“How to Source Products That Are Better Quality And A Lower Price Than Your Competitors” You’ve heard the saying “you make your money when you buy” in real estate, right? Well, exactly the same thing applies to physical products – if you’re buying your products cheaper than your competition you’ll always be ahead of the game.
FREE LIVE EVENT
OUR BUYING SECRETS BOOK THESE DATES NOW 15 - 17 November 2019
Join Steve Eagle and Andrew and Daryl Grant at this exciting new 3-Day Training Program at Mantra Legends Hotel, 25 Laycock St, Surfers Paradise
Steve will show you how to consistently buy products 30-50% cheaper. Gone are the days when you can simply import an off-the-shelf product from China into Australia and make a quick profit – so many people are doing this nowadays that the profits are too lean.
BUT – with Steve’s unique system, you can massively undercut your competition by creating a unique, improved, but lower cost product – one that easily outsells your competitors
CLICK HERE TO BOOK YOUR PLACE
contents
Top Tips for Developing a Great Product
Page
From the Editor
Why you should never buy from Alibaba
Where To Start When Wanting To Make Big Money Importing From China?
How to Find The Perfect Product to Sell
How to Find the Best Clothing Suppliers on Alibaba.com in 8 Steps
Thinking of Joining a Buying Group?
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Thinking of Joining a Buying Group?
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Would you like to have x-ray vision to see the real cost of the products you buy? Here’s how…
Top Tips for Developing a Great Product Would you like to have x-ray vision to see the real cost of the products you buy? Here’s how… What You Need To Know About Importing Goods From Overseas
How to Slash Product Costs by 30-50%
The Differences Between Hong Kong and Mainland China
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20 The Differences Between Hong Kong and Mainland China
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How to Find the Best Clothing Suppliers on Alibaba.com in 8 Steps
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How to Slash Product Costs by 30-50%
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28 ALL RIGHTS RESEREVED
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The publisher or any of the editors, writers or contributors will not accept responsibility The publisher, authors and contributors or liability for the correctness of information reserve their rights with regards to or opinions expressed in the publication. All copyright of their work.
FROM THE
EDITOR-IN-CHIEF Welcome to our first issue of Importing For Profit Magazine. We are glad that you have turned the page and look forward to sharing with you the great content we have pulled together for you. In this issue we cover a whole stack of great information to help you when navigating your way through your Importing business. In this issue you will find some great info including: » » »
How to slash your product costs by 30- 50% Why you should never buy from Alibaba…a must read article! Would you like to have x-ray vision to see the real cost of the products you buy? Here’s how…
We also hear from some really switched on contributors who are sharing some fantastic tips with you. Rosemary Coates helps us understand the difference between Hong Kong and Mainland China. Will Mitchell from StartUp Bros shares his wisdom on where to start when wanting to make big money in China Zak Swan from LawPath fills us in on what we need to know when importing products from overseas. Finally Mark Hayes gives us some amazing tips on finding the perfect products to sell. We hope you enjoy this first issue and get a tonne of great tips from each and every page!
Steve Eagle
Why You Should
Never Buy
from
Alibaba! Are you considering online retail? Here’s why you should NEVER buy from them… and the number 1 reason to ALWAYS use their site!
I
t’s no mystery these days that online retail presents a massive opportunity. It’s never been easier or cheaper for entrepreneurs to start selling products online with many mature marketplaces such as Amazon, Ebay and the Shopify platform ready to host your products and facilitate trade. Unlike traditional retail which is declining online sales seem set to continue double digit growth for the next decade or so and has already been outperforming traditional business models for years. More and more people who are considering starting a business or who are looking to expand their existing retail businesses are turning to online ecosystems to accelerate their sales but is this really a smart approach? Some sources suggest as many as 90% of online shops fail to make money in the first 3 months. So with such sophisticated sales techniques but a continuing high rate of failure - what are they doing wrong? Put simply, these businesses are usually very
good at spotting trends and promoting sales. They have learned from online marketers and gurus about how to use effective, automated email marketing campaigns, how to advertise on Facebook and how to make sure they rank well on Google with the latest SEO strategies. These businesses usually take advantage of social networks and community building but there is one thing that can literally make or break your online business and it isn’t related to selling at all - it’s about buying. Getting the right product for the right cost with favourable trading terms is the single point of difference between those shops that make it and those that don’t. By buying well in the first place you can protect yourself from the competition and make yourself the clear choice in your customer’s eyes. How you find and buy your product is a fundamental part of your online business and its one that all too often is brushed over by most online business gurus and never really understood by those new to online business.
However, if your buying is not done correctly you will very quickly find yourself selling another “me too” product, no different to that of your competitors who may even be buying the exact same item from your supplier. This is a classic mistake made by businesses that leads to direct competition from other sellers. This scenario typically happens when sellers buy their stock from open wholesale sites like Alibaba where literally anyone in the world is able to replicate your business model with the same stock at the same wholesale prices. As a seller you have no protection at all using this model.
price bundle and market it as their own product but are not in fact the actual manufacturer). You can immediately save up to 20% when you identify the factory and approach them directly. This first hand contact cuts the cost of having a middle man handle the transaction and usually means you can customise or tailor the product to the exact needs of your customer too; getting a better product at a cheaper cost. This approach also has the benefit of preventing any other seller from having the exact same product that you have and will make you stand out as a better choice in your customer’s eyes.
The end result is many sellers with the same or similar products fighting for the attention of the customer and often doing this by dropping prices. It’s a race to the bottom with constant pressure to attract sales by reducing your profit margins. This is why you should NEVER buy from sites like Alibaba if you wish to grow a truly profitable and sustainable online business. So how do you do it the right way?
Put simply, Alibaba is a great place to do some product research and shortlist some potential suppliers BUT due to the additional fees and the open market style of the platform there is NO protection for you as a seller. You can do much better for yourself by sourcing a unique product directly from the factory which will be cheaper and help you stand out in the crowded online market.
