Sharing my lifetime experience in export/import. Product sourcing specialist.

[Ultra Magnus]

Hello Walter!

Thank you very much for sharing your expertise in this area with us. I have a question which is not about sourcing, but I strongly believe you are my best bet for a great answer. I am making my own product, which I want to sell in Western Europe and the US (my invention, manufactured in the EU). I am a citizen of the EU, so it's likely that selling within the EU will not be very problematic, as there are no internal customs fees, just VAT and then income tax. However, in terms of selling to US customers (directly, the product is new, as is my company, so I would like to bypass middlemen to have control over building a brand experience), the process seems a bit more complicated.

I was looking into Foreign Trade Zones as the solution. The intention is shipping, say 100 units there, paying for storage, and using a 3rd party logistics partner to ship units to individual customers. From what I gathered doing research online, this would allow me to put the freight and customs fees in the price without the customer knowing, offer them hassle-free domestic shipping on a premium imported product (e.g. by using an FTZ in Nebraska, which would allow similar shipping times and costs to customers on both Coasts); best of all, I would only pay custom fees once per week, and only for the units that have actually been shipped.

My question is, is this feasible? Are Foreign Trade Zones only for large companies and big shipments, not for small entrepreneurs such as myself? Perhaps you address this in your book, and I should buy it? Do you have any experience with Foreign Trade Zones?

Thanks in advance!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MattR82]

For the benefit of other readers I would like to comment that MattR82 has worked hard trying to locate suppliers of a unique product that most people would never dream of importing.

The lack of reputable verification was a barrier, but I think that was because there is probably only one manufacturer in China and that company sees no need to go to the trouble or the cost of inspections by SGS and other forms of verification.

MattR82's progress report will be interesting to follow when he gets to the stage where he has positive progress to report. As it is right now, I am satisfied that he is on the right track.

My latest book revision, due out soon, includes a section dealing with sourcing from unverified suppliers. There are good reasons why doing so can put you one jump ahead of the competition.

Walter

Thought I would give an update on how I went.
Out of the 2 suppliers I found, I only ended up seeing one of them on my trip to Shenzhen last week. They were reasonably professional through the entire process, while the other supplier just became more and more difficult, and well, began saying things they would then renege on etc.

Anyway back to the meeting. I enquired about directions which they gave me. They then messaged back they would send a driver to pick me up from my hotel for the hour long drive to the showroom and factory. Let me tell you.. driving in a storm with torrential rain on a highway in China is an experience..

The sales manager that was with the driver was the same man I had been conversing with. A very young guy in his early to mid 20s at best. His English was passable, but very average. Walter, as per your writing, it is indeed a common tactic for the Chinese to simply avoid the question by basically fluffing over it! During the hour long ride I found it interesting trying to figure out if he was being evasive or just did not have the language capacity. I believe it was a bit of both.

It was already lunch time when we arrived so I was whisked off to lunch with the other sales managers and the clients they had with them as well. It was great to break the ice and chat to some customers from Europe planning the same thing as me. And I also met a more senior sales manager (also Chinese) who had perfect english and even an American accent from college and work in the states for an extensive period. The difference is truly remarkable! As it turns out, the sales manager I had was not really trying to avoid my question, which was if I was able to see the factory. They do not really manufacture so much as buy the different components (electronic, steel frame, ABS material etc) from multiple manufacturers and piece kits together at their warehouse which is attached to their showroom.

After lunch we went to the showroom. Impeccable and clinical looking area. And there were a lot of chinese nationals there dealing with sales people. Every single variation of the product was there to test and try. They were busy. I also had a look at the warehouse and how they put the product and kits together.

At the end of the day, I think they were quite interested in the fact that I was Australian. Went and sat down with the owner and drank tea for an hour or so chatting about the possibilities and where I truthfully was with the project. They also briefly discussed the opportunity of becoming a distributor in Australia if I ever wanted to, although that was something I didnt really want to get into at the time.

All in all, a positive meeting and interesting experience. I would prefer to forget about Chinese immigration/visa scenario though!

Walter your book and AMA thread was an absolutely fantastic help in being able to be at least somewhat prepared. My thanks to you

 

[Walter Hay]

Hello Walter!

Thank you very much for sharing your expertise in this area with us. I have a question which is not about sourcing, but I strongly believe you are my best bet for a great answer. I am making my own product, which I want to sell in Western Europe and the US (my invention, manufactured in the EU). I am a citizen of the EU, so it's likely that selling within the EU will not be very problematic, as there are no internal customs fees, just VAT and then income tax. However, in terms of selling to US customers (directly, the product is new, as is my company, so I would like to bypass middlemen to have control over building a brand experience), the process seems a bit more complicated.

I was looking into Foreign Trade Zones as the solution. The intention is shipping, say 100 units there, paying for storage, and using a 3rd party logistics partner to ship units to individual customers. From what I gathered doing research online, this would allow me to put the freight and customs fees in the price without the customer knowing, offer them hassle-free domestic shipping on a premium imported product (e.g. by using an FTZ in Nebraska, which would allow similar shipping times and costs to customers on both Coasts); best of all, I would only pay custom fees once per week, and only for the units that have actually been shipped.

