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Today I’ve got my buddy Dave Bryant on the show. Dave and I met when he randomly reached out to me via email and we’ve kept in touch ever since. And what’s cool is that we finally met face to face at the Ecommerce Fuel conference last year.
Dave runs several online stores selling boat equipment but I think his most successful site sells boat anchors of all things:) Big and heavy boat anchors that he imports from China. Talk about niche.
Dave also runs the popular blog ChineseImporting.com where he teaches others how to import goods from China. He’s been importing since age 16, he’s written a few books about the topic and what’s cool is he works with his wife just like me.
Today, we are going to discuss his businesses and some more in depth topics on importing that go way beyond your typical find a product to sell on Alibaba stuff that you’ve heard in the past.
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What You’ll Learn
- How Dave got into the boat anchor business.
- Why Dave decided to sell the heaviest, most unwieldy items possible.
- Where Dave finds his vendors.
- How to find Chinese vendors outside of Alibaba.
- Which sourcing services Dave recommends.
- Dave’s opinion on Alibaba vs Global Sources vs Canton Fair vs using Panjiva and Import Genius.
Other Resources And Books
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Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.
Steve: Welcome to the My Wife Quit Her Job Podcast, today I have got my buddy Dave Bryant on the show. Now I’m actually not 100% sure how we met Dave, but he randomly reached out to me one day and we’ve kept in touch ever since. And we finally were able to meet face to face at the Ecommerce Fuel conference last year.
Now David runs several online stores selling boat equipment, but I think the biggest business that he has sells boat anchors of all things. Big and heavy boat anchors that he imports from China, so that’s pretty niche as far as niches go. Now David also runs the popular blog Chineseimporting.com where he teaches others how to import goods from China, he’s been doing this since age 16.
He’s even written a couple of books about the topic, and what’s also cool is that he works with his wife just like I do. Today we are going to discuss his businesses and some more in depth topics on importing that kind of go beyond your typical find the products on Alibaba stuff that you’ve probably heard on other podcasts. With that welcome to the show Dave, how are you doing today man?
Dave: Good and I’ll clarify this because my wife is on maternity leave and the government of Canada would not like to hear about her working for me. She does not currently work for me, maybe in the future.
Steve: Everybody works for their wife Dave; it’s cool to admit it.
Dave: That is true, I only work for her, but she does not work for me.
Steve: I have always been curious how does one get into boat anchors of all things, like they are the heaviest most unwieldy things that you can possibly sell in my mind?
Dave: The lucrative world of boat anchors, so it’s kind of funny, way back when I was in university I was kind of a globe trotter, and I was always in the back [inaudible 00:03:53] crazy parts of the world. One of the things in my bucket list is — one of the countries to visit was North Korea, and the only way to get to North Korea is through China. Believe it or not there is no direct flight from Canada to North Korea.
I had to go through China to North Korea. I was – decided obviously while I’m in China I might as well travel around a little bit. And while I was there I decided to visit a couple of trade shows. I had always worked — I had worked with a family friend working for his import company actually. He was selling boat anchors himself. I was over there and I kind of split off with him, I didn’t talk to for a couple of years.
I was kind of familiar with the business itself, so I attended a trade show while I was in China, a boat trade show. I met a supplier there and I kind of hit it off with the supplier and he had this one product that I was really interested in, and it was boat anchors. I asked him if I could bring one of these samples back with me to Canada and he said sure no problem.
I took this boat anchor and there is actually a couple of other products with me, and I had this huge box of products I carried around me for the next 3 weeks all throughout Asia. And I was like going on trains and I was going on buses, and I was going on…
Steve: With the boat anchor?
Dave: With the boat anchor and actually people I’m sure said all things. Anyways long story short I made my way back to Canada somehow all the products arrived safe and sound. I put them on eBay even though I got the products for free; I knew the cost was about $50, sold them for I think around 200. Of course I went back to the supplier, I asked him, hey can I can buy some more products off you, of course he agreed, he sent me some more products, again had a similar success. And fast forward about 7 years later and the supplier to this day is actually our largest supplier.
Steve: Amazing, so wait you sold things on eBay, did you have the intention of creating this business at the time or no, you were just testing?
Dave: I mean it was a test to me. I knew like I said, I had worked with a friend, our family friend way back when he was actually doing something similar to boat anchors himself. And I kind of split off from him, and he had gone on his own way doing different things. I was kind of testing the water more than anything.
Steve: Do you own a boat?
Dave: I do not.
Steve: You do not own a boat, but you went to — okay you went to a boating…
Dave: My family has been in the boating their entire life, so I think that’s probably part of the reason why I don’t own a boat myself. I have grown sick of the [inaudible 00:06:14] over the years. It’s a great clientele to work with, but by myself, or I myself, no real interest in boats.
Steve: Okay and then you are based in Canada, right?
Dave: I am.
Steve: Okay, so for the listeners what’s kind of interesting about Dave and I get a lot of questions about this. He is in Canada, but he actually makes most of his sales in the United States, is that right?
Dave: Yes, absolutely true.
Steve: Do you ship to any other countries besides the US?
Dave: The way we work is we don’t — we actually don’t inventory anything in Canada really, everything is inventoried in the US. We ship anywhere in the world like pretty much any congress country. But even if we are shipping something in Canada, we actually ship from the US to Canada. We sell something to the UK the same thing going from the US to UK.
Steve: That implies that all of your goods when you make a shipment goes straight to the US and you don’t actually see it or?
