A Full Video Demo Of Worldwide Brands

So today, I thought that I would show you the power of Worldwide Brands directly by giving you a complete video demo of the service. And incidentally, now’s a great time to sign up for Worldwide Brands because they are offering 30 dollars off to MyWifeQuitHerJob.com readers.

The video below is a brief demonstration and test drive of Worldwide Brands using my own account. Let me know what you think and feel free to ask me any questions you might have about the service. Enjoy the video!

Should I just store everything in the garage? What’s the best way to run my online store without having to rent an office?

Photo By Zampano

In reality, you should do what works for you. If you don’t mind losing your garage by filling it with inventory for your business, then so be it. But as your business grows, you’ll soon find that your stuff will eventually fill up the garage and then slowly creep into your house inch by inch. If you don’t plan carefully, your entire house could be overrun with merchandise!

Applying The Principles Of Locality

The best way to store inventory and run your business out of your own home is by taking advantage of a principle known in the microprocessor design world as temporal and spatial locality. My wife is probably going to read this and call me a big nerd but it’s rare that I get to actually apply something from my profession (I’m a microprocessor designer by day) to a real business. So please bear with me and call me whatever names you like but wait until after the article.

Microprocessors consume lots and lots of data. If you’ve ever taken a close look at your computer, you’ve probably noticed that a microprocessor uses many different types of memory to store its data. For example, a computer’s memory system usually consists of cache memory, system RAM and a hard drive. These 3 components all have different storage capacities and access speeds and are used by your computer to efficiently manage the data that your microprocessor requires.

There’s a good reason why your computer has 3 types of memory and it mainly has to do with temporal and spatial locality. Temporal locality is the concept by which data that is referenced at one point in time will likely be referenced again sometime in the near future. Spatial locality is the concept by which the likelihood of referencing a piece of data is higher if a piece of data near it was just referenced.

If you think of your computer’s data just like the merchandise you store for your home business, you can easily apply the principles of computer memory organization to your inventory problems.

Cache Memory AKA Your Home Office

The cache memory is used by your microprocessor to store the most commonly accessed pieces of data. While the cache isn’t very large, it can be accessed extremely quickly and is the closest memory to the processor.

Think of the cache memory like the shelves in your home office. After you’ve run your online store for little while, you’ll likely discover that only 20% of your merchandise sells 80% of the time. In order words, the bulk of your revenues will be from the sales of only a few items in your inventory. As a result, your shelves should only house the top selling merchandise that you move the most. Because you constantly need to pack and ship your bestselling goods, they need to be quickly accessible without any hassle.

System RAM AKA Your Garage

The second level of memory is called system RAM and is the second fastest way for your computer to access its data. Unlike the caches, the system RAM takes an order of magnitude longer to access but it’s also much larger as well.

Your computer’s system RAM is analogous to your garage. Storing and going through boxes of stuff in your garage will take longer to access than if it’s just sitting on your shelf but it’s a nice, large and convenient place to store inventory in your home (Provided you don’t park your car there). Unless your office is huge, chances are you can store a lot more merchandise in your garage than on the shelves of your office. And ideally, you should use your garage to house a large variety of your bestselling goods.

Hard Drive AKA Off Site Storage

The final level of memory is your hard drive which is by far the slowest way for your computer to retrieve its data. In most cases, it’s a million times slower to access your hard drive than it is to access data from main memory. However, the advantage of storing data on your hard drive is that it offers enormous capacity at a low price.

In the home business world, your hard drive is your cheap offsite storage. You should store most of your least popular or your off season items in a facility outside of your home. Sometimes, you may have to physically drive over to get your merchandise for a random order but this should be extremely rare.

Putting It All Together

Let’s put it all together now and apply the principles of locality. The theory of temporal locality states that merchandise that is purchased once is likely to be purchased again in the near future. As a result, once a customer purchases a particular item, you should then move some of that item onto the shelves of your home office (AKA the cache memory) and your garage (AKA system memory). In addition, items which are rarely sold should be moved to an offsite storage facility. By adjusting your home inventory according to what is purchased, you’ll be able to account for purchasing trends and the seasonality of your goods.

The theory of spatial locality states that the chances of selling a piece of merchandise is much higher if other similar pieces of merchandise just sold. Therefore, once a customer purchases a particular item, you should move and keep other varieties of that same item on hand because other customers will be likely to purchase it.