By using Alibaba and similar sites to identify products and find manufacturers you can quickly get a feel for which products are selling well and where they are being made. A good strategy to use is to short list the products and suppliers on a site like Alibaba but then to google search the companies separately and make sure they are not simply a trading company (trading companies love sites like Alibaba, they simply build a wholesale
Would you like to find out first hand from industry experts exactly how this works? Click hear to register for a FREE upcoming workshop that will show you exactly how to avoid the mistakes being made by most online businesses and fast track your store to successful, long term sales. Link for page: http://ourbuyingsecrets.com/
WHERE TO START WHEN
Wanting To Make
BIG M NEY IMPORTING FROM CHINA? by
Will Mitchell
How You Can Make BIG MONEY Importing From China — The Rise and Fall of By My Empire… Wi l l M itchel l Wil l Mitchel l is a seria l entrepreneur and Founder of Start upBros. You can learn more about him at the Start upBros About Page.
M
y very first profitable business was importing products from China and selling them online – mainly through Amazon & eBay. I started out with counterfeits at 12-years old, and by the time I was 17 I had built multiple different e-commerce brands into an empire I was proud of.
I was incredibly confused when I was first getting started. I had hundreds of questions racing around my head: What product should I sell first? How do I know which products will sell (and which won’t)?
How do I find a trustworthy supplier and negotiate with them? How can I avoid scams and low-quality products? Just how the hell do I get started?! When you’re trying to start a new business from scratch, you’ll find your mind running in circles unless you have a clear direction to run into…
Start With Your Roadmap First things first, let’s wrap our
heads around the concept… This is a simple business model that’s easy to overthink. There are lots of moving parts that can feel risky or confusing. It reminds me of one of my favorite quotes: “Everything is simple until you make it complicated” Understand that starting this business, like starting any business, will require taking some risks. If you don’t know what you’re doing, it’s easy to end up with $1,000 worth
of iPhone knockoffs in your garage (or $1,000 worth of nothing at all)… That being said – if you’re careful, have a solid roadmap and a bit of hustle – you can build a profitable business for yourself with a relatively small amount of time/work.
E-Commerce Empire Roadmap It’s important to understand your battle plan before going off to war…
Here’s the basic game plan: 1. Find a good product – You’ll need to brainstorm, research, and select a product(s) to import & sell. Most people find this step frustrating and overwhelming (with good reason), but luckily I have some tools that will help make this easy. 2. Find a good supplier – Once you’ve decided on a product, you’ll need to source that product from a great supplier. It can take some digging to find them, but there’s ways to ensure you avoid the scams & increase your odds at finding an awesome supplier. 3. Sell some samples – You’ll want to place a small sample order to test & validate your product (I’ll show you how I do it). This is part of the ‘secret sauce’ that most new entrepreneurs miss. 4. Scale it up – Once you’ve validated your product, you can feel safe bulking up your order quantity & making changes to differentiate your products. We’ll even talk about private label branding & expanding your product line Here’s the BIG pitfalls to avoid (all explained in more detail below): Don’t buy in bulk from a factory until you have their samples in your hands and LOVE them.
Don’t let any supplier convince you they can’t ship small sample orders, they are just trying to squeeze you. Don’t pay with any other method but Trade Assurance or PayPal for the first 3-months with your supplier. This eliminates a ton of risk. Don’t buy from a company that won’t accept Trade Assurance or PayPal. What it really means is that they were shut down due to complaints. Don’t buy counterfeit crap. Not that there isn’t money to be made, it’s just a bad business to build (and illegal). Don’t buy a lot of inventory in the beginning. I started off buying 5-10 units at a time until I built up the money to reinvest into inventory. Don’t give these suppliers your personal email. The email will be effectively nuked and unusable for years, trust me… Well, I hope that gets you in the right mindset. If you really want to get into the beef of it head over to https://startupbros. com/how-you-can-make-big-moneyimporting-from-china-the-rise-andfall-of-my-empire/ where I give you the full step by step breakdown plus you get access to Our Cheat Sheet so you will always pick prodcut winners.
to Sell by Mark Hayes Director of Communications @Shopify
H
ow do some small businesses like Diamond Candles (230,000+ Facebook Fans), Luxy Hair (708,000+ YouTube Subscribers) and DodoCase (Winner of Shopify’s Builda-Business Contest) break through in their hypercompetitive niches and become market leaders in less than a few years? One of the most important factors in creating a successful ecommerce business is knowing what to sell online. Finding the perfect product(s) to sell is often the most important step in creating a profitable and growing company. For the past 2 years, I have been trying to answer the question - what is the perfect ecommerce product? To better understand what the perfect ecommerce product is, I had to determine common characteristics successful products and niches share. By analyzing hundreds of successful and unsuccessful products and niches alike, I developed a comprehensive list of key metrics and criteria to evaluate new ideas against. What follows is my definitive criteria to evaluating your
ecommerce product and niche. Note: You will likely never find a product or niche that fits all the criteria below. Evaluating your idea against this list though will give you a better understanding of your chosen product/niche, helping avoid pitfalls and increase your overall chances of success.
1. What Is The Potential Market Size? Choose a product and niche with a small but sufficient market size. Avoid niches that are too small with low keyword searches. For example, a product that caters to pregnant females between 25-40 years old is probably good. But a product that caters to pregnant females between 25-40 years old who like punk rock music will likely be too narrow. It will be harder to find customers, more expensive to acquire them and the small market size will limit your potential growth substantially. Example: Shopify store Daneson sells luxury toothpicks. You can probably imagine that the market for luxury toothpicks isn’t massive. Being in a small niche like luxury toothpicks can be both a good and bad thing. The small market size will likely limit revenues, but if they do a great job of defining their target customers and acquiring them inexpensively, they can definitely
own that niche. As a bonus, high-end toothpicks is a product that lends itself very nicely to garnering media attention. Tools: Using Google’s Keyword Tool can help you determine search volume of chosen keywords. This can give you an idea of how many people are searching for your keyword terms and in return give you a sense of the market size. Combine that with realistic judgment and some Google searches on your interested niche and you should start to get an idea of your market viability.
2. What’s Your Competition? What does the competitive landscape look like for your product? Are there no competitors, a few competitors or many? If there are a lot of players in your niche, it can be a signal that the market has been validated. In order to break through, though, you will have to do something different to attract customer attention and build market share. Example: Shopify store Luxy Hair wasn’t the first company to sell hair extensions online, the market was filled with competitors when they began two years ago. Right from the start they knew they had to do something different. Luxy entered the game with a different marketing strategy by offering
value for free in the form of video tutorials on YouTube. 2 years and over 700,000 YouTube subscribers later, they are now one of the biggest online hair extension retailers in the world. Tools: Of course, good ol’ fashioned Google and Bing searches will help you uncover current market players. Google’s Keyword Tool can tell you approximate search volumes for your chosen keywords, and also tell you how competitive they are (meaning how many other people/ businesses are bidding on those words). Don’t forget, the more people bidding on your keywords, the more expensive they will be.
