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

[Walter Hay]

1.Do you look for occasions while purchasing or you do buy stuff you know you will sell right away?
2.Any advice to a person in Poland who would like to start importing/ selling globally?
Cheers!

Hi Michal,

I do not do any online marketing of physical products. I am retired, but I am happy to offer suggestions as you have asked.
1. I recommend searching for products that are unique rather than look for something that is already a "hot seller". It is important though, to be sure that you can sell such a product and you need to do some market testing by buying a small quantity first.
2. I think you may have a big advantage being in Poland. There will be many products that are made in Poland and are not generally available in other big markets such as UK and USA. You can market them through the Amazon FBA system.

If you want to market products within Poland, you would need to look for manufacturers in other countries in order to find products that are not available there.

I hope these suggestions are helpful, but some of our experienced physical product sellers may be able to contribute more for you.

Walter

 

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[throttleforward]

It may not be usual but it certainly does not surprise me. A couple of days ago one of my book users doubled the size of an order and got a whopping 5% discount.

In an article that I intend posting, I wrote about the myth of huge volume discounts. Here is one para: "Over 22 years of importing, I found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls."

To a large extent it depends on how much business the supplier is getting, but also it can depend on how much they sub-contract. Subcontractors are usually beaten down in price right from the start and have nowhere to move for larger volume.

It's comforting to know that this sort of thing should be expected.

Also can't thank you enough for your advice. People like you make this forum awesome!

 

[Walter Hay]

Walter,

Can we have an honest discussion about what value to include on invoicing product shipments for duty and tariffs?

Presently my main items are charge 10% duty, and on nearly 20K in value per shipment this ads up. These items are unique and customized to my brand (that is, I do not think a value could be determined accurately outside of what I actually pay the supplier).

To date, I have been 100% on the level with the documentation we use illustrating the value of our imports. My supplier originally trie to DRASTICALLY deflate the value of the goods to which I protested and had amended to reflect the truth.

That being said, how often and common is it for people massage the value of their goods downwards, what is reasonable adjustment (say 20% below what you actually paid), how can you get 'caught', and what to do if an issue arrises. My suppliers tell me everyone lowers their value.

Thank you Walter

PS: My one supplier tells me sometimes DHL does not levey or charge for the duty and tariffs and sometimes they do. How is this possible?

Thanks for asking this important question. Fortunately it coincides with my arrival in a civilized location where I have a good internet connection. For those interested, have a look at a map of Western Australia and see the vast distance between places on the map. Bear in mind that many of the place names are just ranches, some as big as the entire UK, and others are just roadhouses.

Now to your question. As you suspect it is almost universal practice for false values to be declared for Customs. Chinese suppliers will do it routinely unless at the time of placing the order you firmly tell them not to. The majority of importers insist on them doing it. There are a few things to be taken into account:

• It is illegal and can result in severe penalties. One of the lesser penalties is the flagging of your name and address for thorough inspection of every shipment thereafter, with long delays and extra cost often resulting.
• Numerous suppliers have been flagged also, with the result that every shipment they send is delayed at the port of entry.
• Customs officials are not stupid, and they have a good idea of real values in many cases.
• 10% adds up, but unless substantial undervaluing takes place, savings on small shipments are small. The average duty rate for goods entering Canada is 8.56% and the US is 5.63%, so although in your case it is 10% for many the saving would be very small even on a high value order.
• The way you can get caught is a) A customs official becomes suspicious, b) A supplier is known to Customs, c) A competitor might complain. Not very likely unless you have one or two major competitors who are tracking your shipments. That is relatively easy to do if they know your trading name.
• Insisting that suppliers declare full value enhances your standing with them. They may think you are crazy, but they will respect you.

I know that DHL and others sometimes deliver without lodging clearances. As to why, I have no idea, and I find it difficult to understand how they get away with it, but it definitely happens. It seems random.

Others may care to comment on the whole issue also.

 

[Guest24480]

Hey Walter, I ended up picking up your ebook a few days ago and finished it within the day. There is loads of valuable logistical information in there that will save me a ton of headaches, especially later on in the process.