Dave: It’s kind of a backwards way to do; we do it through the port of Vancouver and what they call your shipping in bond to the US. Meaning that it comes through Canada, we don’t pay any duties or taxes on it. It pays all the US duties and taxes, and then it goes directly to the warehouse in the US. But we never touch — we never put our fingers on it.
Steve: Okay so wow, okay I was going to talk about this later, but let’s try to talk about it now, what do you do about quality control?
Dave: We work with– I do travel to China once or twice a year kind of do a little bit of QA there. It’s a little bit tough to do it if you are not permanently situated in China as you might have experience with. Other than that we’ll use a third party inspection agency, pay $300 or $400, have them check it out kind of according to our checklist.
Then once it arrives in the US, then obviously we’ll have our warehouse down there do some QA there, take the [inaudible 00:08:00] we need it, and just kind of get an idea of the overall I guess quality of the products. And what was I going to say here? Yeah, we have such long lasting relationships with our suppliers where we haven’t really had any huge quality control issues, and when it has come up they’ve been pretty good at addressing it after the buck.
Steve: Because you told me earlier that you sell over 300 items, 300 skews, is that right?
Dave: Yeah, it’s about 300 skews. A lot of those are variations, so I would say it’s closer to probably 75 if you get rid of size and color variations.
Steve: Okay, and then for each one of these items you have a separate quality control checklist for each one of these?
Dave: I mean certain things you don’t necessarily need to have the stringent quality control checklist. So something like an anchor I mean more or less there is not a lot that can go wrong in an anchor, some of the…
Dave: Some of the other things obviously yeah, you do need to– we have a certain checklist that we go through for example something like a rope. We’ll have a checklist, and basically asking them if it’s supposed to be happening throughout, we’ll have the third party inspecting agency or the supplier measure it, physically measure it to make sure it’s actually happened. We have a whole bunch of different criteria we use for all of the different products that we just kind of have either the supplier check, or have a third party inspection agency check, or have a warehouse checked after its been received.
Steve: In terms of sales you have your own website and you are also selling on Amazon, but if someone places an order on your site do you — like how does the communication go to your warehouse to — the shipment is from the US, right?
Dave: Yeah, so if somebody places an order on the website, it goes through our automatic — our auto management software. We have an order taker here, she basically just checks it over and make sure it’s all good, and then she emails it down to the warehouse and they ship it out. It’s kind of, it’s an old school way of doing it with this email and back and forth just a PDF invoices.
Dave: We are trying to get a little bit more automated, but a lot of times when you are working with these third party fulfillment companies especially some of the smaller ones, their automation schemes aren’t exactly up to today’s standards, so they prefer just the old PDF invoices even faxing them sometimes.
Steve: What about returns? Do people return anchors?
Dave: They do believe it or not, a lot of times they are on their boat. So it’s a pretty low return item, but people do return it like anything. A lot of gifts that people return and returns are a bit of a pain in the butt just for the fact that it’s hard without us really having any eyes and ears on the ground to handle returns.
But our third party fulfillment company that we work with, I kind of consider them almost one of the girls there, almost one of our employees because she’s been handling our orders for God almost five years plus now. She knows the products pretty much inside out, she can decide if it can be resold, it should be disposed off or whatever.
Steve: If it can’t be resold you just junk it?
Dave: Yeah pretty much. Well at times a lot of the products that we deal with are metals, so stainless steel items and they can actually be scrapped, and we can actually get a little bit of money back, I mean from when they are scrapped.
Steve: Interesting, so you said you sell over 300 items maybe 70 unique items, and you source all these from China, right?
Dave: Yeah, most of them are coming from China. We work with a few local distributors and manufactures in the US, a couple companies in Taiwan and even the guy in Canada too, but 90% of our sales are coming from Chinese made products.
Steve: I want to talk a little bit about kind of how you found these vendors. Now everyone who kind of listens to podcast and has been doing this, everyone talked about Alibaba, but let’s talk about some of the other things outside of Alibaba today.
Dave: Yeah, so I mean Alibaba is one of those things, it’s — You can’t really escape. And it’s like if you want to buy something online even if you don’t actually buy on Amazon, at some point they are probably going to be on the Amazon website. The same thing if you are looking for a product at some point you are probably going to come across Alibaba. But Alibaba is probably not the most ideal place to find a supplier, basically 99% of importers, that’s the first and only they go to is Alibaba.
If you find a supplier on Alibaba and a really good product and you are selling a ton of them on Amazon, somebody at some point in time is going to come along and see that, hey Dave is selling all these products, I want to buy the same thing. I’m going to go to Alibaba, try to find the supplier that Dave is using and just import the exact same product from the exact same supplier. If you can find the supplier not advertised on Alibaba, you’ve basically cut down 99% of your competition.
Steve: Good point, I think you are pretty safe with anchors though by the way Dave.
Dave: You would be surprised Steve.
Steve: Really, okay?
Dave: I think the nature of kind of the whole private labeling boundary now; I think there is competition in absolutely every single niche. Now obviously some niches are well guarded than others, but every niche out there is you have some degree of competition.
Steve: What’s funny is we never had used Alibaba until relatively recently I guess within the last few years, because we just always went to trade shows to find our vendors.
Dave: Yeah, and that’s how I found our top supplier like I said we meet the trade show too, and the great thing is they don’t advertising on Alibaba, so…
Steve: Yeah same with ours, none of the vendors that we use actually today pretty much they are not advertising on Alibaba anymore.
