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Importing is costlier than Amazon. What am I doing wrong?

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by EsJay, Apr 15, 2018.

  1. EsJay
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    EsJay Contributor Read Millionaire Fastlane Speedway Pass

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    Looks like I have hit a roadblock! and looking for some advise.

    I short listed 2-3 products which I would like to import and got quotes from suppliers including courier shipping for 20-25 sample quantity. . Total Samples shipment weight is ~11-12 Kgs/20-25 LBS. Amazon listed costs for these products are in the range of $18-$25

    While per pcs cost itself seems to be competitive for sample quantity, courier (DHL/FEDEX) cost is what's killing me and effective cost just to get it delivered to my door is coming out more than items available on Amazon.

    Is this normal for small quantity? Or am I doing something wrong?
     
  2. MoneyDoc
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    MoneyDoc Gold Contributor Speedway Pass

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    Your product weight does seem high which would warrant the high freight costs for such a small quantity. Keep in mind, sometimes the courier charges by volume and not by weight which can also explain the high costs.

    Another thing to note, some suppliers, in particular trading companies, WILL quote you higher than the actual freight cost to make some more money. I have caught suppliers trying this against us in the past.

    I think @Walter Hay can help you out a bit more if you provide some more specifics. Knowing the volume, master carton size/quantity, units per master carton, etc. can help.
     
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  3. Mainstream7
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    Mainstream7 Beauty is Truth FASTLANE INSIDER

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    Your competitors are probably using freight shipping with high MOQs.
     
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  4. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    To do more than guess, I would need more details, but generalizing might give you a new perspective on the situation.

    Freight is always going to be an important, and usually major, factor in your costs. This is specially important when buying sample quantities.

    The simple fact is that whether or not the items are bulky, and consequently will be charged on the much higher volumetric weight basis, the small quantity of items being shipped will automatically cost you more per item than larger quantities.

    Put simply:
    • Bulky items cost more per item to ship.
    • Heavy items cost more per item to ship.
    • Small quantities of items cost more per item to ship.

    These must be determining factors when choosing a product, unless you are:
    • Willing to lose money on a small order to validate a product.
    • Able to order a large enough quantity to make it worth the money for the larger purchase quantity and the longer time to ship.
    As a rule of thumb, shipments weighing more than 200 KG (500lbs) will usually be much cheaper per unit to ship by sea freight. Before jumping in and ordering, you need to know exactly what the unit price will be under each scenario.

    The worst case I have ever seen was a woman confirming and paying for an order for a large quantity of very bulky items. The FOB price quoted seemed very profitable, until she discovered that under FOB terms she had to pay the freight and associated costs. :eek:

    She turned to me for help, even though she hadn't bought my book, but the best I could do for her was to advise that she abandon the shipment with the supplier, and lose only $1000 instead of that amount plus the additional $4000 for freight.

    Always be sure that you know all costs before ordering.

    Walter
     
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  5. Valor
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    Valor Silver Contributor FASTLANE INSIDER Speedway Pass

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    Are you saying that the FBA fees are more than your landed product costs? What is the breakdown of your product costs vs. your shipping cost on this order? If your shipping cost is a high % of the cost (which I'm assuming it is), that means it's probably a heavier product relative to its cost and you can save significantly by going freight with larger orders. More info would help

    Either way, if you're competing only on price, I'd say find another product.

    If you still want move forward with this product, I'd recommend:

    -Finding ways to differentiate yourself other than price
    -Like Walter said, look at the initial order as a way to validate your product offer, even if you only break-even (I've lost money when validating products before placing larger orders)
    -Use the Amazon FBA calculator to calculate margins if you haven't already (I'm assuming this is where you got your mentioned costs from)
    -Get a quote from a freight company on what a larger order (500 lbs+) would cost you, and calculate your estimated profit using the numbers you get from the FBA calculator. Use Freightos if you're just looking for an estimate

    Without knowing more details (such as the volume of your product), you could potentially get your shipping costs under $1 per unit with a large enough order. I recently shipped about 2,000 lbs sea freight for under $1 per lb, but my products are also smaller and can be packed more densely. I could even cut my shipping costs/unit drastically with a larger order still.
     
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  6. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    It’s because you only ordered 20-25 and you shipped it by air. If you order 500 and sea ship I’m sure your landed price will be much lower.
     
  7. exclusives88
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    exclusives88 Silver Contributor FASTLANE INSIDER Speedway Pass Summit Attendee

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    I hope that your landed cost is under $1

    If your product is 25 lbs, FBA fee (assuming not oversize item) is $13.45 plus referral fee of $3.75. If your sales price is $25. You would want a minimum 30% profit margin ($7.50).

    Work backwards....

    Sales Price: $25.00
    FBA Fee: ($13.45)
    Referral Fee: ($3.75)
    Profit Margin Needed: ($7.50)
    -------------------------------
    30 cents should be your landed cost.

    EDITED: Oops, it is 25 lbs total sample weight but per unit. Disregard :)

    Echoing everyone else here. You need to sea freight to get your prices lower.
     
    Last edited: Apr 16, 2018
  8. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I think 25lbs was the total weight on 20-25 pcs.
     
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  9. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    +1 to @biophase comment. If you’re ordeing a sample shipment through DHL, it’s probably air freight.

    When you decide to order a normal quantity, sea freight will be much less expensive per unit.
     
  10. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Sorry if I seem pedantic @Scot, but air freight is not the same as air courier. You are quite right in that a sample shipment will usually travel via DHL, UPS, FedEx etc., as an air courier service.

    I labor this point because I have seen too many people ship via air freight (also called air cargo) only to discover to their huge cost that there are numerous inward charges to be paid once the item arrives at the nearest airport.

    Those costs are invariably included if the shipment is handled as an air courier consignment. They are not extra charges as is the case with air freight.

    Walter
     
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  11. EsJay
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    EsJay Contributor Read Millionaire Fastlane Speedway Pass

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    Everyone, Thank you so much, this has been so much helpful.

    Taking inputs from this thread, I got the details required and indeed higher cost is because of Air courier (FEDEX IE). I asked for MOQ quotation to get an idea and per unit shipping costs are significantly coming down. I may also have little more room for further negotiation if/when I place large quantity order.

    So I have gone ahead and placed my first sample order...will keep posted on my progress thread

    Thank you once again.

    SJ
     
    Last edited: Apr 17, 2018
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  12. Sagemoney
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    Sagemoney Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Seems like we're going through the same issues currently :)

    Looking forward to watching your progress bro!
     

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