3. Is it a Trend, Fad, or Growing Market? Make sure you understand to the best of your ability where your product stands. Does your product or niche fall into fad, trend, stable or growing market? Example: A Geiger Counter is a personal device about the size of a cell phone that tells you the level of radiation around you. Cool niche market right? With a quick Google Trends search, I knew instantly that I would have probably made a small fortune if I had been selling them in March of 2011 right after the earthquake in Japan. Likely if I tried to sell them now, I would probably sit on my inventory for a while. Tools: Google Trends will help give you the big picture whether something is a trend, fad, growing or stable market. If you see unexplainable spikes, try doing some further searching to see what the possible cause was of it.
4. Can You Buy The Item Locally? If your product is readily available locally there is one less reason for people to seek your product out online. Example, most people who want to buy a toilet plunger simply go to Walmart or their local hardware store. If your product can be bought locally, how are you going to
differentiate yourself and convince people to buy from you online? Can you offer a better selection? Higher quality? Better price? Example: Ellusionist sells gorgeous, high-end decks of cards for magicians and card players alike. Take a look at their products. Have you even seen something like them sold locally?
5. Who Is Your Target Customer? At this point you don’t need to go into extreme detail but you should be aware of they type of customer you would likely be selling to and their online purchasing capabilities. If you have a product geared for teens, you should keep in mind that most don’t have a credit card to purchase online. Example: Clothes for Seniors offers adaptive clothing for seniors. One of their main target markets has a low level of technology and online commerce adoption. You›ll need to tailor your entire online store to accomodate them. Tools: If you find another company selling similar products, you can use Alexato get information on their visitor demographics, which may help you define your target market better.
6. What Is Your Markup? It is vitally important to take markup for a specific product into consideration before going too far into the process. This is important as there will be lots of other small fees associated selling your product that will eat away at your margins. Having a strong initial markup will provide you with the necessary cushion to absorb these variable costs. Example: Lets look at an actual product to get a better understanding of why initial markup is so important. We will work with a Pet Pedometer - a little device you connect to your dogs collar to count how many steps they take. This might be an interesting little
niche - people are always willing to spend money on their dogs. But can you sell this product profitably? I chose a potential selling price of $24.99 and got a cost per unit of $2 from a manufacturer on Alibaba. I added all the other approximate costs associated with selling the product into the spreadsheet below: Cost Per Unit (Manufacturing) Packaging (Branded) Import Shipping Cost/Unit Customs/Duties Shopping Cart Cost (1% of Selling Price) Credit Processing Cost (2.75% of Selling Price) Fulfillment Handling Cost Fulfillment Shipping Cost *Average Advertising Cost (Per Unit) *Approximate
$2.00 $0.10 $0.30 $0.40 $0.25 $0.69 $3.30 $5.00 $5.00
Total Cost Per Unit
$17.04
Potential Selling Price Shipping Revenue *Average
$24.99 $5.00
Total Revenue Per Unit
$30.00
Margin $ Margin % Markup %
$12.95 43% 76%
You can see from this example how the small fees whittle away at your margin. In this case, a product that had an initial markup of over 1,200% ends up less than 100% when all is said and done. Of course, these are just approximates and you can cut costs significantly by handling fulfillment yourself and spending less on advertising. Tools: Try to find an example of the product you are interested in on Alibaba. Email a few manufactures to find out pricing and minimum order quantity (MOQ). From there, use Google to try to find others selling the same or similar product. How much are they charging? Survey Monkey is a great tool for creating quick surveys to send out on your social networks to get a sense of what others would pay in your social circle. When you begin to get more serious, you can mock up a quick website using tools like Weebly and actually try to attract a customer to put through an order to validate your price point. There can sometimes be a big different between what people say they would pay, and what they would
8. Can You Offer a Subscription?
actually pay, especially if all you solicit is friends and family members opinions.
7. How Much Can You Sell It For? A price point between $75-$150 is general recommended as it minimizes the need to find a large number of customers to turn a decent profit and be able to give you some cushion for customer acquisition (marketing) costs. Prices in excess of $150 tend to come with a lot more customer scrutiny. Potential customers will want and expect a lot more reassurance. They will have more questions and in general will create a longer, more difficult sales cycle. Example: In our previous example with the Pet Pedometer we had a relatively low selling price of $25. Because of this, variable costs ate away at much of our profit, leaving us with a profit per unit of only $12.95. Lets say we switch out the Pet Pedometer for a new product called “Product X” and assume that “Product X” has a potential selling price of $100 (4x more than the Pet Pedometer). For consistency, I have also multiplied the other appropriate cost by a factor of 4x. Because of the higher selling price we have much better margins 73% vs. 42% for the Pet Pedometer, and our profit per unit skyrockets from $12.95 to $76.75. Product X
Cost Per Unit (Manufacturing)
$2.00
Packaging (Branded)
$0.10
Import Shipping Cost/Unit
$0.30
Customs/Duties
$0.40
Shopping Cart Cost (1% of Selling Price)
$0.25
Credit Processing Cost (2.75% of Selling Price)
$0.69
Fulfillment Handling Cost
$3.30
Fulfillment Shipping Cost *Average
$5.00
Advertising Cost (Per Unit) *Approximate
$5.00
Total Cost Per Unit
$17.04
Potential Selling Price
$24.99
Shipping Revenue *Average
$5.00
Total Revenue Per Unit
$30.00
Margin $
$12.95
Margin %
43%
Markup %
76%
You will hear it time and time again: It’s much easier and less expensive to sell to a current customer, than to find new customers. A subscription-based business allows you to sell to the same customers many times over, automatically. There are generally two types of subscription-based ecommerce businesses, discovery and replenishment. Examples: A discovery based ecommerce business like Quarterly Co. sends you something on a schedule but you don’t know what it is. It is picked by someone else but usually falls within the same category every period like beauty or fashion products. A subscription ecommerce model is especially important for a company like Dollar Shave Club because of the extremely low price of their products. Monthly blade subscriptions begin at $1 USD/month. If they didn’t sell to that same customer on an ongoing basis their business model would not work.
