It seems rather easy to make a fortune by importing from China, the truth is that the process is fraught with potential problems. A tiny mistake can lead to a great loss of a good amount of money and time.
I thought it over and came to a conclusion–rather than guiding you to import from China step by step, it would be more meaningful to share with you some common mistakes as a reminder.
Thus you can avoid making those mistakes when wholesaling from China or getting products produced by Chinese manufacturers. That’s the reason why we create the last blog: 20 Mistakes (Don’t Make) When Buying Wholesale From China.
For the 18 mistakes listed in the last blog is far from enough, so I contacted some experts in the field of China’s import and export, and international freight, and financial field, asking them to share their common mistakes about China’s import.
I will share with you their opinions in no particular order, let’s dive in…
1.Mistakes When Choosing Products
“The biggest mistake people make when choosing products is not looking at data. You can get interesting insights by looking at popular Facebook ads to know if people engaging with the ad genuinely want the product or not.
You can also find data points like order volume and performance in the past 30 days and six months on Oberlo. Google Trends is also a popular way to check to see if a product is gaining popularity or declining to help you determine whether or not you should sell it.”
Public Relations Specialist here at ShipMonk – a 3PL that helps small and medium-sized businesses flourish by bundling software and fulfillment into a neat, easy solution.
Choosing the right product to sell is foundational for a successful business importing goods from China or anywhere else around the world. A common mistake when choosing a product to import is picking one you think will sell rather than one you’re passionate about. Obviously, you shouldn’t choose a product you don’t think will sell well, but selling a product you have no real interest in nor passion for just because you think it’ll be popular is much harder than expected. Pick a product to import that you’re knowledgeable, and preferably passionate, about to increase your odds of success.
2. Mistakes When Buying on Chinese Wholesale Websites
“One of the biggest mistakes that most new sellers make when researching products is the failure to properly identify and track competition. The best way to do that is to look for reviews, listing quality scores, and relative keyword prices using tools like Jungle Scout’s web app.
For wholesale products where you’re mostly competing on price, the same applies. Your best advantage is always going to be in what you can buy a product for, so be sure to properly calculate all your costs and research the Buy Box price before listing a competitive product.
Typically, the costs are the cost of goods sold, Amazon referral fees, shipping costs, media fee and costs directly related to your business and sourcing methods.”
Steve Chou runs a site called My Wife Quit Her Job, where he talks about the entrepreneurial story he’s gone through and shares his insights and knowledge on how to build a high-growth business and coaching practice.
“The biggest mistake that I see new e-commerce entrepreneurs make is negotiating heavily on price without taking into account the potential loss of quality.
Whenever you successfully negotiate a decrease in pricing with a supplier, your work is not done. You need to make sure that there will be no compromises or shortcuts in production.
The best way to prevent quality fade is to create a very detailed quality control checklist that specifies every last detail of your product. Make sure you hire an inspector that will examine your goods as they are produced in addition to at the end.”
“One of the biggest mistakes entrepreneurs make when buying wholesale from China wholesale website is a lack of quality check before placing an order. You want to make sure you know the quality of their work and the product.
Once you get your inventory there is no guarantee that it will be up to par and by the time request and refunds are discussed, you will have a lot of unfulfilled orders or a large stock of inventory collecting dust that can’t be sold.
The best way to do this is to visit the manufacturer and see their facilities, other products, and samples of your product. However, if you don’t have the resources to head to China, then it is best to at least get multiple samples delivered to you. This may take more time, but it can help you avoid a potential wholesaling nightmare.”
3.Mistakes When Selecting Suppliers
“When locating suppliers for an existing product or finding a supplier for a new range there are several pitfalls. Price is often the major consideration, but that is the single most common mistake made by importers. Cheapest is not always best and quality is a major consideration.
Looking at quality only is another common mistake. Can you sell the quality of the product you intend to source at a price your customers are willing to pay?
There is always a compromise. A reasonably competitive price for an item that is of good quality will tend to be successful.”
“Many Americans when first deciding to do business with China often decide to rush the process, without doing their due diligence.
When looking for suppliers to do business with, ask friends and other entrepreneurs if they are, or know someone who is, doing business in China. Can that person recommend their suppliers?
When you find a possible supplier, talk to them before you jump on a plane. First, check them out on the internet—Google their business name, or look them up on Chinese marketplace platforms.
Try to arrange to speak to them (many Chinese businesspeople speak English) via Skype so you can meet “face-to-face” before you actually meet in person. Ask to see a virtual tour of their offices/factories.”
“Not all suppliers on overseas product-sourcing websites like Alibaba are the same. Some suppliers are manufacturers, some suppliers are wholesalers, some suppliers are trading companies and most new entrepreneurs don’t know the difference between the three and how it will impact their bottom line.
Manufacturers are in the business of creating products and they’re ideally who you want to choose as your supplier because you’ll be getting your products straight from the source with no additional markups. Wholesalers and trading companies, however, are in the business of selling products from manufacturers, so they mark up the cost of the product which drives up the price for you, which means you’ll earn less in profit.
