10 QUESTIONS YOU MUST ASK
YOURSELF BEFORE YOU IMPORT
1) Before you even consider importing....
You must have a great product and a well thought out marketing and sales plan. A product that has no demand will not acquire demand simply because it is imported. Without a sales and marketing plan, products sit in inventory and consume your cash. There are millions of products out there so find a way to develop a niche that provides a competitive advantage.
2) What country is best suited to supply my needs?
This is another important question. Is the cheapest the best? What contacts do you have in different countries to guarantee your order? Depending on the product, the US can be the best country to manufacture the product in depending on technology, regulations, labor rates, expertise, lead time, risk, logistics, and your cash flow. Research needs to be done based on what does the country offer in terms of technology, quality, reliability on your type products.
3) How do I find reputable factories or dealers?
It is very difficult to understand exactly whom you are dealing with if you don't visit factories. Many so called manufacturers found on internet web sites are middlemen, brokers, or agents. This is not necessarily bad but every layer between the manufacturer and you add cost. Quality is another concern. Often times the first samples or production order is nearly perfect only to find additional orders suffer from multiple defects. It is important to have clearly written specifications for products and to insist on a final inspection done by people you can trust before your orders are shipped. Having a person on site at the factory is not inexpensive, but often necessary, at least until a level of comfort is attained. We always say, "if importing was easy everybody would do it". Importing requires relationships, patience, knowledge, attention to details, and money. Many times things don't go smoothly, situations may require additional resources to attain the best possible outcome.
4) What is my minimum order quantity before I know I have a market to sell them in and what stages do I follow to protect myself?
Most factories expect an average order of $15,000-$25,000. If you want to buy a ten cent widget, be prepared for a minimum order of 150,000 pieces. If there is tooling or special setups involved you may be asked to pay for tooling or increase minimum orders.
Many times foreign companies want the ideal minimum order quantity: 1 million pieces and a high price. Reality is that if you can follow these simple rules you can reduce your risk importing:
a) Always ask for a single sample made to your specifications. Depending upon the care in developing specifications, it may take several iterations to get a proper sample.
b) After a successful sample, ask for a small production run. This is an opportunity for the factory to adjust any processes on a manufacturing line and establish quality standards for each process.
c) If the small production run goes well you are ready for a serious production run. You can ask for full container prices but expect them to charge you a higher price for smaller orders and the freight obviously will be higher depending on method of shipment. They will expect a plan of growth on your orders. Don't expect to order 1 at a time and get their best prices. Remember they can sell elsewhere and probably have many other clients that can order much bigger orders, so again be patient.
5) How do I have to pay for this, all at once or in stages? Do I get terms?
(L/C's) Letter of Credit, payment in advance using a wire transfer, 30% down, balance before product leaves foreign port are common. You may even be able to negotiate terms such as documents against acceptance or against payment, but terms like you see in the US which are called open accounts are very unlikely when importing unless you have built a relationship with the supplier and they trust you. This is another reason to use a development company because they may give you terms depending on your credit history and they handle the payment negotiation with the suppliers.
6) Can I afford to Import?
It can be expensive if you have not done the proper research and developed a good marketing and sales plan. You have overhead such as advertising, rent, inventory, employees, and debt you are paying for and if your product does not sell your days of importing may be over and possibly your business.
7) Can I handle this myself or do I need help for the first few products, from a developer?
Importing can be very lucrative but it also can create sleepless nights and cost you a lot of money. I recommend you use somebody that has the experience and ease into this. There are pitfalls. Unless you have the time and money to work through the learning curve, ask for some help.
8) How do I gage my sales to supply?
This is the balance of logistics of importing so you can manage your cashflow, inventory, and sales. It is a function of when orders are placed, shipping time, delivery, foreign and domestic holidays, warehousing. When you have multiple containers coming in all over the country delivering to multiple clients it gets a little overwhelming. You must be organized and work with a good freight forwarding agent and customs broker or you will be really stressed.
9) Where do I put all this stuff and how fast can I sell 500,000 super balls?
Good question! Do you have a warehouse? You may need to find one that has a loading and unloading dock for trucks/containers. Also, you can use bonded warehouses and they can help you fulfill orders doing the paperwork and shipping the product. Usually you can find a warehouse where you can pay for a portion of space used verses having to rent a big warehouse. Everything is a function of profit margin. How many people touch your product? The more hands the less profit. You may have this product pre-sold to a wholesaler or a retailer and you don't have to warehouse the product, just deliver to their doorstep and invoice.
10) How can I guarantee I am getting a quality product, delivered on time, and not getting ripped off?
Well that is the big question. This really requires somebody there negotiating for you on price, monitoring the quality, and making sure the factory meets the delivery times. Otherwise you are taking a risk.
A note about salvage: Also, this is a big area too. If you run across any great deals remember you have to have an outlet or you will be having a fire sale. You typically buy at 10 cents on the dollar with the hope to sell close to retail prices. If you get stuck with obsolete product or salvage product contact our office. We have families we help all over the world and we can take some of these products off your hands. You can donate them to qualified charities we support and you can take the tax write off and you can help eliminate poverty and suffering around the world.