My question is, is this feasible? Are Foreign Trade Zones only for large companies and big shipments, not for small entrepreneurs such as myself? Perhaps you address this in your book, and I should buy it? Do you have any experience with Foreign Trade Zones?

Thanks in advance!

FTZs were originally set up to promote manufacturing in the US by importers bringing in components rather than completed goods. This has now changed to the point that storage duty free in order to defer duty payments is commonplace. Most users of FTZs are big importers, but use of these facilities by smaller importers has been simplified in recent years by the evolution of the fulfillment industry.

The complexities of operating within an FTZ mean that you will certainly need help in the form of a fulfillment center that operates within an FTZ. An ordinary logistics company would be too costly to use.

There are a few such fulfillment centers, but most are very large companies and they might not be interested in helping a newcomer. There is a family operated one in California, http://www.amsfulfillment.com and a couple of much bigger ones are [URL='http://www.otcorp.com']http://www.otcorp.com and [url]http://www.ohl.com/ This last one operates fulfillment centers in many countries. I mention them because it might interest other readers. I don't know of any in Nebraska.[/URL][/URL]

You might find that the weekly fee for customs lodgement and payment of customs fees could be too expensive unless you make multiple sales each week. The only other real drawback is that new importers using FTZs are invariably flagged by USCBP and shipments will be delayed for close scrutiny until eventually, one day they decide that the new importer is genuine and above board.

On the subject of Foreign Trade Zones, it won't help you, but I will add for the benefit of other readers, that use of a fulfillment center that operates within an FTZ can help you get around the problem of quotas in some cases. Quotas are allocated on Jan 1st each year, so if you have your shipment that is subject to quotas delivered towards the end of the year, you can benefit by the "first come first served" system of quotas, by having the fulfillment center lodge you application early on Jan 1st.

My book does not deal with FTZs, so I doubt that you would find it much help.

Walter

 

[Walter Hay]

Thought I would give an update on how I went.
Out of the 2 suppliers I found, I only ended up seeing one of them on my trip to Shenzhen last week. They were reasonably professional through the entire process, while the other supplier just became more and more difficult, and well, began saying things they would then renege on etc.

Anyway back to the meeting. I enquired about directions which they gave me. They then messaged back they would send a driver to pick me up from my hotel for the hour long drive to the showroom and factory. Let me tell you.. driving in a storm with torrential rain on a highway in China is an experience..

The sales manager that was with the driver was the same man I had been conversing with. A very young guy in his early to mid 20s at best. His English was passable, but very average. Walter, as per your writing, it is indeed a common tactic for the Chinese to simply avoid the question by basically fluffing over it! During the hour long ride I found it interesting trying to figure out if he was being evasive or just did not have the language capacity. I believe it was a bit of both.

It was already lunch time when we arrived so I was whisked off to lunch with the other sales managers and the clients they had with them as well. It was great to break the ice and chat to some customers from Europe planning the same thing as me. And I also met a more senior sales manager (also Chinese) who had perfect english and even an American accent from college and work in the states for an extensive period. The difference is truly remarkable! As it turns out, the sales manager I had was not really trying to avoid my question, which was if I was able to see the factory. They do not really manufacture so much as buy the different components (electronic, steel frame, ABS material etc) from multiple manufacturers and piece kits together at their warehouse which is attached to their showroom.

After lunch we went to the showroom. Impeccable and clinical looking area. And there were a lot of chinese nationals there dealing with sales people. Every single variation of the product was there to test and try. They were busy. I also had a look at the warehouse and how they put the product and kits together.

At the end of the day, I think they were quite interested in the fact that I was Australian. Went and sat down with the owner and drank tea for an hour or so chatting about the possibilities and where I truthfully was with the project. They also briefly discussed the opportunity of becoming a distributor in Australia if I ever wanted to, although that was something I didnt really want to get into at the time.

All in all, a positive meeting and interesting experience. I would prefer to forget about Chinese immigration/visa scenario though!

Walter your book and AMA thread was an absolutely fantastic help in being able to be at least somewhat prepared. My thanks to you

Great to hear from you @MattR82 . Your experience certainly is typical, and recounting it as you have should be helpful to any members who are considering a trip to China.

There is a fine line between manufacturing, and assembling of components. Almost every manufacturer will be assembling or at least processing components sourced outside. Very few will be completely vertically integrated.

In the case of the product you are researching, I would venture to say that the only part that any manufacturer could do for themselves without massive investment in technology and equipment is the steel frame. The ABS material for example requires very specific expertise to manufacture in the form you saw it, and although in that case the molds can be made at relatively low cost, the equipment needed to handle those molds is hugely expensive.

I would have no hesitation in describing the company you visited as a manufacturer.

I hope you enjoyed your hour long Jasmine tea drinking session!

