Ask Me Anything About Product Sourcing and Importing

With a lifetime of experience starting with international shipping, then from 1978 exporting my own products and finally importing since 1987, I know the tricks of the trade and will be happy to help people learn.

I am now retired, having sold my importing business a few years ago. I sold franchises of that business successfully operating in four countries, but my health problems caught up with me and I had to sell.

To keep my mind active I wrote my eBook (now 133 pages) on the subject of safe sourcing and easy importing. I don't expect anyone to buy my book and I will answer any questions except one. That is: "What are the safe B2B sites you recommend."

The reason for that is that there is a lot more to safe sourcing and trouble-free importing than just knowing which sites to look at. It takes me 133 pages to explain all that.

In the absence of questions, I will from time to time contribute some helpful advice on subjects that I know are important, but I am really looking forward to your questions.

Let me help you to enter the high profit world of importing. I don't like dropshipping, and I am not claiming to be an online marketing expert, but please hit me with your sourcing and importing questions.

Walter Hay

 

Great post and offer. Let me be the first to take you up on it.

I have an IT supplies company that sells network cables, panels, cabinets, and other such "infrastructure" accessories to businesses. I have been trying to find a "differentiating" IT product within my niche but have never had any luck. Something new to offer these systems integrators, network managers, etc. In your experience, where would be the best place to find international sources for such an unusual IT product? Obviously, quality and trust would be an issue as I do not want to sell schlock to my valued clients. By the way, I do not sell electronic equipment because they often require installation, support, etc., and I just want to sell off-the-shelf products like cables, panels, etc. I would consider software, however. TIA.

 

Thanks for your question. You won't find the variety of products you want all from the same supplier unless you buy from a trader.

As a general rule I advise against buying from traders because apart from paying a lot more you will find that many of them are opportunists who don't carry inventory, and as a result, delivery can be slow and cancelled orders are common. Orders are often cancelled because of the way many traders operate.

They will advertise products sometimes using pirated photos, but they have no formal relationship with the manufacturer. When they get an order and take your deposit they then try to persuade the manufacturer to supply them at a price that allows them a good discount off the price they quoted you. The manufacturer may not be willing or able to supply, or won't give a low price, so the trader cancels your order.

Having painted this dismal scene, let me say that there are plenty of genuine manufacturers for the products you want, but you will have to search them out by accessory type. You will find them on most B2B platforms, but this is where the fun starts. The B2B sites usually recommended on forums are crammed with traders masquerading as manufacturers. The largest and most frequently mentioned is Alibaba, and the great majority of suppliers listed as manufacturers are not.

As I said in my original post "I will answer any questions except one. That is: "What are the safe B2B sites you recommend."" but I feel bad that you have started off the questions on my new thread without getting a direct answer. So here is my suggestion: Search for suppliers for one or two of the products of most interest to you, and send me their details. I will check them out for you and confirm if they are genuine manufacturers, and if they are ones that I would be willing to deal with. There are a lot of suppliers I wouldn't go near.

I won't publicly name names but will reply to you privately. You can be sure of absolute confidentiality. I have no interest in running an importing business again since I sold mine a few years back. I am too old now, and have no need.

I hope I can be of help.

Walter Hay

 

Okay, thanks. One of my issues is that I am not sure what it is that I am looking for.

Hard to find something new and different. If I come across something, I will definitely get back to you.

 

Step by Step Instructions

I generally don't offer marketing advice, mainly because my experience has been mostly in B2B sales, but many of the principles apply whether selling online or offline.

If you want to start importing high profit items and selling them wholesale, in your bricks and mortar store, at market stalls, on eBay, Amazon, or your own eCommerce site, here are the basic first steps:

1. DO YOUR MARKET RESEARCH. Work out what you want to sell, the best way to sell it, making sure you will be able to sell it, and what prices can you confidently expect to sell it for. That confidence must be based on thorough research, not just checking sold prices on eBay.
2. Work out what maximum landed cost is affordable in order to be competitive, making sure you take into account all selling costs. Those selling costs can include delivery to your customer, advertising, packaging, eBay or Amazon charges, PayPal fees, and possibly others.
3. Search for suppliers using a safe sourcing site. Don't just go to any site casually suggested on forums, because on some of them everything is not what it appears. Find a site where genuine verification is carried out, and where if a supplier is listed as a manufacturer they really are.
4. Avoid suppliers falsely claiming to be manufacturers. Most popular B2B portals have big lists of suppliers claiming to be manufacturers, but they are not. Don't belive everything your read on the B2B site or on the supplier's website.
5. Avoid buying from wholesalers because they soak up a lot of your profits. Buy only from manufacturers. The big margins made by wholesalers or traders can be extra margin for you if you buy direct from genuine manufacturers.
6. Conduct due diligence on the chosen suppliers. One way is to search for their name on the B2B site's community forum.
7. Get quotes. Don’t forget freight. Make sure all quotes are in writing. That is very important in relation to freight quotes.
8. Negotiate payment terms. Beware of W.U., it is the scammers' paradise. Telegraphic Transfers can be safely used provided you know the supplier is genuine, and you only pay to the company bank account. If the manufacturer is in mainland China and the bank account is in Hong Kong, don't let that worry you. Many, many Chinese companies legally use HK accounts for tax reasons.
9. Ensure that all costs to your door are covered and that you have quotes for them in writing.
10. Obtain sample/s. Beware of freight ripoffs in this part. Some suppliers like to make a profit out of the freight. Don't give them your courier account number even if you have such an account, unless you have got a quote in writing from your courier. Insist the supplier prepays freight.
11. If satisfied, place a small order crossing every t and dotting every I. If you make a mistake in your order that could cost you a lot.
12. Pay deposit. This is usually 30% with order.
13. Pay balance as negotiated, preferably after the goods have landed, but most suppliers won't accept that. On small orders you have little room to negotiate terms, but on orders over $2,000 you might be able to negotiate a better deal regarding payment terms. You can play safe by having the goods inspected before they are loaded.
14. Check the goods when they arrive. Report any faults, but don't complain unnecessarily.
15. If all is well to this point, you are in business. You can do your test marketing and be ready to place another order.

Walter Hay

 

Moderators - How can I transfer this thread to the eCommerce section? I realise it should have gone there in the first place.

Thanks.

Walter Hay

 

I have moved this thread to eCommerce because I have realized that it belongs there rather than in General Marketing. Please see the thread, now with the slightly alerted name: Ask Me Anything About Safe Product Sourcing and Importing

Please go there to ask me any questions.

Walter Hay

 

I am restoring my AMA thread here because more than twice the number of views in this section show that it is the most relevant place. I will transfer the posts from eCommerce because many who look here won't have seen them.

Selling Fakes, Counterfeits, and Knockoffs, (or even genuine Big Brand products obtained from unauthorized sources.)

There is a huge trade going on in the selling of fakes online. Some people are making big money selling course teaching how to do it. Others are gullible enough to see brand name products on B2B or B2C sites in China and think they can safely import them and make a killing.

When I have posted about the dangers of this illegal business practice, some forum members have scoffed at the idea that they should not be doing it. Others have boasted about how well they are doing in illegal trade.

Here's a current legal story: In a huge law suit before the courts in the US, a big brand manufacturer is suing over 200 defendants for trade mark infringement. The case itself is still to be heard, but this is what has happened so far to those businesses trading illegally:

• Their websites have been shut down. Result? Overnight they have no business.
• The court has issued injunctions prohibiting them from selling any of the illegally trademarked items. Result? Whatever inventory they have is now worthless. Even if they are caught selling it on the streets they could finish up in prison for contempt of court.
• Motions have been filed for judgement orders. This means penalties payable to the brand owner. Result? Possible bankruptcy.

Note that the above doesn't even cover losses resulting from confiscation of the goods at the border. Customs will be cracking down hard on any possible knockoffs in the particular product area involved.

It is also worth noting that if fakes are detected by Customs, the very least that will happen is that the importer's name and address will be flagged so that all future shipments will be delayed for thorough inspection. In some cases storage fees are charged while that inspection takes place, and it can take weeks.

There are so many ways to operate a legitimate business - why take the risk on trading illegally?

Walter Hay
P.S. Remember this is an AMA. Ask me anything about safe product sourcing and importing.

 

Here is my post on the very important subject of INCOTERMS.
The Alibaba employee with the user name Jason0804 has posted a list of Incoterms to help people beginning to buy from suppliers on Alibaba. He has just copied the list from Wikipedia or a similar source and those sources don't explain in any detail

The very short definitions shown by Jason can be very confusing, so I have set out below all the terms and a more detailed explanation of how they are used.

