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Buying from Abroad - The Basics
By businessbroad | November 11, 2006
Buying from abroad can be a pain in the butt, so if you’re just starting out, you may want to avoid it unless it’s for an item that you really, really, really want to carry.
If you don’t want to deal with foreign manufacturers and wholesalers, you may have luck simply by calling or e-mailing and asking them if anyone in your country happens to distribute their products. What you lose in paying a distributor’s small profit is almost always made up for in the lower cost of shipping (assuming that you’re talking about a fairly small quantity). And of course, you’re not dealing with any of the risks that come from completing a transaction. Not all the companies you may find will be trustworthy (though many are!), and your bank or credit card probably will be very reluctant to refund a $500+ transaction that has gone bad.
All the same, there’s a lot to be gained by buying from international distributors - For our purposes, that means anyone outside of the United States. Some items can only be obtained by buying from abroad, so you’re getting access to a set of products that are (usually) harder for your customers to find outside of your store. It also helps that conventional wisdom says you can only buy abroad if you’re buying huge quantities. More and more people are learning that that’s not true, but there are still enough who believe it to give you a competitive edge.
Because foreign sources are very often manufacturers, you may find that you are able to get rates which enable you to more than double your cost to arrive at a selling price. Big margins are always nice.
Finally, by working directly with the product source, you will be able to stay current with the market. While it’s certainly possible to keep up with trends by watching what your distributor carries and by reading relevant publications, your manufacturer can usually let you know what’s coming just a little bit sooner. That extra edge can often give you several very profitable weeks of exclusivity, especially if you’re an actively advertising online retailer.
While the decision is ultimately based on what makes you most comfortable, here are a few tips just in case you DO decide to start buying abroad.
1. Whenever possible, try to stick to e-mail correspondence. Fax is next best, and phone conversations should be avoided if possible. You may find that your international distributors have thick accents or poor command of the language, which can result in costly misunderstandings. It’s also hard to be sure who’s answering the phone. I’ve known people who had deals arranged over the phone and they were shocked to find out that their deal didn’t even exist. Surprise bills are never fun.
E-mail lets you and your supplier move forth with caution. If their English is not so great, it gives them a chance to really think about what they’re saying before they say it. It also gives you a handy written record of everything, in the event that you WOULD ever need to dispute a charge with your financial institution.
2. Make sure you know the shipping charges up front. International shipping can range from “slightly painful” to absolutely excruciating. Unless you ask, and get it in writing, you have no way of knowing what you’re getting. Factor these costs into your cost per unit. If it doesn’t seem cost effective, consider raising the number of units in your order (or passing altogether).
3. Do your homework. Do a few basic Google searches on the company and see if you find any forums complaining about them. If they have a branch in the United States, check their BBB entry (and if possible, just do business with their USA office). If you can’t find anything, ask them to refer you to a current U.S. client who can vouch for them. They may get offended, but that’s better than losing all your money to a bogus company.
4. Whenever possible, use a credit card to pay. It’s easier to raise a dispute with your credit card than with your bank. It’s generally cheaper than a wire transfer. With the right card, you can accumulate a lot of cash advance money. Why WOULDN’T you use a credit card?
5. If an item is questionable, like designer apparel or weapons, be especially careful. Make sure that you are in accordance with all relevant import/export rules. If the item is a designer product, make sure that you’re actually getting the real deal. You can get in a lot of trouble for reselling fakes.
In general, designer products are only available to (a) people with brick and mortar stores, and (b) people who can place relatively large orders. You may also be able to get them through closeout dealers, but your selection and availability are greatly reduced through those channels.
If you do it correctly, nternational product sourcing can only help your business. Hopefully these tips can help avoid most of the common pitfalls - once you’ve done it once or twice, you’ll feel like a pro.
Topics: Tricks of the Trade |