CE

General product requirements

This goes with the previous chapter.

Larger retailers or buying companies usually have their sample tested professionally before placing an order. This is done either by their internal lab or a third party. If you would like to make absolutely sure that your product conforms to regulations and is up to quality standards take this step. It will usually cost you a few hundred USD, depending on the third party. I recommend this step if your item is costly and your quantity is larger than 500 pieces or 2000USD in total value. You will usually receive a test report that you could also send to your supplier and ask for his feedback or improvement of the product before order placement.

Today there are many basic requirements that need to be met. For example, chemical substances in plastic or textiles are not allowed to exceed a certain amount within the product. Some items need to have a certain certificate (such as FCC, RoHS or CE), which means that the product is preapproved under certain criteria and OK to import.

Of all the smaller companies that drop-ship or have smaller order quantities I know for a fact that 95% of them don’t have their items tested for chemical substances or other technical requirements. If you drop-ship directly to your customers (for example FBA-fulfillment by Amazon) you won’t get into trouble. But if you are selling to larger companies or wholesalers they will probably ask you for test reports.

If you (or the third party) found anything that you would like to change or have explained ask your supplier to look into this, either to improve the product quality or give you feedback on any problem. Make sure that the supplier will fix any problems, and indicate to him that (in case of an order) you will test again during the inspection (performed by third party, Chapter 23).

Bear in mind if you are a start-up or planning your first import this step may not be necessary as it adds cost to your product.

However, if you have an existing business and are trying to expand into larger importing this is an absolute must.

Depending on your product you can check general requirements here:

http://www.unzco.com/basicguide/c10.html

Finding inspection and third party companies that can tell you what needs to be fulfilled is covered in Chapter 23.

 

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I m thrilled with the quality of this sample!

Testing your samples

Once you receive your samples it is time to perform a visual inspection and a functioning test. Whether your sample is of a textile nature, an electric product, or a decorative item, make sure you test it. Bend it, stretch it, use it, and test how it functions. Often I receive samples and they are so difficult to figure out (for example electronics) as they are not user friendly at all.

How can your customers understand and use your product in a simple way when you can’t? Make sure that your item is easy to handle for everyone and that it comes with an instruction manual (if applicable).

You don’t need to be an engineer to test simple functions. If you do have a friend or colleague who knows technical things hand the sample to him and let him give you an honest opinion.

If you found anything that you would like to change or have explained ask your supplier to look into this, either to improve the product quality or give you feedback on any problem. Make sure that the supplier will improve any problems and indicate to him that (in case of an order) you will test this during the inspection (performed by third party, Chapter 21).

 

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I m happy with my samples!

Ordering Samples

It goes without saying that you shouldn’t place a large order without ever having seen a sample or product. You need to test your sample for function, durability, and more.

When ordering samples most suppliers will charge you. And the majority of those will charge 20-50% on top of the regular price, because making a sample is more “costly.” The actual reason they charge more is because they are afraid you only want to order a sample and then never come back.

Either way, this is an investment you need to make.
Insider Tip: Most suppliers will refund you the cost of the sample on the first order. So make sure to remind the supplier of this when you place an actual order.

Tips on sending/receiving samples:

1) When you ask for a sample, you don’t want it to be caught up in customs. There are a few items that may not be sent via airmail or courier, such as items with a built-in battery (e.g., power banks to charge mobile phones). Check with your carrier or local post office on that.

2) Ask the supplier to state: “samples of no commercial value” on the sample invoice that is packed with the sample. This way, customs will see this is a sample not to be resold and should therefore not be taxed.

3) Ask the supplier to lower the value of the sample cost on the invoice. BUT it shouldn’t be an amount that is too low; if it is it may sound not credible. For example, if you order an item that is sold to you at 9USD, then the declared amount should not be lower than 3USD. If you have an item that is obviously expensive then make sure you don’t set the amount too low (e.g., real value 99USD, but declared value 8USD).

4) In some cases large sample orders will be held at customs, mainly because samples with a value that is declared too low arises suspicion. You may have to pay the tax and duties.

5) Sometimes the supplier will ask you for your courier number (e.g. DHL/FedEx etc.). If you feel comfortable with him give it to him but NEVER give away a courier number to a supplier. It happened to me that they misuse it for their other clients. 

When you order a sample with the factory make sure of the following steps:

  • Send an email inquiry on how many pieces you would like
    State the color and describe what the sample should look like (based on the supplier’s offer)
    State the address it should be sent to
    Make sure the supplier states “samples of no-commercial value”
    Tell the supplier that you will deduct the sample charge from your first order
    Declare a proper amount of sample value

There is an example sample invoice in our document section under:

http://importdojo.com/docs/supporting_docs.zip

 

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alibaba

Alibaba and Globalsources

We have covered important groundwork and the necessary steps to successful importing.