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[JAMES-L67]

Hi Walter,

First, thank you for taking your time to answer all these questions for us.
The question I have for you is this (may have been covered, but 29 pages is a lot to sift through):

- When starting out, would you recommend building a brand to sell your item(s) through existing sales channels (eBay, Amazon etc.), build an ecommerce site, or sell through an unbranded account on an existing sales channel (such as a personal eBay account)?

Cheers
James

 

[Ultra Magnus]

FTZs were originally set up to promote manufacturing in the US by importers bringing in components rather than completed goods. This has now changed to the point that storage duty free in order to defer duty payments is commonplace. Most users of FTZs are big importers, but use of these facilities by smaller importers has been simplified in recent years by the evolution of the fulfillment industry.

The complexities of operating within an FTZ mean that you will certainly need help in the form of a fulfillment center that operates within an FTZ. An ordinary logistics company would be too costly to use.

There are a few such fulfillment centers, but most are very large companies and they might not be interested in helping a newcomer. There is a family operated one in California, http://www.amsfulfillment.com and a couple of much bigger ones are http://www.otcorp.com and http://www.ohl.com/ This last one operates fulfillment centers in many countries. I mention them because it might interest other readers. I don't know of any in Nebraska.

You might find that the weekly fee for customs lodgement and payment of customs fees could be too expensive unless you make multiple sales each week. The only other real drawback is that new importers using FTZs are invariably flagged by USCBP and shipments will be delayed for close scrutiny until eventually, one day they decide that the new importer is genuine and above board.

On the subject of Foreign Trade Zones, it won't help you, but I will add for the benefit of other readers, that use of a fulfillment center that operates within an FTZ can help you get around the problem of quotas in some cases. Quotas are allocated on Jan 1st each year, so if you have your shipment that is subject to quotas delivered towards the end of the year, you can benefit by the "first come first served" system of quotas, by having the fulfillment center lodge you application early on Jan 1st.

My book does not deal with FTZs, so I doubt that you would find it much help.

Walter

Thanks a lot! Rep transferred.

I will look into the options you listed, maybe one of these companies is willing to work with me.

Just wanted to say, the value you are adding in this thread is legendary – many of the well-liked threads on this forum focus on mindset and motivation, yours is just actionable advice in a very profitable area from a veteran. This is the stuff of trade secrets.

 

[Walter Hay]

Hi Walter,

First, thank you for taking your time to answer all these questions for us.
The question I have for you is this (may have been covered, but 29 pages is a lot to sift through):

- When starting out, would you recommend building a brand to sell your item(s) through existing sales channels (eBay, Amazon etc.), build an ecommerce site, or sell through an unbranded account on an existing sales channel (such as a personal eBay account)?

Cheers
James

Hi James, I am not the best to answer this because I am not an internet marketer. Both of my previous businesses were selling B2B.

But..... I do have an opinion that might help. If you can be certain that you have chosen a product that will sell at a high margin, and you have the ability to sell it, you could start off private labeling. If you want to test the water with a product and also test your marketing ability, selling a generic product on eBay can give you the experience and might help you decide the right direction.

I have no doubt that establishing your own brand, preferably with products that are unique, is the way to secure your market as much as is possible.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Here is a calendar showing all holidays in China for 2016. Ideally all should have started planning earlier than this, but if you have not, you should act now. Don't forget that the few weeks before and for at least 2 weeks after Chinese New Year will be hectic over there.

EDIT. Deleted because formatting had gone crazy. Will re-format and post again.

 

[AgainstAllOdds]

Here is a calendar showing all holidays in China for 2016. Ideally all should have started planning earlier than this, but if you have not, you should act now. Don't forget that the few weeks before and for at least 2 weeks after Chinese New Year will be hectic over there.

EDIT. Deleted because formatting had gone crazy. Will re-format and post again.

Walter - I have a factory telling me they're off from January 10th to February 15th. Is that normal? Or is there something questionable going on? I received that response after trying to schedule a factory visit the week of January 10th.

 

[GravyBoat]

Hi Walter,

See your PMs. I have included the instructions on how to navigate the site. Not easy, but well worth it. Just another barrier to entry that keeps people using Alibaba instead of looking elsewhere.

Can you also PM me?

Thanks alot,

Gravy

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Walter - I have a factory telling me they're off from January 10th to February 15th. Is that normal? Or is there something questionable going on? I received that response after trying to schedule a factory visit the week of January 10th.

That is highly unusual, and makes me suspicious. Vacations of 1 month would be exceedingly rare. I suggest you investigate their credentials very carefully.

Walter

 

[Mac]

I saw somewhere in this thread that your trips to China are tax deductible. How much of your trip would that usually cover?

 

[Walter Hay]

I saw somewhere in this thread that your trips to China are tax deductible. How much of your trip would that usually cover?

If you only travel for business, the trip, including meals and entertaining for business should be tax deductible from the time you leave home. This means even your cab fare to the airport would be covered.

