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How I started and built my B2B importing empire

Discussion in 'Business Models, Niches, Industries' started by Walter Hay, Mar 29, 2019.

  1. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    With concerns growing among forum members regarding the lack of control when selling on Amazon, there has also been an increasing interest in B2B selling, to some extent due to the greater control possible.

    To help as much as I can, I decided to start this thread, firstly outlining the way I started my second B2B business, based on importing, and a strong marketing policy. Then I will show how I scaled it. I will be happy to answer questions that might arise.

    Some of the following information can be found by searching my posts, but that can be very time consuming, so here in detail is the story:

    I began importing in 1987 and I was fortunate enough to have a good starting point.

    I had been exporting to countries in the Asia/Pacific region for 9 years, selling B2B.

    One of my biggest customers was a distributor in China. During my many visits to China I built a network of contacts, which was easy, because as I found, every business person there has a relative who operates a business, and I was continually being introduced to these keen entrepreneurs.

    Many of them asked me to import their products, but I filed all their requests until I sold my exporting business.

    Then I had to decide what products and what market sector were most likely to produce a profitable business. After looking through the files of material supplied by my China contacts I chose a particular industry sector about which I had some knowledge, and I also knew of a big need in that market.

    I knew about that need because several relatives worked in a particular field and I recalled hearing them all complaining about supply problems. These were:
    1. Failure to deliver on time when specific deadlines were critical.

    2. Appalling customer service, including suppliers’ employees knowing almost nothing about their products.

    3. Constant quality problems, with breakages being commonplace.
    Because I had visited so many factories in China I knew how to choose ones that produced good quality, on time, and at reasonable prices. I obtained samples and used those samples to make B2B sales.

    Those sales were helped by me being able to convince prospects that I would always deliver on time. A guarantee of goods supplied free if delivered late was the clincher. I was able to make that bold offer because I chose suppliers who actually kept to my deadlines. Delivery from China was quicker than local manufacturers could offer. The quality I purchased, and re-sold, was far superior to what my competitors were supplying. I also went the extra mile with more than generous guarantees.

    Sales grew rapidly, and I employed family to help handle the growth. That growth quickly became too much for all willing and available family members to handle, so I chose franchising as the way to continue growing.

    The method I used to sell franchises was to employ commission reps for locations where it had become impractical for me as a salesman to continue visiting. I set up local addresses and telephone numbers. Calls to those numbers were all automatically diverted to our head office.

    For those interested, my commission structure was: 20% for sales resulting from our advertising leads, and 30% for all sales generated by cold calling. Ask me later about “warm calling.”

    Commission reps knew that once I sold a franchise for that territory it was the franchisee’s choice whether or not to keep them on. Consequently, quite a few established territories were sold to commission reps.

    Eventually I had a franchise network in four countries. I taught my franchisees how to safely source the product range, and handle the importing without needing to know all the rules and regulations, though most preferred to buy from my established suppliers.

    Walter
     
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  2. DeepScripted
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    DeepScripted Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Walter, after reading your book and having discussed with you a few of my issues - which was very helpful. If it wasn't for you, I would have placed my first order, which would really be a glamorous fail. I really appreciate you sharing your personal story and experience for our benefit.
     
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  3. DURABLEOILCOM
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    DURABLEOILCOM New Contributor

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    I wanted to ask you which one of your products you would recommend for me. To give you a Gauge of where I am at, I currently have a business tax ID to buy Wholesale. Currently have been working with Synnex but have found their pricing not to be competitive or wholesale at all. Selling products from their prices there is no profit to be made or even be competitive with other sellers on Ebay and Amazon. I am trying to buy good quality known brands at true wholesale costs in order to turn profits.
     
  4. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    If you want to buy from wholesalers and resell, my books will not help you.

    Synnex is an importer, not a manufacturer, so they are in effect acting as a middleman, and that takes a lot of potential profit out of the equation for resellers like you.

    To get the best prices on good brands you would need to buy direct from the manufacturers in the USA. The problem with that is that as a general rule, US manufacturers take the easy way out and sell to distributors, who in turn sell to smaller resellers.

    As a result US prices are higher than they need to be, with everyone taking their cut.

    This is one of the reasons why importing has boomed, particularly relatively small scale ones, who sell their imported products direct, mostly to consumers, but sometimes to business customers.

    You would need a convincing story to persuade a US manufacturer to sell direct to you. If you had a B & M store that would help.

    If you find a manufacturer that will sell to you, and they enforce MRSP pricing (illegal in many other countries) at least you won't have to fight a price war, but you will need a great listing and sales copy.

    Walter
     
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  5. DURABLEOILCOM
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    DURABLEOILCOM New Contributor

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    What if I want to import or potentially start my own brand do you have any books for doing that you recommend for me?
     
  6. million$$$smile
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    million$$$smile Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    Subscribed!

    Appreciate the thread.
    Question: How did you come up with a price for your franchises?
    Were they based on size of market territory, on potential sales or?

    Was it a franchise that need to be renewed yearly and were they all branded under one company?
    Did all sales go through you or were they direct to your suppliers overseas?

