Some say that if you really want to make it big in online retail, you need to import your goods. This is because importing gives you a broader variety of products and, even more importantly, lower prices. The costs of manufacturing in China are much lower than other parts of the world, which is why suppliers in China can offer you such incredible prices on wholesale goods.
As good as all that sounds, importing from China isn't for everyone. Keep reading to find out whether this method of doing business is viable for you.
Why import from China?
- Low prices: The number one reason to import from China is because you can source items that you can resell for profits in your home nation for low prices. The cost of manufacturing — and running a business in general — is low in China compared with Western countries. Without a doubt, this is the biggest incentive to import your products.
- Huge variety: China is the manufacturing capital of the world and you can pretty much source anything from there. The benefit for you as a retailer is that you can offer products that other retailers in your local area do not have. This gives you a solid point of difference.
In other words, importing from China gives you a very strong advantage over your competitors. This results in more sales and higher profits for you.
What are the drawbacks of importing from China?
- Language barriers: Larger wholesalers will usually have an intermediate level of English but you might struggle to communicate with some other suppliers. In general, most Chinese suppliers will have better written English than spoken English. For this reason, using instant messaging on Skype and sending email is a good way to communicate. If you do get stuck, you can always try using Google Translate.
- Shipping: The cost and risks involved with shipping goods from China to your home nation can be overwhelming. I'll elaborate on this below.
- Risk of scams: Unfortunately, there are wholesale scams operating in China. We've talked at length about scam prevention but if you need a refresher, refer to these lessons: Avoid these 3 dangerous scams that target eBay sellers and Avoid these 2 common wholesale scams.
- A medium investment is required: While many suppliers in China have low minimum order quantities (MOQs), you will find that you are better off if you make a medium to large order, as you will save money on shipping.
- Generally, drop shipping from Chinese suppliers is out of the question as shipping times are often a lot longer than most customers are willing to wait.
Note: Although the list of drawbacks of importing from China appears to outweigh the benefits I listed above, for most sellers, importing from China is a crucial step toward business success.
Shipping from China
Your supplier will probably have accounts or partnerships with courier services such as EMS or FedEx, which will determine who ships your items to you. Feel free to run a Google search for the name of the courier company that your supplier uses to check out their reputation. Unless you are shipping a very large order, you should be able to use a regular courier company. Of course, the definition of "large order" depends on the shipping company your supplier uses, the weight of the order and the dimensions of the order.
For larger orders, you will usually use a freight company who will rent you a container, or a part of a container to fill with your goods. The first time you import your goods using a container can be a trying experience, but once you have done it, it's easy to wrap your brain around how it all works.
One thing that you need to get to know is the meaning of all the acronyms used in freight/international shipping. You might notice these on supplier websites. Here's a quick guide:
- Ex-Works: You are responsible for all costs once merchandise leaves the supplier's door. All the supplier does is makes sure the items are packaged and ready to go when they are due for pickup.
- FOB (free on board): Supplier pays for everything up to the port of departure, including the export charges. Once the shipment arrives in your country, you, the importer, are responsible for the order. This is the most common of the shipping terms.
- CIF (cost, insurance and freight): Supplier pays to send the goods to the port of destination and arranges the minimum coverage for marine insurance. The importer must arrange insurance for once the items arrive on land.
- DDU (delivered duty unpaid): The supplier pays for all costs to deliver to the buyer's door, with the exception of duties.
- DDP/Carriage Paid (delivered duty paid): The supplier delivers to the buyer's door and pays all of the costs, including duties.
Obviously the latter of these final two is the best option for retailers, but it's not the most common option and unless you are spending mega bucks on an order, you are unlikely to be able to negotiate these terms.
Shipping Insurance
Shipping insurance is just as important as any other form of insurance; without it, you could find yourself in big trouble if something goes wrong. Insurance is particularly important when you are importing goods from overseas, as they can and do go missing. In fact,you would be surprised to know how often an entire container goes overboard! Shipping insurance varies from package to package and it depends greatly on the value of the contents of the shipment, as well as the origin and the destination.
Quite often, your supplier might be able to recommend a company you can insure your goods with. Some suppliers will cover insurance costs, but you should never assume that their insurance is comprehensive. Make sure you check it thoroughly yourself.
If the supplier does not provide insurance, your freight forwarder should help arrange it when they book your shipment.
Freight forwarders: How they can make shipping easier
Freight forwarders are professionals who arrange the logistics of moving cargo internationally. This makes them the best friend of any new importers! Using a freight forwarder for your first import (or first couple of imports) will really put your mind at ease and help you learn the ropes. They will show you how things work and and ensure that your shipment arrives at your door safely.
While you have to pay to hire a freight forwarder, such an agent can often save you money as they know how to get good deals on shipping containers. Forwarders can sell you space in another client's container if you have a smaller lot to import.
To find freight forwarders, try running a Google search for "your area + freight forwarder" or try one of the following options:
In the US
All US freight forwarders must be licensed by the Federal Maritime Commission or the International Air Transport Association (if they are an air freight forwarder).
Visit World Class Shipping to get free quotes on shipments. You may need to know the terms of shipping before you can fill in the form completely, e.g. you need to know if you require door-to-door, port-to-door or port-to-port service). Or, call 1-888-465-8861 for more information.
In the UK
Visit the British International Freight Association. You can find freight forwarders on the site.
In Canada
Canada has its very own Canadian International Freight Forwarders Association. You can check out the membership directory of freight forwarders and Customs brokers here.
In Australia
Visit the A–Z list of Australian Freight Forwarders here.
In New Zealand
Visit the Customs Brokers and Freight Forwarders Federation of New Zealand to view the membership directory.
Customs brokers: How they can make clearing customs easier
Like freight forwarders, customs brokers really are a first-time importer's best friend. They go a long way in helping to ensure that your import goes smoothly. They can take care of paperwork and make sure that it is all filled in correctly.
While hiring a customs broker does incur a fee, most importers find that in the long run, they save money by using such a service. This is because brokers know all the ins and outs of dealing with Customs and making sure you only pay the duties you really need to.
All US sellers will appreciate the help of Customs brokers when it comes time to having their order inspected by Customs. Since 9/11 there has been a big crackdown on border security and if you don't declare everything you need to, there can be big delays and serious penalties such as fines.
US importers may need to give their broker Power of Attorney, because they need to sign for or declare information about the shipment. Your broker will let you know if this is required. As for a Customs Power of Attorney form, you can download one from the UPS website.
To find a Customs broker, you can try Googling "Customs broker + your area" or if you are in the US, check out The National Customs Brokers and Forwarders Association of America for a list of brokers.
Quick recap
- The benefits of importing from China are getting a better variety of products at lower prices.
- When you import from China, you will have an edge over competitors who source locally.
- The majority of the time, the benefits of importing far outweigh the drawbacks.
- Freight forwarders and customs brokers will make your first import much easier.
Ready to start importing from China? Make sure you are set for success by meeting trusted China-based suppliers in the SaleHoo directory. Skip the scammers and choose suppliers who are accustomed to working with both new and experienced sellers.
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