Sometimes when visiting China and other Asian countries I would take one of my children with me. In those cases, I did not claim their airfares, or the cost of entertainment and travel just for us, such as a visit to Disneyland in Tokyo. If (unusually) the hotel charged extra for the additional guest, I also deducted that from my claim and made it clear why. Side trips as a tourist are not deductible.

You should also keep a detailed daily diary showing where you went, who you visited, the purpose of the visit, and any costs involved. This is also important for recouping the cost from your petty cash

Probably my scrupulous attention to such details was the reason why, in over 40 years in business I was never audited by the tax authorities.

Please note. I am not providing legal or taxation advice.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Sorry, but I can't get the formatting right.

Here is a site that is easy to read: http://publicholidays.asia/china/

Just make sure you scroll down to 2016.

Walter

 

[RisingStars]

Sorry, but I can't get the formatting right.

Here is a site that is easy to read: http://publicholidays.asia/china/

Just make sure you scroll down to 2016.

Walter

Thanks for the calender site Walter.
I saw that from 6. Feb to 14. feb are festival days.
You said somewhere that you should prepare 2 weeks before this and 2 weeks after for chinese new year.

So if I order till mid january I am fine? Should I write my factorys till when I should order to get my goods before chinese new year?

Thanks,

Paul

 

[Walter Hay]

Thanks for the calender site Walter.
I saw that from 6. Feb to 14. feb are festival days.
You said somewhere that you should prepare 2 weeks before this and 2 weeks after for chinese new year.

So if I order till mid january I am fine? Should I write my factorys till when I should order to get my goods before chinese new year?

Thanks,

Paul

That's a good idea Paul. If you write now and ask, that will at least put them under some obligation to abide by what they tell you as the shut off date.

Even mid January could be cutting it fine, but it depends on whether they carry inventory, and what their usual lead time is for production. Don't forget that their raw material or component suppliers will be under pressure too.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[RisingStars]

That's a good idea Paul. If you write now and ask, that will at least put them under some obligation to abide by what they tell you as the shut off date.

Even mid January could be cutting it fine, but it depends on whether they carry inventory, and what their usual lead time is for production. Don't forget that their raw material or component suppliers will be under pressure too.

Walter

Thank you,
Already asked one of my suppliers, they said if I order till Jan 15th I should be fine

 

[BryQ]

Hi Walter,

After back-reading from page 1 of this thread, I've endeavored to do importing from China some toy models. Here's my situation and I hope you could help:

1. The products I found are already available here, but only very few merchants sold them and at prices I considered expensive. There were no private label for them too and sold with factory packaging. I don't plan to private label them myself with the reasons stated in succeeding point.
2. Toys typically have large varieties (commonly mentioned having different SKUs) distinguished by model designs and colors. I believe it would be difficult and expensive to do private labeling for this kind as I got information from the supplier that each "printing mold" (described as changing one character or digit of original factory packaging) would cost about $170 each for each design with mandatory minimum quantity of 2000 pieces. In addition, doing a total modification of the packaging will cost $100 per die cut plus the $170 printing mold per design with the same minimum quantity. So imagine how costly it would be to customize the packaging for merely 10 designs (they have far more than that). Hence, I decided not to as well. I'm beginning to doubt if toys are even a good starting point, what's your take?
3. The supplier gave me a quote list for all their product designs. In terms of size, there are 2 sizes with each size having its own MOQ. They also included their corresponding EXW unit price, I assume this would be the factory unit price as well? Additionally, I had requested to lower MOQ of each design and simply replace them with other designs, i.e. 1 carton can contain 60 pieces with only two designs, I am requesting if they can do 10 pieces of six designs in a box, of which the request they rejected. Is this a proper yet failed attempt to negotiate?
4. I have yet to order samples, and requested to receive one sample of each of the 40 designs I selected. They gave me a sample invoice which cost a lot! Not only they charged for the freight cost, but also for each sample item. What's shocking was the sample unit price for each design was relatively more expensive (almost twice) than its EXW price they quoted. As far as I know, it is possible to receive the samples for free; subjecting them to commercial value only would deem a hassle when the package arrive at our customs. What's your opinion about this?
5. Regarding the shipment of samples, I have requested to ship through China Post. They sent me a quote for China Post (labeled as "China Post Express Freight") and another quote by FedEx. The cost to ship through FedEx was cheaper, differed by $24. Are there any other available services specific to China Post that are used here? Moreover, at first they suggest shipping by batch of 20 pieces, instead of requested 40 pieces, reasoning that they have not shipped such high volume of samples. What's your thoughts on this?
6. I requested to pay the freight charges via Paypal for the samples, they seem to be okay with it. When I find that product quality is okay and I decided to purchase "minimum" trial orders, I plan to use T/T but not pay the lump sum and pay only the proper percentage distributed across the entire order-to-shipment process. Although this I have yet to discuss, because the default payment they posted for T/T is 100% lump sum upon purchase. For L/C, I think it would be a difficult alternative since the banks would require a lot of paperwork and licenses, if any?