Dave: Yeah absolutely and it’s kind of weird, not every supplier wants to advertise on Alibaba. Alibaba is kind of like internet dating for Chinese suppliers, and if you ever talked to a girl that’s on an internet dating site, they get dozens of enquires a day, people messaging them all types of creepers and only a small selection of actually serious incredible guys.
For Chinese suppliers I get the impression it’s kind of the same way with Alibaba where they might get dozens of enquiries a day, and only a really small fraction of that actually turn in to sales. And the sales that they do get tend to be kind of picky really cheap buyers who are typically ordering pretty small orders.
Steve: Right, yeah, actually I asked our vendor the last time we were there why they weren’t on Alibaba. And they said that — in so many words that they didn’t want to deal with the riffraff.
Dave: Yeah, I think that’s absolutely right, but I mean it’s a lot of work I think for these guys actually managing all the leads that they get on Alibaba, and some which are obviously not the greatest quality.
Steve: Do you use Alibaba for any of your stuff?
Dave: Yeah, I mean again like I said, like Amazon if you want to buy something online you kind of go to Amazon. If you want to find a supplier you kind of go to Alibaba, and I would say about half of our suppliers I found through Alibaba. Those products don’t make up a huge percentage of our sales, but they are a lot of our recent products that aren’t necessarily a huge part of our sales yeah, we use Alibaba to find source.
Steve: In general do you go there first, or do you hit some of the other places we are going to talk about here first?
Dave: I mean it depends, if there is a product which I think that — I just know that our customers are going to buy it, they going to buy an anchor and they need this product as an ad on, and they really not that pretty sensitive, absolutely I go to Alibaba and just try to find it in the lowest price there and import it.
If it’s a product that I really want to be kind of considerable portion of our business which I — yeah which is not going to be an ad on or an accessory product, then I’ll try to reach out to some of our current suppliers, or like I say I’ll use a couple of the other tools available which I don’t know if you want to get to now or later to try to find a supplier.
Steve: Okay, well let’s talk about the way that you guys find vendors right now first, so outside of Alibaba.
Dave: Yeah, so first thing we do is go to trade shows. And every year I try to go over there and I try to attend a big one for instance obviously boat trade shows. Like I said the great thing with the trade shows is that you will find a lot of suppliers not advertising on Alibaba. The great thing with China is a lot of people know about Canton Fair. The Canton Fair is great, that’s a huge massive trade show, it takes place twice a year in Guangzhou, China.
The only problem with the Canton Fair is that it tends to be just such a huge fair and it has a little bit of everything, but it doesn’t really specialize in anything. In China there is a specialized trade show for absolutely every single niche that you can think of. Going to these specialized trades shows, there’s really a network; you’ll find some of the best suppliers for your products. Again the Canton Fair is an okay place to start, but there are a lot of trade shows outside of the Canton Fair.
Steve: How did you find these trade shows?
Dave: I believe Chinaexhibiton.com; I just goggled China trade shows, it has a huge list of all the trade shows. And again once you’ve kind of learn your niche that you are in, you just kind of get a feel for what the most popular trade shows are. It’s kind of a — it’s a long process to learn a niche, but once you do, you do this just intuitively through speaking to various people. You kind of know the big trade shows.
Steve: What is your process from when you get to the trade show, like what preparation do you do prior to going?
Dave: Ideally I’ll go through the website of the trade show, go through the supplier list, and kind of try to get a feel for anyone’s that I would like to speak to in particular. So go through — most trade shows will have exhibition or exhibitor list, go through those exhibitors, kind of browse their website, and get a feel for who is there. Make kind of a hit list for people that I want to talk to, and then when I’m there talk to them.
Then at the same time while I’m there maybe some other companies catch my eye which I never even knew about browsing the exhibitor list and talk to them. And more or less so I do kind of when I go to these trade shows, I want to kind of have an idea of various products I am interested in importing. I don’t really go there and get surprised by new products that I even never even thought about.
Steve: Is there a lot of overlap between these companies, do they go to both that fair and the Canton Fair?
Dave: Most of our suppliers especially in our niche they don’t go to the Canton Fair.
Steve: Okay, probably because you are in boating, right?
Dave: Yeah, I mean there is a boating section in the Canton Fair. There is a boating section at the Canton Fair, but again I think it’s maybe six or seven suppliers where a boat show would probably have like 300 suppliers. It’s the same thing for anything; I mean there is a popcorn trade show in China. There is a trade show for everything.
Steve: Interesting, okay, yeah, I have only been to the Canton Fair myself and some of the ones in Hong Kong too, but…
Dave: Yeah, I’m surprised with you because I think linens, handkerchiefs; there must be a natural specialized trade show for that I would think.
Steve: Interesting, yeah I’ll go look after this, not that that would really excite me, but yeah, I’m sure — at least with the Canton Fair there is variety like, if you are bored you can go off and see some of the other cool stuff.
Dave: I know, I mean it’s overwhelming. I mean I have only been there actually once in my life, and it’s — you definitely need quite a few days to actually go through it. And I think that’s almost the predicament people are getting into, there is so much selection there, it’s almost too much selection. If you have a more narrow idea of what you want to import, it’s a lot of times you can deal with a more a little bit more efficient.
Steve: Yeah, I don’t actually recommend going there without a plan, because otherwise you’ll just wonder aimlessly. Okay so trade shows, what else you got?
