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

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by Walter Hay, Sep 17, 2014.

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

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    Your questions are no trouble to me. I would much prefer you to ask rather than make mistakes. I have numbered your questions.

    1. When shipping via air courier you will usually get the best deal if the supplier arranges the shipment. They will almost always get much better rates than you can.
    2. NEVER pay via Western Union. It's as risky as sending banknotes.
    3. PayPal can provide an extra level of safety, but search my thread for PayPal to see warnings about how to make a PayPal claim if the goods are faulty.
    4. Photos can be sufficient for some types of product, but to be sure of quality and compliance with your specifications you would need a quality inspection. The big European based inspection services will usually charge about $300, but a number of my book users have had good results with a Chinese company that charges a lot less. You can contact direct the person that I deal with at safeimport@topwin.com
    5. Customs clearance is almost invariably included in the courier charge.Your suppliers were probably thinking you meant payment of duty, not the clearance work.

    Walter
     
  2. exclusives88
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    exclusives88 Silver Contributor FASTLANE INSIDER Speedway Pass Summit Attendee

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    Hi @Walter Hay

    I am doing a full container shipment from Pakistan to the US. I am calculating my total cost but I'm having a hard time estimating what the exam fee will cost (assuming there is one). I know there are various levels of exams from X-Ray such VACIS exam, Tail Gate, or even CES exam. Are there anything I can do to minimize the chances that my cargo will be examined? Is there an average cost of how much these various exams may cost?
     
  3. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    I know what a worry these examinations and their cost can be. Although random exams are most common, many shipments are flagged on the basis of the importer's history or the history of the supplier/s. Others are flagged because of intelligence received, but that is not usually a worry to legitimate importers unless it is an LCL shipment. One of the smaller consignments in the container could be suspicious.

    VACIS exams, carried out using gamma ray technology, only take about 90 seconds once a container arrives at the head of the queue. The problem is that some shippers are certified under C-TPAT and their containers get preferential treatment. This can cause delays for ordinary shippers. Cost for a 40 foot FCL VACIS examination is $350 but there can be extras that can't be quoted in advance. These can include any transportation/trucking to the exam location, plus any PGA fees, if applicable.

    Tail Gate, also known as Back Door exams, cost at least $100, but the final cost can't be known until the exam is completed. If nothing suspicious is found, the tailgate is shut and resealed for delivery.

    CES exam. This is the scariest of all. The good news is that by shipping a full container load you will have minimized the risk of a CES being required. They are usually only a result of a suspicious scan in a VACIS exam. If for example a secret compartment is seen inside the container, a CES will be carried out. Delays can be weeks, and costs can range upward from $500, plus the cost of the VACIS, which must always precede a CES.

    Ensuring your shipper is registered under the C-TPAT scheme is the best way of reducing the risk of CBP examinations being carried out.

    You can find more information about C-TPAT here: C-TPAT: Customs-Trade Partnership Against Terrorism | U.S. Customs and Border Protection

    Walter
     
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  4. RahKnee
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    @Walter Hay , once again I'd like to say thank you for this thread. It's literally priceless.

    I've been importing products from around the world and reselling them in the US, and making a nice return on them. But the entire process has been death by a thousand cuts. One here, two there, maybe a "large" order of five units that I pack up and ship myself. All of this small stuff is really a drain on my time. I started seeking out larger chain stores to carry my products a while back, basically harassing their buyers for weeks and months on end, and some are finally starting to show interest.

    As far as I'm concerned, that's the goal. Get a large retailer to buy large volumes of my products and put and end to the small orders and the time and effort of fulfilling them. The only issue now is that I've been asked for a comprehensive list of product sheets for everything I carry.

    Any guidance or suggestions on what goes into a product sheet? Any tips on how to make it look professional? Is there an industry standard that I need to consider? Any input on this would be much appreciated.