The resources you posted are also invaluable - you were not kidding when you said you would provide a wealth of resources for sourcing from countries other than China. For anyone reading this who is contemplating buying it solely for the list of resources (this is only a fraction of the value Walter provides, but was the main reason I made the purchase), I highly suggest taking the plunge. There are about 2 dozen sourcing resources on there, many of which I have yet to explore.

All in all, I don't have any questions for you to answer yet but I'm sure I will be back at some point. I have already begun to do some research on possible products to import and have made a list of about a dozen products today that I will research further. Within a week, I will probably end up taking action by contacting some of them and getting some samples sent to me.

The few hours and small change I spent on the book has already led me to more progress than I had made from scouring Alibaba for hours on end looking for a product from a trustworthy supplier that wasn't already on the market.

Thanks Walter!

 

[Walter Hay]

Sidebar to say I am not sure where on the internet you can find contributors and content that rivals what the Fast Lane Forum has to offer.

I am also glad to see that you guys are buying his book. It's OK to pepper him with questions (he initiated the AMA) but I also like the fact that your questions have been educated questions for taking concepts deeper than what has already been outlined for you here and in the book. There haven't been too many stupid questions (and contrary to what your Mom might have told you, not every question by definition is a good question.)

There's been a ton of learning in this thread, including people doing their OWN research, buying books for continuing education (including Walter's) and THEN asking questions. Somewhat refreshing from some threads where people ask questions that could be easily answered on Google.

The reason this thread was marked gold was a combination of your great questions, and Walter's great and knowledgeable answers.

Carry on.

Yea, Walter has been here for months, 20+pages of Q and A. The value he's provided is immense: Buy his book.

Proven Global Sourcing - Proven Global Sourcing.

You can't get a much stronger suggestion than that.

Wow! I am overwhelmed.

It is great to know that what I am doing really is appreciated. I am having the time of my life.

As I have previously posted, I originally wrote the book to keep my mind active after heart surgery forced me to sell my importing business. I know that for many of those who ask for my help via PM and through questions to my support team I do things that are "above and beyond the call of duty", but for me that is all part of the exercise. As the volume grows I may have to decline to help where it is clearly outside my purview. I hope not, but if that does eventuate, please understand.

Regardless of that, every public question on this thread will get my close attention.

 

[Walter Hay]

Alibaba Under Fire From China’s Consumer Protection Watchdog.

In a report issued earlier this year, The Chinese State Administration for Industry & Commerce (SAIC) accused Alibaba of allowing merchants to operate without required business licenses, to run stores selling famous brands without authorization, and selling fake products. The SAIC is a government watchdog for consumer protection, trademark protection and business practices.

The report also said that Alibaba employees took bribes, and the e-commerce giant had not fixed flaws in customer feedback or internal credit-scoring systems. The government watchdog said “For a long time, Alibaba hasn’t paid enough attention to the illegal operations on its platforms, and hasn’t effectively addressed the issues.” The report went on to say “Alibaba not only faces the biggest credibility crisis since its establishment, it also casts a bad influence for other Internet operators trying to operate legally.”

SAIC said Alibaba was still allowing sales of contraband including fake cigarettes and alcohol, as well as items “that threaten public safety” such as knives and phone-tapping devices.

The watchdog says: “A huge number of merchants” haven’t registered for operating licenses and are engaging in illegal behavior including bribing Alibaba employees. The report also accuses Alibaba of allowing merchants to mislead customers during sales promotions on Nov. 11 and Dec. 12, it said.

“Some operators on the platform have created fake transactions and deleted negative comments to improve their own and others’ reputations,” SAIC said.

For more details see: http://www.bloomberg.com/news/artic...baba-of-lacking-proper-oversight-of-merchants

What Does This All Mean For Buyers?

• It means that little confidence can be placed in Alibaba’s verification system or Gold Supplier rating.
  
• It also means that although 90 million fake product listings were deleted prior to Alibaba’s float on the NYSE, the fakes are back.
  
• It means that feedback scores can’t be trusted.
  
• It means that sellers listed on Alibaba continue to mislead buyers.
  
• It means that Alibaba can’t or won’t deal with illegal activities on its sourcing platform.
  
• It means that bribing of Alibaba employees is still taking place even after it was supposed to have been cleaned up after the “Alibaba and the 2236 thieves” scandal.

My readers might now appreciate why I don't recommend using Alibaba for product sourcing.