Thank you so much for posting this AMA thread in this awesome forum. It is indeed a GOLD mine of experience, each information you shared is an exhilarating read. My notes are overflowing and you inspired me! Kudos to you and the rest of the people who supported this thread!

P.S. I'm seriously planning on buying your book, hopefully after I get to know the importing processes and regulations of my country first. Rest assured, I know that I won't be disappointed when purchasing your tome.

 

[Walter Hay]

Hi Walter,

After back-reading from page 1 of this thread, I've endeavored to do importing from China some toy models. Here's my situation and I hope you could help:

1. The products I found are already available here, but only very few merchants sold them and at prices I considered expensive. There were no private label for them too and sold with factory packaging. I don't plan to private label them myself with the reasons stated in succeeding point.
2. Toys typically have large varieties (commonly mentioned having different SKUs) distinguished by model designs and colors. I believe it would be difficult and expensive to do private labeling for this kind as I got information from the supplier that each "printing mold" (described as changing one character or digit of original factory packaging) would cost about $170 each for each design with mandatory minimum quantity of 2000 pieces. In addition, doing a total modification of the packaging will cost $100 per die cut plus the $170 printing mold per design with the same minimum quantity. So imagine how costly it would be to customize the packaging for merely 10 designs (they have far more than that). Hence, I decided not to as well. I'm beginning to doubt if toys are even a good starting point, what's your take?
3. The supplier gave me a quote list for all their product designs. In terms of size, there are 2 sizes with each size having its own MOQ. They also included their corresponding EXW unit price, I assume this would be the factory unit price as well? Additionally, I had requested to lower MOQ of each design and simply replace them with other designs, i.e. 1 carton can contain 60 pieces with only two designs, I am requesting if they can do 10 pieces of six designs in a box, of which the request they rejected. Is this a proper yet failed attempt to negotiate?
4. I have yet to order samples, and requested to receive one sample of each of the 40 designs I selected. They gave me a sample invoice which cost a lot! Not only they charged for the freight cost, but also for each sample item. What's shocking was the sample unit price for each design was relatively more expensive (almost twice) than its EXW price they quoted. As far as I know, it is possible to receive the samples for free; subjecting them to commercial value only would deem a hassle when the package arrive at our customs. What's your opinion about this?
5. Regarding the shipment of samples, I have requested to ship through China Post. They sent me a quote for China Post (labeled as "China Post Express Freight") and another quote by FedEx. The cost to ship through FedEx was cheaper, differed by $24. Are there any other available services specific to China Post that are used here? Moreover, at first they suggest shipping by batch of 20 pieces, instead of requested 40 pieces, reasoning that they have not shipped such high volume of samples. What's your thoughts on this?
6. I requested to pay the freight charges via Paypal for the samples, they seem to be okay with it. When I find that product quality is okay and I decided to purchase "minimum" trial orders, I plan to use T/T but not pay the lump sum and pay only the proper percentage distributed across the entire order-to-shipment process. Although this I have yet to discuss, because the default payment they posted for T/T is 100% lump sum upon purchase. For L/C, I think it would be a difficult alternative since the banks would require a lot of paperwork and licenses, if any?

Thank you so much for posting this AMA thread in this awesome forum. It is indeed a GOLD mine of experience, each information you shared is an exhilarating read. My notes are overflowing and you inspired me! Kudos to you and the rest of the people who supported this thread!

P.S. I'm seriously planning on buying your book, hopefully after I get to know the importing processes and regulations of my country first. Rest assured, I know that I won't be disappointed when purchasing your tome.

I will answer your points and questions in order.
1. Your point 1 partly answers question 2 regarding whether toys are a good category to start with. It seems to me, although more expert internet marketers might provide better advice, that if you have found a niche with demand but low levels of competition, it could well be worth pursuing. Does you research tell you that you can make a good profit at the prices you have been quoted, plus all costs?
2. It's difficult to answer regarding labeling costs without more information, but there could be lower cost options. A charge of $170 for a "printing mold" is excessive unless it is for a large area of foil stamping. For other types of printing a mold is not required unless they are referring to a screen for screen printing. In that case the charge is excessive unless it is a very large screen.
Your reference to the die cut suggests that the packaging is cardboard. If so, a cutting die charge of $100 is towards the high end for China, but if it includes the setting up charge to diecut the box shape, that would be reasonable.
A mandatory minimum of 2,000 pcs for packaging suggests that they are not really interested in private labeling for you. It could be worth shipping the product without POS packaging, and having it made locally. If more than one model could fit the same size box, that would make for economy. Other labeling methods could be used rather that direct on package printing.
3. EXW is ex works and means all costs and risks from the factory door are yours. You would need to get a freight forwarder to quote door to door for you. Freight can be extremely high per until on some toys because of their volume/weight ratio. I suggest that you get some freight quotes before you do much more. You will need unit weight, carton dimensions and weight, plus number of cartons to get a quote.
Your request for assorted models was reasonable, but probably premature, which is why it was rejected. Negotiate slowly.
4. Requesting 40 different samples at the one time was not a good idea. A flea market stall holder could potentially do well if he could obtain that many samples from various suppliers. It is common to charge for samples and freight is invariably added, but doubling the unit price for samples is probably due to you requesting so many. Be content with representative range to begin with. At this stage the supplier might not concede much because he has already quoted a price.
5. China Post do have a standard parcel service, not express. The express post service will usually be much higher than air couriers charge. Standard service will be slow, taking as long as a month.
6. Payment of 100% with order is way too risky. Maybe they are concerned about high bank fees on two transactions instead of one, but I would advise against paying 100% up front. 30% deposit is common. Balance when goods are ready to ship is usual. L/C is often arranged on a 100% basis and the terms should be payment upon presentation of appropriate documents. If they have the L/C they are guaranteed payment by the bank provided they strictly comply with the terms and conditions of your order as set out in the L/C. It is safest for both parties. Check out you bank's fees for both options.
If the total value warrants spending $250 to $350 I would recommend using one of the inspection services I have previously written about, and their tick of approval would be required before the L/C would be paid.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[BryQ]