Now let’s get to one of the most important parts of finding products and suppliers.

ALIBABA AND GLOBALSOURCES

ALIBABA:

If you don’t have contacts the easiest way is to start looking at

www.alibaba.com.

Ever heard of the biggest IPO in history? Yes, that was Alibaba in 2014. Alibaba is the world’s largest directory for suppliers.

Alibaba is also relatively simple to use.
You create an account, fill in your company information and details, and then you can start sourcing right away.

You can filter by products or suppliers. Nowadays it’s pretty safe to use Alibaba. Most suppliers are pre-assessed by Alibaba through document checking, phone calls, and various other methods. Some suppliers even have on-site checks, which means that a third-party did a factory audit and you can actually download that audit.

There are many other cool functions, such as filtering by country or region. Say you plan on going to Shenzhen or Guangzhou. You can narrow down the province in filters (in this case Guangdong province), so you only see suppliers from that region.

Most products are made in specific areas. Here are a few examples:

– Guangdong province (South of China): Electronics of any kind, especially consumer and household, toys
– Zhejiang province (Shanghai area): DIY products, tools, metals and fabrics, lighting
– Hebei province (Beijing area): Textiles, coal, steel, iron, engineering, chemicals, power, ceramics, and food.

Section 1) Begin your search:

This is fairly straightforward. You can browse two options, products and suppliers.
We will start with products since we are assuming we don’t know the supplier.

We are looking at a Bluetooth speaker.

Wow, over 1,000,000 products!!


Bear in mind, many of them are duplicates because of multiple entries by the same supplier. Also, you will often find that popular and openly available products are offered by different suppliers.

Insider tip: It’s also very easy to tell the trading companies, middle men, and scammers from the real factories.
How? Simple. In the middle of the columns I can filter by:

Gold supplier: This is a paid membership from Alibaba for the supplier. They get featured and can put up a lot more items in their catalogue (among other functions).

Onsite Check: The onsite operation of the factory has been checked by Alibaba and a third party confirmed its legal existence.

Assessed supplier: This is a third-party assessment usually done through a testing company to verify various parts of the company. This includes machinery, staff, engineers, workers, certification, and much more.

So how do I tell if it’s a trading company, an illegitimate company, or a real factory? Simple. Trading or fake companies would not be a Gold Supplier or have an onsite check done, and they would not be assessed by a third party. First, it’s quite an investment for the supplier promoting his service (Alibaba doesn’t pay anything), and second, if this third party arrives at the address to check the factory they won’t find anything but three guys sitting in a small office selling items from the real factory at higher prices.

Alibaba unfortunately has hundreds of middlemen and scammers that pose as manufacturers. Many of these “manufacturers” are not manufacturers at all, rather middlemen that pose as such, marking up the price and increasing the level of miscommunication between you and the actual manufacturer while providing little, if any real value.

With these filters you can pretty much eliminate middlemen, trading companies, scammers, and so on. Unfortunately, you will also eliminate real factories that are either new to Alibaba or do not make the effort of going through all stages of verification. If your search did not conclude anything in the first step, then you can perhaps extend the list again by unchecking “on- site check” or “assessed supplier” and looking through your options with Gold Suppliers first.

Moving on, through filtering I now “only” have 165,000 products to choose from. I naturally look at the first one and a few others that interest me in terms of design/color, etc.

This supplier uses nice photos, provides crucial details and specifications, and even test reports at the end.

The second supplier also uses nice photos, a clear description, and a clean look.

So what do I look for now and how do I go on?

A) The price

One of the first things you’ll look at is the price. For this listing we can see a price of $30-60 USD FOB. FOB stands for Free On Board and means that the seller will pay all involved costs that get the product to the nearest port. This would be the most viable way to ship goods from Asia. The buyer pays the

cost of actually transporting the goods across the ocean to the final destination. The price here is not really relevant as it is most likely just a place holder.

B) Minimum Order Quantity (MOQ)

We look at the minimum order quantity. The minimum order quantity (MOQ) is the smallest order the manufacturer is willing to accept to start production. However, it’s important to note that this is almost always negotiable. In
our example, the minimum order is nine units. I highly doubt that this is the MOQ. In this case it usually means that they have stock and you can buy from nine pieces. But for mass production (and cheaper prices) they probably have a MOQ of 100 pieces or more.

C) Payment Options

There are several common methods of payment, and each have their pros and cons for both the buyer and the seller. The longer you work with a supplier the easier it will be to deal with payments. If you have an established business relationship you could ask that the next order should be paid 100% on delivery (TT). He can always say no, but if he agrees this gives you financial liquidity.