    The franchising part of your story alone could be a thread...

    R
     
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  7. Raoul Duke
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    Raoul Duke Call it. Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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  8. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Both of my books, ProvenGlobalSourcing, and Labels For Private Labeling would be useful, but I suggest you first read through my thread
    GOLD! Sharing my lifetime experience in export/import. Product sourcing specialist.

    Keep in mind that you won't learn all you need to know, even by reading all 64 pages.

    The books are available at a discount. See my Marketplace offer below.

    Walter
     
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  9. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Deciding on the price to charge required skills like those of a water diviner. There were many factors to consider, but the main one was population.

    From the results achieved in several locations during the first year it became apparent that population X could produce sales of Y, provided there was a reasonably similar distribution of organizations of the type that bought our products.

    Knowing what sales were achievable using our marketing methods, and the consistent profit margins, made it easy to calculate a price.

    Unlike many franchisors who like to make a killing on the franchise license fee, we charged only 1/3 of the profit that we would have expected to make if operating in that area ourselves.

    There was only ever one license fee, and that had no expiry date, subject to the franchisees following the rules. Royalties were the income source.

    Everything was sold under our brand, regardless of the country in which the franchisees operated.

    Franchisees were at liberty to source supplies anywhere, provided they met our quality specifications. In almost every case they chose to play it safe and buy from suppliers listed in the Operations Manual.
    I am well on the way with my writing of a detailed explanation of franchising as a means of scaling, but don't hold your breath.

    Walter
     
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  10. million$$$smile
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    million$$$smile Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    So, your reasoning for franchising rather than outright hiring sales reps and either managing them yourself or hiring for that position was that you thought franchising would be an easier/quicker way to scale?

    All in all, would you do it that way again and if not, why not?

    I have always regarded franchising as a loss of control unless your business is franchising and not really creating/developing your own end of the business.

    Sorry for the questions, but I am really interested in why one would franchise rather than scale by hiring territory managers yourself....

    Fascinating subject.
     
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  11. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Employees are a pain to manage, particularly as numbers grow.

    Control is quite tight under a franchise agreement. Failure to obey the rules as set out in the agreement, which always incorporates reference to being obliged to follow the procedures in the operations manual, would allow me as franchisor to terminate the agreement.

    I only ever had to do that to one franchisee.

    Scaling by franchising was easy. Imagine setting up fully functioning and profitable branch operations in 10 locations, and doing that within 18 months from start to finish.

    Later, rather than hiring territory managers, I chose to sell master franchises covering big swathes of territory, and they sold the individual franchises. Naturally, I received a slice of the license fee they received.

    I also received a share of the royalties they collected.

    All advertising material was replicated, so it only had to be prepared once. My office arranged bulk printing prices for brochures, price lists, and letters for direct mailing. Franchisees paid for the quantity they had ordered.

    I also designed a miniature version of one of the products for use in bulk mail outs. Its obvious presence in the envelope ensured that it would be opened. (Think Readers Digest, but vastly better quality.) Franchisees paid for them.

    I already had admin staff (family) so I was free to travel, doing my DIY market surveys, selling franchises, visiting franchisees if they weren't under the care of a master franchisee, and visiting suppliers in various countries. Oh, yes... I also managed to see the sights.

    Walter
     
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  12. MoneyDoc
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    MoneyDoc Gold Contributor FASTLANE INSIDER Speedway Pass

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    Hey Walter,

    Any tips/suggestions for dealing with retailers? Currently in talks with GNC. When/If it gets to the point of pricing, logistics, payment terms, etc. anything I should know? What markup do these retailers usually aim for?
     
  13. million$$$smile
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    million$$$smile Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    Thanks for adding insight.
    And your time in answering.

    Rep++
     
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  14. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I am pleased and relieved to say that I never supplied retailers.

    Before starting my chemical business I worked in sales for a specialty industrial chemical company, and although they were doing well with a great range of industrial chemicals, management decided to produce consumer lines.

    I had to visit retailers large and small. I made the sales, but my employer soon realized it was not a good move.

    The problems were: Minimum discount 50% off retail, and the retailers, particularly the large ones, treated suppliers as their bank.

    The bigger they were, the worse they were to deal with. Big retail chains demanded 120 day terms, otherwise, no deal.

    Walter
     
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  15. DURABLEOILCOM
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    DURABLEOILCOM New Contributor

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    Thank you, by purchasing your books do you offer any coaching support?
     
  16. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I don't provide coaching, but I do provide support by way of answering questions that might arise.

    Those questions that are not confidential are answered on my AMA thread, but any that need to be kept confidential can be sent to me via the forum messaging (PM) system.

    I try to answer swiftly, but time zones can sometimes cause a delay.

    Walter
     
  17. Chandler Ruffini
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    Chandler Ruffini New Contributor Read Millionaire Fastlane

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    Cool thread! Thanks for the insight! Me and my partners are currently building a B2B marketplace our selves and hope to bring some waves to the space we'll be operating in so I appreciate any post I can read and learn from about B2B in general!!
     
  18. therealmark
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    therealmark Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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