I would like to say that the complexity is not a worry to most new importers provided they are aware of the basic meanings of the ones most commonly used. These are FOB, CPT and CIP.

• EXW - Ex works Means: The supplier will make the goods available at their loading dock. All costs and risk from that point are yours. In worst cases they won’t provide any assistance in loading, so your carrier has to have the capacity to handle the loading without help from the supplier. Be very careful about accepting EXW quotes
• FCA - Free carrier Means: Similar to EXW, but the supplier will load. Can also mean delivered to your carrier’s depot. Check with supplier to confirm which definition they are using.
• CPT - Carriage paid to Means: Includes freight cost to the place named. It can be the cost to the sea or airport of shipment or it can mean to the port of delivery in your country. It can even mean including delivery to your address. It might include other costs such as Customs clearance, but doesn't include insurance. Check with supplier to confirm which definition they are using.
• CIP - Carriage and insurance paid to Means: Same as CPT but does include insurance.
• DAT - Delivered at terminal Means: Includes freight only cost to either the terminal at the port of shipment or it can mean the port of delivery in your country. Check with supplier to confirm which definition they are using. It doesn’t include any of the additional costs such as insurance, wharf fees, storage fees, deconsolidation fees, customs clearance etc.
• DAP - Delivered at place Means: Usually means delivered to your nominated address, but not including duty.
• DDP - Delivered duty paid Means: Same as DAP but including having duty paid on your behalf. Be cautious because this could mean only that the Customs process including the duty payment process is included, but you are likely to still be responsible to also pay the duty that they have paid on your behalf. Check with supplier to confirm which definition they are using.

There are also four categories that are specific to consignments transported over water - either by sea or inland waterway. These are:
• FAS - Free alongside ship Means: All costs and risks are the responsibility of the supplier until the shipment is actually sitting on the dock ready for loading on board the ship.
• FOB - Free on board Means: All costs and risks are the responsibility of the supplier until the shipment passes across the ship’s bulwark. (Railing around the edge of the deck.) Important note: This Incoterm is widely misused in China. It is almost always the term quoted when you first request a quote, regardless of which means of transport is being used, but strictly speaking it cannot apply to any form of transport other than sea freight. Chinese suppliers often incorrectly use this term also when they mean EXW.
• CFR - Cost and freight Means: Same as CPT but is only used for sea freight.
• CIF - Cost, insurance and freight Means: Same as CIP but is only used for sea freight.

I would recommend that if anyone is placing their first order, and it is not being shipped via air courier, it would be easiest and safest to get the help of a freight forwarder to organize the shipment. Be sure to get their quote in writing and specify that it must include all costs to the point of delivery at your home or business address.

It is important to know freight cost before you place an order for the goods you are buying overseas.

Any questions - just ask me.

Walter Hay

 

Don't forget: This is an AMA thread. so fire away with your questions.

Walter Hay

 

thanks for sharing with us, the information is quite helpful
but, could it work with product digital? in the system or proccess maybe

 

Digital products are sometimes sold in physical form such as DVD or CD, but not usually imported.

My book would not be of any help to you. It is only useful for people who want to safely source physical products overseas, and import them.

If you have any questions on those subjects I would be pleased to help.

Regards,
Walter Hay

 

Is Payment Through PayPal Completely Safe? There are many cases in which buyers have received parcels that contain only sawdust, paper, stones, old rags, or other scrap materials, and the buyers think that they will get their money back because they paid through PayPal.

That is not always the case. Scammers have worked out how to beat the system so that PayPal won't order a refund.

This could happen to you so I am showing you how to avoid it. Because you signed for the parcel, payment will be released to the seller unless you follow the dispute rules. First they will also ask you for proof that the package only contained scraps or maybe the package was empty, but a photo is useless as proof. If you raise a dispute with the B2B site such as Alibaba or DHGate, they will tell you to return the parcel to the supplier, but the supplier will either say they did not receive it, or that it had the goods inside when they sent it. The B2B people are only going through the motions until you give up.

If you paid through PayPal, lodge a dispute with them, but do not say that the goods are not as described, otherwise PayPal will reject your dispute. Tell them that this is a fraud and you signed for an empty package. Depending on which country you are in, contact any government fraud watch body and report this fraud, asking them to contact PayPal and the B2B site on your behalf. This method has worked for others.

