I”m sure you’ve heard the news like some one become a millionaire by selling on ebay products sourced from China. Yes there are people making money from it, a lot of money. If you have a look around at the products you bought, you will find a lot of them are marked Made in China. After working in the import industry for the past 10 years, I will show you the secrets on import from china, the formula you can use to find the right product, and ways to market and sell the product. I will show you what a Chinese buyer/procurement manager will do if they want to find a product. I will also show you the insider’s way of doing business in China.
Marketing and selling is more important than just finding the product, a hell lot more. You can sell your product on ebay/amazon, but everyone knows it now and the margin has become very small unless you have a very unique product that no one else is selling. They are important selling channels but I will also show you how to build a business model on your own website using digital marketing. You won’t be making a lot of money from start, no one can, but you will build up the selling momentum when your brand awareness gradually grows.
How to find the right product
Before I start, I will always advise you not to import branded products like Apple iPhone, Samsung Phone, Nike etc…It’s nearly 100% fake. And you will be sued sooner or later if you sell fake branded products. You should contact the owner company of the brand and buy from them if you want to sell their products.
OK, this is a big topic because there is so many ways to find the right product and it heavily relies on the sales channel you’ve got. I’m listing some of the most widely used tools/websites here. I use them to give me ideas of products I can choose from. A good product is a product that you can make some profit in your chosen sales channel. Write down any products that interest you in the following tools.
You might already know this but I want to introduce it to you again. It’s so widely used, even the factories in China use it to do their market research. It offers free 7 day trial.
Now go ahead and register a FREE account.
Then click on the Total Sales heading to make the list in descending order in sales.
I’m sure you will be shocked as much as I did the 1st time I saw this, some items have generated more than £50,000/week, that’s 2 to 3 millions a year on eBay only. And some of them are imported from China. If you sell on eBay, normally you will pay about 15% as fees for both ebay and paypal, you will need to use paypal as a payment gateway for ebay. You can get this percentage down after you traded a lot on paypal, but as a rule of thumb when you start, just use 15% when you do your calculation.
Now play around with Terapeak and familiarise yourself with all the functions it offers. Competitor research, Category Research and Hot Research, I use them almost everyday. After you know your way around, write down the products you are interested in and also their selling prices.
Have a look around the people close to you, your friends/colleagues/family members, what are they buying recently. Use the industry knowledge in your career, do you/your company buy anything locally that can be bought from China, do they buy them on a regular basis?
3. Business to Business platforms
Go to Alibaba.com and pick the category you are interested in. It’s without doubt the most widely used sourcing platform now. There are also other sites that’s worth having a look at, listed below, if you can’t find the product you want in Alibaba
4. Other platforms I always use
There are also some good business to consumer sites that offer great inspirations for ideas.
5. Chinese B2B and B2C sites
Yes, it’s in Chinese, most people will just close it because of the language barrier, but there is a very easy way to walk around it. Just download google Chrome and use the Translate the Page function. To fully utilize the Chinese sites will give you a huge advantage because these are what insiders look at.
- 1688.com – This is Alibaba’s Chinese website for local tradings, not for exports.
- taobao.com – Another website owned by Alibaba, functions like ebay
- tmall.com – This is also owned by Alibaba, most time it’s companies selling on it
Now you can use this method to translate any page that isn’t in English, this is not perfect because it won’t translate the words in pictures but it will be enough for product inspirations.
Get the landed cost
Now you must have a list of products, now let’s work out their LANDED COST. Yes, in the calculation, make sure it’s landed cost, cost delivered to your door/warehouse/distribution centre, not just the product unit cost from the factory.
Head to Alibaba and contact the supplier of the product you are interested in and request for a quote for the quantity you can afford. Also make sure to include in the quote for shipping by air by a courier and shipping by sea.
If you use a couriers service by air like DHL/UPS/Fedex, it’s delivered to your door and you will pay duty and VAT either on delivery or they will call you beforehand. Currently VAT rate is 20% on the product cost, so if your product cost £1000, you will need to pay £200 as VAT. Duty rate depends on the product imported, I use Duty Calculator to work it out, it’s also based on the product cost. After you registered VAT, you can claim the VAT back but you also need to pay VAT on the product you sold. If the customer pay you £12.00 for one product, you will have to pay £2.00 as VAT. The formula is sold price*(1-1/1.2) when the VAT is at 20%.
There is some cost you must be very careful if you ship your products over in a container. Look at the table below as an example in the UK, port in Felixstowe and hauled to Coventry
As you can see, when it’s landed in the UK, there is still some cost generated total of £722, which is quite a lot when shipping a 20′ container from China to Felixstowe costs only $950.00. This is also on top of the Duty and VAT charges. Again just be careful with it as it will eat into your profit margin.
Work out the net profit margin and verify and business model
Net profit margin = (Total Revenue – Total Expenses)/Total Revenue
Remember Total Expenses, that’s all your expenses including everything. If you have warehouse cost, factor it into your product unit cost.
Marketing cost is another big part of the expenses. The cost varies on different sales/advertising. Here is the most widely used 3 channels for starters.
Ebay is most widely used now as everyone knows it, so the competitive is intense. Generally Ebay and paypal will take about 15% off your sales as their fee. You can apply for a lower rate with paypal when the monthly sales figure is big enough but as a start, just use 15% in your calculation. The downside with Ebay is the platform is seen as a second hand place, everything is cheap and low quality, I know we can always find very good products there but in general people always look for cheap on Ebay. That’s the downside of this platform because the sales is so price driven and you can only make very little profit. To make big money, you will need to sell a lot.
The selling fee on Amazon varies on product categories, see here http://services.amazon.co.uk/services/sell-online/pricing.html. Amazon is slightly better in terms of sale price. And people tends to look for a quality product with reasonable price on Amazon, and good customer service of course.
Adwords is Google’s marketing platform. It’s based on a Pay Per Click model. I absolutely love it because it gives you a lot of data you can use in your calculation. There are a lot to be learned you can start here http://www.google.co.uk/ads/new/step-by-step-adwords.html. I won’t go into details teaching you how to use it step by step but I will only show you how to use it to evaluate whether your business model will work, I.E. whether you can make money selling your product by advertising on Google. You will need to have a website first but it won’t cost you much. I will write another blog on how to cheaply set up your own ecommerce website with good design.