Here’s a real life example with our store. Many of our products are seasonal and we mainly sell wedding handkerchiefs, linen napkins and linen towels. During the spring and summer months, the orders are predominantly for our wedding handkerchiefs. As a result, we keep our bestselling handkerchiefs on hand during the prime wedding season period. However, once the holidays roll around during the fall and winter months, the sales transition to linen napkins and towels as more of our customers host tea and dinner parties.

Since we’ve run our business for several years now, we have a really good idea how much of each type of product that we need to carry on hand from month to month. As a result, we only store what we need to store and we aren’t overrun with merchandise. If you haven’t been around long enough to know your demand patterns, then simply go with the flow and adjust the level of inventory that you carry in your home according to demand. As you gather more data, you’ll be able to refine your storage needs and reclaim your house from your home business.

Eventually, you will make enough money to move your business entirely out of your home and the added expense of renting office space will not be as big of a deal. Good luck!

Photo By Zach Klein

• Multi Entry Visa Cost To China – $440 (We paid $160 extra for special service so we didn’t have to drive all the way to the Embassy in San Francisco)
• Airfare To Hong Kong – $1740
• Bank Transaction fees – $45 (atm and credit card foreign transaction fee)
• Train to/from Guangzhou – $120
• HK Taxi/Metro – $140
• Meals and Incidentals – $550
• Hotel in Guangzhou – $260 (can be as high as $450/day) for a 5 star hotel
• Hotels in Hong Kong (approx $300/day) for a 5 star hotel

Now you could easily find places to stay in Hong Kong and China for far less money but my wife and I like to treat ourselves when we travel. For this particular trip, we did not have to pay for any hotel fees in Hong Kong because we crashed with a friend, but in general hotels are especially expensive during the trade show months.

For my wife and I, the trip was all about saving time and enjoying a tax deductible vacation in Asia. In general, you can always forgo trade shows altogether and contact potential vendors individually through services like Alibaba.com and GlobalSources.net but in most cases you can’t see their entire portfolio online. If you wish to obtain samples, often times there are long lead times (on the order of months) just to see an actual product. As you can imagine, this back and forth communication can be frustrating and take a good amount of time and effort.

The other thing that my wife and I have discovered is that Asian vendors are less likely to pull any shenanigans once you have met with them face to face and have developed a personal relationship. What do I mean by shenanigans exactly? Let’s just say that some vendors will test you to see what they can get away with. Since they are all the way across the world in Asia, there is very little that you can do if you get delivered junk from their factories. Below are some bad experiences we had with our Asian vendors when we first started out. Since we primarily purchase linens, all of the stories below involve textile factories.

Irregularly Shaped Merchandise

I still remember the first shipment of handkerchiefs that my wife and I received from Asia. It was a very small order (on the order of 20 dozen or so hankies), and when we busted open the package, we were extremely happy with the quality of the product. The handkerchiefs were carefully made, soft, and they pretty much arrived pressed and ready to sell out of the box.

We had read horror stories about importing goods from Asia, and felt extremely lucky to have found a quality vendor on our first try. Everything was fantastic until we placed our second order.

The second batch was a disaster. The quality and worksmanship of the first order was nowhere to be found. While the hankies were shipped to us in packs of a dozen, only the top 5 or 6 hankies of each dozen were pristine and the remaining product was crap. While these handkerchiefs were supposed to be square, 6 out of every 12 hankies were either rectangular or some weird trapezoidal shape.

When we complained over email, the vendor told us that it was because we had not ironed the fabric completely flat and that fabric stretching could account for a slightly rectangular shape. What complete and utter BS! The hankies we received weren’t even close to being square. A hanky that was supposed to be 13 by 13 sometimes ended up being 15 by 11. There’s no way in hell that you could stretch a cotton piece of fabric 2-3 inches by ironing it improperly. What pissed us off even more was that it seemed as though these vendors tried to hide bad and irregular product by mixing it in with the good on purpose hoping that we wouldn’t notice.

What’s worse was that since the quality of our first order was so good, we didn’t even bother going through the product before shipping it out to customers. As a result, we received a lot of angry customers and had to give out a bunch of refunds.

Stains In the Fabric

It was only after repeated complaints about the irregular shaped fabric did the quality slowly start improving. While the workmanship was not as good as the first batch, we started ordering larger quantities and were told to expect some degree of irregularity since the hankies were all hand made. Fine! Despite the defects, we were still making a decent profit.