    Thanks,
    Ron
     
  5. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    When operating my importing business I was selling B2B, and I generally avoided selling to retailers. My main reasons were:
    • They demanded too big a slice of the pie. The rule of thumb was always 50% off the RRP, but it was not unusual to find some that expected more, often in the form of subsidies for their advertising.
    • Big stores expected extended credit, and I was not willing to act as an interest-free bank for them.
    • Small stores were generally in my opinion too big a credit risk.
    • Getting the sales at big stores was far too time consuming, and I preferred to spend my time making much higher margin sales to other businesses, government authorities, clubs and charities, where repeat business cost me only courtesy calls.
    • The few small retailers I sold to were willing to pay COD for a small extra discount and re-ordered automatically, so risk was absent and effort was minimal.
    • I preferred to sell bespoke items and this meant that I carried no inventory except for those few retailer customers. This business model was very attractive to my franchisees, because it required so little capital.
    Sales resulted from advertising in print YP, later progressing to online, by direct mail, and by personal calling at the businesses either myself or by using commission reps.

    I used product sheets in my first major business, and they were sales sheets, describing the product and setting out the product's virtues, but they were very industry specific and technical, unlike the product sales sheets you would use if selling to retailers.

    For more expert help than I can give, I suggest you look at posts by @G-Man and @amp0193.

    If you want to make sales in bigger single orders with high margins, I suggest you think about B2B.

    Walter
     
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  6. hatzil
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    Hey Walter,
    My product is a clothing product that requires embroidery, cloth labels, etc. after talking with Asian suppliers because my initial order is small the prices are high. I would like to buy a wholesale or stock out in the USA to save set-up and shipping costs but mainly because of speed.
    1.Because I am buying from stock out- my product comes with different ready designs. If I embroider my brand name to it for resell at retail price- Am I violating any copyright/design law?
    2.Some wholesale products look great but have a brand name on it. Is it possible to remove this brand embroidery and put my brand on it instead? Or usually, it will just look bad?

    Thank you :)
     
    Last edited: Jul 17, 2017
  7. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    I would first do some more searching for suppliers in the USA who could have blank items of the kind you are wanting to use. I have sent you a link where you will find over 100 suppliers, some of whom definitely supply blanks. Among them you will find some who will embroider with your brand name.

    In answer to your questions:
    1. The design of the clothing product itself would not be covered by copyright or design laws. I can be confident about this because I know what the product is. Adding your own brand would be normal practice.
    2. Removing existing embroidery is not an option because that is a very labor intensive procedure and also the stitch marks would remain, and might not all be hidden by your embroidery.

    Keep in mind that most will also supply other related products, so if you get them to do the embroidery for you, ask them to keep the program for possible use on other types of products. For ideas, see my labeling book Chapter 7.9 where I suggest that.

    It is unlikely that they will offer the type of labeling that I deal with in Ch 7.11.

    Walter
     
    Last edited: Jul 17, 2017
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  8. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    SHIPMENTS HELD TO RANSOM

    I am in the process of checking the formatting of the latest revision of my sourcing and importing book. Having reached the point where I have written a warning about shipments being held to ransom, I thought I should share the warning with all Fastlane members, not only those who buy my book.

    The details are in the new edition which will be out within a few days, but here is the main point: Using Chinese freight forwarders can be very risky. The reason I am posting is that I have received a number of reports lately of shipments being held to ransom by Chinese forwarders. It can cost importers hundreds and in same cases it has been thousands of dollars.

    Not all Chinese forwarders are involved in this practice, but there have been enough companies mentioned for me to issue this as a warning to be very careful if you do choose, or if your supplier chooses, to use a Chinese freight forwarder.

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

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    I have posted this in the Publishing forum, but I am repeating it here just in case some don't look there.

    I am pleased to announce that the latest revision of my book is now available. Those who have purchased previous editions are entitled to free copies of every update. Over the next few days they will be receiving emails from my support team with a free download link.

