China isn’t known as the factory of the world without good reason, over 100 billion dollars worth of goods are exported from the country each year, with a large chunk coming from business to business trade. Countless companies import wholesale products from China suppliers to resell for profit on a daily basis.
It’s no surprise either, china based manufacturers can produce colossal quantities of products quickly and for extremely low prices. Think of any latest gadget and there’s no doubt it can be manufactured in China for a fraction of the price.
However, importing wholesale products from China suppliers is no walk in the park, particularly for someone who has never done it before. There are many factors to take into consideration from shipping costs to logistics, import duty, customs and taxes.
Thankfully, in this step by step guide, I’m going to show you exactly how to import from China successfully while avoiding the common pitfall newbies fall victim to.
Find a China based Wholesaler or Manufacturer
When it comes to finding a China based supplier, there are multiple options. Websites like Aliexpress, Alibaba and Dhgate have been connecting China wholesalers and manufacturers with overseas buyers for years. These website also come with the added benefit of providing payment protection for buyers. However, the downside to these middlemen websites is the fees they charge the suppliers, fees which lead to higher prices than if you were to trade with the supplier directly.
Using supplier directories on the other hand gives you the ability to cut out the middleman. Here at Wholesale Frog, we have many China based wholesalers and manufacturers listed in our free to use directory. Unlike Alibaba, you can start trading with the suppliers directly to lock in the lowest prices possible.
Research the Supplier
As more and more business owners turn to China suppliers to source wholesale products from, its growing popularity comes with a downside – scams and fake wholesalers. It’s not uncommon to find so called China wholesalers who are simply buying the products from the real wholesaler and adding a few extra dollars to the unit prices. Even worse, some companies just jump on the bandwagon and take the opportunity to flat out scam people.
Therefore, once you find a China supplier you like the look of, it’s essential to do your research on the company before making a purchase. Verify their business information by looking up their address on Google maps. Send them an email or even give them a call to confirm their legitimacy. Check for social media profiles, search for reviews online and study their website and policies closely. The more you know about the supplier, the more confident you’ll feel when placing an order.
One common term you’ll come across when importing wholesale products from China suppliers is MOQ’s. MOQ stands for minimum order quantity and most suppliers, particularly manufacturers have them. For example, if a supplier has an MOQ of 50, you’ll have to purchase a quantity of a least 50 units. Quiet often, the more you buy, the cheaper it will be per unit.
Research the Products
Diving in head first and choosing any old products to start importing from China is the most common mistake newbies make. Researching the products to determine whether they’re popular or not is the difference between selling a few and selling them out quickly.
The best way to do this is by finding other sellers who are already selling the same item, or a similar item successfully. These days, eBay has an awesome feature which tells users exactly how many times a particular item has already sold, a great indication of its popularity. Amazon reviews are also a great indicator. If the product has a lot of positive reviews from customers, you can have confidence in knowing that it’s good quality and in demand. Reviews also give you a change to uncover any potential product flaws.
Understand Import Duty & Taxes
When importing from China, import duty and tax is something you must be aware of. The import duty and tax you’ll pay to get the goods into your country will vary depending on the value of the goods, and which country you’re importing them to. However, one quick search on your local government’s website will reveal the exact rates you’ll be expected to pay.
For example, in the UK, 20% value added tax (VAT) will be charged. Custom duty may also be charged at a rate of around 2.5%. In some cases, the local courier who delivers the goods when they reach your country may also charge an administration fee. Therefore, it may be worthwhile to find out which courier will be used and if they charge an admin fee. The total amount has to be paid, usually via cash or credit card at the time of delivery, otherwise the goods may be sent back.
The following websites will aid you in calculating import duty and taxes:
Calculate Profit Margins
Now that you have a basic understanding of import duty and taxes, you can accurately calculate your profit margins. Tally up your total cost to purchase the goods and have them shipped to your country. Add any import duty or taxes you may pay. Also factor in a reasonable amount for potential courier admin fees. Now divide that number by the quantity of goods you purchased to get an accurate idea of the price you’ll be paying per unit. Take that figure away from your target selling price minus any fees if you’re planning on selling on platforms like eBay to get a final profit amount.
At this stage, you’re prior research on the products will come in handy. Having an understanding of what other sellers are currently selling the same item, or similar item for will allow you determine if it will be profitable or not.
Place an Order Securely
Once you’re happy with the supplier, the products you plan on sourcing and the potential profit margin, it’s time to place the order. Whether you’re dealing with a website like Alibaba or sourcing from the China supplier directly, always place your order securely. If you’re placing an order on a supplier’s website, make sure you check for https: in the suppliers URL, this means the website is on a secure connection, something that is essential for any website that accepts payments.
Never send cash or use any type of money transfer services like Western Union. Always pay with a credit card or through a trusted platform like PayPal, this way you’re payment will be protected by your bank or by PayPal if something was to go wrong.
Wait for Delivery – Patiently
You’ve placed your order – exciting times! The next step is to simply wait for delivery of the goods. Shipping from China can take a while. However, your supplier should be able to provide you with tracking information which you can use to check the progress of the shipment. Just be patience and your order will be with you before you know it.
Test the Products
Once you’re order has arrived, the first and most important thing you can do is test the products, particularly if you’re dealing with electronics. The last thing you want is to sell products that may be faulty. This will inevitably result in them being returned by upset customers.
Furthermore, you’ll usually only have short window of time to report any issues to the supplier. Therefore, it’s absolutely essential to test the products and ensure they’re working as they should be. Don’t cut corners with this one, not testing could end up being a very costly, even business crippling mistake.
If you’re products are as good as expected, the final stage is to start selling them and get those profits rolling in.
For useful guides and articles on selling products, be sure to check out our training portal.