No sooner did we think that everything was all good again, we started noticing small stains in the fabric of select handkerchief styles. Nothing large per se, but if you looked at some of the hankies very carefully, you would notice small dots and sometimes small lines in the fabric. Naturally, these stains were unacceptable. Since we were selling to would be brides, all of our merchandise needed to be perfect or close to perfect.

When we pointed the imperfections out to our vendors over email, they mentioned that all of those dots could be easily washed away by laundering the hankies. The catch-22 here was that once the hankies were laundered, they could no longer be sold as new. Just for the sake of argument, we threw some of the stained hankies into the wash, but none of the stains ever did come out. Thus, we were stuck with a batch of stained and unsellable goods.

Crispy Fabric

After being shipped crap a few more times, we ended up dropping that first vendor and found another one through a global sourcing website. This time, we made sure to emphasize that we did not want any stains or irregularly shaped fabric. And the vendor reassured us that we would not have these problems with his factories.

He turned out to be correct. The hankies arrived perfectly square and stain free, but the fabric felt like crap. Instead of a soft and delicate handkerchief, the hankies were thin, crispy and had the consistency of paper. ARGH!!!

Even though the vendor told us that everything was 100% cotton, there’s no way in hell that cotton could feel so coarse. I suspect that to save money, they used a mixture of polyester along with the cotton or something along those lines. In short, the hankies we received were mostly unsellable and we had to scrap most of the batch.

The Resolution

After having a few bad experiences with our initial vendors, my wife and I ultimately decided to hop on a plane to visit and find new potential vendors in person in Hong Kong and in China. We even decided to visit our first vendor just to checkout his facilities.

After visiting our vendors in person, the quality of our goods drastically improved. In fact, after speaking with our first crappy vendor and showing him samples of the irregular hankies that he sent us, he promised to go through each shipment by hand before shipping it out to our office.

I can’t really explain the result, but after physically meeting with our vendors, both the quality and speed of fulfillment of our orders drastically improved. After meeting face to face, our vendors also became more receptive to our complaints. This is why I always emphasize in my articles the importance of personally meeting with the people you do business with, especially in Asia. It’s all about the relationships. So is it worth several thousand dollars to travel to China and meet with hundreds of vendors face to face all at once? Definitely. There is no doubt in my mind.

The Canton Fair

For all of you who are unfamiliar with the Canton Import and Export Fair, it’s held in GuangZhou, China twice a year (Usually during the end of May and the beginning of November) and is probably the largest show you will ever attend in your lifetime. It easily trumps any trade show in the US and is so large that it is split into 3 phases.

The first phase covers electronics, the second phase covers consumer goods, gifts and home decor and the third phase covers textiles, garments, shoes and office supplies. In order to give you an idea of the magnitude of the fairgrounds, picture the largest trade show that you’ve ever been to and multiply that by 10-20.

Yes, it’s that large. The phase that my wife and I attended (Phase 3) was the smallest of the 3 but the exhibition area covered almost 125 football fields worth of area by my rough estimates (The largest phase occupies over 200 football fields). The fair is so large that it’s impossible to cover the entire thing so you definitely have to have an idea of what areas you want to hit before you attend. You can’t just aimlessly wander and possibly hope to find what you are looking for.

The best part of the fair is that it’s a place where vendors and factory owners from all over China and Asia congregate all at once and you can easily find a vendor that either carries what you want to sell or can make what you want to sell.

If you’ve ever tried to find Chinese vendors or factories in the past, you probably know how difficult it is. In fact, it’s next to impossible to find a good vendor online or through a service like Alibaba.com. There are just too many companies to go through and it’s hard to gauge the quality of the goods being offered by just looking at photos online. That, and there’s often a language and cultural barrier which makes things even more difficult.

What’s awesome about the Canton Fair is that all of the vendors bring in samples of what they make and sell direct from their factories so you can get a sampling of all the merchandise first hand before committing to a purchase. Most of the vendors deal with US or European companies on a regular basis so they have the experience and infrastructure to export products to wherever you live. The other good news is that a good number of these vendors speak English…not good English mind you, but enough to communicate at a basic level. If you require an interpreter, you can easily hire one for a very reasonable price (100 yuan = 15 bucks for the day).

What To Expect

The only downside of the fair is that since you are dealing with Chinese factories directly, you have to buy in large quantities. Therefore if you are just starting out with your online store or just testing the waters, the Canton trade show is probably not for you.