    Among changes of note are:
    Information links are provided dealing with labeling requirements.
    Expansion of the Alibaba section, with advice on how to safely use that site.
    Detailed report on Alibaba's Trade Assurance system. Their rules have been expanded substantially, from 2 A4 pages to 16.
    Addition of a section on obtaining binding duty rates in advance. (Thanks to @Vigilante. This can save a lot of pain.)
    Addition of sections dealing with Importer of Record, Customs Bonds, and Power of Attorney.
    There are now 27 links to help source products from countries other than China, including more detailed site navigation help, and a few paragraphs on making sourcing requests through various means other than the B2B sites.
    Inclusion of an important warning note about Aliexpress dropshipping.
    Expanded chapter on Inspection Services, mainly resulting from changes to Alibaba's listing of those services.
    Updating of the Glossary, including a link to Incoterms.

    Walter

    P.S. If current book owners don't receive a download link please email my support team with your purchase details and permission to use your email address for this purpose only.
     
    Last edited: Aug 7, 2017
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  10. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    Since releasing my latest book version and posting the announcement above, I have realized that I should draw the attention of all readers of my thread that importing is an ever changing scene.

    The list of notable changes in my post above highlights this fact, but it should also make it obvious that some earlier posts may have become obsolete.

    Whenever I have answered a question that was also asked a long time before, I have not simply cut and pasted, or referred the questioner back to my original post unless it was up to date.

    This means that later posts might be more relevant to questions currently being posted. This leaves readers with a dilemma - although I do post smaller changes, the changes that I make to my book are often far reaching and occupy a lot of space, so I can't simply post them in this thread. Just by way of example: Already, just a week after releasing the latest version, I have about 22 pages of notes to incorporate in the next revision.

    Summary: I suggest that anyone reading my thread from start to finish should make notes, at least a heading indicating the topic. Then when you find the same topic dealt with later, make a comparison so that you know you are learning the latest on the subject.

    Walter
    P.S. If urgent matters come to my attention, I ask my support team to send out a bulletin to all who have bought my book.
     
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  11. A.Mitchell
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    Just wanted to say thank you for all the great info in this thread!
     
  12. Atticus
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    Atticus New Contributor Read Millionaire Fastlane

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    Hi @Walter Hay I've finished reading your book and through most of this thread and I want to thank you for your honest and helpful information.

    I have a question if you don't mind.

    I'm trying to apply for a BTI ruling but they require an EORI number. However, the EORI application requires information such as business name; supplier details; port of entry; method of import etc. I don't have this information yet, so would it be okay to make it up or does it have to be accurate?
     
  13. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    You are in a Catch 22 situation. To obtain an EORI number you will have to have the transaction under way to the point of at least being ready for despatch.

    I know that some new UK importers in exactly the same position as you have registered for an EORI with totally invented information, and have obtained a number by that means. This enabled them to obtain a BTI ruling, but they were unable to use it because it was in a different name. It only served to show them what duty should be charged, but when it came to the actual import, an HMRC official might have a different opinion, and at least one of those importers was hit with a much higher rate of duty.

    My suggestion is that you immediately purchase a sample - any sample - from any supplier, and lodge a non-VAT registered EORI application as a sole trader

    You should get your EORI number within a day of lodging the form, and you can then apply for a BTI.

    Sorry to say it will cost you for the sample, but that is the only way I can suggest in order to circumvent the HMRC's beloved red tape.

    Walter
     
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  14. Atticus
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    Atticus New Contributor Read Millionaire Fastlane

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    Thanks for the advice Walter, it seems like the most practical solution.

    I have another question regarding the product itself. I know the general rule is to look for small, light and cheap items with no electronics/moving parts. However, the product I'm looking to source is the complete opposite being large, heavy and consisting of electronic components. If I can authenticate the manufacturers CE certificates is it safe to assume that the products will be of a good standard?
     
  15. Atticus
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    Atticus New Contributor Read Millionaire Fastlane

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    Also, I don't have a business name, does this have to be genuine for the EORI application or can I make one up?
     