Let’s take a look at the most common payment options and the associated risk level to you as the buyer:

1. TT (Telegraphic Bank Transfer)

Risk Level For Buyer: Risky
With a bank transfer, the supplier will receive payment before production starts. Very important: if you agree to this payment, NEVER pay more than 30% upfront. Seventy percent will be paid upon inspection and shipment release. This payment method bears a high level of risk to the buyer and generally is not recommended when dealing with an unknown supplier. There is little that can be done to get your money back if something goes wrong.

2. Letter of Credit (L/C)

Risk Level For Buyer: Relatively Safe
A letter of credit is safe for both parties. However a letter of credit is rather complicated to issue through a bank, costs quite a lot of money, and is generally only recommended for larger purchases ($20,000 and above).

3. Western Union

Risk Level For Buyer: Very Risky
Western Union generally should only be used when dealing with people you know very well. There is no guarantee if something goes wrong.

4. PayPal

Risk Level For Buyer: Fairly Safe
PayPal is a popular payment method for buyers as it presents a much lower risk, ease of use, and generally pretty good buyer protection. Although it’s a

popular option with buyers, it’s less popular with suppliers due to difficulties in withdrawing money, high tax rates, and potential charge backs from less than honest buyers.

5. Escrow

Risk Level For Buyer: Safe
When using an escrow service, the buyer’s money is held by a third party and is only paid to the supplier after the buyer confirms satisfactory delivery of their order. Escrow is a fairly safe payment method for buying and selling online because it protects both the buyer and supplier.
You can read about common payment methods on Alibaba on the Alibaba Safe Buying page.

http://www.alibaba.com/help/safety_security/class/buying/pay_ship/ 002.html

Generally, when you are just starting, you’ll probably want to look for or negotiate with suppliers to either accept PayPal or some type of escrow service to give you the highest level of protection.

The next step would be to start communicating with the supplier.

D) Contacting Suppliers

Now that you understand how to better protect yourself when doing a transaction on the other side of the globe, it’s time to contact some suppliers.

Introduce yourself to each supplier professionally. When I first contact a supplier it usually looks like this.

You can copy this section or look under supporting documents for a blank supplier introduction form (http://importdojo.com/docs/supporting_docs.zip ) and use it for your first contact:

Dear…,

My name is ….. and I am the ….(Manager/President/Buyer etc.) of …. Limited/Inc.

We are a (fill in your company’s business, e.g., Importer/Buying Office/Whole seller/Online shop) and are operating in (fill in your country).
You can also check out our website under: www. …..

I am writing to you today to inquire about the product I saw on your website/catalogue/exhibition.

The model number is….

Could you please give me the following information: You can fill in the details in the attached quotation format or send me your quotation in the first step.

Unit price based on …. Pieces
Minimum Order Quantity
Available certification (CE, RoHS, FCC, GS, etc.) Production lead time
Available colors
Payment terms

I would then evaluate and get back to you as soon as possible. If you have any questions please don’t hesitate to contact me.

Thanks and best regards,

E) TIPS WHEN CONTACTING SUPPLIERS:
Do this step with multiple suppliers, because it’s never good when you start

to rely on just one supplier.

Don’t let the suppliers on Alibaba know this is your first import. If they know you are new, they usually try to take you for as much as possible on the first order and assume you will not be back.

For easier reference and keeping track of your offers and suppliers I recommend making yourself a folder on your desktop. Name it “Alibaba” or “Sourcing” or anything that you can relate to easily. Create subfolders for each supplier. In each subfolder create folders such as: “quotation,” “supplier profile,” “certificates,” and so on.

Within this course we will provide simple offer sheets and supplier profile forms that you can include in your email when sending to the supplier for the first time.

Also, I have found that some suppliers don’t read your full email. So point out the model number that you are interested in and ask them to quote specifically.
Sometimes you will receive a simple email back with a PDF catalogue asking which item you are interested in. It can be exasperating but that’s the way it is sometimes. Politely reply back that you are “looking for a specific quote on model number…”

You don’t necessarily have to use these forms for contacting the supplier for the first time. Many will actually not fill it in because it obviously takes time to do so.

HOWEVER, I recommend if you have narrowed down your suppliers you should ask them to fill it in for your records. Keeping clean records is crucial to your follow-up.

F) Ask questions and follow up

As you begin narrowing down suppliers make sure to ask a lot of questions about their business and their products:

Ask for a copy of their business license and company and factory standards (for example ISO-9001)

Ask which laboratories/third party companies they work with. If they only work with Chinese test or inspection companies be cautious.

Ask for photos of the factory or company presentation (PDF/PowerPoint) and sample products.

Feel free to ask for whatever makes you feel more comfortable doing business with them. Ask who their customers are and where they are located. If they don’t have any customers in your country be careful, as they might have no experience dealing with your country’s regulations and standards. Ask about them. If they already work with a competitor of yours or with an industry similar to yours it’s a good sign that they can fulfill your requirements.