Dave: The other way, so another actual good way that we reach out to a lot of suppliers is we’ve got put on these Chinese spam lists. And somehow if you ever give your card out to any trade show in China, you get put on any email list. First pity you and second you are going to get a lot of emails from a million different suppliers every day.
The only funny thing is aside from your traditional spam which nobody is ever interested in, when you get put on these Chinese spam list, actually quite a few credible suppliers will email you. They’ll say, “Hey Dave, we noticed that you are selling boat anchors. By the way we sell boat anchors. You may be interested in our products.” It’s actually, responding to those spam emails is kind of a nontraditional way actually to find suppliers.
Steve: We’ve actually found two legit suppliers that way now that you mention it.
Dave: I think talking before you; you met a guy in India out of all places?
Dave: So, it’s kind of funny. I will never reply to a spam email from a US company, but Chinese company for whatever reason, it’s pretty well directed spam.
Steve: Yeah, exactly and actually that one person even showed his photos of stuff that was similar to what we sold on our site, and so that’s what caught our attention.
Dave: Yeah, they do a lot of due diligence.
Steve: Unlike the US companies which just …
Dave: I know, it’s just a mass of email to everybody.
Steve: Okay, so we’ve got emails, what else?
Dave: The other thing is you can public import records. This might not be news to all of your listeners, but probably news to a lot of them that whenever you import something to US, at least if it was coming via ocean freight, the information contained on the shipping records is public information. If I’m importing boat anchors, you can actually, and you know that company name, you can go find what supplier we are using and what products we are importing.
The US government releases its public information. I think they do it on the premise that’s it’s free information, and can be used to predict economic indicators, but long story short it’s public information. To get access to this information, you either have to pay the US government a fee, or you can use one of the websites out there. There’s free websites out there and you can actually access this information, and you can type any company name, and basically type in Dave Bryant company import records, and it will return a list of some of the products that we’ve imported.
But some of the paid services like Import Genius and Panjiva, what they will do is they aggregate the information a lot more nicely. So you type in the company name, and it will really give you an itemized list of all the suppliers that my company or any other company is using, and it will give you a list of the products they are importing and a list of all the supplier names.
And why this is really good is that you can use one of these import tools, you type in the company name that you are kind of snooping on, and normally what I like to use, I do pick a big retailer who is probably less products I know they are private labeling themselves. Type in that name of that company and maybe take for example [inaudible 00:22:30]. I will type into Import Genius and they will give me a list of all suppliers that [inaudible 00:22:34] is using to import from China.
Then I will get that list of suppliers and I’ll search for them on Google, and I will reach out to all those suppliers, and only a small fraction of them are actually going to reply to you with cost sheets and spec sheets. And the ones that do, typically they are going to have really good high quality good products, because they are selling to the bigger brands, and they are going to have pretty low prices as well.
Steve: What I actually didn’t know is that, you mentioned that there are some free services that do this? Do you happen to know what they are off head?
Dave: Yeah. I think there’s, Port Examiner is one of them. I think if you go to them, you’ll kind of get my point of what I mean is that they don’t aggregate information very nicely. So they’ll give you I think, if there’s 30 different import records from my company, they’ll give you 30 different HTML pages, where some of the paid services, they’ll actually export to a nice excel worksheet for you.
Dave: There’s [inaudible 00:23:25] and then there’s paid services.
Steve: In terms of ordering, or when you look for suppliers, do you tend to go this route first, second, third, last?
Dave: It’s pretty aware now, we have such a– we have a nice typing group of maybe ten to 12 suppliers that we kind of rely upon. When it comes to actually finding new suppliers, first thing I will do is actually I would go through kind of my list of various companies that I’ve bumped into tradeshows, and see if there’s anybody there that might be selling the products I’m interested in.
Second, I would see if one of the big box retailers is selling the products, because the big box retailers they tend a lot of times especially in small niches like boating, they tend to sell for really high prices. So I will go on to Import Genius or one of the other tools, find the list of the suppliers that they are using, get that list of suppliers, find the ones who are selling the products I’m interested in, see if there– and reach out to those suppliers directly. Then as kind of a last resort, I’ll go on Alibaba.
Steve: Okay, okay. What about Global Sources?
Dave: I think, I’ve heard good things about Global Sources and the fact that you can kind of refine your search criteria a little bit better, but my impression has always been Global Sources more or less is kind of Alibaba 2.0.
Steve: Global Sources, from what I understand is, the vendors are more vetted and they tend to cater to – they are like more established players, whereas Alibaba seems like a hodge purge [ph] of a lot of different types of vendors.
Dave: Yeah, I’ve heard really good things about Global Sources. Just my experience using that I always find it more or less a lot of overlap between them. Like said, I know people that swear by them.
Steve: Yeah, I just actually had Peter, I don’t know if I added the episode yet, the CIO of Global Sources here. I was just curious what your opinion was.
Dave: Yeah, I’ve actually never used them, but I’ve heard good things about them.
Steve: Okay, so that, today at least that’s the order it seems like you go to Alibaba, kind of like a last resort so to speak today?
Dave: Yeah, like I said the only problem with Alibaba, and you can actually find good suppliers, the problem is I know if I go to Alibaba, I find a supplier without a product I know if it starts to take off, somebody is going to rip me off probably within a year.
Steve: Okay. Let’s just assume now for a sec that you’ve kind of found a potential vendor, what I was going to talk with you about today was kind of more along the lines of establishing relationships with vendors, negotiating and that sort of thing. You’ve gotten in touch with a vendor, what are some steps to kind of ease the relationship so to speak? Do you start negotiating on a price, do you talk about MOQs, what do you do to ensure quality?