 

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[Walter Hay]

Thanks Walter. Handy tip, everybody else is doing it through Alibaba so as well as better marketability and quality, finding suppliers elsewhere would make it a lot more difficult for a competitor to copy cat your product. I'm off to do some product & sourcing research.

Another Fastlane member has recently told me that he has started looking at one of the "other countries" links in my book and has already found unique products. You will find that most of those sites are not so user friendly, but that is just a barrier to entry, requiring patience and persistence, and is one reason why the crowds source through Alibaba.

Walter

 

[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]

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

 

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[Walter Hay]

Hey Walter,

I hope you are well. This is more of a general question, but I would love to hear your input since you have been in this field for decades.

I listened to an interview with Jack Ma, and he said something like Alibaba is still in its infantile stage. In 15 years from now when ecommerce is no longer a new concept, the company will grow to be much bigger. With the ever growing popularity of smartphones, I read somewhere that there are 5 smartphones per 1 toilet in the world now, I only see ecommerce getting bigger too.

My question is: how drastically has the Internet affected the industry? If this was the 1980s, or even 1990s, and someone wanted to get into importing/exporting..how would you even start? Attend a conference nearby to get a list of Chinese manufacturers and contact them?

Where do you think the field will go in the future? I know the countries are always shifting in term of being the cheapest labor. At one point I believe Japan was a labor of cheap country, then it went to S. Korea, and now China. I see that Mexico and certain parts of Middle East are rising as the cheapest now.

I have no doubt that eCommerce will continue to grow for a long time yet.

The internet has produced some amazing changes in the world of exporting and importing. Most of those changes are good, but not all. Telex was used for many years before faxes became available, and when exporting I had my own international cable address. Communication was fast, but drawings and forms could not be transmitted.

Later, when I first started importing in 1987 almost all communication including artwork, was via fax. Now, most people find it so easy to communicate by email, but the big drawback to that is that it is not as secure as using a fax. If I had not been a frequent visitor to China as an exporter, I would have had difficulty locating good suppliers before the advent of the internet. While in China, I made good use of the local Yellow Pages.

This led me to finding one of the only two manufacturers of a product I was reluctantly buying from a wholesaler. His little factory was located on a hillside outside a small village. He met me in dirty overalls, because he operated some of the machinery himself, but over several cups of Jasmine tea, we negotiated a good deal and he became one of my regular suppliers. He still does not advertise online!

The anonymity of the internet has spawned a large number of scammers, who can hide their true identity and location. In some countries that can still be done using mobile phones, but when only landlines were available, tracking down criminals was a bit easier.

The big benefits of the internet are: 1. For manufacturers and wholesalers: Access to international advertising for nothing, or for relatively small fees.
2. For resellers: Easy access to sources. Easy access to consumers to sell to.

The transition of low cost labor from country to country did begin as you say with Japan. Post WW2 Japan was helped in building up an industrial economy, and labor costs were very low. The result was low cost and mainly low quality products. Japan quickly went on to improve living standards and product quality, with the result that buyers looking for cheap and nasty products turned to South Korea.

The process was repeated with Taiwan next in line, then British controlled Hong Kong took on the role of the world's supplier of cheap goods, until mainland China joined them.

Now it is more of a free-for-all, with low labor cost countries in Asia, Africa, and Latin America all wanting a share of the pie. I see this trend continuing with Eastern European countries joining in. India still has a lot to learn before they will get their share as exporters.

These latest developments are mainly what have prompted me to expand my book's treatment of sourcing from countries other than China. China will still play a big role for some years yet, but importers wanting to be a jump ahead of their competitors will need to include other countries in their sourcing programs.

Walter

 

[Walter Hay]

The benefits of thinking outside the box.

I will give two examples of how I made a killing by thinking outside the box. Both related to my importing business, but please note that these were B2B sales.