Send a vendor profile so they can fill in their details. They should cover production capability, how many workers/staff/engineers, main customers, certifications, company turnover, etc. (we provide a blank format here: http://importdojo.com/docs/supporting_docs.zip

G) Get samples

It should go without saying that before you invest any significant amount of money into inventory you need to get samples to check and verify quality. We explain the sample process in Chapter 10.

H). Sounds fishy!

Finally, if something is too good to be true, it usually is. Be aware of prices, suspicious payments, or communication that doesn’t seem right. It’s never too late to simply cease communication and look for another supplier.

Tip: When asking your questions and formatting your emails to suppliers it’s best to work with paragraphs or bullet lists of requests so that it is easy for them to understand your requirements and needs. Make the supplier answer each of your “bullet-questions.”

I) Requesting a quotation

Requesting a quotation/price, also referred to as a RFQ (request for quote) is a relatively simple process. However, taking a few extra minutes to plan your email can make a significant difference in the number and quality of replies you receive.

Here again is a simple form for a RFQ:

Dear…,

My name is ….. and I am the ….(Manager/President/Buyer etc.) of …. Limited/Inc.

We are a (fill in your company’s business, e.g., Importer/Buying Office/Whole seller/Online shop) and are operating in (fill in your country).
You can also check out our website under: www. …..

I am writing to you today to inquire about the product I saw on your website/catalogue/exhibition.

The model number is….

Could you please give me the following information: You can fill in the details in the attached quotation format or send me your quotation in the first step.

Unit price based on …. Pieces
Minimum Order Quantity
Available certification (CE, RoHS, FCC, GS, etc.) Production lead time
Available colors
Payment terms

I would then evaluate and get back to you as soon as possible. If you have any questions please don’t hesitate to contact me.

Thanks and best regards

J) Negotiating

Once you have begun conversations with multiple suppliers and have a good idea about their prices, MOQ’s, and payment terms, you can begin negotiating with them.

Here are some tips on negotiating:

It is a given that once you place your order you negotiate the price, whether you are below the supplier’s MOQ or not.

Use the price that you were originally quoted and decrease it by 20%. Give this target price to the factory and let them know you would like to order with your (20% reduced) price. In most cases, the supplier will not agree to your new target price but he may reduce it by another 5%.

In 80% of cases he will give you a further reduction on his original quoted price, unless your quantity is really very low.

Also, mention to him that this will be the first trial order and that if it is successful larger orders will follow.

K) Weighing Your Options

Once you’ve narrowed it down to a select few suppliers, you’ll want to weigh all your options. Bear in mind it’s not always about the price and MOQ. It’s also a gut feeling that you should get when communicating with a supplier. Did he reply eagerly and quickly? Did he follow up in detail or just send fragments to your questions? If you have the feeling it’s difficult now to communicate, imagine how it would be to work with him once the order is placed. Make sure you eliminate the suppliers with the least potential and the most issues now!

Conclusion for ALIBABA

Sourcing a reliable supplier for your product from Alibaba can be a great experience. Following the above steps and tips should get you working with a reliable and good supplier. Don’t just settle on your first supplier or only one supplier. Keep your options open and order multiple quotations and perhaps samples.

GLOBALSOURCES

Global Sources is very similar to Alibaba. It’s just a bit smaller and less known.

Sometimes when I don’t find a product on Alibaba I go to Global Sources, or vice versa. What I like about Global Sources is that their customer follow up is usually better than Alibaba’s. I guess that’s because they are located in Hong

Kong, while Alibaba is based in Hangzhou (China), so their customer support is usually in a better English.

Start by registering and creating a profile as a buyer. It’s the same process you followed with Alibaba.

Once you have completed your registration you can start looking for products and suppliers.

Once you have input your product search you will see suppliers and products. On the right they have a nice tool that is similar to those in Alibaba. You can see if the supplier has been verified, which customers he has, does he exhibit, and so on.

You can also filter by “manufacturer,” “locations,” and much more. Again, it’s very similar to Alibaba.

Check out all their features such as Magazines, Tradeshows, Marketplace and more. There is a LOT of free information on there. I personally really love their e-magazines. There are a lot of suppliers in there with great photos, contact information, and much more. This is only available as a registered user though.

Start your product search as under Section 1 on Alibaba in the previous chapter.