9. What is Your Product Size & Weight? Product size and weight can have a big impact on your sales and bottom line. More and more customers expect free shipping these days. If your product is oversized and/or heavy, costly shipping can deter potential buyers. Did you know that shipping costs are the #1 reason for shopping cart abandonment? Additionally, there will be added costs for shipping the products to you if you are working with an overseas manufacturer and it will increase warehouse costs if you choose to use a fulfillment warehouse. Example: There is a popular oversized yoga mat company which sells giant workout mats. The product itself is a reasonable $99. Shipping to the USA is $25, Canada is $40 and the rest of the world is $100. For some, it would be hard for them to justify spending 40100% more for shipping.
Same goes for any large or heavy item. You may be very keen on selling iron weight sets, and perhaps you found a great supplier that will give you an excellent price - well, you need to take into account the increased shipping cost. There’s only so much in shipping costs that a customer is willing to pay.
10. Is Your Product Durable? How fragile is your potential product? Fragile products can be an invitation for trouble. Breakable products will cost you more in shipping/packing costs and you are bound to have more customer returns and exchanges. Always keep in mind that even if it’s the shippers fault, it’s still the customers experience with your brand. You are ultimately responsible for that entire experience. When you get to the stage of ordering samples, test them and push them to the limits. Leave them in a hot/cold environment, apply pressure, twist it, pull it, drop it, kick it. Don’t worry about breaking a few hundred dollars in samples. It’s more important you know exactly the quality of your potential product. Example: Play Lashes lost over $2,000 worth of product due to a damaged shipment to themselves when the shipping company tried to fit the shipment into a P.O. Box that was too small. The hard plastic cases that were protecting the delicate product shattered on most of the units. Going forward they decided to have their fulfillment warehouse bubble wrap all orders.
11. Is Your Product Seasonal? Businesses with seasonal products can suffer from inconsistent cash flow. Ideally, you want to find a product that will show even demand year round. At the very least, you just want to be aware of seasonal demand fluctuations to plan accordingly. Example: Christmas items like the Omega Tree Stand are best sold leading up to the the holidays. Take a look at the Google Trends
report below. Tools: Look for seasonal trends by looking at Google Trends for your product/niche keywords.
12. Does Your Product Serve a Passion or Pain? Products that sell best serve a passion, relieve a pain, or solve a problem. Customer acquisition (marketing) costs tend to be lower as well since customers are actively seeking out a solution as oppose to discovering it. Example: Pro Teeth Guard sells custom mouth guards to prevent teeth grinding. People with this problem are likely to seek out a solution and find Pro Teeth Guard rather than needing costly advertising to draw them in. As JP, owner of Pro Teeth Guard pointed out in a Skype call, “It’s a much easier sale when someone is in pain and your product helps alleviate that pain.”
13. What Will Your Turnover Be? It’s risky to have products that constantly need to be changed. You run the risk of not being able to sell your product before time of turnover. For example, clothing with seasonal colors or accessory products for the ever-changing smartphone and tablet market. Now of course there are plenty of successful businesses who cater to these markets, like iPhone and iPod cases, but it’s important to realize how fast your product turnover may have to be. There are costs associated with entering a market like this. Example: I got a chance to talk to the owner of Sutra Designs who is the designer/owner of a line of leather smartphone/tablet cases. He has been having difficulties building awareness of his brand and selling his product since launch. Sutra Designs’ biggest challenge is creating enough traffic to sell his inventory before the cases become obsolete due to new models of hardware. If he choses to design new products for new hardware models, he will
be faced with additional costs for developing new designs and minimum order quantities by manufacturers. This will be perpetual and ongoing because of the niche he chose.
14. Is it Consumable or Disposable? As we already discussed, it’s easier to sell to existing customers than to new ones. Having consumable or disposable products makes this easier by essentially putting a time limit on the products life. Example: Manpacks sells products that generally have a lifespan like razors, condoms, socks and underwear.
15. Do You Need to Consider Perishability? Perishable products are risky for a physical storefront, never mind for ecommerce. Since some perishable items require speedy delivery, shipping can cost quite a bit. For example, baked goods, meat, frozen foods, and anything else that needs to be kept cold or has a short expiration date all require special care when shipping to a customer. If you choose to sell perishable goods, you need to be prepared for the extra process and shipping costs associated with your product. Example: The Yummy Tummy Soup Company makes delicious homemade soups and desserts that they sell and ship to customers through their ecommerce website. This model works well for them and they›re doing very well, but it›s not right for every ecommerce merchant. They need to prepare fresh soup every day and be very conscious of shipping times.
16. Will There Be Restrictions & Regulations? Before you dive into a niche or choose a product, make sure there are no regulations or restrictions, or make sure they are at least manageable. Certain chemical products, food products, and cosmetics can carry restrictions by not only the country you are importing your goods into
but also the countries you are shipping your product into. Some places to make a few phone calls are customs of the country you will be importing your product into, your warehouse if you plan on using one, and the food and drug administration if it’s a food/supplement product. Example: Silky Polish, a nontoxic, cruelty-free nail polish, was excited about their product and niche, but ran into problems when they learned it was considered ‘hazardous materials’ because of flammable chemicals in it. These regulations prevented them from having the product transported by air when they were importing it and when selling it to customers, preventing oversea sales.
17. Is Your Product Scalable? Many people don’t think about scalability when they first start out. It’s difficult to think about the future when you are still in the launching process but scalability should be thought of and built into the business model right from the start. If your product is hand made or contains difficult to find materials, think about how to scale it if your business takes off. Will you be able to outsource manufacturing? Will your number of employees have to increase with the number of orders or will you be able to maintain a small team?
Conclusion The product and niche you choose is at the very core of your business and one of the most important decision you will have to make. Although the perfect product may or may not exist, there are definitely ways to minimize risk by choosing a product and niche that have more going for it, than against it. Using the above criteria as a guideline can help you better understand the product you are considering and increase your overall chances of success.
