What is Importing?
As the digital business environment has become ever more sophisticated, the ability for small businesses to access foreign manufacturers has skyrocketed. The most popular marketplace by far is Alibaba, a China-based wholesale and manufacturing portal that functions very similarly to eBay - but for minimum product volumes sometimes numbering in the thousands.
The essence of import businesses is no different to any sales strategy: buy low, sell high. The key difference is that huge profits can be achieved by purchasing products in massive bulk, minimising both the per unit cost and spreading shipping costs across a large number of products. It is not uncommon for a product to cost an importer as little as $1-2 per unit, but fetch a price of $20-30 per unit on the retail market.
What are the top things to consider before you start importing?
Before you rush to import anything and everything, however, it is important to do your due diligence and understand the demands and risks of running an import business. Certain products are far more suited to being shipped internationally, and understanding your responsibilities as an importer or exporter is vital to ensure you meet your legal obligations. There can also be a number of hidden costs associated with importing that you haven't considered, and putting processes in place to ensure prompt delivery of goods is essential.
- Choosing the right product is essential: If a product is easily broken, has many moving parts, is prone to malfunction, is too heavy or is too expensive, it is going to be a nightmare to import. Ideal import products are priced between $20-$200, are small enough to carry single-handedly and are durable and non-complex (i.e. low-tech, no small parts, little or no assembly required).
- Choosing the right supplier is even more essential:There are many low-quality and knock-off providers out there. The best importers ensure that they have done their due diligence, which often includes physically visiting the factory prior to taking on the risk of large orders.
- You must understand the law:Regulations are different from country to country, and just because it is legal to manufacture something in China or another foreign country, does not mean it is legal to import to your country.
How do I choose a product to import?
If you are looking to import products from foreign manufacturers, you will need to become familiar with Alibaba. Alibaba is the largest online marketplace for Chinese manufactured goods and is by and large considered the primary source for small business importers. While other options do exist, they will require heavier vetting on your part, and you will need to establish your own relationship with the manufacturer, which can be difficult for a new or small business.
Once you have an account on Alibaba you will be inundated with options. There are thousands upon thousands of potential products you could import, but not all suppliers are equal. You should only be looking at gold suppliers with trade assurance. This significantly lowers the risk of you being sent faulty/counterfeit products or being scammed.
Once you are looking at the right suppliers, you need to find products which:
- Are not patented, trademarked or subject to copyright
- Are legal to import
- Are not already popularly sold on Amazon, eBay or Etsy
- Do not pose a health or safety risk to consumers, of any kind
- Are not likely to break in transit
- Are not likely to malfunction
- Can be branded
- Are available at manageable minimum order quantities
What are the top tips for new importers?
That covers the essentials. If a product fits those criteria, it is possible to make money importing it. Does that mean it will be easy? Of course not. If you are a first-time importer, there are a few extra tips you might want to take on board to limit your exposure and increase your chances of success:
- Choose a product in the $20-200 price range
- Avoid liquids as they have longer shipping times
- Avoid chemical, medical and food products
- Find a niche market with few major players
- Choose products that are labour intensive (this is where Chinese manufacturers have the greatest advantage)
- Request samples
- Visit the factory in person and establish a relationship with people in the business
- Build a marketing and sales funnel first to test the viability of your product idea
- Choose a niche where you have a competitive advantage (knowledge, brand value, price, product range, etc)
How much does importing cost?
Entrepreneurs first exploring the import space can sometimes feel giddy when they see the potential profits of imported products. It is not uncommon to find an item which you can buy for $1-2 per unit selling for $20-30 per unit on Amazon or eBay, leading some of the less risk-averse new business founders to throw down $1000 in a heartbeat, expecting to make huge returns overnight. These entrepreneurs invariably get burned.
First of all, there are hidden costs of importing they generally haven't considered, including:
- OEM branding fees
- Shipping and handling fees
- Import taxes and tariffs
- Storage costs
- Investment of time and resources to package and distribute products locally
- Postage fees
- Cost of returns and refunds
- Sales and marketing expenses
- Business overheads
- Income taxes
- Your own time and labour
It can also take a significant amount of time to sell your inventory, if the product is not one that sells in high volume, or you lack the marketing budget to push it more aggressively. So what may look like a whopping 2000% profit margin on the surface may be reduced to a 20% margin when everything's said and done. If you are considered importing, don't be dismayed. Many businesses operate on slim margins, it is just important to manage your own expectations and do the research necessary to ensure you aren't forecasting unrealistic profits.
How do I start importing?
In order to start importing you will need to:
- Pick a product/product range to import
- Source suppliers
- Determine shipping and handling fees, import taxes and tariffs and other related costs
- Develop a logistics strategy and find a freight forwarder
Importing provides great opportunities but there is a lot of work involved on the logistics and regulatory compliance side of things. For example, you need to comply with exporting and exporting laws and regulations and complete all of the necessary paperwork.
For this reason, many businesses decide to hire a customs broker to streamline the clearance process. They do the heavy lifting to ensure you are compliant and your shipments are delivered with minimal issues. Learn more aboutcustomers brokers and the services they offer,