Also check out my blog post & video screencast I made for Alibaba here:

http://importdojo.com/alibaba-hacks/

 

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looking for products at an exhibition

Ways to product sourcing

I think there are generally three effective ways to source your product:

  • Internet (Alibaba, Globalsources, Aliexpress, HKTDC)
  • Exhibitions / Conventions
  • Contacts

Internet:

The Internet is probably the fastest way to source for products.
There are hundreds of providers on the Internet to source for products. The most reliable and efficient ones would be:

ALIBABA (B2B-Business to Business for larger quantities)
ALIEXPRESS (B2C Business to Consumer for small order and drop shipment)
GLOBALSOURCES (B2B and Marketplace) Alibaba’s competitor in Hong Kong
HKDTC.COM (B2B with small order and drop shipment) from Hong Kong

I mainly use Alibaba or Globalsources since they have been around the longest and are the safest to use.
There are many other websites within China similar to those two but they are not as user friendly and safe. For some of them, including TAOBAO or BAIDU, you would need to speak Chinese or hire a translator.

I go into details about Alibaba & Globalsources here.

Exhibitions/Conventions

I would say exhibitions are the most effective way to find suppliers and products since you meet face to face and can also see the products.
As a first step Internet sourcing is fine, but maybe try to arrange your next China trip around an exhibition.

I learned, after many disappointments, that you don’t want to place a large order (more than 100 pieces) without knowing what you will get. You wouldn’t want to place an order with someone you never met and transfer a lot of money to him. So going to exhibitions helps a lot.

Insider tip:

Even if you can’t go to an exhibition you can still find out about all the suppliers exhibiting there. How? Simply go onto the exhibition’s website. For example, this lighting fair in Hong Kong: http://www.hktdc.com/fair/hklightingfairae-en/HKTDC-Hong-Kong- International-Lighting-Fair-Autumn-Edition.html.

Then click on “Full Exhibitor List” and there you go. You have all exhibitors exhibiting at this fair. It’s a bit of a lengthy process but you can check all websites of the suppliers, look at their products, and contact them directly without even going to the exhibition.

As I mentioned already, in this section we focus on the exhibitions in Asia. I would say there are three major organizers and hosts that cover EVERYTHING that you need. You need to preregister with all three organizers and it’s FREE of CHARGE.

Main Exhibition Organizers in China/Hong Kong:

HKTDC

www.hktdc.com

HKTDC covers most of the fairs held in Hong Kong. All exhibitions are held at the Wan Chai convention center on Hong Kong Island. Hong Kong exhibitions will also be the most important ones for you (apart from Canton Fair). They cover everything from jewelry to food to electronics, gifts, optical, maritime, and much more. Click on the link and see all the upcoming events. HKTDC’s events usually have the big names exhibiting. That’s a good way to spot trends and innovative products. But eventually you want to buy from the factories with lower prices.

GLOBALSOURCES

www.globalsources.com

Globalsources is the second organizer in Hong Kong. They exhibit at the Asia World Expo Hall at the Hong Kong International Airport. But they also hold other events around Asia (Korea, China, Thailand, India), which are usually a lot smaller and deal mostly with local industries.

They also cover the most product categories (electronics, jewelry, textiles, and more). The events are usually smaller in size and the exhibiting suppliers are mostly cheaper than at HKTDC. This can be positive and negative, as in lower prices but less innovative products.

CANTON FAIR

http://www.cantonfair.org.cn/en/

The Canton Fair is the holy grail of exhibitions. This event is so large that it is held twice a year and each time runs over a span of 31⁄2 weeks in three different phases. Each phase comes with different product categories. As of 2014 there were over 22,000 exhibitors. This exhibition is a must for me and it should be for you too. You will find a lot of innovations, big brands, small factories, or the product you have been looking for for so long.

Plan at least 2, or better 3, days for your product category/phase. Sign up once and get a badge that will be valid forever.

Don’t throw away your badge. You can use it for your next visit without paying 100 Yuan for a replacement card.

CONTACTS:

Last but not least, contacts that you already have can be very helpful. Ask around in your friend circle, relatives, and so on. You never know, your sister’s cousin might have a contact that you didn’t know about.

Sign up on business networks such as www.linkedin.com or www.xing.com if you haven’t already. You can find a lot on there and can ask around if anyone has any contacts to suppliers for your products.

There are also professional groups on those two websites with lots of suppliers offering their services. Simply search for a group that could meet your needs (e.g., consumer electronics suppliers / textile suppliers, etc.) and post your inquiry to this specific group.

If you aren’t on any business networks or have no contacts, I recommend that you start with Alibaba/Aliexpress.

Usually, government agencies in your country will also provide you with supplier contacts. But be aware, most of these contacts will likely be importers themselves. You will want to cut them out and go to the source. Remember, that’s what this course is all about.

 

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IMG_2548

Validate your product idea

You’ve found your product, GREAT! But careful, don’t get over excited about a product that you just found or had an idea for. You need to evaluate first if your product fits the market and its consumers.

We call this “product-to-market-fit,” meaning you have something that the market really needs.

