Whether you own a new ecommerce business or a multi-million dollar brick and mortar corporation, foreign importing is something virtually all businesses get involved with at some point or another. And while it’s generally more cost effective than domestic sourcing, you need to ensure you aren’t making the following profit-eating mistakes.
1. Assuming You Know Everything
Thanks to a number of online platforms and communication tools, importing from Asia is a breeze. Anyone can do it in a matter of hours. However, don’t confuse easy with successful. While anyone can contact a supplier and place an order, not everyone can negotiate a good price, account for quality, and ensure an order arrives promptly and safely.
Most would agree that it takes two or three shipments for an importer to completely understand the process, terminology, and rules. While you have to start somewhere, it’s unwise to assume you know everything the first time around. This can land you in hot water pretty quickly.
2. Contracting Urgent Order Syndrome
Experienced importer Ashish Monga says that the number one issue she sees with new importers is something she calls “urgent order syndrome.” This is when an individual is so anxious to get started that they rush through the process of finding a supplier, negotiating terms, and meticulously reviewing details associated with the order.
“This urgency often results in requirements for product & packaging not being ‘specific’ enough, quality control procedures being lax, factories skipping procedures to cut down on ‘production time’ and last but not the least, losing out on good suppliers, who may have a quality product but are not flexible on their delivery times, or have longer delivery times simply because they have more business,” Monga writes.
3. Not Accounting for Landed Costs
One of the bigger issues you can encounter is not accounting for landed costs. All too frequently, businesses focus on the per-unit cost and block out everything else. This is a major problem, since landed costs can actually account for up to 40 percent of total product costs.
Landed costs include things like transportation, insurance, taxes, handling fees, duties, and more. If you don’t account for these expenses, you can go from turning a nice profit to actually losing money. That’s why it’s incredibly important to break down total cost calculations for an overview of what you’re likely to spend on a given order.
4. Being Timid with Price Negotiations
Some people are born to negotiate, while others get queasy at the thought of haggling. Unfortunately, those in the latter category also have to perfect their negotiation skills.
Asian suppliers rarely advertise their best prices. In fact, it’s expected that customers will negotiate rates and adjust the original asking price. If you simply place an order without haggling, you’re potentially leaving profit on the table.
Of course, you have to understand the “economies of scale” concept if you want to negotiate good per-unit prices. Most suppliers will give you a quote chart that indicates where price drops occur and when it makes sense to order more units. Use this as a guide and negotiate from there.
5. Failing to Visit Suppliers in Person
If possible, you should attempt to visit a supplier in person before placing an order. This is beneficial for three primary reasons. First off, it shows the supplier that you’re a serious customer. This should make them more likely to appease your needs and offer generous terms on the first order.
Second, visiting a supplier in person establishes a personal relationship. You’re no longer just an email address or phone number. You’re a living, breathing individual with needs and interests. This lessens the likelihood of being ripped off or mistreated.
Third, visiting a supplier in person lets you see how exactly your products are being manufactured and whether the quality is up to your standards.
6. Not Maximizing Orders
You have to understand the complexities of international shipping before placing your first order. It’s not like ordering something from an Amazon warehouse two states away. When you place an order, it may change hands three or four times before it arrives at your warehouse. Because of this, it’s imperative that you maximize orders and avoid wasting space.
Shipment containers should be filled in order to make the most of your time and reduce long-term landed costs. If you don’t maximize orders, you’ll see costs rise and profit margins wane.
7. Failing to Consider Compliance
Just because international regulations differ from domestic rules and requirements doesn’t mean you can ignore compliance. Running an organization that doesn’t take compliance guidelines seriously is a risky proposition. It can put you in legal jeopardy with both U.S. and foreign governments and threaten the financial status of your business. Any time you work with a new country, it’s wise to speak with a business attorney about proper protocol.
8. Not Leveraging the Right Tools
Finally, one of the biggest mistakes you can make is failing to acknowledge and leverage the right tools. While it certainly costs money to purchase sophisticated solutions and tools, it’s almost always money well spent. If you can trim inefficiencies by even a percentage point, you may be able to offset the expense and increase your profit margin.
Ideally, any tool you use should communicate with the other tools you’re using. Thankfully, most modern solutions in today’s marketplace can talk to each other. This makes it easier to manage your business with better visibility and control.
Contact QStock Inventory Today
At QStock Inventory, we offer best in class turnkey solutions that are designed to help businesses improve supply chain efficiency, maximize visibility, and increase profitability. Our software and hardware solutions allow you to achieve 99 percent order accuracy and enhanced productivity with seamless, real-time integration and sophisticated features that your warehouse currently lacks.
For additional information regarding our solutions and how they can help your business become more efficient and profitable, please contact us today. We would love to learn more about your organization and how we can help you grow.