Dave: I mean, I think one of the bigger mistakes that new importers make is that, I don’t know how to say it, they tend to be a little high maintenance. So they’ll send a million emails back and forth with the supplier on a really small order. So I think one of the first thing that you can do to kind of start building that relationship is be to the point, be efficient with your communication, don’t hug all over pennies on a crazy off, you should have an idea if you are importing a product. You got to have an idea of more or less what the fair price for it is.
So if you know the fair price for an anchor is $100, don’t try to get them down to $50. Get a whole bunch of quotes from different suppliers, figure out what the fair price for it is, and just make sure you get a fair price, but don’t be a haggler, nickel, and diming the supplier. Be efficient with the communication. Don’t– if you get your products and you order a thousand widgets and one of those widgets is defective, don’t make a bid deal of it. So I think just being really efficient is a really good way to kind of get your relationship with the supplier off on the right foot.
Steve: I actually don’t ever negotiate on price in the beginning. Instead I just do a shot gun, and just go with the range of prices and kind of wrap up the highest and the lowest. Do you do that too?
Dave: Yeah, absolutely. I think time is changing quite a bit in the last few years where the prices you get tend to be a lot more firm. I don’t know about your experience too, but the negotiating room there isn’t quite as high as it used to be.
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Steve: In fact my prices have been going up.
Dave: Yeah, except up until recently with the price of oil and everything has really been dropping prices.
Steve: Okay, so your tip was be low maintenance.
Dave: Number two, it’s scary for a lot of people this idea, but actually travelling to China and meeting your supplies, because China still is a very relationship oriented country. So actually going over to China and going for beers, going for dinner with your supplier, you can’t really duplicate that relationship building and trust building the same way that you can through email and even Skype.
It’s scary I know travelling over to China, and eating a bunch of weird of food, but if you can go over there even once and meet a supplier that you’ve been working with, I guarantee you, you are going to see a huge improvement in your relationship with that supplier, and so certain benefits that you don’t get. Obviously your lead time will go from 60 days to 30 days if you let the supplier know that your order is urgent. They won’t be self [inaudible 00:29:23] on minimum order quantities with you. Overall the quality of products that you get will tend to be a lot higher if you kind of have that good relationship with your supplier.
Steve: I think that a lot of suppliers that you find, at least on Alibaba, they give you a high MOQ just to kind of weed out like the riffraff, but if you actually fly over there and visit them, they know you are serious and they are probably much more willing to work with you and be more flexible.
Dave: Yeah, absolutely, I mean our main suppliers; MOQ is not really an issue. Obviously they are not going to sell you one, but we want to import ten or twenty as a sample, no problem. The minimum order quantity doesn’t really come up all that often. Again, that’s kind of one of the things that’s important about building that relationship with your supplier, because getting low MOQs is probably one of the most important things when you are importing from China. You have that relationship and you can kind of make it. So MOQ is not really an issue. You are going to have quite a leg up on your competition.
Steve: Let’s say you can’t go to China, what are some of your strategies for lowering the MOQ at least in the beginning?
Dave: Yeah, if you are just working with a supplier, professional off the butt, first thing you can do is again just be low maintenance. So a lot of times, take for example I was working with a new supplier this year. I think that an MOQ 250 pieces, I only wanted to order 50. They said there’s no negotiation on the MOQ. I said, okay, we can only do 50, but we will pay entirely upfront not 30% deposit and 70% upon shipment like normally, and will make payment right away tomorrow.
And they said okay, fine, fine, fine. Yeah, we made the payment in full and upfront, real quick and we never really hag all over the price too much. Again, paying upfront and just offering to pay 100% upfront a lot of times will– a lot of suppliers will be a lot more open to that low MOQ.
Steve: Also just asking for their bank number, so you can wire the money over right away does wonders.
Dave: Yes absolutely. Yeah if you start asking for something like a PayPal account, where you can escrow the money to, they are probably not going to be as receptive. Again, just be straight to the point like you said ask for the bank information, and a lot of times money talks. It’s hard to say no to money.
Steve: Okay. What are some other things because we were talking prior to the recording here, what are some of the other things that you kind of talk about besides price and MOQs, some of the more obvious things. What else do you negotiate?
Dave: When I’m negotiating with the buyer, I kind of figure, price is kind of the last thing I always negotiate. I figure these five things that I kind of go to order trying to negotiating. Kind of every order I try to negotiate with that supplier on a new item. The first one is obviously minimum order quantity. I think for most importers, that’s always going to be the first thing they need to negotiate, because it’s pretty rare that a supplier gives a minimum order quantity that you are completely comfortable with. So it’s kind of trying to negotiate that minimum order quantity.
Then the second thing that you can negotiate is shipment terms. Again, I’ve seen so many importers get burned on this. Supplier will get them a really low price, but will have shipment terms of EXW their factory, and I get the impression that you … Have you been burnt?
Steve: I haven’t been burned, but some of the students who just didn’t do their research, they are like, this is so cheap and then they realized they had to pay everything from the factory all the way to their warehouse.
Dave: To give some background of EXW you basically normally people or suppliers are going to quote you on FOB Shanghai or FOB Beijing, and that basically means supplier pays everything to get it to the port. If you’ve been quoted EXW, chances are you are going to pay at least $500 to $1000 more in extra fees, basically customs, brokerage to export the products, getting the products from your supplier’s factory on to a track and load it to the port, and a bunch of other mysterious fees. EXW adds a lot of money to the price. So if you get quoted EXW, that’s another negotiation point. Try and negotiate it to get FOB terms.