To evaluate your product you should go through the following steps:

COSTS: 

  • Cost of manufacturing
  • Cost of transport.
  • This can be crucial to your margin if the transport cost is very high.
  • Cost of duties and taxes
  • Possible profit before tax

COMPETITION:

  • Make sure no one or not many people carry your product.
  • Analyse the market, do your research. Look at social media hash tags: http://topsy.com/ (enter your product’s name or category, e.g., LED bulb)
  • Test the idea with a few forums (but don’t give away too much information) – Research trends on blog sites (such as Shopify.com)

More great tips available on Shopify:

http://www.shopify.com/blog/12932121-what-to-sell-online-8-strategies-for- finding-your-first-product

For Example, look at the picture of this post. Its a Projector that can stream movies, music, documents via WiFi / USB and more. I don’t remember exactly but when I saw it at the Exhibition I was really excited. I was eagerly waiting for the price from the supplier. Once I got it I was really disappointed as the price was so high I could never sell it to any of my Customers. Not even if I would have done a lot of Marketing etc.

So what went wrong? First the supplier probably hasn’t done enough research on the market if his product can actually sell and if there is a niche. Second, I was super excited and sent pictures to my Customers already and they were all giving great feedback asking for the price. So when I finally got the price and (embarrassed as I was) sent them the price I made a fool out of myself. Not one Customer was interested in such a high price item.

Remember, do your research and make sure you have a “product-to-market-fit”.

 

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developed a new product!

How to find the right product

As mentioned earlier this can be a very lengthy process or a very short one if you already have something in mind. We will give you a few ideas and guidelines if you don’t have a new product idea yet.

Unfortunately, China’s factories rely a lot on your product input. When it comes to innovative products from regular factories there is not much to be found. What is found a lot is copies or slightly modified products from the big names. Most of the time you can also request a little modification such as putting your company logo on the item, private label packaging, or changing the colors of the product.

We will cover custom products in the section OEM Products.

Other than that you will need to rely on factories for their input.
What you can give them without investing a lot of money for new products (that no one has yet) is a good pitch. Say you see some new cool gadget on websites like Engadget”, Wired, CNet, PCMag (to name a few in the technology sector). You could send this idea to your trusted supplier and ask them if they would be willing to invest in developing this product. Or perhaps he has something very similar already in his assortment.

Fortunately, what Chinese factories are very good at is producing standard items that you can find in your local Wal-Mart / Sears / Lowes / Bed, Bath, & Beyond, and many more. These items can be a bathroom accessory, TVs, garden furniture, and much more.

One of the best ways for me to find a new product is by scouting the Internet and looking at trendy websites.

For example, this link provides all the necessary company websites that you need: http://www.kadaza.com/.

Just click on any category and browse through the many major websites provided.

For example, click on “Computer & Tech” and you will find the top 24 websites where you can start your research on the product that you would like to import. It is time consuming but it’s also a great way to find ideas and scout your potential competitors.

What also helps me a lot are newsletters. I subscribe to at least 100 newsletters of companies that I think provide cool gadgets and items. This way you get weekly newsletters of trending products. Simply go onto a company’s website and subscribe, easy as that. It could be your local supermarket, a big brand name company, or some blog that always features the coolest and trendiest items. Perhaps you could create a new email address that you register with on these sites so that your main (work) email address doesn’t get overwhelmed with newsletters.

Another way to find new products is obviously when you are out in a shopping mall. To start your own import business means that you also work when you are out with friends/family at a shopping mall. Keep your eyes open and when you see something cool make a reminder for yourself on your smart phone to look up this product.

Travelling is also a great way to find ideas. When you are out of your country or state you will likely see items that your country/state does not have. There could be many reasons why they may not be available where you live, but it’s always worth it to check an idea out. I remember when my friend told me about 10 years ago about Bubble Tea & Fancy Green Tea drinks sold in Hong Kong and Asia. She was from Germany and she had never seen these drinks back home. She didn’t go on any further with that idea but a few years later back in Germany these drinks started to pop up and were a smashing hit! So even when you think at first that idea might be nothing, it could be worth millions! Share the idea with a few friends and brainstorm about it.

One of my favorite and an efficient way to find new products is at exhibitions. There are hundreds of exhibitions each year in many countries. You get to meet the supplier, see the products, and talk over details such as prices, models, and much more. On top of all of that I guarantee you that you will get inspired. To find exhibitions near you just Google the exhibition center near you and get your entry ticket. Most times you will need to provide name cards and contact details for that. You can order business cards for $5 these days. Going to an exhibition prepared and with a professional image gives the supplier a great impression of you. We will cover exhibitions and how to behave there in another chapter in Part 2 of this book.

Obviously, looking at competitors can help you find a product. But doing so means you need to be more price competitive and that gives you a disadvantage, unless you are selling at a different price level and providing additional services that your customers value.

Amazon, Ebay, and the likes can help you get started on basic product ideas. I don’t recommend starting by importing products that the majority of companies already have. But these websites give you great input on trends and items that sell very well.

