Importing Products to Sell

Import Products For Sale.

Importing products from countries with a low cost of production, and reselling in the United States, is becoming more popular as the Internet has made it easy to locate suppliers overseas. You will need to decide what items to import, and how you are going to sell the items once you get them. Your method to sell the products might include, flea market sales, road side stands, show sales, gift and antique mall space rental, in-home party sales, a web site, e-bay, or catalog sales to name a few. The cost of inventory and storage space is the big drawback to being an importer.

Suppliers:

You locate overseas manufactures by search the web for merchandise India, or china etc. Or search for trade directories by country. You can find product by visiting the foreign trade sections of trade shows such as the National Hardware Show, or the Builders Show. Every major industry has a trade show annually.

Container Quantities:

The overseas manufactures sell in container loads. Containers are sized as 20', 40', or 48' long (each Box is 8' x 8' x length or larger). Manufactures practices vary as to what can be mixed in a container. Some manufactures want only one item, (stock keeping unit, sku), per container, and others let you mix sku's of anything they make. Keep in mind that the manufactures produce to order, and will want large quantity orders.

For example, a typical order for swimming pools might consist of 400 pools, in three different sizes, at a cost of $32,000 plus shipping fees. Shipping fees will add another $5,000 plus by the time the load is delivered to you. The cost of shipping a 20' container is only about 15% less than shipping a 40' container.

L/C's:

Most overseas suppliers manufacture to order. Allow up to 6 months lead time to get a shipment. Orders are pre-paid by a letter of credit issued by a bank. The bank's fees vary. Expect to pay about $600 for the LC, and the money to cover the LC face amount will need to be on deposit at the bank. The manufacture will get payment from the bank when your order is shipped from the country of origin, it is then yours. Be sure to request insurance while in transit.

Warehousing:
You could rent a warehouse, mini storage space, or use your garage for storage. The freight company will drop the loaded container at your designated address, and come back for it after you have unloaded it. You could also use a bonded public warehouse service that will store the products for you. Some warehouse operations will even do your shipping for you. Public warehouses operate on a "fee for services rendered" basis. Be sure you know what your cost will be. You will find these companies in the phone book under warehousing and shipping.

Profits:

You should expect a profit margin of 100% to 300% on imported items. Any item that will not allow you to double, or triple your landed cost, is not worth importing. Keep in mind that you are the warranty company, and the product liability company, for your imported items. Carry the necessary insurance coverage.

marked up 40%, is figured like this - $60 your cost x 1.67 (40% factor) = $100. You check this by dividing the difference by the selling price, $100 (retail) minus $60 (the cost) = $40 (the margin) divided by $100 (retail) = 40% (the mark-up percentage).

How the Internet assist this business:

The Internet gives you a way to find manufactures of products from overseas . When selling, you can use a web site, rather than an expensive catalog, for sending to potential retail re-sellers. You also use the web to locate Internet retail stores who might sell your products.

You can also operate a retail web site and thus quickly test the market for the products you plan to offer. The web allows you access to all manner of businesses and contracts to use in operating your business, as well as business how-to information from banks and other web sites. Most importantly, a retail sales web site can give you a way of testing the market for items you want to import.

For example: you find items you want to import and find what companies import them currently, or who has similar products that you can buy from a US based importer. You buy from the domestic sources and try selling the items from your own web store. The items that sell well become the items that you import directly from the manufacture. This is the method we use to test new items before making a large dollar commitment to them.

Import & Wholesale Sales.

Wholesaling of imports can be a good business. The problems are that it can take a long time to accumulate enough retail accounts to become a profitable wholesaler. You find products that are made overseas that you think will sell and you import them for resale to retail stores. The retailers may want you to handle all the merchandising details such as displays, signs, packaging, pricing with bar codes, etc... They will also want credit terms from 30 to 120 days.

The bad news is, it can take several years, and be expensive to acquire enough good retail stores to reach your sales goals. The good news is, that you will be selling to the same customer base repeatedly. The retailers need products to sell in order to make a profit and, if you have the correct items, they will keep reordering from you.

Locating Retailers:

You will need to use some, or all, of the following methods of reaching the retailers.
Display at trade shows, advertising in the trade magazines, hiring manufactures representatives to show your products to their retail clients, mail out post cards to the retailers, send out product brochures to enquiries from your ads, buy mailing list of stores to send information to, E-mail to retailers, get listings in wholesale directories, and search the web for possible E-retailers.

Profits:

You should expect a profit margin of 20% to 100% on imported items sold at wholesale. Keep in mind that the retailer will take your wholesale price and add any shipping cost needed to get the items to the store, and then they will mark up that number by X 1.67 (40%) to X 2 (50%) or more.

The items you offer for sale will need to be a good value to a consumer with both your mark up added and the retailers mark up added. Also remember that you are the warranty company, and the product liability company for your imported items. Carry the necessary insurance coverage

Disadvantages:

This business takes a lot of cash to start, both for inventory and marketing. The sales build up slowly and can take two or three years to get up to a respectable sales volume.

Advantages:

High cost of entry limits competition. The Internet makes finding suppliers and information easier than in the past. You can test market products online before making a large commitment. You can use the web to get rid of your mistakes. Once you build up your customer base, you will sell to them repeatedly. Profit margins can be very good.

"A personal financial statement is a mile marker on the road towards wealth"
Jim Glasgow