Figuring out whether you’re dealing with a manufacturer or trading company can be tricky, though and some trading companies will blatantly pretend to be a manufacturer when they are not, so you have to be careful.
Ask for the company’s business license (which will likely be in Mandarin) and it will tell you which kind of company you’re dealing with. Then look for the “Business Scope” label on the license which will be a list of categories that the business is legally permitted to operate in and should give you all the information you need to know whether they’re a manufacturer, wholesaler or trading company.
Manufacturers will usually be more than willing to share a copy of their business license with you and if you’re communicating with a company that’s not — well, then that’s a red flag.”
“A lot of products are created in China, but they have often branded products. With the generic products you sell, you’ll likely have a higher defect rate than the branded kind.
Not to say China doesn’t make good products – they do, most of the products you’ll sell from legitimate wholesalers come from China. But when you drop ship straight from China you’re going to have problems.
Since these are going to be generic products it’s going to lead to some items being defective. Some of the items won’t look like how they are portrayed in your product photos. That’s going to lead to customers wanting to return them and what happens then?
Because you’re drop shipping out of your home country, the returns won’t be coming back to the supplier. Similar to drop shipping on Amazon, these products will most likely be coming back to you.
You’ll have to pay out of pocket for those defective products yourself. And that’ll eat into your profits quickly.
Instead, find and build relationships with domestic suppliers in your country.
When I say domestic dropship suppliers, I mean using dropship suppliers from wherever you’re selling. So if you’re in Australia and you’re selling in that market, use Australian suppliers.
This lowers shipping time down to 3-5 days, resulting in happier customers and more positive reviews for your drop shipping business.
First, choose a niche. Then build a store based on that specific product category. Next, look for people that already sell what you want to sell. These future competitors will have dropship suppliers that’ll you want to contact and get approved to sell their brands.
4.Mistakes Before Massive Production
“Too many businesses fail to do a rigorous pilot project or at least a comprehensive trial run as a condition before committing to mass production from an external supplier. This oversight can lead to costly product flaws and missed deadlines, like those that continue to plague streetcar and subway vehicles producer Bombardier in Canada.
Another proactive step is for the client to approach several of the supplier’s existing customers to verify how successful the mass producer was in executing similar projects in the past. Simply depending on sales pitches can severely muddy the water about production reliability and obfuscate hidden costs.
Mass production also requires formal trade documentation signed by both the client and supplier before actual work is scheduled. A clear and thorough legal contract should define precisely what acceptable product deliverables are, the required delivery dates, quality control testing, and financial penalties plus any other recourses for failing to live up to contract provisions.
Typically trade documentation is in English, although a supplier in China may also require a translated version in the native Chinese language. One must also consider cultural differences and geographic time-zone differences that can interfere with communication when distant parties do business.
These complications are all the more reason to run carefully thought-out pilot projects to address potential snags upfront, thus avoiding much costlier mass production runs.”
“Be sure to do the calculations right as inventory management is critical for your success. Carry too much stock and you risk losing money. Carry too little and you’ll struggle with order fulfillment.
To estimate the approximate volume for your first massive production, study average industry conversion rates. With the traffic of 5,000 visitors/month and 1% CR, you’ll probably make 50 sales. Anything between 20-50 items would be enough to stock.”
“I rushed production of a product based on a similar sample – not an EXACT production sample – and ordered containers of it to send to the client – a distributor in the USA. Later the paint on the table would melt in the heat and the sticker would come off.
The USA distributor said that it was my fault – but actually, they didn’t want to wait until the production sample was ready and didn’t want to spend the $300usd express shipping for another product sample to be sent.
Lesson – spend the extra time and money to get an exact sample and have it signed off. Especially if any modifications are made on it.”
Many suppliers cannot comply with US and EU product safety standards, putting you at high risk of facing a sales ban and major fines. Verify the suppliers product safety test reports before placing an order, to assess if they have the capability to make compliant products – before it’s too late
5.Mistakes When Shipping Products from China
“One mistake people make when shipping products from China is they don’t account for any costs beyond the overseas transport. During this process, issues like customs inspections can happen on both sides of the ocean. If your goods are inspected it can cost a few thousand dollars per container.
Mistakes like errors on paperwork can also cost thousands and cause delays in receiving your goods. Even if it is unlikely, it is best to be prepared and understand events like these do occur when shipping.”
1. Choose The Lowest Shipping Rate
This is a very dangerous mistake, lowest is always the highest. You may choose a cheater and lose your goods if the shipping rate is super lower compared with most forwarders.
2.Declare Very low Good Value
If you declare too low goods value. your goods may be held by the customs and finally, you may lose your goods or need to pay a big bill higher than the value of your goods.
3. Provide Incorrect Goods Information
The incorrect goods info will delay the shipping of your goods and have a problem with the customs clearance.
4. Bag Packaging
If your shipping goods do not have good packaging, they may be damaged during the shipping.