 

Alibaba, Aliexpress, Global Sources, and Taobao are great ways to find products. You could search through millions of products from thousands of suppliers. But I don’t recommend this option, as you can quickly get lost in the products. These sites are a great way to find a supplier, however. We will cover these four sources later.

Now, having said all that, you might think, “but how do I figure out what product is right for me?” Again, all options above give you some ideas where to find products, but it is up to you to try and test them. You can start by importing small quantities via Aliexpress (drop-shipping) and testing them through your EbayEbay/Amazon or other sales channels.

Make sure that the product you want to import is not regulated or a restricted item in your country. Do your research! See the section The 6 Step Import Process.

 

We will also be a forum & community later on http://importdojo.com for product discussions where you can interact with other Buyers all over the world.

 

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The 6-step Import process

This is a rather large section so I will outline in 6 steps and go into detail in later chapters.

 

The 6-step import process

 

This is the general outline of the process. We will look into each process in great detail in later sections. It is also the same process, no matter if you go to China or sit on in the comforts of your home.

 

These are the 6 steps that you always need to follow trough no matter what product you want to import.

 

 1) Decide for your manufacturing country. In our case this will be China or South East Asia (depending on your product).

Countries have different export/import regulations. While products may be cheap to buy from Asia, there are many other factors, which might add costs. Requirements for importing specific commodities depend on a wide variety of criteria. Some information, such as whether an item is subject to quota restrictions, eligible for reduced rates of duty, or restricted from entry because they originate in an embargoed country, can be determined only if you know the item’s Harmonized Tariff customs number. This can be found for the US for example under: http://hts.usitc.gov/

If you live in Europe or any other country simply Google: “customs tariff number your country”

Click on the link and head over to the official’s country’s government website.

On these databases you can simply look for a product’s tariff or regulations.

You can also try: http://www.dutycalculator.com/

They give you 5 free “look-up’s” the rest is premium & paid services. But to start you can check it out. It’s a great way of finding out all the costs of taxes & customs fee’s you have to consider.

You will also find a lot of tips on items that have “Anti-dumping” tax on them to minimize the import and protect the local industry under above links.

 

2) Find a product

This can be easy but also difficult. You may want to have a niche product or an item where you can make large profits. We will go into this section in more detail later.

 

3) Find a supplier

This is the most exciting but also most difficult part; we go into that in great detail later. If you are new to importing there is usually a lot of support from your local government that are ready to answer your questions. But with this E-Book we want to help you to understand the process by yourself.

 

4) Calculate all duties and taxes

This goes in hand with the first part of the process. Import duty can be calculated in different ways and can make or break your item. I have a rule of thumb myself. I take the Buying price from my supplier and add 20-30% on top. This gives me a rough idea on what my landing price will be. This rule applies to first world countries like the US, Europe, Canada, Hong Kong & Singapore for example. Many 2nd or 3rd world countries are not so open to importing and put a high percentage of duties and tax on top of import products to protect the local industry. Many 1st world countries even have 0% duties & tax to encourage the import. This applies especially on “green products” that are very sustainable and help the reducing energy or waste. A good example is an LED bulb with 0% tax and duties. Of course you can check in detail trough Customs Tariff Numbers (see above) or resources like www.dutycalculator.com

We will go trough an example in “Chapter 19) Calculate your costs”

 

 

 

5) Find a freight forwarder and customs broker

Don’t do this process (logistics) yourself. It can be a nightmare, trust me. Ask your supplier who usually has his own forwarders to give you contacts. If you already have contacts in the industry, great, if not, we will also provide you with a list of freight forwarders & customs brokers. Part of not doing this yourself is also because the freight forwarder usually knows all the procedures and documents necessary. This rule applies to bulk shipments in containers only. If you only have a few samples or pieces to be sent then use airmail or couriers such as DHL/TNT/FEDEX and so on. We will also give you some contacts together with this course. Often times your supplier also has a preferred courier for samples with great rates. Ask him to provide them to you.

 

6) Monitor your shipment and have an Inspection!

If you are having a larger shipment or products that are valuable you NEED to hire a Third-Party for Inspection. This third-party can inspect your shipment during or after production and send you a report. Based on this report you can give the supplier the release of the shipment or have him REWORK your goods. If there are problems found during your inspection the supplier will ALWAYS agree to re-work your shipment because he is still waiting for the rest of his money, which you will only release to him once you are happy with your shipment (do not pay 100% of your order up-front, NEVER). Many Importers skip this step to save costs or trust their suppliers completely. TRUST ME, in my 10 years working with factories for my Buyers I could tell you tons of stories were the products were not 100% according to my Order requirements. It could be a wrong Instruction Manual, many scratches on the product, a faulty wire or heavily damaged carton boxes. Don’t let me discourage you, many times its just minor mistakes that can be accepted but again since I worked for the biggest retailers in the world, products needed to be top-notch. Once you let your supplier know that you will do an inspection on your products he is more likely to pay more attention on your order too. And the best part? This can be done for ~300USD from companies like: Asia-Inspection, TUV, Bureau Veritas and many more.