How to Find the
Best Clothing
Suppliers
on Alibaba.com in 8 Steps
With thousands of suppliers to choose from, sourcing clothing and textiles on Alibaba.com can be overwhelming.
H
ere are some essential steps to set you on the right path:
1. 2. 3. 4. 5. 6. 7. 8.
Find the right keyword and use the ‘Supplier search’ function Review the supplier page How to read the TrustPass profile Review product pages Select suppliers, submit techpack and request quotations Order product samples from 4+ suppliers Place your order with Alibaba Trade Assurance How to book a sea or air shipment
the right keyword and use the ‘Supplier 1 Find search’ function Using the right product keyword is the key to success when sourcing products on Alibaba.com. All suppliers have their own product focus, and we need to be sure we only identify those that are relevant.
A few examples follow below: » Bamboo rayon t-shirt » Polyester yarn » Organic cotton baby clothes Don’t go too specific, you won’t find matching suppliers.
Supplier search Once you’ve found the right keyword, you must switch from product search, to supplier search. After all, we are here to find qualified factories, not product listings. By now you should see a list of suppliers. I just searched “Organic cotton baby clothes” and got 832 options to choose from. Obviously, that’s too many suppliers to process.
How to filter suppliers The left column on Alibaba.com gives you many options for further filtering suppliers. When sourcing clothing and textiles on Alibaba.com, I suggest that you only focus on ‘Mgnt Certification’ which enables you to filter suppliers based on the following: » ISO 9001 » BSCI
» ISO 14001 » SA 8000 » IS 13485 I primarily filter clothing suppliers based on BSCI, and in some cases, ISO 14001. These suppliers also tend to perform better in terms of quality and compliance.
Alibaba Trade Assurance It’s a big plus if the supplier is part of the Alibaba Trade Assurance program. I get back to that further down in this guide.
to read the TrustPass 3 How profile Alibaba.com provides verified company information for every Gold Supplier. This information can also be used to assess if the supplier is qualified or not. When sourcing clothing and textile products on Alibaba.com, the only piece of information that truly matters here is the registered capital.
Review the supplier page BSCI, which is a social compliance protocol used in the clothing and textile industry, filtered the number of suppliers down to only 20. That’s easier to manage than 832 suppliers. This is about as far as we can get, using the search function. Now it’s time to open the supplier page, and make an assessment based on the information we find on their company page. Use this checklist » Are they listed as a trading company or manufacturer? » Are they specialised in your product category? » Do they offer the same types of fabrics? » Do they provide factory images? » Do they have uploaded test reports? (i.e., REACH) » Do they have uploaded factory audit reports?
Gold Suppliers You can also see the number of years a supplier has been a Gold Supplier. This is of some interest, but certainly not the main thing I look at.
Look for suppliers that have at least RMB 500,000. Suppliers with less registered capital are more likely to be traders.
4 Review product pages Many buyer’s go straight to the product page, and then start reviewing the supplier page and TrustPass profile. But what’s the point of spending time reviewing product pages, if the supplier is not qualified? But that’s not the only reason I save the product page for last: a. Many suppliers don’t provide accurate product listings. In many cases, you just see a few product photos, and a basic spec sheet. b. Most suppliers only use product listings to ‘demonstrate’ what they can make for you. It doesn’t mean that they actually have the materials in stock, or even a pattern file ready. c. Hence, product listings don’t really matter. What does matter, however, is the suppliers’ capabilities and main product focus. There are of course exceptions, but this is the situation for most suppliers.
suppliers, submit 5 Select techpack and request quotations
At this stage you should have a shortlist of at least 10 suppliers. You can get in touch with the supplier, either by clicking on the ‘Contact Supplier’ button or ‘Chat Now’. Your success from this point and on will depend largely on how you introduce yourself. Most new customer leads are extremely vague. Hence, the suppliers don’t even bother to respond to many quotation requests. Use this checklist to maximize the number of successful RFQs: a. Provide patterns, specification sheets and component images b. Introduce yourself and your company c. Clarify that your intention is to get a quote, order samples and then place your first test order. d. Request the supplier’s Wechat ID. e. Follow up a few times per week until you’ve received your quotation You should give your supplier at least 4 to 7 days to provide quotations.
product samples 6 Order from 4+ suppliers Despite the fact that you’ve already invested significant time in vetting suppliers and requesting quotations, the real test remains. Making product samples.
This is not a small task. In the textile industry, I’d say that the fail rate is normally around 50%.
You must also specify the final delivery date, quality check terms and incoterms.
To avoid a situation where you have to start all over again, I strongly advise you to buy product samples from at least 4 suppliers.
Step 4: Confirm contract Step 5: Make payment: Credit Card or Telegraphic Transfer (ONLY use the designated account)
Assuming that 2 supplier fail, you still have 2 options left.
You should also follow up each order with a quality check, before shipment.
Prices Expect to pay around $50 – $200 per sample, excluding delivery fees. You can either pay via the Alibaba payment gateway, or directly to the supplier.
Lead times Most suppliers need at least 30 to 40 days to produce the product samples. Request photos before the supplier ships the samples. That way you can spot quality issues, without having to pay $50 in shipping fees.
your order with Alibaba Trade 7 Place Assurance The Alibaba Trade Assurance protects you in 2 ways: A. If the goods are not shipped on time (as specified in the digital purchase contract) B. If the products are not matching the specifications (as stated in the agreement)
The Trade Assurance doesn’t cover refunds or replacements once you have approved the order.
8 How to book a sea or air shipment Once the goods are quality checked, lab tested and approved, you can go ahead and book the shipment. You essentially have 3 options: a. Let the supplier book the shipment (I suggest you avoid this) b. Book a shipment via Alibaba (This is still under development, but they are expanding their logistics network worldwide) c. Book a shipment via Freightos.com, Flexport.com or other online platform Import duties, and other taxes, are paid once the goods arrive in the port of destination.