Just as an example, let’s say you want to buy stuffed animals or baby blankets to sell in the United States. The merchandise might only cost you a dollar a piece to have made but you would have to commit to buying a minimum run of 1000 blankets per style/color. Other vendors might require you to purchase 10-20K worth of goods as a minimum but allow you mix and match.

In any case, the minimum order is generally on the higher end and the initial cash outlay is usually on the order of tens of thousands of dollars. The good news is that since you are buying direct from the factory, the prices are extremely inexpensive. When it comes to electronics, consumer goods, textiles and garments, nothing beats Chinese factory prices. Buying a t-shirt over here is in the 40-50 cent range (depending on quality). If you can and are willing to spend more money up front, you can find goods to sell at extremely attractive price points which will have a positive effect on your profitability when you sell them back in the United States.

The Canton Import and Export Fair is also an excellent place to find factories to produce items of your own design. Let’s say you want to create your own line of handbags. You can easily find a vendor to mass produce what you want to sell by showing them patterns of your design.

It’s All About Establishing Relationships

Going to a trade show like the Canton Fair allows you to have face to face contact with a large number of vendors and to establish relationships with potential vendors early on. This is invaluable! In just one short trip, you can easily meet hundreds of factory owners that are all congregated in one gigantic exhibition hall. Most of the vendors who attend the tradeshows do not have a web presence so it’s next to impossible to find them otherwise.

It can be intimidating to travel to China to attend the fair but it’s well worth your time if you are serious about sourcing your products at rock bottom prices. If you are just starting out, I recommend that you start with a dropshipping and/or a light bulk wholesale vendor that can be found with a service like WorldWide Brands. Then once you are profitable and are used to running an online store, you can attend the Canton Trade Fair and have your products created factory direct at lower prices.

To make travelling arrangements as simple as possible, I also recommend that you stay in Hong Kong(where most people speak english) and then take a train (2 hours) directly in GuangZhou, China to attend the show.

Questions

If any of you would like to attend the fair and need travel advice, feel free to drop me a line. I literally just went last week so all of the travel arrangements are still fresh in my mind.

Tradeshows Are A Great Place To Find Products To Sell

Tradeshows like the SF Gift Fair are a great place to meet vendors because hundreds of companies congregate under the same roof for several days. And in that span, you can talk to many vendors and discover new products to sell without having to travel more than 500 ft.

Most vendors that attend these trade shows bring along a large collection of products. As a result, instead of having to go back and forth requesting product samples by mail, you can touch and feel all of the products first hand at their booth. This saves a ton of time with product sourcing and you can get a good idea of product quality as well.

Are You Getting The Best Price?

However, the big problem with vendors at these trade shows is distinguishing the real wholesalers from the middle men. Now there are many vendors out there who call themselves wholesalers but the term wholesale can be very misleading. My definition of a “real wholesaler” is a distributor that is one step removed from the manufacturer.

If you’ve never been to a wholesale tradeshow before, almost every company that you meet will give you a price list which consists of both a wholesale and a retail price. The retail price is the “suggested retail price” and is usually around the ball park of 2X the wholesale price. The problem is that unless you have some context for the pricing of the goods you are buying, you will have no idea whether the wholesale prices you are getting are the absolute lowest. After all, the “retail price” is usually just a bogus number that you can’t really expect to charge.

For example, there were several vendors at this show that sold the same or similar products that we offer in our online store. However, the wholesale pricing that they were offering was a good 2-3X higher than what we could get directly from our vendors in Asia. In some extreme cases, the markup was upwards of 8-10X. But if you looked at their retail pricing, it didn’t appear to be a bad deal. That is why you have to be extra careful and do your homework before making a bulk purchase.

Finding Real Distributors

Distinguishing the middle men from the real distributors takes a lot of time which is why I always recommend using a service like WorldWide Brands in addition to attending tradeshows. Companies like Worldwide Brands help you screen out the little guys and provide useful search facilities for real distributors. You can think of them like a “Google” for true wholesalers of goods.

A good strategy for sourcing product is to attend wholesale tradeshows to obtain ideas for what you want to sell and then use Worldwide Brands to track down a true distributor for that product. While my wife and I didn’t find any new vendors for our online store at the SF Gift Fair, we did come away with a ton of new product ideas.

Some Other Observations

This may only be true with my particular niche, but I found it extremely odd that many of the vendors on the show floor did not have their own websites. And those that did had really crappy ones.

We even met one company that not only didn’t have a website but didn’t accept credit cards and didn’t have an email address either! All business was conducted via phone or fax and you had to manually request samples of new product before ordering. But despite still living in the stone ages, this company had been around since 1927!