How To Beat The Scammers: In future, ask the courier to wait while you open the package. If he/she is a reasonable person they will allow this and you can then refuse to sign for it if it contains paper or other filling instead of the product. I have known people to receive stones, and in one case half a brick.

Be Prepared: Whenever you start the process of making a purchase you should always save a screen shot of the page where you found the product listing, as well as keeping copies of all emails, whether through your own email account or your member’s email on the B2B site. Do this progressively from the beginning of your earliest negotiations to buy, right through to receiving notice of shipment. Save every email even after that point. A number of people report finding all their member emails deleted and that makes it impossible to pursue a dispute claim.

Remember that in almost every case you will be required to return the goods in order to have your claim processed, and this will often cost more than the goods are worth. If you do return it, it is common for suppliers to not take delivery of your parcel, and so they can say you did not return it, and that means the return freight you paid will be another loss to add to what you have already paid.

This is why it is better to use safe sourcing methods instead of just believing everything you read on the supplier's sales page. I have taught safe sourcing to hundreds of new importers.

Make sure you have read the B2B site's dispute rules, if you can find them. Copy them also.

Walter Hay
Provenchinasourcing

 

I don't have the budget to source stock from wholesale or manufacturers, instead I will prefer Dropshipping. I approached 1 dropshipper in Perfume niche and they stock unknown brands only. How do I drive traffic(short-term) for such perfume brands on ebay as the listing is valid only for 10 days?

 

You don't need a lot of money to buy direct from manufacturers. I have had plenty of newbies start off with only a few hundred dollars and make good money. Here's an email from one of them:

"Ok. From extremely skeptical to successful completion. Credit given where credit is due. I followed the book instructions you laid out. Took my time to double check everything and was able to successfully import an order from China. Not only that but it was also a “sample order” for less than 300.00. A 300% mark up has allowed to get initial investment back and I have 70% of my inventory left. Stop promoting your book. Your encouraging competition for me Many thanks." Email on file for FTC inspection if required.

Buying from wholesalers is not a good idea because they have bought from the manufacturers, added a big margin, then sold to you. If you go direct to the manufacturers you get to bank that extra margin yourself. I have taught hundreds of people how to buy small quantities direct from genuine manufacturers.

I am not an expert in online marketing, but I do know that you have chosen a highly competitive product. I suggest you look for something that is not so crowded.

Walter Hay

 

what is the name of book you written and selling on ecommerce niche?

 

My book is not about marketing products by eCommerce. It is about safely sourcing the products you want to buy with high profit margins and importing them the easy way.

It's called Import Direct From China and Many Other Countries. You can find it here: http://provenchinasourcing.com/

Walter Hay

 

I am posting this explanation of Alibaba’s Trade Assurance Service to help all those people who think it gives them full protection when they buy from a supplier on Alibaba.

When you read Alibaba's encouraging advertising about Trade Assurance it appears to provide a far better level of safety than the old escrow system, now called Secure Payment. But...
Alibaba’s Trade Assurance Service is not without difficulty for buyers. I suggest you read the relevant Terms and Conditions, (T & C) but in particular the following:

2.4, 2.6, 5.5, 5.5.1, 7.3, 7.5, 9.5.1, 9.5.2, 10.2.4, 10.3, 10.4, 11.3,11.4, 11.5, 11.6, 11.7, 11.13, 11.14, 14.6.5, 15.5.

Because I know that few will bother to check out the huge page full of technicalities, I will draw attention to some very important matters found in the (T & C) plus some important things that they do not specify.

Alibaba have the absolute right to decide if your money will be handed over to the supplier. No right of appeal.

Claims that the product is faulty must be made before the goods are delivered!

They say in 7.5 “Buyer may confirm the shipping invoice within 15 calendar days after Seller uploaded the evidence of shipment”, but they do not explain this very important clause. “Confirming the shipping invoice” is not mentioned anywhere else in the T&C.

Data recorded by One Touch, Alibaba, and http://www.alibaba.com/ constitute almost the only evidence admissible in dealing with a claim. This means it is imperative that you keep screen shots of every transaction, every page visited, every attachment sent to you or by you, every email to or from your supplier and to or from Alibaba and OneTouch. You can provide other supporting evidence, but it certainly appears that it is inconsequential.