However, the coverage only applies if you strictly follow this process: Step 1: Place order through Trade Assurance Step 2: Use Alibaba Trade Center (Under My Alibaba) to communicate with the supplier Step 3: Create Purchase Contract on Alibaba.com This contract is only valid for the products. Trade Assurance doesn’t cover any warranties, replacements or other services agreed upon between the Alibaba supplier and the buyer. This should be included in the Purchase Contract: » Patterns » Seams » Tolerances » Material specifications » Bill of Materials » Label Files » Compliance Requirements (i.e., REACH) » Export Packaging » Prints & Artwork » Packaging
About Fredrik Gronkvist Fredrik Gronkvist has been based in Shanghai since 2010 and is our main contributor. In addition, his content has also been featured in Bloomberg, Quartz Magazine, Global Sources, Alibaba, China Chief Executive and more. You can send him an email on fredrik@ chinaimportal.com or via Linkedin.
Thinking of Joining a
Buying Group?
Buying groups, or purchasing groups, are an association of companies who leverage their purchasing power to negotiate lower prices from vendors and suppliers. But before you jump at the opportunity to join a buying group, you should be aware of exactly what you’re getting yourself into.
What Are the Benefits of Joining a Buying Group? There are many reasons joining a buying group is the right decision for you and your business. Let’s go over some of the key benefits:
Lower prices. Being a part of a buying group
gives you greater negotiating freedom. This means you can buy products and services at a much lower price than if you were to approach suppliers independently.
your business, joining a buying group is a great way to gain exposure and attract potential purchasers. This is because potential purchasers will already know how your business operates.
networking opportunities. Expand your
business network with the help of buying groups which connect you with your preferred supplier’s senior executives at group meetings. While this is a difficult feat for individual businesses to accomplish on their own, buying groups makes networking easy.
Better payment terms. You can expect to get
better payment terms when making a purchase as a group. This includes enjoying extended invoice terms and prompt pay discounts.
Central billing. Rather than making several
payments to multiple suppliers, being in a buying group lets you make a single payment for all your separate purchases. So you deal with less receipts and invoices.
increased affordability. Get more bang for your buck with higher discounts available for buying groups. Products which were previously out of your means now sit comfortably within your budget. Contract lifecycle management. Buying
groups manage all stages in the lifecycle of contracts on your behalf, including request, authoring, negotiation, approval and renewal. This gives you more time to focus on core business functions instead of doing paperwork.
ongoing support. One of the main concepts behind buying groups is collaboration. Exchange sourcing tips, your experiences with suppliers, and any challenges you face with other businesses in your network. Smart exit strategy. If your end goal is to sell
What Are Some Possible Drawbacks of Joining a Buying Group? Every pro has its con. Here are some possible drawbacks you should be wary of when thinking of joining a buying group:
Paid membership. Not all buying groups offer
free membership. You might need to pay to join. However, considering all the benefits you’ll receive once you join, it’s a pretty smart investment.
Administrative fees. Most buying groups have administrative fees that suppliers and members need to pay. Therefore, you should ask the buying group about their fees before you join.
Minimum order quantities. Some buying
groups have a minimum order policy which may not necessarily align with your planned budget. As a result you might end up paying more than you bargained for. Joining a buyer group gives you the financial power to take your businesses to the next level. There is strength in numbers, however, it’s up to you to weigh in your options and make a decision that feels right for you and your business.
Top Tips
for Developing a
GREAT PRODUCT
O
ne of the biggest challenges entrepreneurs face when developing a new product is aligning their vision with reality. There’s a lot to consider. Is it innovative? Is it useful? Is it affordable? While you might think your product is the next best thing since sliced bread, others may not share your enthusiasm. We’ve got just the tips you need to develop a great product.
Use Market Research Data Think about who you’re developing your product for. Do the expectations of your target market align with your product’s features? Solicit feedback from potential customers and use the data to fine-tune your product. You should build and shape your product based on what users actually want, not what you think they might want. It’s also a good idea to acquaint yourself with the competition so that you know what you’re up against.
Form a Formidable Team You can’t develop a great product without the creative team to back it up. Form a team that has all the necessary skills for product development, including production, design, marketing, sales, finance and management. See what each person has to bring to the table and welcome each fresh idea with an open mind.
Crunch the Numbers Doing calculations is a major part of product development. This includes running cost estimations on everything from planning, producing, launching and even marketing your product to the masses. How much will manufacturing cost you? What about human resources? Can you expect to turn a profit? Just because you can make something doesn’t always mean you should. Crunch the numbers before you begin developing your product to ensure
a cost-effective process.
Define a Clear Roadmap Go over the steps needed to develop your product to establish some structure. Prioritize your tasks and organize your processes. What needs to be done first? Which activities can happen in parallel? What can wait until later? Don’t rely on a hit and miss business strategy and cross your fingers in hopes that everything will work itself out. Instead, define a clear roadmap of actions for you and your team to follow. Set various parameters such as timescales, budget and goals to maintain order.
Invest in High-Quality Materials A cheap look, poor packaging and a flimsy product isn’t going to score you any points with consumers. So whatever you do, don’t skimp on materials. People will recognize low-quality when they see it and they will avoid your product. Be ready to spend more on high-quality materials. Consumers will appreciate it.
Resist the Urge to Overstock It can be tempting to mass-produce your product, especially since you can get a great deal from suppliers when you order more. And you don’t want to risk running out of products, do you? While the decision to fill up your inventory makes sense, you should resist the urge to overstock. Instead try to predict how many sales you’re going to make and work with what you’ve got. After you make initial sales, it will be much easier to forecast sales patterns. Developing a great product is no easy feat. It requires a lot of market research, strategic planning, and number crunching. But with great effort, comes even greater reward.