The key takeaway here is that even though there are a ton of ecommerce companies out there, I strongly believe that technology has still not caught on with the majority of shop owners. While this trade show only represents a small sampling of the US, the fact that we saw many vendors completely neglect their online presence indicates to me that those with web skills or web initiatives have a clear opportunity here.

Start an online business online now! As my wife and I walked the show floor, we saw many companies doing business the old way that could easily be done better online. Do your research when sourcing your products, avoid the middlemen, throw up a web store and I guarantee that you’ll rock these dinosaurs over time.

Photo By Youssef Hanna

Don’t be shy! Unfortunately, you can never be sure what to expect when calling a vendor for the first time. Are your order quantities going to be too small? Are their prices going to be too high? Are they going to give you the time of day?

The most important thing is to be prepared and to speak with confidence. Your vendors are busy people and the worst thing that you can possibly do is to act clueless on the phone. Here are a list of questions and strategies when dealing with vendors for the first time even if you don’t have a website.

Practice On Some Vendors You Don’t Care About

As you go down your list of vendors, you need to realize that the majority of these vendors are not going to be working with you for some reason or another. And before you start contacting them, you need to prioritize your list. Which vendors do you absolutely want to land? Which ones do you care less about?

Especially if this is your first time sourcing product, you should do some practice runs on vendors that you don’t really care about until you have refined your pitch. I remember sounding like a bumbling idiot the first time I contacted one of our Asian vendors and that was over email! I had no idea what the proper procedure was nor did I even know how to make a payment overseas. I was also unfamiliar with the terminology when it came to shipping and importing goods from abroad.

In any case, it took me a few iterations and a few lost vendors before I fully understood the lingo. In my case, my ignorance drove away a few key vendors early on that I really wanted to work with. Don’t make that same mistake!

What Questions Should I Ask?

Before you begin refining your pitch, you should make sure that you know ahead of time which products you want to carry as well as all of the details and configurations the product comes in. Ideally, you want to come across as someone who knows what they want already and are ready to buy if the vendor is a good fit. The more prepared you are, the more likely that a vendor will take you seriously and be responsive.

Realistically, the most important questions that you need to ask are the following.

• What Is The Price? – Wholesale vendors are never going to publish their prices. Instead, they usually have different pricing structures depending on the client. While my experience lies primarily with Asian vendors, I’ve found that prices tend to be a bit higher when you place your first order. But over time as you establish yourself as a reliable client, you can start asking for price breaks on your highest volume products.
• What Are The Lead Times? – I remember early on, I made the boneheaded mistake of placing an order without clarifying what the lead times were. When the vendor said 2-4, I assumed that he meant 2-4 days. In reality though, he meant 2-4 months! Depending on the volumes that you are interested in, make sure that you find out how quickly the vendor can actually ship you product once you place the order.
• What Is The Minimum Purchase? – Once of my most famous blunders was placing an order for 100 handkerchiefs when that was nowhere near what the minimum order was. When I said 100, the vendor assumed 100 dozen! Needless to say that I was surprised when I received the invoice. Get this out of the way first, otherwise finding out the price is pointless.
• How Do You Ship and What Are The Payment Terms? – Most vendors will offer both air and sea delivery depending on the quantity. Make sure you understand all of the shipping and payment lingo before you contact your first vendor especially if the vendor is overseas. In addition, make sure that the payment terms are what you are expecting. Some Asian vendors require some amount of payment up front whereas others will let you pay once the order has shipped

People Skills 101

Whenever I contact any vendor for the first time, I try and gauge their personality and stress level right away. In fact, I usually allow them to do most of the talking and adjust my level of conversation accordingly. For example, if the vendor seems in hurry, then I get to the point right away. If the vendor wants to shoot the breeze, then I make small talk. Ultimately, you are going to be establishing a long term working relationship with your vendors so you need to be tactful and respectful.

These days, our relationship with our vendors is so good that they are willing to ship us thousands of dollars worth of product in advance without us even paying a deposit for it up front. Likewise, our vendors are less likely to ship us shoddy product now that they understand what our product standards are.

If all goes well, your vendor won’t even care if you have a website or an established business. As long as you can pay for your products and you are dependable, that is all the vendor cares about.

Photo by Star5112

Hi,
Just want to say thanks for the extensive information you provide on your site. I have found it quite valuable and encouraging.