I will answer your points and questions in order.
1. Your point 1 partly answers question 2 regarding whether toys are a good category to start with. It seems to me, although more expert internet marketers might provide better advice, that if you have found a niche with demand but low levels of competition, it could well be worth pursuing. Does you research tell you that you can make a good profit at the prices you have been quoted, plus all costs?
2. It's difficult to answer regarding labeling costs without more information, but there could be lower cost options. A charge of $170 for a "printing mold" is excessive unless it is for a large area of foil stamping. For other types of printing a mold is not required unless they are referring to a screen for screen printing. In that case the charge is excessive unless it is a very large screen.
Your reference to the die cut suggests that the packaging is cardboard. If so, a cutting die charge of $100 is towards the high end for China, but if it includes the setting up charge to diecut the box shape, that would be reasonable.
A mandatory minimum of 2,000 pcs for packaging suggests that they are not really interested in private labeling for you. It could be worth shipping the product without POS packaging, and having it made locally. If more than one model could fit the same size box, that would make for economy. Other labeling methods could be used rather that direct on package printing.
3. EXW is ex works and means all costs and risks from the factory door are yours. You would need to get a freight forwarder to quote door to door for you. Freight can be extremely high per until on some toys because of their volume/weight ratio. I suggest that you get some freight quotes before you do much more. You will need unit weight, carton dimensions and weight, plus number of cartons to get a quote.
Your request for assorted models was reasonable, but probably premature, which is why it was rejected. Negotiate slowly.
4. Requesting 40 different samples at the one time was not a good idea. A flea market stall holder could potentially do well if he could obtain that many samples from various suppliers. It is common to charge for samples and freight is invariably added, but doubling the unit price for samples is probably due to you requesting so many. Be content with representative range to begin with. At this stage the supplier might not concede much because he has already quoted a price.
5. China Post do have a standard parcel service, not express. The express post service will usually be much higher than air couriers charge. Standard service will be slow, taking as long as a month.
6. Payment of 100% with order is way too risky. Maybe they are concerned about high bank fees on two transactions instead of one, but I would advise against paying 100% up front. 30% deposit is common. Balance when goods are ready to ship is usual. L/C is often arranged on a 100% basis and the terms should be payment upon presentation of appropriate documents. If they have the L/C they are guaranteed payment by the bank provided they strictly comply with the terms and conditions of your order as set out in the L/C. It is safest for both parties. Check out you bank's fees for both options.
If the total value warrants spending $250 to $350 I would recommend using one of the inspection services I have previously written about, and their tick of approval would be required before the L/C would be paid.

Walter

Thanks, Walter, for such information; truly useful to know! Chaining up the conversation for each point:

1. The total landed cost has not been exactly determined yet. What I did was to inflate the factory unit prices by almost three-fold to make sure expenses such as duty, tax, freight, brokerage, and other handling fees are safely covered given the number of cartons to be shipped as initial order while still maintaining competitive yet profitable selling price for each product. It's really a big risk given the average MOQ for both sizes to be approximately 40 per design. And each unit is not that cheap either when ordering by bulk with such per MOQ.
2. It seems private labeling becomes a complicated matter when it comes to multiple SKUs with different designs, colors, and sizes. Essentially, the products only come with 2 distinct sizes, but with large design varieties. The packaging material stated are either PP Box or Window Box (seems like cardboard enclosure with transparent plastic on the front portion), the latter is cheaper. So I'm not sure what they mean by printing mold and the die cut, since they generalize it for both types of packaging. By the way, the packaging are not that big so perhaps what you said it's true that they are charging excessively for private labeling. The mandated 2000 pieces MOQ is probably because they outsource the packaging; so it might be through contract agreement that they should acquire such amount as minimum or else the printing/packaging company won't supply.
3. I have yet to ask for specific quotes for FOB and CNF terms; however, the supplier does mention that FOB costs approximately $500 without mentioning how many cartons to be shipped and whether is is via air freight or sea freight. I thought that fee for FOB (with specific location, usually) adjusts itself depending on the volume and weight of shipment - I got the unit weight, carton dimensions on quote. So, I'm not sure how they get $500 since they stated as "per order basis". As of now, I'm planning on finding local freight forwarders to help out with shipment consolidation and delivery. Additionally, I've heard that it would be better for new importers to recommend DAT for air cargo or CNF for sea freight, or any sort that would ensure shipment arrives at destination country and ready for domestic port pick-up to deliver-to-door, do you recommend this method as well?
4. Do you recommend that I ship 20 samples at a time? They did suggest reducing my sample order to half (from the original 40) but the quote they gave me is still for 40 pieces with really high unit price, stating the unit price will be the same whether for batch of 20 or batch of 40. By the way, if it is not possible to negotiate the price, do suppliers tend to agree to put the sample cost on top of the first official trial order instead of the sample order, so I just have to pay for the freight cost only. Have you had this kind of negotiation?
5. I will also request for shipment to use China Post Standard Service. Hopefully they would agree with the terms.
6. I have to agree that T/T is risky, the method of splitting to 30% down payment and paying the rest upon shipment could at least reduce risk, marginally though. Paypal won't be feasible for bulk orders as well. I know that you are endorsing using Escrow, I'm not familiar with it yet and uncertain if it is supported in my country. As for its mechanics, I hope to ask you privately, if you mind.

Thanks again, Walter! I am grateful for your support!

 

[RisingStars]

Hello Walter,

I am selling my product pretty good right now.
Your thread helped me a lot. Thank you

My current problem is, that there is pretty much "hand-work" involved in my product.
Also my 2nd product will be pretty similar, and I have to do the same amount of work with two products.

I want to optimize the process:
Currently I ship to my home adress then:
-repack
-fold flyers into manuals
-pack everything together
-stick fba label on it
-ship to fba

I could sent my manufacturer the manual in german language and let them print and pack it, but I dont want this because I fear they may sell the product themself then.

I researched a little bit and I found out that you would advice a prepping service or a fright forwarder who offers prepping service.
What companys can you recommend?
I am based in germany, but I think that a chinese company would be a lot cheaper.
Do the prepping service also offers package sourcing and manual printing or do I have to find a chinese company which offers packageing, one who offers manual printing and then let everything ship to the prepping service/fright forwarder?


Thanks in advance.

Best regards,

Paul

 

[hatzil]

INTRODUCTION.
Through my eBook on safe sourcing and easy importing I have helped hundreds of people in 35 countries learn how to enter the high profit world of importing. Their questions through my support channel provide the subject matter for alt of what I plan on posting here.

There are myths and misinformation in abundance on forums everywhere. I am here to dispel those myths and correct the misinformation that I see being published daily in business forums.

A bold claim? Yes, but all you need do is ask me some questions about sourcing and importing and you will soon find that because I have been there – done that for most of my long life, I do actually know what I am talking about.

Disclaimer: I do not pretend to be expert at online marketing. There are plenty of others who have far more experience than I in that field. I am well on my way through reading all 40 pages of Ecom man’s thread, but I already see that he can offer some good advice on the product selling side.

I have been self-employed since 1967, and I started with just enough cash to buy a typewriter and some letterheads. My first job after college was with a big shipping company. Eleven years after I started that first business in 1967 I began exporting my products to Asia/Pacific countries including China which I have visited on countless occasions.

After selling that business in 1987 I began importing from countries including China, Taiwan, Korea, Singapore, Malaysia, Vietnam, and Brazil. This new business sold products B2B. I had no retail sales. Business boomed and soon I ran out of family members to employ, so I expanded by selling franchises until I had franchisees operating my importing business in 4 countries.

Heart surgery a few years ago forced me to sell that business but my brain won’t slow down so I wrote my book and am now having more fun than ever helping new entrepreneurs get a safe start into importing.

Fire away with your questions.

from my understanding i need a commerical importing licence in order to ship big quantities to my country(Israel) that cost fee's and etc. a friend of mine in the uk, told me he imported from alibaba without any issues 250 pieces to his door, without any licence. i want to import from alibaba to amazon FBA, my questions:
1.Do I need an importing license in every country i ship to?
2. can you recommand a service that i can trust, so i can order from alibaba directly to them, and then they will ship it to my Amazon FBA account? so i can avoid my products getting stuck at the customs if i import it to my country.
thank you!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

from my understanding i need a commerical importing licence in order to ship big quantities to my country(Israel) that cost fee's and etc. a friend of mine in the uk, told me he imported from alibaba without any issues 250 pieces to his door, without any licence. i want to import from alibaba to amazon FBA, my questions:
1.Do I need an importing license in every country i ship to?
2. can you recommand a service that i can trust, so i can order from alibaba directly to them, and then they will ship it to my Amazon FBA account? so i can avoid my products getting stuck at the customs if i import it to my country.
thank you!