Here is 10.2.4 in full: “10.2.4 In the event of a dispute between Buyer and Seller on product quality, Buyer should raise a complaint before Seller delivered the product. The product verification report issued by a product verification company obtained by Buyer shall serve as the basis of determination on whether or not the products are in line with the agreed product quality standards.” This implies, but does not clearly state, that you should have every shipment inspected before the goods leave the factory. See important note below. The inspection cost will be yours.

Now, if you have digested that, here is 10.3 in full: “10.3 After Buyer submitted a request for Alibaba to resolve a dispute on product quality, Buyer shall instruct one of the designated Product Inspection Company to inspect the products and pay for the relevant inspection fees. Alibaba shall make a determination on the dispute based on the product inspection report issued by the Product Inspection Company. If Buyer and Seller did not expressly agree on the quality standards required of the products, the Product Inspection Company shall have the right to issue the quality standards report based on the relevant industry standards. Alibaba shall have the right to reject any product inspection reports issued by other product inspection companies. If the products cannot be inspected due to reasons or faults attributable to a particular party, such party shall be liable for any damage or liability that arises therefrom. “ The bolding and underlining are Alibaba’s. Put simply it means you will have to pay for another inspection, using an inspection service of Alibaba’s choosing. In the past they have specified SGS, which will cost you about $350 or more. This clause also highlights the requirement to precisely specify quality standards. Few importers will have the technical knowledge to do this and will have to have specifications drawn up by an engineer familiar with the particular type of product being ordered, and in keeping with your specific requirements included. Cost to you $????.

The other major point I would make is that if you pay a deposit, that will be covered by Trade Assurance if you ask for it and the supplier agrees, but if you pay the balance before shipment, that is not covered. See Clause 10.4

Before using Trade Assurance, it would be a good idea to carefully read all the T&Cs to be sure that you have dotted every i and crossed every t.

IMPORTANT! If the goods have been delivered there is no possibility of making a claim. They do not specify what "delivered" means, but that could depend on the terms of contract. If FOB, the goods have been delivered when loaded on a carrier. If EXW, the goods have been delivered as soon as they leave the supplier's dock.

Finally, note that the English version of the rules published on Alibaba’s site is not binding, only the Chinese version. There is a partial (non-operative) link to the Chinese version at the end of the T&Cs. Those of you fluent in Mandarin may be able to locate an active link.

Walter Hay
Provenchinasourcing

 

I have often been asked how to tell if a supplier is genuine. I can't go into all the details because it takes about 10 pages in my book, but today I posted an answer in the thread: How to choose products to sell? Recommending that for those buyers who want to use Alibaba (Certainly not my preferred B2B site) they should only deal with Assessed Suppliers and should read the entire Assessed Supplier report before contacting a supplier. Here is the logo to look for:

If any readers want to know more, just ask me here.

Walter Hay
Provenchinasourcing

 

How I Learned.
I learned the hard way, by experience. I must admit that I had a head start, with my first job being with a huge international shipping company, but I still made some mistakes.

When I started exporting to the Asia/Pacific in 1978, with my only knowledge being what I had studied and then what I had learned at work with the shipping comapny, I was still unprepared for the real world.

The most pleasant thing I did learn very quickly is that if you treat Chinese people the way you would like to be treated they are a pleasure to do business with. I have never been scammed by a Chinese supplier, and none of my former importing franchisees in 4 countries have been either.

Many of the contacts I made while exporting were extremely helpful when I changed to importing in 1987.

They had offered me products to import, mostly through businesses owned by their relatives, and some of them have become very long term friends. Even though I am retired, that helps me keep up to date on matters relating to doing business with China.

Before long I had to look for sources for products other than those offered by my friends. This was before the Internet went public so I had to use physical sourcing methods, including frequent visits to China.

This turned out to be a huge advantage, because I gained a knowledge of government sponsored and industry sponsored sourcing networks years before they set up websites and went public on the Internet.

Their sites are generally not easy to find because Google searches are swamped by the likes of Alibaba, GlobalSources, Tradekey, and the myriad of other privately owned sites, where sad to say, checking of the credentials of suppliers leaves a lot to be desired.

Several of the sites that I know and recommend to my students have great reputations among professional importers, but never get a mention on forums.

Safe sourcing small (or large) quantities direct from the manufacturer can earn entrepreneurs far higher returns per hour spent on their business because of the mind boggling profit margins that are obtainable. If dropship resellers only knew what they're missing.

Walter Hay
Provenchinasourcing