I’m just starting out with my new venture and was hoping you could help? I have decided on the kind of product I would like to work with but I’ve come to a grinding halt at the thought of contacting my supplier. The kind of things that run through my mind are:
1. How do I approach my supplier e.g. what kind opening letter/email should I write?
2. Should I have decided on a company name and have my website up and running before I make contact with my supplier?
3. How do I deal with the question – How long have you been in business for?

So, I was hoping you could shed some light on the above and whether you have any samples of letters/emails you may have used in the begging when first making contact with your potential new supplier?

Be Up Front And Honest

The first point I want to emphasize is that your relationship with your vendor is going to be based on mutual trust and honestly so it is important not to exaggerate your current state of affairs. If you don’t have a website up yet, it’s not a big deal. If you haven’t been in business that long, don’t sweat it. Every successful business has to start from somewhere.

The important thing to realize is that there are a wide variety of vendors who cater to different classes of customers. And it’s essential to figure out if you and your vendor are a good match up front so that you don’t waste any time. For example for our wedding linens store, we are still considered a small fry when it comes to our purchasing volume so it wouldn’t make sense for us to contact a large linen manufacturer directly.

When I contact a vendor for the first time, I always prefer contacting them by phone rather than email. If possible, I try to arrange a face to face meeting, but of course this isn’t always possible. After the initial phone conversation, I always follow up with an email.

In general, I don’t use standard form letters because I purposely write my correspondence in a more personal tone based on elements derived from the initial phone conversation. Remember, you are dealing with real people here and you are trying to develop a relationship. I try to treat all of my vendors like I would treat an old friend or coworker.

Make An Educated Guess About Your Volumes

Assuming that you’ve already determined that the vendor you are contacting carries items that you would like to sell, I usually try to address the minimum purchase or volume question first.

Before you contact your vendor, you should already have an idea of how much you are willing to buy and how often. While this is a difficult question to answer if you don’t have any customers, the reality is that you need to make an educated guess and not be wishy washy about it. Make sure you get this out of the way first.

One time my wife and I spent a few hours talking to vendor only to discover at the end that their minimum purchase was something like 50k worth of merchandise. There are different vendors and distributors that deal with different classes of customers. Make sure that you are dealing with the right one that fits your business.

Once you’ve determined that your purchasing power is a match, the next question to ask is how soon the items can be sent and how they are shipped. If you are looking to carry your own inventory, you should ask about the lead times. If you are dropshipping, you should ask about how soon the products are shipped once an order is placed. You should bring up the payment terms as well.

Here are some other questions we like to ask. Depending on what you are trying to sell, you probably need to address more specific issues related to your niche.

• How long have you been in business?
• How large is your facility?
• What products do you specialize in?
• Who are some of your existing customers?
• How do you deal with product quality issues? Is there an easy way to return defective product?
• Can you provide product pictures?
• Can you provide samples?
• How do you prefer to communicate—phone, email etc…
• How easy is it to contact you? Do you return phone calls and emails promptly?
• Are you willing to do custom manufacturing of designs given sufficient quantities?

Since we deal primarily with overseas vendors, we usually have to pay a small upfront fee to cover the cost of materials and then pay the remaining balance once our products are ready to ship. Our lead times are typically 2-4 months.

Have Your Business License Ready

If you are dealing with vendors in the US, you may be asked for your business license. Having your business license ready to go allows you to purchase your supplies tax free. It also demonstrates to your vendor that you actually have or are trying to start a real business.

If you would rather not deal with any of the legal stuff first, that is understandable too. But just keep in mind that you will need to get your business license eventually and it usually costs under 100 dollars to obtain. Incidentally, if you are dealing with foreign vendors or suppliers, showing them that you have a business license isn’t necessary.

Do I Need A Website First?

There’s no real point in throwing up a website if it’s not ready. If you tell your vendor about your website and it’s empty or incomplete, then they may not take you seriously.

Once again, it’s best to be upfront and honest. You don’t necessarily have to say that you are just starting out. But it’s important to convey that you would like to feature their products for your business. You can always throw up a website later.

Vendors Are Just Regular People

If you feel intimidated by contacting your vendors, you need to remember that they are just people running a business and that they are in the same boat as you. It all boils down to establishing a good business relationship and finding the right fit. If a vendor is rude or doesn’t give you the time of day, then they are not the right fit for your small business.

Sure you can pretend to be larger than you are to get your foot in the door but the truth will come out eventually when you can’t afford the minimum buy. I can guarantee that once you find the right vendor, you will not feel intimidated at all.