  16. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    CE certificates won't be any guarantee of quality. They only show that the product meets the safety standards. To check on quality you will need to get a sample and test it.

    You can apply for an EORI as a sole trader. You don't need a business name.

    Walter
     
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  17. Denim Chicken
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    Denim Chicken Silver Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Hi Walter,

    I'm about to order via sea freight, last time it was just air courier. I asked my supplier for a quote and he gave me DDU terms and I asked him to confirm that it includes customs and port clearance. He confirmed and said it is door-to-door. An agent in the US will contact me with some details. I will have to pay duty and taxes.

    Is there any measure I should take to protect my shipment when working with a 3rd party, what I'm guessing is a freight forwarder with my supplier?

    I'm guessing I pay my supplier everything as he quoted me shipping total, and then he would arrange for everything. But if things were to go wrong, whose responsibility is it at that point? (shipment gets lost, held at port, etc.) I didn't bring up the issue of insurance yet but I'm going to ask him if this covers insurance on the shipment.

    I know if I were to use my own freight forwarder, the forwarder would take care of everything and just need my supplier's info, shipment specs, dates. But because this is going thru my supplier and his guy, I'm not sure how to effectively approach this issue.

    FWIW, supplier is high quality, very honest with me. He has also made an effort to find me a 3rd party warehouse for assembly before delivery. The first order went well no issues.
     
  18. Atticus
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    Atticus New Contributor Read Millionaire Fastlane

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    Okay, the only reason I ask about the business name is that even for a sole trader the application requires one.

    I guess I'll just put my name down instead.
     
  19. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    DDU is only door to door if after DDU it states your delivery address. If it says DDU and then names the port of destination, it is not door to door.

    Insurance (at 110% value) is always necessary for sea freight. Without it the shipping company won't accept the goods on board. If they did and the ship sank, you could be instantly bankrupted.

    The biggest risk that I see is that of working through a Chinese freight forwarder. There have been numerous problems with long delays, and even scams. It is also important to have the US agent's contact details before the goods are shipped.

    The US agent should be the one who handles any issues after shipment. This is why you should talk to them before the shipment is dispatched.

    Walter
     
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  20. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    It is quite OK to put your own name in the application. If the form you are using doesn't make provision for inserting your name as sole trader, it might be an obsolete form. Unfortunately, the internet by its very nature keeps obsolete information online forever.

    There is no obligation in the UK to trade under a registered business name. If you feel that you must, I suggest you register a limited company at a fraction of the cost of registering a business name.

    Walter
     
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  21. Denim Chicken
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    Denim Chicken Silver Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    I plan on checking and confirming with my supplier before sending any money but good to know to ask about insurance and to get in contact with the US agent before money is sent. Ill have to find out how much I owe in duty and taxes.
     
  22. Atticus
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    Atticus New Contributor Read Millionaire Fastlane

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    Thanks Walter.

    I have another question if you don't mind. One of the suppliers I'm speaking to is asking me for my "DHL/FEDEX account" so they can send me their printed catalogue. I don't have a DHL/FEDEX account so how should I respond? I don't want to come across as a newbie
     
  23. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    You should ask them to send by airmail. The main reason they ask for courier account details is to help them sort out genuine buyers from those who are just after cheap samples for personal use.

    It is risky to ever get suppliers to ship via courier on a freight collect basis, unless you have already negotiated with the couriers for a big discount. You must have their quote in writing.

    Tell them that airmail from China has become quicker lately.

    Walter
     
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  24. Magneto C
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    Hi there @Walter Hay

    As I said earlier in your personal post area, your answers are of incredibly high quality. It's obvious that you even did research to make everything as accurate as possible: When you recommended a book on Japanese culture in #606 Sept 1, you even wrote "until the latest edition is released on September 15"! After a quick Google search to verify the statement, I had to pick up my jaw from the floor.