Third thing that you can negotiate is actually the cost of freight. Again once you are ordering big enough, your supplier might not be receptive to say a 5% price cut, but if you ask them hey do you think you can cover the cost of freight to Vancouver, for whatever reasons, suppliers tend to be a lot more receptive to covering the cost of freight to your country rather than actual price discount.
Steve: Interesting. I have not tried that before.
Dave: Our two biggest suppliers right now, one of them pays all the freight, every order to Vancouver, and the other one pays half bill.
Steve: I wonder if it’s just all the same though. They are like wamping that into the cost of the goods.
Dave: I’m sure it’s being locked in to the cost to some degree. The one that obviously pays for all of it I’ve no idea what they are charging. The other guy, where we pay 50%, I mean our prices haven’t changed in four years.
Steve: That’s impressive. Okay.
Dave: When we first started working with them, they weren’t paying the cost of the freight, so I get the impression that they are actually just eating that cost now.
Dave: Yeah, obviously if they agree to cover the cost of freight and they jack up your prices, $2 per unit then you are not really saving. The third thing or the fourth thing you can negotiate is packaging. Again it’s something that a lot of new importers forget about is packaging. Your supplier, when you are importing, their default is going to be to give you the cheapest ugliest packaging possible.
Dave: Depending on your product, I’ve ordered products before, 100 different widgets. Assuming that they are going to come individually boxed, instead they just give you 100 widgets in one massive box. Of course you will be selling online, that means that now you have 100 widgets which you need to buy boxes for. That can actually be a pretty sizable sum.
So either getting something as simple as what they call an inner box for each item, or actually have them pay for the cost of all color packaging. Because even if you are selling online, look in what somebody gets when they first get an amazingly design package, it does result in a lot better reviews on places like Amazon. Packaging does matter even if you are selling online. That is something to keep in mind, negotiate with your supplier especially once you start getting orders which are, have the bigger variety.
Steve: So you guys have a box for your anchors, or is it for the other stuff?
Dave: No we actually don’t, we don’t have – actually it’s not true, some of our anchors do have boxes off. It’s a long story. Most of them do not, but all of our other products do.
Steve: So I’m just curious, this is kind of a different topic, how do you find the suppliers outside of China since prices are kind of increasing?
Dave: We don’t actually– we work with suppliers in like say Vietnam, United States and Canada, but that’s pretty much it. I haven’t actually gone looking for boat anchors anywhere else in the world yet. Maybe in the future that will happen. I do notice for a lot of suppliers, the suppliers in China, they are outsourcing a lot of their manufacturing to different countries.
Take for example I was getting a quote recently for some life jackets, just like [inaudible 00:36:51] that you wear them on the boat, and they were having a lot of production done in Vermont. So it seems to be kind of the way Chinese suppliers tend to be outsourcing their production now.
Steve: Yeah, that’s kind of what I’ve noticed as well. They have like teams in like Pakistan or Vietnam.
Dave: I don’t know if we’re ever going to come to a point in history where we have such a big country of cheap labor that’s barely professional and they can barely high quality goods. India and Pakistan and those countries, they are trying to compete, but still in terms of price and quality, it’s really hard to compete with China even today.
I know prices are going up in China, but it’s still ridiculously cheap and like we kind of touched on before with the price of oil and kind of the Chinese economy not going down right now, they are not doing as well as it was in the past. Prices due seem to be stabilizing in China. I’m not an economic forecaster, but I think it’s probably going to be stable for at least a couple more years down.
Steve: Prior to the recording we kind of talked about some of these cool online services that you use for importing. What are kind of your go-to services?
Dave: So important doing this like I mentioned Duty Calculator is definitely your importing product, that’s what you should kind of always, that should be one of the first places you go to is figuring out what the duty on your product is. And Duty Calculator does a really good job of kind of classifying goods.
You can type in a pretty broad definition of your product. So running shoes and it will give you a fairly accurate duty rate for that product in your country. That should definitely be one of the places that you check. Make sure that you don’t get burned, because you can get burned pretty easily importing various products.
There’s personnel mastermind group for importers. The guy was importing pencil crowns from China. It turns out that pencil crowns have been plagued like antidumping product by the US government. Basically he gets charged like 110% duty on pencil crowns when he imports them, and he had no idea until the shipment actually arrived in port. Make sure you actually get an idea of what the duty rate on your products is.
Steve: Pencil crowns?
Dave: Yeah, for some bizarre reason, the US government what they call antidumping they think China is really affecting supply of pencil crowns in the United States, and they’ve now decided to tack on 110% duty on pencil crowns.
Steve: Interesting. What is your go to place in terms of finding out whether there’s any special rules and regulations for selling a product in the US?
Dave: Yeah, I know it’s a tough one, I mean that’s one of the reasons why you should try to work with a customs broker. If you work with a customs broker and you kind of build that, again that relationship they will likely tell you for free if you say, “Hey I want to import pencil crowns. Is there anything I should be aware of?” They will probably tell you for free, “Hey Dave, watch out, there’s a 110% duty on that product.”
Or if I’m considering importing a product that’s heavily regulated, they might say, “Hey Dave you got to be careful that you need to have such and such testing done.” A customs broker is a really good place that you can start. After that, there’s definitely certain categories of products which you always have to be aware of, and that you can eat or drink, anything for a kid, and anything really that’s inherently dangerous.