As part of running our online store, we get requests from businesses all of the time that want to carry or purchase our items wholesale or in bulk. Some of these people greatly exaggerate their volumes and some of them pretend to be much larger than they really are to get discounts. In almost all cases, we do our due diligence and find out the truth one way or another.

The bottom line is that I’d much rather work with someone who is upfront and straightforward. You are trying to build a business relationship here, not just buy products. You need to know that you can depend on your vendor to deliver and they need to know that you will pay on time. The rest will work itself out.

Sorting Out The Various Vendors

Initially, my wife and I found it a major pain to find vendors who were willing to ship in the low volumes that we were comfortable with when we first started out. And we wasted a bunch of time cold calling vendors and sorting them out through trial and error.

If you ever find yourself getting fed up with the whole product sourcing process, keep in mind that there are services like Worldwide Brands that can save you time by sorting and categorizing a large database of vendors for you. You still have to develop the necessary business relationships but at least you won’t waste time contacting vendors who are out of your league. Whatever happens, don’t be intimidated. Rest assured that there exists a vendor out there that will fit your business needs.

Photo by Ronnie44052

What To Expect When Importing

• Long Lead Times – Most overseas vendors won’t even begin making your products until you actually place an order and put down a small down payment to cover the cost of materials. Depending on the nature of your items, expect to wait anywhere from one to four months to get your products manufactured. Very rarely will any vendor actually carry any significant inventory so you must plan ahead. When we order the linens for our online store, the lead times are typically 3 months long so we really have to plan ahead and anticipate demand.
• A Hefty Minimum Order – If you are ordering products to be manufactured overseas, expect to place a pretty large minimum order. Every manufacturer will have their own minimums but don’t be embarrassed to ask before ordering. If you are just starting out, take whatever you consider a large order and multiply that number by 10.
• Payment Terms – Most if not all manufacturers expect to be paid by wire transfer. Usually, you have to put down a certain amount of money upfront to cover the initial costs and then pay the balance once the items are ready to be shipped. There are escrow services available to handle payment issues, but in general, transactions go much faster when there’s mutual trust between you and your vendor. Of course, you’ll have to establish this trust over time.
• Quality control – Quality will be an issue in the beginning. In general, it will take several iterations in order for you to get your products exactly the way you want them.
• Language Barriers – Many vendors in Asia will not speak English very well. But as long as you keep your communication along the lines of email, things will go much smoother. Most vendors are able to read English much better than they can understand the spoken language.

Preparing For Your Shipment

So you’ve ordered your products and they are finally ready to be shipped to you. What now? There are two main ways to get your goods into your home country, by air and by sea.

But before you initiate your shipments, make sure you ask for the following documents from your vendor. These will be required in order to clear customs.

• A Commercial Invoice – The declared value of the items
• A Packing List – What you are importing
• A Detail Sheet – Outlines how the products are manufactured so customs can determine the duty classification
• Bill of Lading

Shipping By Air

Shipping your items by air is by far the easiest option but also the most expensive. Expect to pay between 5-6x more to ship by air versus shipping by sea.

Personally, we use DHL for all of our international air shipments. Our vendors all have accounts with DHL and shipping with them is a breeze because they take care of everything.

Basically, the vendor provides DHL with all of the materials mentioned above and then DHL will transport all of your goods directly to the address that you specify. If this is your first time importing goods from overseas, you will be contacted by customs to provide your social security card or a company id number. Just have this information handy once your goods have shipped and you are all set.

DHL will also send you a bill so that you can pay any and all duties associated with your imported goods.

Shipping By Sea

Shipping by sea is a much bigger headache but totally worth it if you are importing a large volume of goods. As mentioned before you can easily save between 5-6x off of shipping by air.

The key to accepting shipments by sea is to hire a good customs agent. This is absolutely required especially if this is your first time importing by sea. Do not try and do things on your own unless you know exactly what you are doing.

This is what the customs agent will take care of for you.

• Customs Documentation – They will take care of any and all documentation required in the entire process
• Customs Entry – They will take care of getting your goods from the port directly to your office
• Customs Duty – They will take care of calculating and billing you for any duties associated with your goods.
• Customs Single Entry Bond – You are required to buy a bond that acts as insurance with Customs in the event you should default on the customs duties. Your customs agent will take care of this for you .

Of course all of these services come at a cost. For our last shipment, we paid over 300 dollars to our agent but it was worth every penny. We got our goods through customs swiftly and without hassle.