    I'm up to page 30's and will keep reading until the end within the next 2 days. But my questions are piling up and they are burning inside my head.

    B2B importing

    From your experience of a successful importing business, I wonder if you could comment on my thought process.

    1. Find a suitable product for beauticians (e.g.) to replace a current bad one they use regularly.

    2. Send samples to a few beauticians and obtain their testimonials. I don't sell to them because that'd be B2C.

    3. Find out the retailers of the existing inferior product and sell my product to them and they will handle the end consumers (beauticians)?

    -----------------------------------------------------------------------------------------------
    Page 33 #802
    These points sound scary. I don't have much capital. Financing is out of option too. Is it possible to make retailers pay with their credit cards, if not cash in hand? I know this is newbie's talking but I just don't have any other ideas at the moment.

    -----------------------------------------------------------------------------------------------
    Also, in this business how do I protect myself from potential competition? I understand that you said previously, the difficulty of sourcing can serve as a barrier to entry, better service, and branding, etc. Is there anything else you can add?

    -----------------------------------------------------------------------------------------------
    If my questions were not too many already, I'd be interested to see a post on Parallel Imports Australia. Only if you feel like it as this topic is not my top priority.

    Many, many thanks!
     
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  25. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    Hi Magneto, I appreciate your kind comments.

    Regarding B2B selling,
    1. If you know the industry, I think you could do well, provided you can offer genuinely superior products. There are two parts to the industry that would interest you.
    1.1 Products used by the beauticians in their salons, and
    1.2 products they sell to their customers. If the beautician uses your product, they have a reasonable chance of making retail sales to their clients.

    To make the best out of both, I suggest you offer to supply the product with the salon's own brand and label. Your price to the salon would need to be low enough to allow them to sell to their clients at a good mark up. Some salons won't want their own label, so you will need to create a memorable brand name and labels in order to sell to them.

    2. Provision of samples would be an essential step. Free samples for the salons would work well in that industry. Marketing to the end user in that industry generally takes two forms:
    2.1 The first is basically gimmicky, describing on the label one or more of the ingredients in pseudo technical language, implying that having such an amazing ingredient will produce the desired result.
    2.2 The second is imagery. By that I don't mean pretty pictures of beautiful models, although that is often part of the advertising. I refer to appeals to the imagination so that the women will see in that product what you want them to see. That can be achieved with words, pictures of models, colors, locations, shape of packaging and even price.

    3. I think you mean wholesalers. They would be the ones to supply the salons. I would bypass the wholesalers because:
    3.1 No prospect of the salons selling to their clients unless the product is such a raging success that it becomes "must have" for every client.
    3.2 Wholesalers are likely to demand a bigger discount than the salons would.
    3.3 Salons, being mostly small businesses would be more likely to accept COD terms for a further discount. This would largely eliminate your credit risk. You can structure your pricing to allow for 5% or 10% for COD. You can explain that your wholesale discount to them is X%, but because you only supply on a COD basis, you will allow them X + 10%. There are various forms such a pricing structure can take, but I would only supply COD. That would usually not work for retail stores.
    3.4 Offering a discount for payment with credit cards is also acceptable to many small businesses.

    Competition will be fierce. Some salons will only use and recommend big names. This will mostly apply in upmarket salons in higher socio-economic areas (PC speak for upper class).

    You will also, in some places, be competing with suppliers of products made to a price, and these will usually appeal to salons in lower socio-economic areas (=working class). If you can obtain your quality products at exceptionally good prices, you could still produce custom labeled products for those salons.

    Don't search for "Private Label suppliers". Search for businesses that do produce or are capable of producing the types of products you want.

    Don't worry too much about needing to order large quantities of labels for a big number of brands and label designs. Digital printing can make such small runs feasible. See my labeling book for ideas including sources in Australia.

    Finally Parallel Imports are big business in Australia. I will write up a post soon.

    Walter
    P.S. Don't forget your product liability insurance.
     
    Magneto C likes this.