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How I started and built my B2B importing empire

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Walter Hay

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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. They might as well have been selling groceries, just scanning the barcodes.

  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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DeepScripted

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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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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.
 
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Walter Hay

Walter Hay

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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.
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
 

DURABLEOILCOM

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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

What if I want to import or potentially start my own brand do you have any books for doing that you recommend for me?
 

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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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Walter Hay

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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?
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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Walter Hay

Walter Hay

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

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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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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?
 

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Thanks for adding insight.
And your time in answering.

Rep++
 
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Walter Hay

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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?
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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Walter Hay

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Thank you, by purchasing your books do you offer any coaching support?
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
 

Chandler Ruffini

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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!!
 

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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
Hi Walter,

I love your contributions on here. Thank you!

I'm about 10 pages deep into a "Franchising" search in the archives, and I'm only finding "thinking about franchising", so I'd love to buy that guide when you do make it, because... well... I'm "thinking about franchising".
 
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Walter Hay

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Hi Walter,

I love your contributions on here. Thank you!

I'm about 10 pages deep into a "Franchising" search in the archives, and I'm only finding "thinking about franchising", so I'd love to buy that guide when you do make it, because... well... I'm "thinking about franchising".
The book is completed and will be available as soon as I have completed formatting. That should only take another couple of days.

I will make an announcement when I launch a new marketplace thread.

Walter
 
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Walter Hay

Walter Hay

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Hi Walter,

I love your contributions on here. Thank you!

I'm about 10 pages deep into a "Franchising" search in the archives, and I'm only finding "thinking about franchising", so I'd love to buy that guide when you do make it, because... well... I'm "thinking about franchising".
The book is completed and will be available as soon as I have completed formatting. That should only take another couple of days.

I will make an announcement when I launch a new marketplace thread.

Walter
The couple of days turned into a couple of weeks, but I hope members will find the wait worthwhile.

This book answers the many requests posted on the forum for suggestions on how to scale. You can find more details here:
PUBLISHING Forum Members and Their Books!?

Walter
 

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Walter Hay

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Selling B2B Face to Face - COLD. Scroll down to see selling WARM.

I once, (and once only!) attended a sales training session, where the only thing of value I heard or saw was a postcard that portrayed a tomcat walking along the top of a fence, followed by a line of kittens. It displayed the motto: "You've gotta make the calls to get the results."

There was, and still is, a need for that lesson, because the average sales rep only makes 8 calls a day. Even when selling as an employee, my average was 17. Even if I had only been an average salesman, I would have outperformed the average rep.

Here are a few rules I set for myself, then for my commission reps, and finally for my franchisees:
  • Organize your day. I listed about 20 planned calls and mapped out a route using a huge street map mounted on the wall. I wrote my schedule with ETA and ETD listed for each, and with the least important ones highlighted, so that if I was behind schedule I could bypass one or more of those.
  • Know your product. If you can live and breath the product that you are selling, you will know all there is to know about it. There's nothing worse than dealing with a sales person who doesn't know how the product works or why it is genuinely superior to others.
  • Don't use desk size graphic flip folders or power point presentations. Speak from knowledge instead of reading out a set spiel from those charts.
  • Don't waste the buyer's time. Talk about your company, your product, but not about football or the weather.
  • If your product or service can be demonstrated in the buyer's office, do that. If it must be demonstrated in the factory, warehouse or other location offer to do so and ask for an appointment. If it is software, can you provide a part of the program on a USB stick? Your company name and number should be imprinted on the stick.
  • If your product has eye appeal, show a sample or samples. The products we sold were small and looked good. I and my reps and franchisees carried a display attached to red velvet trays, and it was gratifying to see eyes open wide when the prospect saw them, and even more so when they called other staff to have a look.
  • Leave something memorable. Promotional products are frequently used, but must be quality! I always handed over a silver plated coin as I left, saying: "You might find this decision maker handy." The coin had on one side YES, and on the other, NO. Variations were available such as BUY or SELL, BULL or BEAR, FIRE or HIRE. Our business name and URL were also on opposite sides. As a result, we sold many thousands of those with the customers' contact details embossed.
  • Follow up. Busy executives do forget sometimes and a reminder can lead to a deal.
Selling B2B Face to Face - WARM.