To give you an idea of the savings, our last shipment would have cost 1600 dollars by air, but by sea it only cost us 250 + 300 = 550 dollars. Overall, we saved about 3x. The tradeoff was that it took over 3 weeks to receive our shipment as opposed 4 days by air.

Do you have additional questions? Feel free to drop me a line or check out some of my other articles on product sourcing.

• Finding Products To Sell

Photo By El Isma

I’d be willing to bet that the majority of people out there believe that buying “wholesale” magically means that they can sell their products lower than anyone else. They probably think that obtaining wholesale pricing means that they can undercut the entire market and make millions.

The truth is that the term “wholesale” is just a bunch of BS. Admittedly though, the word exudes cheapness which is why most people fall into the wholesale trap. Well here’s a dose of reality. Wholesale pricing does not guarantee profit. Here are some things to keep in mind.

You Are Not The Only One

If you were able to find your wholesaler easily, chances are a bunch of other people have as well. Even if you receive attractive prices for the products you want to sell compared to MSRP, the low barriers to entry will lead to severe pricing pressure in the marketplace.

In addition, pricing for wholesale purchases are usually tiered based on quantity. When you are just starting out, guess what? You aren’t going to be buying enough to get beyond the first tier so you can forget about getting better pricing than your more established competitors.

Wholesale Prices Aren’t Always The Lowest

When my wife and I were shopping for vendors for our online store, every single person we talked to claimed to a be a wholesaler. But the price ranges were all across the board. Believe it or not, some of these wholesalers had prices that were more expensive than if I just went to Walmart.

How can that be the case? Shouldn’t wholesalers offer the most competitive prices? The fact is there are many retailers out there who offer only a few products, buy in extreme bulk and concentrate on volume. In many cases, wholesalers are just small businesses that don’t have the capital to purchase large enough quantities to get the best pricing across the board.

The reality is that anyone out there can call themselves a wholesaler as long as they do the paperwork. There aren’t any guidelines or certifications required so the term “wholesale” can mean a huge range of prices.

Take The Road Less Traveled

If everyone can obtain “wholesale” pricing, things look pretty bleak in terms of starting your own online retail business right? This is absolutely true if you choose to sell easily obtainable or highly competitive products.

For this exact reason, I would never sell electronic goods. Not only is this market extremely competitive, but your products have a time element involved as well. If your electronics go obsolete, you may never be able to liquidate your inventory.

In highly competitive markets, your products are susceptible to price erosion as well. Since you’re probably getting similar pricing as everyone else for identical products, a price war is likely to erupt which will erode your margins.

Moral of the story: Pick the market less traveled. Choose a small niche and sell products that are not readily available. In a previous article entitled “How To Find Vendors For Your Online Store“, I recommend importing products from outside the country to obtain unique products at superior prices. If you can find products that aren’t readily available in your home country, you should have no problems making a decent profit.

It’s Not Always About The Lowest Price

Let’s face it. No matter which market you choose to pursue, there are always going to be competitors. If there aren’t any, then chances are your market isn’t even worth pursuing. Most people who want to open a store (myself included) often balk during the research phase because they do a Google search only to find several competitors already in their market space.

Often times, some of these competitors offer rock bottom pricing making you second guess whether you can make a decent profit. The reality is that there’s more to the success of your store than just the lowest price. It all starts by establishing your unique selling proposition. What makes your store special? How can you set yourself apart from the rest?

Our wedding linens store offers similar products to over a dozen other websites and we charge more money for some of these products. And guess what? The stuff still sells. Not everyone is going to make purchasing decisions strictly on price. If the market you have selected is large enough, you will still make sales if you can make your business stand out. With our store, we pride ourselves on our customer service and the useful information we provide on our website.

Do you offer superior customer service? Do you offer higher quality items? Don’t hesitate just because you see a bunch of lowball competitors. If you think you can provide value, your business idea may still be a viable one.

Can You Face The Big Boys?

It can be extremely frustrating to go up against large retail giants, so don’t. Don’t go head to head against the behemoths because you will definitely lose. Instead, offer items that aren’t covered by the large retailers. Large companies have to determine whether it’s worth it to carry a certain product and factor in all of the logistics with physically stocking and transporting items to their stores.

Often times, they need to sell an enormous (to you and I that is) amount of product to make it worthwhile. But for a small business, if you can find that product that is not worth selling for a large company and sell it in your store, you will be well on your way to making some serious money.