1. A government authority contacted me to see if I could make an unusual product. It was related to a very common type of product that I and many competitors were selling for less than $2.00 on orders of 1,000 pcs. They had contacted every business advertising in the Yellow Pages, and none were willing to do what they wanted. I knew that the manufacturers from whom I was buying would not make such a product because their equipment was unsuitable. so I searched and found a small engineering company in China. I provided drawings, accepted their quote and landed 1000 pcs at a total cost of $3,000, having already obtained an official order for 1,000 pcs for $21,000. A handy profit for very little work, just because I was willing to think outside the box.
2. An entrepreneur had an idea for making an every day product seem better quality. It was not a cosmetic change, just a way of adding a better feel to the product. He knew that many of the products I was selling were manufactured using a process that would suit his product, but he had no idea where to find manufacturers. I knew, and quoted him $2.20 each for the 100,000 pcs initial order. The product was nothing like anything in my product range, but with a landed cost of 19c each, I did very nicely. Again, this was a result of deciding to make a product in China, even though it was way outside my industry sector.

I should point out that the second customer had also thought outside the box. Frustrated at being unable to find manufacturers for that type of product he thought were there any products on the market that must be made the same way. That's how he found my business.

Just as an aside, these two stories highlight the fact that cost plus pricing would not have gained me the big profits I made by charging what I thought the market could bear.

Walter

 

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[IGP]

I don't do any importing at the moment, but I bought your book just to say thank you and to show support for the wealth of knowledge that you have provided in this thread!

Kudos!

 

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[Walter Hay]

I just finished reading the whole thread. It includes so much useful information that I decided to print it to pdf so it is easier to read and look up.

Thank you Walter for your continued support.

@Money Talks, I hope people don't make the mistake of thinking that my AMA thread teaches everything you need to know. Some of the earlier posts are already obsolete, and I have my hands full doing a thorough revision of my book ready to publish next year for free download by all my book users, so I can't also go through all those posts to see what needs to be changed. I also send out update bulletins to my book users, the latest being last month. I don't publish those updates online, and some of them contain seriously important information.

I have seen too many people get started in the importing business without sufficient guidance. Maybe I should put a disclaimer in every post warning that I don't intend this thread to provide all the information needed to safely and confidently invest your time and money in a new importing venture.

It actually frustrates me somewhat when people contact me for help to recover from a disaster resulting from them starting off only with information they have gleaned from forums and blogs. You might be surprised how often this happens. I'm a soft touch, so I still usually help them out, but it adds to my workload and I am "retired" after all. Just as well I still enjoy what I am able to do in this industry.

Walter

 

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[Walter Hay]

@Walter Hay I've just finished this thread and firstly I must express how grateful I am that you've taken the best part of 2 years helping us just starting on our importing journey, and I will most definitely be purchasing your book in the next day or two.

In the meantime, I hope to get your thoughts on something.

If you were starting out selling B2C, would you use an established ecom site such as Amazon and leverage their already existing customer base (and thus violate the commandment of control since your products are listed on "someone elses" site, and exist/rank at their discretion. Or would you build your own website and maintain full control whilst building up your own brand, customer base and reputation?

I know you said you're not big on marketing etc, but I bet you've got a damned lot more experience than most of us,

The opinion of others such as @Vigilante would also be appreciated.

Hi Michael, In my opinion, Amazon is a good starting point, but you would also be well advised to set up your own eCommerce site. If you establish a brand on Amazon, that will lead to people looking for that brand, and consequently some or maybe many will find your site.

Amazon can't prevent you from displaying your brand name/logo on the goods and packaging, but they don't like people advertising their contact details on the goods.

It's important to not wade in where there is massive competition that will usually only lead to a price war. Look for products that are unique, or have not previously been imported to the UK. My book can help you find such products.

Walter

 

[Walter Hay]

Hi!
I hope its OK I post an update on whats been going on since it might be of value to someone else being in a similiar position sometime.

1. I told my supplier that I kindly had to notify them that there has been some damage done to the packages during transportation, I was very clear there was not any hard feelings or demands for compensation.
2. I contacted the Polish manufacturer with a picture of the packaging, they said they could not help me since they only produce "flexible bags" and mine is not. I thanked for their time and told them Ill be in touch if I need their service in the future.

My asian supplier wanted some pictures of the damages and I provided them with that, and then they offered me to send new bags with my logo for the entire order. Completely free of charge. I doubt that would have happened if I bursed out my dissapointment to them in the first place.

Thanks alot for the value provided @Walter Hay it really helped turn my situation around.

Thanks for letting our readers know that the softly softly approach works. It often results in getting a lot more than you expect.