I include this because it worked incredibly well for me and my reps and franchisees. They were hesitant at first because it seemed so menial. Once they tried it and their cell phones began ringing before they got back to their car, they were hooked.

It won't work for all B2B selling, but here is how it worked for me:

An envelope was prepared containing a product sample, small color brochure, price list, and letter. The sample was there to ensure that the envelope would be opened. Something such as the coin mentioned above or a USB stick would suffice, but the letter is the critical element. That letter must have a killer headline, and a call to action, even if that call was only to phone for a visit.

I walked up to the reception desk, and handed over the envelope with the request that it be given to the person responsible for ....... Product type X, Service type Y etc. I immediately thanked the receptionist, turned on my heels and walked out.

The result for me, reps and franchisees was often that cell phones rang before we got back to the car. Quite often that meant an immediate meeting with the buyer. If you can get prospects to ask to see you, and your product or service is good, you can go to that meeting with confidence.

You are no longer cold calling, this is a warm call.

It's hard work, but even one day a week following this method can give a great boost to your sales.

Walter
 
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Walter Hay

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With the huge emphasis on ecommerce and the competition that is a feature of that business model, I thought it time to revive this thread.

Questions and comments have tended to concentrate on my suggestion to scale by selling franchises of your successful business, or buying one with a view to scaling it by franchising it, I would like to at least for now, concentrate on B2B.

To begin with, please read about my Business#1 in my thread:
How I Made My First Million and the Next…….

Then I would like readers to consider how big the B2B field really is. There seems to be a lot of ignorance about the opportunities in B2B, so just consider this:

In the USA there are 1,228,780 manufacturing businesses. Unlike consumers who buy sporadically, and in many cases will never even buy from vendors a second time, B2B customers are almost invariably repeat customers, unless you have sold them capital equipment, a website, or one off software etc., without continuing service required.

Please note that I have no affiliation with NAICS organization. It is privately owned by Mitch Feldman.

If you want to see a list of the types of manufacturing carried out by US businesses, see: SIC Division: D Manufacturing | NAICS Association where you will find business categories listed and if you click on manufacturing you will find how many different manufacturing categories there are among those 1,228,780 manufacturing businesses.

Some companies will purchase items only periodically, but the majority will be placing orders frequently.

To find companies to sell to, Google the company type and then find everything about that business. Study them, think of what they must need on a daily, weekly, or monthly basis.

Find out who are your potential competitors for the product or service that you want to sell, and use the usual methods, such as calling as a potential customer, to learn how much they would charge. In the process you might discover flaws in their system such as website deficiencies, slow responses to sale inquiries, poor product knowledge, slow delivery times quoted, high cost delivery charges etc. The possibilities are endless.

If you are prepared to buy contact information you can obtain that from Targeted Business Lists | NAICS Association Personally, I would prefer to avoid paying for such information unless I could be very confident of getting a good response for little cost.

If you have read my thread linked above, you will see that I built my businesses primarily by cold (and warm) calling. In business #2 I also used Print Yellow Pages and Direct Mail, both with a great deal of success.

I will be happy to answer any questions about B2B business.

Walter
 
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Walter Hay

Walter Hay

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My post has stirred some interest, with people asking me about finding companies in their country.

Rather than finding an equivalent to NAICS in each country, you can do well by searching Wikipedia for a list of companies in your country. They won't all be there but not only will you get a list of hundreds or thousands of companies, more importantly you will get a list of industries at the same time.

If you use Google advanced search looking for a particular industry, restricting results to your country, you will find companies listed. There you have at least a starting point to explore the possibilities of what products or services you could supply.

In particular, read again my paragraph about finding out who are your potential competitors are........

Walter
 
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