I think the big thing with importing: everybody assumes there is great dollar risk in the import business and there is. It just depends on how you do it.
Why would you want to think about being an Importer?
The types of markets that I have imported to in the past or seem to have imported to in the past;
- the best places to import from based on what you are importing
- product sourcing
- a lot about the Canton fair
- how to use importing websites
- getting a great price on what it is you want to buy
- how to actually physically place the orders
- shipping
- delivery
- tariffs
- what to do once you get the products Stateside.
Obviously people were interested in importing, a lot of you are, but you guys come up with a good reason why I guess or why you thought you were interested to start with. Most people’s reason for importing is because products are cheap and they are plentiful. That is a place to start, but like most things, you find in marketing or business, price is secondary.
One of the other big reasons to import is customization. You can have products made your way and I am going to talk about that a lot. A lot of you are familiar with Internet Marketing and Sales Letter Writing and Information Publishing and you hear over and over and over again that you need a USP and that is one of the things that China importing gives you. It gives you the ability to customize whatever it is you are buying to give your product a particular USP.
Establishing brand value.
I am selling a company right now. We are in the final stages in negotiation that sells packaging equipment. We started an importing packaging equipment from China, 2 years ago, and we came up with a brand and we branded the product with a very American sounding brand, and some of the products that we imported like heat sealers came over. Almost everybody that’s ever seen a heat sealer knows its kind of that bluish gray color and they are all the same color coming from China. We had ours color coded differently, they were kind of bright red with our logo played on the side of them. We almost immediately had a distinctive look to our product. We were able to charge 15 or 20% more than the competitor because our product did not particularly look imported.
If its just a small color change that is great, if you can really add value that is even better One of the things that we did add value, as a matter of fact, in the heat sealer , market there is an interesting thing and this gives you an example of how things work in China. We bought plenty of heat sealers for a long time. One of the problems of heat sealers is they have a little band that runs across the top that burns out, it is a heat element. And usually after a year or two, depends
on how much you use it, that heat element will burn out and most of the people just throw away the heat sealer because they only cause $50 or $60, anyway.
We kept getting people calling saying “Hey you know my heat sealer burned out and I need to get another one” and ask if we sold the additional elements, the little heat sealer elements, but we did not so we called our supplier to ask if they would sell them to us and they said instead that they would just put 3 replacement elements in every box that we bought, every heat sealer that we bought. So we ask them to send those separately, so now we can sell a heat sealer for $60, let us say, our upsell are 3 additional heat elements for $9.95 that don’t cost us a single cent. The factory included those free, that’s one of the cool things about dealing with China. A lot of times you will ask for things, and if they are not terribly costly, or fairly easy for them to do, they will include them at no cost or little cost, rather than negotiate down a price, they feel like they are giving you something. So maybe you want to ask them to lower your price again anytime soon.
Establishing Brand value is big deal because when you get ready to exit, I always tell everybody; establish a business with your exit in mind. When you get ready to exit an import company’s predominant value is going to be the brand of the products that it sell. Anybody can import, anybody can export if they got some money. There is no real value in a trading company, there is value in brand, so if you are building a brand you can do much better. In the States everybody
wants you to sell their brand to something. If you are buying a product, they want you to sell their brand so that you’re constantly promoting their brand.
One of the big advantages to importing from China is you get to build your own brand and that is one of the important things. Even some of the Chinese companies now are buying branded products like Dirt Devil vacuum cleaners are
owned by a company in China. They bought the brand from the company here in the US, they made the vacuums for Dirt Devil for years and finally they realized that the only difference between the $20 vacuum they were making and the $150 vacuum cleaner in the store that was being sold was the brand, so they bought out the brand, so they can continue to sell them.
Market Domination. It is another reason you import. A good example of that is Old Navy Stores. Old Navy, The Gap, that whole line of clothing stores have one thing in common, they direct import everything they sell. If you have a clothes store around you, they are the same way. Most major discount retailers are importing those brands that you have never seen before, those are their brands. St John’s Bay from JC Penney, they import all their own stuff and what
that does is gives them enormous advantage, you have got a pair of pants, let us say that sells for $20.00 that the average retail stores paying $6.00 for. You can import that pair of pants for $2.00, create your own brand, your own brand value and your own look by hiring a designer to give you a nice style, you can increase the quality of the product considerably for 20¢ or 30¢, so now you have got $2.50 for what you used to pay $6.00 for. Some retailers will take that discount and then make the product really cheap and sell a lot of them. Retailers like Old Navy, hold the price point high, but because they have got this increase margin, they have the ability to buy incredible amounts of media, that is why they have got George Jefferson doing there – doing their commercials and they can run all those tons and tons and tons of Old navy commercials because they have got 2 or 3 or 4 extra dollars or more in every garment that they are saving by being a direct importer.
And one of the things that they do, The Gap has an interesting story behind them, they have a 7 day delivery window when they order. When The Gap orders a product from a factory in China, it has to be on an airplane within 7 days. They fly their own freight airplanes into the States, so they are literally buying from factories in China and delivering goods to their stores quicker than they could if they bought the goods within the United States. I met on an airplane, they sell these same thing with trophies and awards, he goes to Fortune 500 companies and gets all their trophy and award business. He actually has the trophies, not only made in China, the parts made in China, he has an engraved customized and everything and then flies in 2 loads of trophies per week into LAX airport and then ships out of LAX all those finished trophies to these major corporation’s people give an awards. And he has become one of the largest trophy sellers in the country in the last 3 or 4 years.
Direct to retail is the last one and that’s Old Navy that is taking anything that you make direct to retail and avoiding the supply chain. A restoration hardware is a good example of that. Direct mail companies, catalogue companies have been
doing this for a long time, they have been importing, putting price in catalogues and then selling, and now a lot of those companies like Pier1 Imports and those guys, they buy their product take them direct to retail so there is no distributions, no warehouses, there is no middlemen, so they are getting that big margin and if you will notice the trend, there are fewer and fewer brand retailers out there that are selling name brand stuff and there are more and more of these direct import retailers out there because they can afford to out market the brand retailer people. Like Dillard’s or Macy’s who can only afford to market based on the amount of money they have between what the brands is willing to give them like Polo. Polo’s going to want $30 for their shirt that sells for $60 and they get it because they built brand value in those $30. But they would much rather sell you that same shirt that they bought for $3 that’s their structure brand or whatever they want to call it within the store. So that tends to be the trend.
So those are the reasons why people import mainly because products are cheap and plentiful and sometimes it is a price play. You can get it customized, you can establish brand value and market domination and direct to retail. And that is
one of the biggest things to take care of in the import business, it is very easy, much easier than you think, to sell an import product before you ever buy it and that takes all the risk out of the equation.
Tags: best places, business price, canton fair, China, container load, export agent, export prices, finished goods, Global Sources, guangdong, heat sealer, import, import business, importing from china, information publishing, material costs, negotiation, packaging equipment, price hikes, profit margins, raw materials, risk, sales letter writing, shipping delivery, tariffs, Yangtze River Delta
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