 

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Why should you import?

I would generally say there are 2 main reasons why you should import yourself.

 

1) There is a saying. “Margin is made in purchasing, not selling”.

Every successful Buyer in the world who works for a larger company will tell you that it’s all about the purchasing. Profits are made when buying and not selling.

 

Huh? Yes sure, there is a profit to be made in selling but what if you are not the only one selling this product? Then you have to work for your margin at the root and not when selling the product. The competition doesn’t sleep, so they do research on you and your sales price. If they match or even lower their price you have a to-do. And that’s either accepting a loss in margin or looking for a new supplier. And you don’t want to go to your importer for that. You go to the source directly. And that’s the factory in China. This is the 1st part of the book.

 

2) Apart from Reason No.1 there is also the “Innovator effect” to be taken in account. This will be covered mostly in Part 2 of the book. Say your competitor buys the same or similar product you have and probably from the same source (your importer). You don’t want that. You want to have a great product with a great margin but you want it to be sold in your shop/store only. So you have to be the first one who finds it and make a deal with the manufacturer to have it exclusively. And the only way this is done is being in China, meeting companies and going to factories to see their products and perhaps develop your own product or private label.

 

Here are some more main reasons for you to consider when importing from China:

  • Low manufacturing costs
  • Suppliers are much more open to working with smaller businesses and providing smaller quantities
  • Large number of suppliers to choose from
  • For many products, China might be the only place that produces the item
  • One-stop services like Alibaba have made it very easy to navigate and purchase from suppliers

Along with the advantages of sourcing from overseas suppliers also comes several disadvantages that you should be equally aware of. Some of the disadvantages include:


Disadvantages

  • Perceived lower quality from customers
  • Sometimes lower manufacturing and labor standards (although this is changing rapidly)
  • Almost no intellectual property protection
  • Language and communication barrier can be difficult to overcome
  • Difficult/costly to verify manufacturer and visit on-site
  • Longer shipping time
  • Cultural differences in business practices
  • Product importation and customs clearance

 

HOWEVER, with our course we will take away these fears and disadvantages and prepare you for a trouble-free import.

 

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About China

Well there are a lot of statistics I could give you but I wouldn’t know where to begin.

I want to break down China and its manufacturing in a few sentences.

Believe it or not, China is still the biggest production site by far. While there are several countries in the vicinity such as Vietnam, Thailand, Bangladesh and others, they simply do not have the infrastructure like China.

 

Imagine you need sanitary items, furniture, household appliances, insurance and a smart phone. You walk into a Wal-Mart. You can practically find anything you needed in there and that’s within 10,000 square feet. That pretty much sums up China’s infrastructure.

 

Factory A provides Plastic & tooling, Factory B provides packaging, and Factory C provides raw material and components. Factory D assembles everything. And they are all within a stone throw away from each other. Most of these factories bosses are relatives of each other. They set up a perfect system within their “community”.

 

I give you an example and I am not kidding you, 95% of the world’s supply of electrical multi-sockets comes from a small town in Cixi near Ningbo/Shanghai. When I say small I actually mean small for China. Over 1.4 Million people to be exact.

 

When you step into “Ningbo Kaifeng” (largest factory in the world for multi-sockets) you will be overwhelmed. And when you step outside of the building you will see 5 of his competitors across the street. And they are all brothers or related. And down the street they find everything they need. Factories that make packaging, tooling, plastic, steel and so on.

 

The Chinese are so effective in terms of production & infrastructure, some 1st world countries could really learn a lot.

 

The big retailers have figured that out a long time ago, nearly every large corporation, retailer, discounter or online shop has a Buying Office somewhere in China/Hong Kong. I know this because I am in the industry for over 15 years. When you walk into a factory and look at the production line you will see cartons of goods with the famous names on it. Be it a fan from Homedepot, an audio speaker for Target or a ceramic pot for Bed Bath & Beyond. They ALL buy in China.

 

Most products are settled in specific areas.

Here are a few examples:

 

Guangdong province (South of China): Electronics of any kind, especially Consumer & Household, toys

Zhejiang province (Shanghai area): DIY products, tools, metal & fabrics, lighting

Hebei province (Beijing area): Textiles, coal, steel, iron, engineering, chemicals, power, ceramics & food.

 

These would be the main areas for production. However nowadays production is also shifting inland for lower labor & production costs.

 

And that’s why China will be the Number 1 for production and export for many years to come.

 

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