Walter

 

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[petkovic]

Walter,

I just wanted to drop by and say that I have now imported small quantities by air and am in the process of negotiating a sea shipment.

Thanks to your advice and that of many others here, I am able to talk intelligently with suppliers, freight forwarders, customs agents, etc. and people are taking me seriously at least 90% of the time.

Therefore: Thanks!

 

[petkovic]

Wish I had registered earlier! would love to have a copy of that book. Definitely going to continue following this thread. Seems to be a wealth of knowledge.

It's only a couple clicks and a rough 100$ away

It pays for itself with the first dumb thing you don't do because you read it

 

[iizu]

Great stuff, thanks for that Walter; he has confirmed that their FOB really is FOB and not EXW. He is also saying he needs to know how big my order will be to calculate CIF. So I'm taking your advice about being evasive on that one

One thing I am finding hard to find out from suppliers is how many of their boxes fit on a pallet, and it seems this is crucial info for freight forwarders when I contact them. Any tips in that area?

Maybe this will help, if you know the package dimensions..

http://www.toocraft.com/postpic/2013/08/standard-pallet-size-dimensions_663494.png

EDIT:

This is pretty cool also:

Onpallet.com/ free online pallet calculator | Online Palettier-Rechner | Ordinateur du palettiseurs | Calcolatrice per palletizzatori online | by Lorenz Pan AG

 

[Walter Hay]

It's been heart warming lately to receive kind messages of appreciation from Fastlane members.

Here is one that I am posting with @Roli's permission because I think it refers to an important issue that many members could take to heart:

" Hi Walter,

I just wanted to thank you personally for all of your help both directly and indirectly. Especially your tips on saving face. My Chinese supplier is now throwing free samples at me; simply because I took care to be polite and understood his culture, which is down to you.

Thank you and take care
Roli"

The way we treat our suppliers or potential suppliers can have a profound effect on their attitude towards us.

That's not to say things always work out. One member has described having received horrible treatment from a new supplier. If money was no object I would walk away from them and cut my losses, but he is trying to be super patient in the hope of at least finishing up with saleable product.

He has been patient, has visited their factory, has observed proper protocol, and yet they have let him down in a most atrocious manner.

I publish this to show that even with best practice you can still suffer from suppliers who seem to treat new customers with arrogance. It's a bit like courtship and marriage. All sweetness and light during courtship might sometimes turn into unpleasantness in marriage.

Walter

 

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[Vigilante]

Regarding cultural study, I recommend the book

Thick Face, Black Heart: The Warrior Philosophy for Conquering the Challenges of Business and Life

 

[geko_man]

Welcome Walter and thanks for this AMA.

You mentioned in another comment that you can lose the relationship with a supplier in your first email by not realising the language style you should use. Can you elaborate on wording and things to avoid in emails with suppliers.

Thanks.

 

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[Walter Hay]

I'm in the process of sourcing tin cans for the packaging of my product. The packaging is what is going to set my product apart so it is of vital importance to get it right. I contacted like 15 different companies on alibaba with the same questions (granted, I asked some of the newbie questions you mentioned ) and i got like 15 replies. some where barely understandable, some where one liners, but 5 where complete answers to every question, of this 3 of this companies are veritas assessed, so
i guess i will stick with one of them.
I'm a total newbie by the way.
I have a ton of questions so I'll break it up in different posts.
to begin, as i said the design of the cans is very important. Do you know how is the standard procedure or the best one to accomplish the design I want? Is it ok to ask for custom printed samples before the order? most of the companies are wiling to send me a sample of the finished product before shipping, but for that i have to order and pay 30% deposit. What happens if at that point I'm not satisfied with the product? what happens if I ok the product but when I get the shipment there is a considerable number of faulted items? what % of faulted items is acceptable?
thank you very much for every thing you are aporting to the community

First let me suggest that you keep communicating with all 3 of the Bureau Veritas assessed suppliers provided you have read the reports and confirmed that they are real manufacturers. Don't keep all your eggs in one basket.

I need to know whether you are intending to import the cans and pack or have someone pack the product in them for you, or are you intending to have the product packed in your cans in China. Let me know and I will advise further.

