You've done a great job keeping up with all that we have covered so far. Over the past couple of weeks, you've learned how online retail works, what you need to start a retail business, and got to grips with the basics of product sourcing and using suppliers.
In the next couple of newsletters, we are going to look at what's involved with sourcing products from international suppliers. You'll learn:
- The difference between sourcing locally and internationally
- How to decide what time is the right time to import
- The realities of importing: Insider secrets about the challenges of importing
- What costs are involved in importing
- How to deal with Customs duties and taxes
- And much more
Doing your first import can be a little daunting for first-timers - there is a lot to think about, but don't worry; we are here to help. We will talk to you through some easy-to-follow plans to get you well on your way to sourcing some amazing deals... and making some great profits, too!
Right, let's get into it!
Local and International Product Sourcing: What's the difference?
Local sourcing is fairly simple: You find a supplier in your city or country, place an order and they ship it out to you. In some cases, you might even be able to pick it up yourself. Local sourcing is fast and easy because the supplier speaks your language and your merchandise has to travel a relatively short distance. But those same benefits are exactly why you might end up with your fair share of competing sellers using the same supplier! On the other hand, you'll be pleased that you can still make a decent profit without having to stick your neck out too far. Any problems and your supplier is only a phone call away, and in the same - or similar - time zone!
International product sourcing has a lot of benefits, but it also poses challenges that are quite different from local sourcing. There are two main benefits to importing.
- Cheaper prices. These days, most products are manufactured in Asia or India, so going directly to the source can cut out most, if not all, middleman costs.
- Access to a wider range of product. Some products may not currently be imported by wholesalers into your country, so if you want to sell a product like this, you'll need to do it yourself. Going directly to manufacturers or wholesalers based closer to the product manufacturer means you'll very likely be able to access a deeper range of products.
Once you've found a good international supplier (not always an easy task), you will need to negotiate price and shipping terms. Next comes a whirlwind of paperwork and logistics - although the intensity of this whirlwind varies significantly depending on the size of your import and what you are importing. This process can be tough on first-time importers, but it's always worth it in the end when you get your shipment full of all the fantastic items you ordered - and at such an amazing price!
One might say that the biggest difference between sourcing locally and internationally is that sourcing locally is usually faster and less complicated, but not always the most cost-effective option. Meanwhile, international sourcing takes more time and patience, and has greater risks, but allows you to source products very cheaply.
When Should You Consider Importing?
Most sellers should aim to import at some stage, as it lets you buy low and sell high. It's also great way to access otherwise unavailable niches and/or expand your product range. However, importing is also not something you should jump into while you're still learning the basics of online selling. Importing successfully requires a very comprehensive understanding of your business, especially your profit margins and your target audience.
Typically, an online seller's product sourcing path will go something like this:
Of course, there are often variations to this. For example, a seller may drop ship products at any stage to test out new products or to earn money to use to purchase their first wholesale lot. Another variation might be that the seller never progresses to importing; they may find the perfect supplier locally that allows them to achieve the level of business growth they want, without having to import.
Some sellers might go straight from selling a few things from around their home to importing, simply because they couldn't source the product they wanted to sell locally and they have enough cash to invest in an import.
But in general, the plan above is a very good tried and tested route for new online sellers to follow.
For a lot of sellers, importing is a natural progression from getting some experience in online selling and looking for a way to achieve a higher level of sales and profit.
If you have consistently maintained a good feedback score, have some sturdy processes in place to deal with a larger volume of sales, and are willing - and have the finances - to take a (calculated) risk, then it could be time for you to think about importing.
What Are The Realities of Importing?
Before you get too excited and go in search of an overseas supplier, you need to know the realities of dealing with an overseas supplier, getting your import through Customs and filing all the right paper work. We just wouldn't be doing our job if we didn't tell you all about what is involved!
Don't feel overwhelmed by the long list of 'to-do's'. Once you know how, importing is pretty simple. And the benefits mean retailers very rarely return to local sourcing once they have mastered the art of importing.
First up, there are 4 things you should know about importing before you go any further.
1. Importing as its simplest is ordering a small quantity of merchandise and having it shipped over by a courier company, like UPS or EMS. This is a good way to start out, as it's not too risky because the amount of money involved is limited, and the courier company takes care of all the documentation and Customs. On the other hand, importing becomes a lot more complex when you are ordering a container load of children's toys from a supplier in mainland China. You have to find a trustworthy supplier, work out the safest way to pay them, negotiate shipping and delivery, work out Customs duty and find out whether you need any special licenses for the product you are going to import.
2. Importing takes time and long-term thinking. You need to be super organized to make the most out of all the benefits. For example, seasoned sellers will be importing Christmas stock in August, selling it in the lead up to Christmas and ordering new stock for Valentine's Day in December or even earlier. It can take anywhere between 2 weeks and 3 months to receive an import order from the time you place it with your supplier, depending on how busy the supplier is, weather conditions - which can cause sea freight to slow, and whether there are any delays at Customs. Things are always a bit unpredictable when you import, so it pays to place your order early.
3. Importing costs are more than just the wholesale cost of each item you order. Your 'wholesale cost' includes the cost per unit, the shipping and insurance charges, import duties, and often, customs broker and freight forwarder fees. You can't be sure that a particular product will be viable to import until you know all of these costs. For example, you might find a supplier who will sell you jeans for $6 per pair, but once you add all the extra costs, the true wholesale cost might add up to $11.70 per pair.
4. When you import there is quite a bit of paperwork to do and importing laws to familiarize yourself with. As the importer, you are responsible for ensuring that what you import into the country complies with importing laws. We will talk more about these later in the newsletter series.
All in all, importing is not something you should rush into, as that is how costly mistakes happen. However, in upcoming newsletters we will be breaking down the essentials of importing so that you can see exactly what you'll need and how to go about importing, without making silly newbie mistakes!
Quick Recap
- Anyone can import, but only fools rush in! There is a lot to learn before you make your first import.
- Importing is a natural progression for most sellers and something to look forward to and work towards.
- You cannot know the true 'wholesale price' of an imported item until you have calculated all the costs involved.
- Sourcing and importing goods from overseas suppliers offers big benefits! These include finding great new products, and making more solid profits. Importing from overseas is also the only way to compete in some niche markets.
In our next newsletter: Do you know what it's like to hit the eBay ceiling? Find out how SaleHoo member Steve Marmas broke through by making some radical changes to his product range...
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