Steve: What is your go to place for finding a customs broker? For us, we just kind of went with the first one and we’ve kind of stuck with him ever since. But do you actually have a go to place that you recommend.
Dave: No, I’m kind of the same way; we’ve worked with our customs broker for years. I mean, I’ll just pick the biggest one in your area. I mean there’s quite a few of them. I think every city probably has at least a handful of them. Pick the biggest one, preferably the one that we work with they also have a freight forwarding division, so they can do everything for our shipment, by the time it comes in the port they can pick up their shipment, they can pay the various different local companies that need to be paid, they can pay the ports; they can absolutely do the customs for us.
Look for a customs broker that kind of has a few different services branched together. You might even be able to find one where they can actually arrange for pick up in China from you and ship it all the way to wherever you need to have it shipped. It’s really; it’s a really nifty feature to have if you have a customs broker who has a few different services that they offer.
Steve: It’s worth saying that the freight forwarding is pretty important because otherwise your goods are just sitting there at the port. What’s funny at least for me at least is getting the goods from the port to our warehouse often times cost as much as or more the shipment over.
Dave: Yeah, absolutely. We have something coming in the port right now. Overall cost was $9000 on the container. I think after the container fees, customs and all that, I think the fees were nearly $4000. It’s almost 50% of the overall cost was just on customs, freight and all that money stuff.
Steve: Cool. So what are some of the other services?
Dave: Aside from that, another fun little one is seafreight.com. Seafreight.com, what you can do is you can track basically any boat in the world, and track it where it is in the world. Why that is kind of fun is if you are importing something from China, you are going to get a bill of rating, and on that bill of rating is going to be the name of the ship that your products are on. It might be the Korea 123 Express.
You simply go under seefreight.com, type in the name of that ship and you can actually find out where your products are in the world. I don’t normally have some practical use, but there is something about seeing your shipment of products sitting in the middle of the Pacific Ocean, I don’t know, something bad about it.
Dave: I think that’s pretty much the big three that I would recommend. Import Genius, Duty Calculator, and searates.com, sorry.
Steve: Searates.com yeah. I want to switch gears a little bit because I want to talk, since you are kind of unique in that you are from Canada and you sell into the US, but you don’t have like a US entity, right?
Dave: We don’t have US entity per say. I will get into that after the only thing that we do have to have.
Steve: Okay, but you do have like a three PR I guess in the US.
Dave: Maybe an easier way I will give a brief overview of how we do things. We are a Canadian company through and through. We don’t have a US company. What we do have, if you are– wherever you are warehousing your products in the states, if there’s a state sales tax there, you are going to be responsible for paying that state sale tax.
If you are– in our case, we warehouse our products in Washington State. We have to collect sales tax on any Washington State order. We have to be registered with the State of Washington. We collect sales tax of any Washington order, but in terms of actually US business, paying US income tax, we don’t do that.
Steve: And in terms of just selling on Amazon, you pretty much just need a bank account, right?
Dave: To sell on Amazon yes you only need a bank account. FBA is a whole another [inaudible 00:44:03] of legal issues when it comes to the tax ratio. But in terms of the selling on Amazon, yup, absolutely I believe that is right now all you need is just a bank account. That bank account, it can be a Canadian bank account. The only crappy thing is if you are a Canadian company, or a UK company or whatever, Amazon will only pay you in your local currency. For us if we had a Canadian bank account, Amazon would only pay us in Canadian dollars which kind of sucks, because when you are paying your Chinese suppliers you are paying them in US dollars. What happens is you are changing money from basically US to Canadian back to US.
Steve: Right, right.
Dave: It’s kind of a in-depth answer, but…
Steve: I’m also kind of curious what avenues you use to kind of market your store. First of all, I was just curious; do you make more money on Amazon or on your own site right now?
Dave: Every year you get maybe you can just speak to this. It seems every year Amazon is chipping away 10% on all the other channels. I don’t know if that’s kind of been reflective of your experience?
Steve: I haven’t been doing on Amazon as long as you have, so I have less data to work with. I mean our site is still by far more lucrative than Amazon. But that’s probably going to change this year.
Dave: Yeah, with Amazon taking more and more. For us right now Amazon– our website sales are about 25% of our sales, eBay is about 20%. 5% is just miscellaneous tradeshows, selling direct and 25% is selling directly on Amazon as a third party seller. The other 25% is selling on Amazon what they call through the vendor central platform. That’s basically them buying our products and selling them directly on behalf of Amazon.
Steve: They asked you to join that program, right?
Dave: It’s an invite only program. I get the feeling if you hit a certain threshold on Amazon in terms of your private label products; they will send you an invite because we’ve gotten a couple invites after we’ve been enjoying this program. They think that we are different company than we really are, but I do get the sense that after you hit a certain point on Amazon sales, they’ll pretty much automatically send you the invite.
Steve: Is that basically like an invite where you join or else they’ll find someone else to replace you?
Dave: No, they seem to do it. I think every– basically Amazon’s goal is to have every product in the universe. So once they kind of categorize you as a fairly large seller, they’ll say, okay we want to have your products. You can decline the invitation, but there are already lots of parts to it.
It seems that Amazon when they buy your products, they’ll tend to outsell you 2 to 1. We might have been selling 100 boat anchors as a direct seller on Amazon, when they start to buy our products; they were selling maybe 200 boat anchors. So it’s seems to be you are going to move up to 50% to 100% sales increase by selling directly to Amazon.