If you intend shipping empty cans, you need to consider freight cost before you spend money on samples. For empty cans you will pay freight on a cubic ton basis and that can be very expensive.

Walter

 

[Walter Hay]

@Walter Hay I'm looking to find something to laser cut and sell online and thanks to @OnlineGodfather for pointing me to some incredible ideas, I'm thinking I'd like to order some pocket knife varieties through an alibaba supplier. My question is, do you think I would have any trouble with customs getting them to the US? Thanks for this thread and TIA!!

I doubt that you will have any problems with USCBP provided the knives are not illegal.

If buying through Alibaba, are you sure you are dealing with a genuine manufacturer, or just someone who claims to be? You may think you are getting a good price, but if it is not a manufacturer of the knives you will not be getting the best price.

 

[ddall]

Walter,

The value you have provided in this thread is excellent. Thank you.

I have a question. I've imported 500 units of an item, and had them shipped from China to an intermediate inspection warehouse in the US before forwarding them on to Amazon FBA. 48 of those units (approx $600 worth of product) is damaged. Not the item itself but the packaging, which is high end, essentially has rendered the items non-salable. I think the manu did a poor job and protecting the product within the boxes. 10% damage rate seems high.

1) What is a common course of action in this situation? Should I go hard on the manu and request refund? Ship it back at their expense for repackaging?Am I screwed? What advice would you suggest in these scenarios.

Thank you.

 

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[Walter Hay]

Walter, Thank you for your AMA. I have learned a lot from it.

I had a question about shipping on samples. The item I am looking into is about the size and weight of an empty soda can. What shipping method is most cost effective for me?

Based on previous experience, I expect the cheapest to be HK/China Post, then ePacket, EMS, DHL/FedEx/etc. Is that correct or is my memory failing me?

Hi Mike,

Your memory has served you well.

China Post is subsidized even more than HK Post, so will be a little cheaper.

If you don't need them urgently, the cost saving on using postal delivery is substantial, but many suppliers don't like using it because it means going to the post office to send the parcel. They will make all kinds of excuses, but if you persist they will usually give in.

Walter

 

[Walter Hay]

So I finished the book - and as someone who has already taken a course on how to source/use fba/ do what ecom mans doing.. I've got to say I still liked the book! It goes very in depth in terms of the technicalities of sourcing and importing which for someone like me who is trying to take this business seriously, is great! I'd definitely recommend it.

One thing I have to ask (which may have been answered elsewhere in this thread - i'll check as soon as I'm done posting) is where you find the products that you want to import. At this point all that I've been doing is scour Amazon Best Sellers which has helped me find a few good products - but I know there HAS to be a better way.. I mean you can't even see past item 100 in any given category. Any tips?

Thanks for your review!

I am not an internet marketer, although the corporate website used by my franchisees when I was running my importing business did morph from a strictly online catalog style to a sales site where people could order online. That applied mostly to the small range of consumer products that been acquired as a result of satisfied B2B customers asking if we could supply such products.

In answer to your question specifically, let me just say that I don't like competition. I can hear all the free market exponents groaning now! "Competition is good for business" etc.

I must say that my competitors were always my best salesmen, because of their poor attitude to customer service, mean attitude towards replacements/refunds etc. Few seem to understand the potential value of making a loss on a sale even if the claim is unwarranted.

Example: I once repaired at our cost a number of faulty items that a competitor had supplied to our customer. The products looked alike, but when I personally delivered the repaired items along with one of ours that had been faulty, I was able to show the difference. The result was that we had a customer for life because we went the extra mile and gave more than could possibly be expected.

Now back to your question .... I always looked for products that were either not subject to a large amount of competition, or where the market was dominated by suppliers who could not care less about their customers, or where product improvements were possible.

Generally you won't find such opportunities among the Amazon Best Sellers list, although if you look at that list from the perspective I have outlined, maybe you will.

There is a big benefit in browsing printed sourcing magazines. You will find some offered on a couple of the sites that I have listed in my book. Quickly flicking through the pages can give you ideas that might not otherwise occur to you. They offer online versions but unless they have flip pages, you should opt for the print version, because browsing page by page is quicker than searching categories.

 

[Walter Hay]

Thanks for the feedback. I have doing exactly that. Let them know it is "company policy" not to pay for express shipping on samples. Sometimes they budge, sometimes not.