Would you like to have X-RAY vision to see the
F
or 20 years I worked in manufacturing and product development. One of my key responsibilities over those years was to correctly identify cost and negotiate supply contracts but perhaps more importantly to make sure that we never paid a single cent more than needed for any particular part or product. If there is one thing that I learned over those years, it is that very few businesses really understand the detail about how they spend their money and even fewer understand where they have opportunities to save money by discussing cost with their suppliers. But why is that important? Well, without understanding your costs in business it’s very difficult difficult (if not impossible) to understand your profitability.` profitability.`
REAL COST
of the products you buy? Here’s how…
Of all the industries that do this the best Automotive manufacturers are the leaders of the pack. Ever since the early days of Henry Ford’s first first attempts at mass production the automotive industry more than any other has gone to great lengths to build systems that are repeatable, have a focus on quality and reliability and in many cases have spawned entire new genres of efficiency efficiency study such as Six Sigma, The 5S system, 8D system for quality problem solving and many others. What few people realise is that Automotive manufacturers employ the same focus and effort on their
product costs as well. It’s not uncommon for the purchasing departments in these companies to be among the top 3 in terms of size of personnel employed (often in the thousands or tens of thousands) but also in terms of expense to the businesses. They clearly take purchasing very seriously. So what can we learn from these juggernauts of manufacturing and how can we apply it to smaller businesses? Firstly, understanding cost in fine detail empowers any business of any size to identify strong and weak points of their business model and therefore plan effectively. This granular level of cost study can often prove whether a supplier is being genuine with their pricing or if there is room to negotiate better terms. Also by staying abreast of cost, opportunities to increase profitability become more obvious should the cost of raw materials or currency change as an example. Having a detailed understanding of cost also makes negotiation faster, easier and results in better outcomes as it’s much easier to see where the best value for money is so those points can be focused on for improvement rather than negotiating points that have lower impact to the overall deal. So, that sounds good but how can you implement it into your business? The most effective way to begin working on costs in your business is to start with a “cost estimate”. This is a detailed 1-page document that identifies the processes and materials used by your suppliers and assigns cost to each step. When done well this document
acts as x-ray glasses allowing you to peer into the costs your supplier has in making your products and therefore predict the costs they will pass on to your business when you buy from them. The steps to complete a cost estimate are as follows: 1) Identify and list all the materials used in your product (put each item on a separate line) 2) Identify each process used to change the parts (moulding, cutting, painting, assembly and so on) 3) Determine how long each of these process steps take for 1 part to be complete (if 100 pieces pass this process every hour then 1 part takes 0.6 of a minute to complete) 4) Determine the labour required at each step (you can use an hourly rate and divide it by the time used on any particular process step) 5) Add a percentage for indirect factory support (usually 15% is reasonable) 6) Finally add a reasonable profit margin to the cost – it’s important that your supplier makes money too otherwise they will go out of business and your product will go with them. When the cost estimate is complete this can be used to assess your current costs. Where you identify a big cost difference you can begin to negotiate this with the supplier to understand if cost reduction is possible. This process can be applied to any product in any industry. The more accurate you are the more powerful the estimate is as a tool. As your estimate is refined over time the better you will become at buying and the more profitable you will be as a business. Do you want to supercharge your profitability by understanding the detail of your product cost but you’re not sure where to start? Click below to join my free 3-day workshop in May where I will take you through the cost estimating process step by step and show you how to make even more money when you buy!
What You Need To KNOW About
IMPORTING GOODS From OVERSEAS
Thinking of purchasing goods from overseas and importing them into Australia? There are a few things you should know before doing so.
B
efore you decide to purchase and import goods from overseas, you must familiarise yourself with the legal requirements, and identify possible legal issues that can arise.
1 By Zac Swan Zac is the Head of Content at LawPath, Australia’s fastest growing online legal platform. Since joining LawPath, Zac has assisted 1000s of startups and small business’ with their legal needs. www.lawpath.com.au
You Don’t Need a Licence to Import But You May Need A Permit
Companies and individuals are not required to hold a licence to import goods into Australia. However, depending on what your goods are, you may need to obtain permits or treatment to clear goods through customs. For example, some products may be subject to certain biosecurity import conditions and quarantine regulations, and are not permitted entry unless an import permit is obtained. The Department’s Biosecurity Import Conditions System (BICON), grants import permits before goods arrive in Australia for commodities such as food products. For an overview of the process, check out the Department of Agriculture and Water Resource’s How to Import Goods in Australia. Also, if you import plant, mineral, animal or human products, they may need to be quarantined, inspected and treated by the Department of Agriculture and Water Resources for pests or diseases.
A tool you can use is the Australian Government’s Biosecurity import conditions database. This database will help you identify what import conditions exist and if an import permit is required.
2
You Must Follow Importing Laws and Government Regulations
There are government laws and regulations that you must follow if you want to avoid breaking the law and having your imports seized by the Department of Immigration and Border Protection. These regulations exist to protect domestic industries, consumers, and the environment from harmful and dangerous goods imported from overseas. For example, if you wish import therapeutic goods (medicines or medical devices), you must refer to the Therapeutic Goods Act 1989, which sets out the legal requirements for import of therapeutic goods in Australia. There are many regulations you can familiarise yourself with that covers quarantine, trade management, prohibited imports, etc. If you are unsure about whether the goods you are purchasing and importing are prohibited or retracted, check out the Department of Immigration and Border Protection website. Also check out our post on what consumer products are banned in Australia.
3
There May Be Duties and Taxes You Will Need to Pay
All goods imported into Australia are cleared through the border. There may be duties, taxes or charges that apply if your goods are worth a certain amount. •
•
•
If your goods are imported through air or sea cargo or international mail and are valued at $1,000 Australian dollars or less (low value imports), there are no duties, taxes or charges to pay. If your goods are worth more than $1,000 Australian dollars, you are required to fill out an Import Declaration, and pay duties, taxes and charges. If you are importing goods like tobacco or alcohol, you will need to pay duties and taxes regardless of their value.
Before you enter goods, you need to supply an Australian Business Number (ABN) to the Department of Immigration and Border Protection. Also, you must be registered for GST purposes and have an ABN to claim input tax credits.
If you are a first-time importer, or need more information about costs and what forms you must fill in, check out Clearing Goods Through The Border.
4
Your Goods Must Be Correctly Labelled With A Trade Description
Certain goods must be correctly labelled with a trade description before they can be imported into Australia. Basically, a trade description must state, indicate or suggest directly or indirectly how or by whom the goods were made, produced, packed or prepared. There are requirements the trade description must satisfy: 1. Be in the English language and in prominent and legible characters. 2. Include the name of the country where the goods were made or produced. 3. A correct and accurate explanation of the goods. 4. If the goods are not prepacked, then a principal label or brand must be attached in a prominent position, as permanently as practicable, to the goods.
If your imported goods do not meet the labelling requirements, it may be seized. For more information about the labelling requirements, check out the Department of Immigration and Border Protection website.
