market every week and slash the price on the useless items just to get some money back.

The good thing about import/export is that it's pretty easy - I started off when I was a teenager - and it's relatively easy to turn it into a passive income business if you're not really focused on expanding.

Key things are:

* Relationships (both supplier and customer)
* Exclusive supply and/or product differentiation
* Orders and contracts
* Detail; who pays for what, and who does what?
* Physical stock and storage
* Faulty items and QA
* Logistics

 

[Anon3587x]

Hi Bateati,

I guess by "incentives", I meant anything you'd be willing to do to clinch that deal with the chain stores, without jeopardising your own business. One question to ask is, "how important is this order going to be for me, in the long run?" And that's why long term planning is so important.

For example, my first successful import/export venture was importing home décor items from Asia. In order to secure that initial order, I had to provide samples (this is probably required anyway - how else would they be able to gauge the quality of your product?), volume discount (they probably would demand that anyway, given their size), exclusivity (this would depend on you product - obviously if they can source it as well, you're toast because they have volume and economies of scale) and I also paid for the cost of delivery. There were other quite rigid conditions I had to agree to as well - can't really recall what they were now (I think they were things to do with returns). I think at the beginning the margin was almost non-existent because I simply wanted to secure that particular chain's order.

Once you've established a relationship with them, you can introduce other, more profitable lines. You have to make sure that the product does sell though, otherwise they probably won't order from you again.

The decision-makers are usually pretty hard to locate, let alone securing a time for you, but just keep trying.

My first import/export was a total disaster, because I did everything wrong. I was so sure that some idiotic toy would sell that I decided to ship half a container-load of crap without securing a buyer first. It was before internet commerce was prevalent and I simply couldn't sell the crap (I recalled my best mate buying 40 units and throwing them in the bin LOL). In the end I had to head to the local flea market every week and slash the price on the useless items just to get some money back.

The good thing about import/export is that it's pretty easy - I started off when I was a teenager - and it's relatively easy to turn it into a passive income business if you're not really focused on expanding.

Key things are:

* Relationships (both supplier and customer)
* Exclusive supply and/or product differentiation
* Orders and contracts
* Detail; who pays for what, and who does what?
* Physical stock and storage
* Faulty items and QA
* Logistics

Speed+ Thanks for your reply.

So the relationship between the buyer and yourself is one of the main ingredients?

Slashing your margins at first just to build trust and get some motion between yourself and the buyer really fits well in my book of things that work.

• Secure a buyer before you order the main shipment
• Build a relationship even if this means taking a cut in profits at first

I must admit one thing I don't like with all this is the leverage the retailer has over you (the salesman). Anyway to take the upper hand here, so your making "them" agree to your terms?

 

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