Products with multiple manufacturers are not an issue. There are usually enough manufacturers willing to send samples with favorable term that I can get what I need. The products with few manufacturers occasionally require me to pay.

I look at this as the barrier to entry.

Persistence pays. When sourcing, I would never stop at one or two possible suppliers.

If you contact enough of them you must eventually find the best in relation to prices, service, payment terms etc.

The barrier to entry may be your willingness to do the work in getting the best deal.

 

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[Walter Hay]

This thread is very intriguing and instructive.
Thanks so much Walter.

I am living in Seoul, Korea and have been for about 6 years now. My nationality is Irish and I have a spousal visa here. My wife is Korean. I will be here for the forseeable future. I am teaching English at the moment here which I enjoy but I am really keen to start doing some exporting or business from within Korea.

From what you have written I believe you have some dealings with Korea.
I am interested in exporting Korean Fashion in particular especially Ladies Clothes. My wife has been a Manager at a department store here for about 6 or 7 years too which would be a big help.
I am sure there are other opportunities here too.

What are your thoughts on developing a business within Korea exporting stuff from here?
My target market will be the UK and Ireland.
There is a Seoul Global Business Center here and I will be having a consultation with them next week about it all.

I realise most of the Business mentioned here is about importing from outside the Far East. Are there good opportunities from within the Far East to develop a business exporting etc..
There is of course huge competition.

It would be fantastic to get some insights from you on all this.

Kind Regards,
Michael

Hi Michael,

I must warn you that exporting is many times more difficult than importing. I did it successfully because I manufactured my own products, I knew the market on a worldwide basis, and I had been involved in the shipping industry since I got my first job after college.

That does not mean you can't do it. You have some distinct advantages, in particular an understanding of the local language where you will source supplies, and a wife with highly appropriate experience.

• You need to know the product and the market. That is where your wife can help. As a department store manager she would be able to tell you which manufacturers give good reliable service, and have products that would be desirable in your target market.
  
• You will need to learn shipping terminology, in particular Incoterms. See: http://en.wikipedia.org/wiki/Incoterms There are other terms that you will have to learn such as Letter of Credit and Bill of Lading.
  
• Your biggest problem will be finding buyers. One way you can do that is register as a seller on Alibaba (I know I knock Alibaba, but that is for buyers. It is great for sellers.) You may have to pay their $699 fee to become a Gold Supplier. That is the current discounted rate on offer for the "Lite" version.There are other places where you can advertise for free, but that must be done in a manner that I will explain to you privately. Let me know when you are in need of that information.
  
• Your next biggest problem will be to establish good relationships with the manufacturers while acting as a a middleman, which they generally won't like.
• You will have to be prepared to carry a small sample inventory to be able to ship to buyers wanting to check out the quality. For this you will have to negotiate very low rates with air couriers. Don't agree to pay any more than 50% of their schedule rates, but even lower prices are common. Cultivate an association with a good freight forwarder for larger shipments.
  
• Check the garment sizing and make sure the manufacturer knows you are buying for women in western countries.

The Seoul Global Business Center will be able to help you with the business set up side of things, but probably won't be able to help much with other aspects of the business. I suggest you visit the World Trade Center which is quite close to the Seoul Global Business Center. They are more export-oriented and should be of much more help.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
■ Introduction. Dealing with myths and misinformation.
■ Some things you should know or do before you start product sourcing.
■ Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
■ The difference between Alibaba and Aliexpress.
■ Alibaba and the 2236 Thieves.
■ Sourcing from countries other than China. Is it worth it?
■ Part 2. Traveling to source supplies. Visiting factories in China.
■ Parallel Imports USA.
■ Do your suppliers use child labor or slave labor?
■ Inspection Services.
■ Sourcing Agents and Quality Control.
■ Misinformation Is A Wealth Hazard.
■ B2B Scams
■ Q & A 1,2,3,4,5,6,7,8,9,10,11,12
■ Protecting Trademark, Copyright, and Other Intellectual Property.

 

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[Walter Hay]

Hi Walter, thank you so much for the great thread. Took me a while to browse from the beginning but I will review them and take notes!