Some countries love red tape. Countries such as Israel are extremely security conscious, and the red tape is partly due to that. In places like India, I think it is designed to boost employment.

Most countries don't require you to have a license in order to import. That is certainly the case with the US.

Many people ship from their suppliers direct to FBA, but I suggest that it is better to go through a US prepping service. I have written before about doing this to reduce the risk of your supplier bypassing you and selling on Amazon themselves. It also reduces the risk of Amazon choosing to compete with you.

If you buy from suppliers listed on Alibaba, you will need to do a lot of research to make sure that you are dealing with a real manufacturer and not a trader. One of my Chinese contacts used to work for a trading company selling on Alibaba, but it was listed as a manufacturer. He estimates that 90% of those listed as manufacturers are traders. That's only his opinion, but I know from experience that it is certainly a very high proportion.

Walter

 

[hatzil]

Some countries love red tape. Countries such as Israel are extremely security conscious, and the red tape is partly due to that. In places like India, I think it is designed to boost employment.

Most countries don't require you to have a license in order to import. That is certainly the case with the US.

Many people ship from their suppliers direct to FBA, but I suggest that it is better to go through a US prepping service. I have written before about doing this to reduce the risk of your supplier bypassing you and selling on Amazon themselves. It also reduces the risk of Amazon choosing to compete with you.

If you buy from suppliers listed on Alibaba, you will need to do a lot of research to make sure that you are dealing with a real manufacturer and not a trader. One of my Chinese contacts used to work for a trading company selling on Alibaba, but it was listed a a manufacturer. He estimates that 90% of those listed as manufacturers are traders. That's only his opinion, but I know from experience that it is certainly a very high proportion.

Walter

thanks alot walter! im going to purchase your ebook now, even that my budget is small and im a little bit scared, im willing to take the "risk" for the opportunity to learn alot from you

 

[Allan Oliveira]

Walter, I just want to say this thread and your book are gold. Thanks for sharing your experience!

Sent from my XT1053 using Tapatalk

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Merging Left]

Hi Walter,

30 pages of Q&A, wow! Thanks so much for taking the time to answer all of this.

I've been talking with a manufacturer in China for a few weeks now and have inspected samples and finalized the design, agreed on the price, etc. etc. Everything is in place, except they say they cannot quote me for shipping before I place an initial order of 500 units (I chose the order number). On the one hand, I guess I can understand that they won't know exactly how they'll box up the packages and whatnot, but on the other, it just appears like a ploy to hold my inventory hostage after I've paid for the production.

Have you ever dealt with this? The supplier is being really adamant that they cannot give an accurate estimate before production finishes, and has gone so far as to say that I am accusing them of taking advantage of me by not estimating the shipping cost. I really like the product and they're BY FAR the highest quality supplier out of the 5 that I ordered samples from.

Have you ever experienced anything like this? How do you think I should proceed?

Thanks so much!

 

[Walter Hay]

Hi Walter,

30 pages of Q&A, wow! Thanks so much for taking the time to answer all of this.

I've been talking with a manufacturer in China for a few weeks now and have inspected samples and finalized the design, agreed on the price, etc. etc. Everything is in place, except they say they cannot quote me for shipping before I place an initial order of 500 units (I chose the order number). On the one hand, I guess I can understand that they won't know exactly how they'll box up the packages and whatnot, but on the other, it just appears like a ploy to hold my inventory hostage after I've paid for the production.

Have you ever dealt with this? The supplier is being really adamant that they cannot give an accurate estimate before production finishes, and has gone so far as to say that I am accusing them of taking advantage of me by not estimating the shipping cost. I really like the product and they're BY FAR the highest quality supplier out of the 5 that I ordered samples from.

Have you ever experienced anything like this? How do you think I should proceed?

Thanks so much!

This is unusual. They might have a less efficient order handling process than most, so you should make allowance for that possibility.

Because they have the most desirable product, it would be worth being a little conciliatory now. I suggest that you tell them that you understand that they can't quote for freight at this time, but you would like to have your freight forwarder quote for you. To do that you need to ask them for shipping package dimension, and weights, and also number of packages.

You can then ask several freight forwarders to quote in writing on a door to door basis, including customs clearance costs. The only extra charge should be duty and taxes if applicable.

Depending on shipment size it can be a good idea to leave the door open for the forwarders to quote both air freight and sea freight. Air freight can sometimes be cheaper than sea freight if the forwarder consolidates the shipment. This is often done if you tell them that urgent delivery is not essential.

Walter

 

[Nicholas S]

Hi Walter,

I want to thank you for taking the time to put together this amazing thread. I will be purchasing your book this week.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[RahKnee]

Walter, Google is giving me nothing when I search for your book by title and author name. How about a link to your website?

 

[Walter Hay]

Walter, Google is giving me nothing when I search for your book by title and author name. How about a link to your website?

Hi @RahKnee, you can find it at Proven Global Sourcing - Proven Global Sourcing.

I hope it does for you all that you need.

Walter