MARGINS. Readers might be surprised to know that some German-made products are sold by retailers in other Western countries at prices no higher than similar Chinese made products.
It is almost certain that those products cost more for consumers in Germany. WHY? Because the German consumer is willing to pay those prices.
For my own use I regularly import certain products from the USA to Australia. My landed cost is no more than 40% of the prices charged by local manufacturers in Australia. Why do Australian consumers pay so much? Because local manufacturers are content with their market share and competition is based on slick marketing, and the consumers are unaware that they can easily import such products and save 60%.
Retailers worldwide often have big sales in which they offer discounts, usually around 50%. The gullible public rush in and buy, thinking they are getting a great deal. In fact the retailers are still making a huge profit because their cost on imported goods can be as low as 10% of the originally advertised retail price. Even if it is 15% they are still making good money.
So how can Fastlaners benefit from this? The answer is to understand MARGINS. New importers tend to believe everything they read on sites such as Alibaba.
They have no idea of manufacturing costs in places like China, Vietnam, Bangladesh, Estonia, Romania, etc., so when they see a price displayed that is way under the retail prices they have found in their marketing research, they say WOW! That's cheap.
The reality of pricing in China is that it is possible to buy at prices beyond an importer's wildest dreams. For example I know where to buy products in China for US$2 FOB, and I have seen them retail for as much as $60. Landed cost in the US would be about $3 if shipped via sea freight.
MARGINS will depend on your buying price. That's so obvious but I had to say it. You must buy at prices that give you a high margin.
To find the very best prices nothing can beat personal visits to factories, but if that is outside the budget, try offering well under the best price a supplier offers. Make that offer at a price that gives you a high margin.
They will say no, but if you thank them politely and say “If you find that you can meet our price, please contact me”, some might come back to you in a week, or two, or a month. Unless you have convinced them that you can benefit them because you have a ready market, they won't respond.
Remember that in places such as China there will be hundreds, and sometimes thousands of suppliers for the product you want. Spread your net.
The alternative to DIY negotiating is to use a truly reliable sourcing agent, but finding those can be like sticking a pin in a list while blindfolded.
Walter
It is almost certain that those products cost more for consumers in Germany. WHY? Because the German consumer is willing to pay those prices.
For my own use I regularly import certain products from the USA to Australia. My landed cost is no more than 40% of the prices charged by local manufacturers in Australia. Why do Australian consumers pay so much? Because local manufacturers are content with their market share and competition is based on slick marketing, and the consumers are unaware that they can easily import such products and save 60%.
Retailers worldwide often have big sales in which they offer discounts, usually around 50%. The gullible public rush in and buy, thinking they are getting a great deal. In fact the retailers are still making a huge profit because their cost on imported goods can be as low as 10% of the originally advertised retail price. Even if it is 15% they are still making good money.
So how can Fastlaners benefit from this? The answer is to understand MARGINS. New importers tend to believe everything they read on sites such as Alibaba.
They have no idea of manufacturing costs in places like China, Vietnam, Bangladesh, Estonia, Romania, etc., so when they see a price displayed that is way under the retail prices they have found in their marketing research, they say WOW! That's cheap.
The reality of pricing in China is that it is possible to buy at prices beyond an importer's wildest dreams. For example I know where to buy products in China for US$2 FOB, and I have seen them retail for as much as $60. Landed cost in the US would be about $3 if shipped via sea freight.
MARGINS will depend on your buying price. That's so obvious but I had to say it. You must buy at prices that give you a high margin.
To find the very best prices nothing can beat personal visits to factories, but if that is outside the budget, try offering well under the best price a supplier offers. Make that offer at a price that gives you a high margin.
They will say no, but if you thank them politely and say “If you find that you can meet our price, please contact me”, some might come back to you in a week, or two, or a month. Unless you have convinced them that you can benefit them because you have a ready market, they won't respond.
Remember that in places such as China there will be hundreds, and sometimes thousands of suppliers for the product you want. Spread your net.
The alternative to DIY negotiating is to use a truly reliable sourcing agent, but finding those can be like sticking a pin in a list while blindfolded.
Walter
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