As for my questions:

1. What can you say about the companies listed in Alibaba's inspection service page?
http://inspection.alibaba.com/1.html

I haven't found the reliable companies you mentioned previously. However, they provide a number of transactions and reviews from clients which is a good indication of their reliability. They are also priced cheaper which is a good thing for beginners such as myself.

The top company there is RichForth and their price is $103 per man day. Their website is http://www.inspectgoods.com but I did a quick search and found richforth.com. It seems to be owned by the same company and they are offering their own products there, which tells me they are into trading as well.

2. What are your thoughts on this? Should I avoid an inspection company that's also a trading business?

3. I asked for their certificate but the only available is a Chinese version. Also, I can't find any certificates or accreditation from their site. Is that a red flag? Even though they are the top 1 listed in Alibaba with tons of transactions and good reviews?

Thank you!
Matt

HI Matt,

You have opened up a very interesting subject. Inspection services in China are multiplying rapidly and it is common on some business forums to see numerous Chinese individuals jumping on the bandwagon and offering their services.

The big question is how well do they do their job, how reliable are they and are they ethical? I will answer your questions first.

1. I find it disappointing that Alibaba's listing of inspection services contains obsolete information. I checked out 4 of the services quite extensively, and found that none have transactions listed later than Sept 2013. This begs the question whether the quality of the services listed has been maintained or has it dropped off?

Also, the charges shown are mostly obsolete. In fact the rates for the ones I checked had risen substantially above the rates show on Alibaba's list. For example, Richforth now charge $180 per man day not $103 as listed.

It is also interesting to note that on Richforth's own site they display a price of $180 on their home page, but still show $103 on some other pages that are clearly well out of date. You are right about inspectgoods.com being owned by Richforth.

They only display one testimonial on their site and being a suspicious person I doubt that it is genuine. I have contacted a friend in Taiwan where the testimonial supposedly originates and will let you know what he reports.

2. I would see the fact that Richforth are traders as a possible red flag, but only if they offer product sourcing for you. It only suggests that either the inspection service or the trading is a sideline.

3. Inspection services in China are completely uncontrolled. Some of the services listed by Alibaba quote membership of bodies that I have never heard of. The whole system relies entirely on trust. Knowing that there is no verification process whatsoever, and that Alibaba will list for a fee any person claiming to be an inspection service does not instil trust.

One of the inspections services listed quotes a rate much higher than that charged by the century old European services, but in the list of reviews the amount charged in each case is shown as $0. Another service listed shows a charge of $253 for a supplier verification!

Summing up, I would suggest you be absolutely sure what you are paying for before you employ any of the services listed. It would probably pay to also get a quote from one of the services I have previously mentioned. I think it is significant that Alibaba's rules relating escrow claims specify that you must have an inspection done by one of the 3 big European Inspection services. (see my post Jan16)

 

[Walter Hay]

BUYING LOCALLY

It may seem strange that I would suggest buying locally rather than importing, but although importing is often the best option because of the generally lower prices available outside of developed countries, in some circumstances it may be worth buying locally.

Manufacturing industry is today a much more fluid field than it was prior to the internationalization of the world’s markets that began in earnest after WW2. Now with the world being a global village manufacturing will move from country to country following low labor costs and also technical skills and material resources.

One symptom of this is the slow return of some manufacturing industries to their country of origin after manufacturing for 10 or 20 years in lesser developed countries.

This means that it may be possible to buy locally at prices equivalent to, or even less than you can buy from Asian or other low labor cost countries. It is certainly worth checking it out in relation to the type of product you are interested in selling.

One major drawback to this idea is that manufacturers in Western countries have a tendency to be reluctant to deal direct with small retailers, and insist on working through major distributors. This is a big factor in the growth of small importing businesses, because the distributors’ margins eat into the profit margin available to small retailers.

Search for manufacturers in your home country who are advertising that they want to export. These are generally more entrepreneurial and may be more inclined to deal with smaller local businesses. There are a number of sourcing sites that relate specifically to one country, or you can inquire through your country’s trade department responsible for exports.

Don't just look at price. Take into account ease of communication, no international shipping costs or duty etc., you ability to more easily visit the manufacturer, and most importantly quality control. If you can sell a product in Germany that is Made In Germany, and your price is reasonable, that could be a great marketing advantage.

 

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