5
You May Have To Register Certain Goods
Goods that contain industrial chemicals like cosmetics, solvents, adhesives, plastics, inks, printing and photocopying chemicals, paints, household cleaning products and toiletries, require registration. Also, “therapeutic” (medicine and medical devices) goods must be registered in accordance with Therapeutic Goods Administration laws. You have an obligation to comply with registration, particularly if you are importing chemicals that are used in the industrial, agricultural or veterinary sectors.
Conclusion There are many considerations to be made when purchasing and importing goods from overseas into Australia. If you do comply with your obligations and the relevant laws and regulations, you are not at risk of having your goods seized.
How to slash by
30-50% T
he problem most ecommerce stores have is that they pay way too much for their products.
The system they use is flawed. flawed. What most retailers do is use one of the following systems: - Buying from distributors rather than from the manufacturer – the problem with this is it’s impossible to control costs and quality as you are always 1 or 2 layers away from the manufacturer and all the middle men along the way are trying to make money on your stock purchases - Buying from Alibaba or Canton Fair – the problem with this is that it’s impossible to protect your business from competition – anyone can buy and sell the same stock as you - Buying locally because you think importing is too hard, too expensive, or you need to
buy large quantities – this literally leaves money on the table as you cannot take advantage of favourable labour rates and trading terms offered offered by other markets. Paying too much for your products makes it almost impossible to compete in your industry. Because, just like in real estate, you make your money when you buy, not when you sell. How do I know this? For the last 17 years I’ve been working in product development and importing from all over the world. I’ve been
responsible for purchasing $750 million of product. As you can imagine, I’ve learned a thing or 2 about the best way to get the lowest prices, best quality and lowest MOQs when dealing with suppliers globally. Here are the steps I use to get the best deals: 1. Always make sure you are dealing directly with the factory to avoid unnecessary expenses being paid to middle men along the way 2. Always do a cost estimate to ensure you understand the real cost of your products before you buy them and are not setting yourself up to pay too much 3. Always differentiate differentiate your design so that no
one else can sell the same thing that you are selling – this protects your market and build customer loyalty 4. Always understand the manufacturers market – if they are getting government support or good deals on raw materials then this should be passed on to you too 5. Always protect yourself against currency fluctuations fluctuations – this should be contracted in a way that is favourable to your business and makes sure any market advantages are passed on to you. To Learn More Join Our Buying Secrets Event Now http://ourbuyingsecrets.com/
The Differences Between
Hong Kong Mainland China and
People in mainland China think of Hong Kong as part of China, while people in Hong Kong are often resentful of the Chinese government and think of themselves as a separate entity.
I
travel to China frequently. I often y to Hong Kong and then cross the border into mainland China and the megalopolis cities of Shenzhen, Dongguan and Guangzhou. People sometimes ask me about the differences between Hong Kong and China, especially now as we are coming up on the 20-year Hong Kong anniversary of the transfer of sovereignty from the United Kingdom to China.
The UK had a 99-year lease on Hong Kong, Kowloon and the New Territories after the treaty of 1898 and an interesting history of trading goods and the Opium Wars between the nations. In 1997, China officially regained control and designated Hong Kong as a Special Administrative Region or SAR. The Chinese refer to this as “One Country, Two Systems.” Even after the hand-over, there has been little change in the very different ways each operates. So what are the differences? • Government: China is a Communist nation ruled by a central government and a President. Hong Kong is a limited democracy and although Hong Kong recognizes the President of China as head of state, Hong Kong is managed by a Chief Executive. People in mainland China think of Hong Kong as part of China, while people in Hong Kong are often resentful of the Chinese government and think of themselves as a separate entity.
• Taxes: Hong Kong has a flat corporate tax rate of 16.5% In addition, many goods are imported into Hong Kong dutyfree or at low tariff rates. On the other hand, Chinese corporate tax rates are about 30% and import duty rates can be as much as 50%. Importing into China can also be complicated. • Laws: Hong Kong has its own legal and judicial system which is based on the British Common Law system of justice. Hong Kong also has its own police force. The Chinese system of law is based on Civil Law. • Driving: People drive on the left side in Hong Kong, a system inherited from Britain. In China, people drive on the right. But please don’t try to drive in China, where the rules are very different, always evolving, and the driving is chaotic. • Money: The currency of Hong Kong is Hong Kong Dollars (HKD), while the Renminbi (RMB) or Yuan (CNY) is the currency of China. HKD is pegged to the US Dollar, while RMB is not. People who frequently cross the border between the countries often carry two wallets with the two
currencies separated. • Travel: For Americans traveling to Hong Kong, no special visa is required for entrance into the region. For mainland China, a visa is required for entry. • Language: In Hong Kong people primarily speak English and Cantonese. In the Pearl River region of southern China, the native language is also Cantonese, however Mandarin is the official language of China and this is what is taught in schools. Almost everywhere in China these days, you can find people who speak at least a little English. • Internet: Hong Kong has one of the fastest internet infrastructures in the world. It is also uncensored. But mainland China censors its internet access causing slowing of services. In addition, common sites such as Google, Facebook, Twitter, and YouTube are blocked in China. If you have access to your company’s VPN or if you buy this service, you can generally get around the blocking. But be prepared for very slow response. Skype seems to work just fine for me in both Hong Kong and in China. So these are some of the differences between Hong Kong and mainland China. Of course there are many more differences as well as similarities. No matter where you travel in the world, always remember to be respectful of the culture, be polite and cooperative. Try to learn a bit about where you are going before you go and at the very least learn how to say hello, please and thank-you.
How to Source Products
That Are Better Quality And A Lower Price
Than Your Competitors
How to Source Products Free LIVE EVENT!
hat Are Better Quality And A Lower Price You’ve heard the saying “you make your money when you buy” in real estate, right? Well, exactly the same thing applies to physical products – if you’re buying your products cheaper than your competition you’ll always be ahead of the game.
Than Your Competitors
In this video - Product Sourcing Expert Steve Eagle talks about how to consistently buy products 30-50% cheaper.
Free LIVE EVENT!
u’ve heard the saying “you make your money when you buy” in real estate, right? Well, exactl same thing applies to physical products – if you’re buying your products cheaper than you mpetition you’ll always be ahead of the game.
his video - Product Sourcing Expert Steve Eagle talks about how to consistently buy product -50% cheaper.
Click Here To Register For Our FREE Event Now
Click Here To Register For Our FREE Event Now