Steve: Outside of just the volume of sales, in terms of margins though, how far did they go down once you started…
Dave: That’s the crappy thing. They take more or less about 25% off your margins.
Steve: Okay, but they make up for it in volume.
Steve: Have you ever had any…
Dave: You got to be careful. We got burned our first year of not watching the margins quite as well as we should have, and I’ve heard that from other people too.
Steve: Okay. I mean, is there any– what are the pros and cons of doing—like would you have declined? What would have happened if you declined? They probably would have found someone else and then lowered your visibility, right?
Dave: It’s hard to say. I mean, you’re always going to wonder with Amazon what kind of punishments they inflict on people. It’s kind of hearsay what they would have done. We agreed to it more or less. We don’t sell every product to them. We over the– they really wanted us to sell the product to them, but some of the time the margins just, we can’t do.
Steve: Didn’t make sense, right. Okay, and then you do a combination of that and you do FBA also or no?
Dave: I try to stay away from FBA just for some of the sales tax issues. I know it’s– FBA is becoming such a monstrous zone on behalf, but sometimes I try to avoid.
Steve: Okay by avoiding FBA, you are only covering sales tax in Washington.
Dave: Yes, and that’s one of the things, I mean, every seller, no matter where you are, if you are selling an FBA you should theoretically be collecting sales tax in nine states, or however many states that Amazon has warehouses in. Truth of it is that probably no one is doing that, but technically you should be. Again that’s a talk for another day.
Steve: Okay, no I was just curious because if you had that attitude, then FBA probably would have boosted your sales regardless, and are they going to go after you in Canada, maybe less likely than someone in the US.
Dave: In terms of Amazon and trying to find our competitors?
Steve: No, in terms of the US government going after you for taxes.
Dave: Yeah, yeah, I figure they’ll go after you before me.
Steve: Yeah exactly. Actually can we comment on what you just said though, Amazon like just going by passing you and going straight for your supplier?
Dave: Yeah, I don’t know. I mean, they are definitely doing that. There’s actually one product that we sell which is not a huge chunk of our sales, but they’ve actually are now sourcing it under what do they call private label brand, I forget. That was on basics I think. They have actually are sourcing now directly from China for that product. I think boat anchors and that type of product is going to be pretty low on their packing order, but I think it’s something everybody else is going to be aware of. They do seem to be reaching out more and more directly out to Chinese suppliers.
Steve: So given that they are doing that, when you are actually finding products to sell, do you have criteria more along the lines of random products, or like more niche products like boat anchors.
Dave: Again, that’s something I always try to recommend to people that the more niche you can get, the more successful you are going to be. Me and you, like you’ve mentioned in the intro we were at the Ecommerce Fuel live conference. One of the striking things attending this conference, it was basically a whole bunch of sellers just like me and Steve, and the crazy niches that were all in from boat anchors to handkerchiefs to pencil crowns to coloring books. Everybody seems to be…
Steve: Air filters.
Dave: Air filters. Everybody seems to be in some crazy little niche. I guess that’s one defining criteria to pick a product to sell. The crazier the niche probably the better protected you are going to be.
Steve: I also want to– every other person I talk to there seems to have been hijacked, or had problems with Amazon in some shape or form. That was one of my key take away from the conference session.
Dave: In terms of Amazon and kind of stealing their products and…
Steve: Either stealing their products or other suppliers just hijacking, similar to what you said, they found it on Alibaba, someone else just went on Alibaba and decided to either hijack or piggybacked a listing or sell something exactly the same.
Dave: It’s a check we do every month. Now we actually check all the listings to make sure nobody is piggybacking our brands, because you can’t, if you are selling our branded products, you can’t theoretically hijack that listing, you shouldn’t be able to. Normally just send an email to them saying, “Hey, you are probably not aware of what you are doing, but it is not allowed and could you please stop.” So that’s kind of a monthly check just to make sure nobody is piggybacking any of our products. Again we probably find five people every month doing it.
Steve: Going forward, just curious, are you spending more effort on your own site or Amazon and if it is your own site, what are some things that you are trying to do to increase sales?
Dave: I wish I could say it’s more of our own site, but Amazon– even people that go to our site, they are ultimately ending up on Amazon it seems. They might start this search and they might end up on our website looking for a product, but they are going to simply go to Amazon and see if they can find our branded product on Amazon. They have that trust I guess with buying through Amazon. It seems people sometimes joke about best buy being the display room for Amazon. I think in a lot of ways our websites are display rooms for Amazon.
Steve: Interesting. Even for boat anchors, amazing.
Dave: I know, it’s crazy. We are putting a lot– we are still continuing to put a lot of energy into our website, but not necessarily for direct sales through the website. If anything, just as kind of a display room for the products on Amazon.
Steve: Given that you are saying that, why not just have links directly to Amazon product listing.
Dave: Well, hopefully people buy through our websites; we don’t get charged 15% commission that Amazon does. I mean, ideally they don’t click through to Amazon, but like I mentioned, still about 25% of our customers do buy through our website, but a large portion of them are going to Amazon. Hopefully they buy through our website, but still a lot of them are going to Amazon ultimately.
Steve: What is your primarily traffic source of sales for your own website?
Dave: Definitely AdWords. And AdWords again is becoming more competitive. Just going through our yearly profit and loss kind of per campaign like our cost per clicks it seems like 50% higher in 2015 than they were in 2014. Again, everyone is getting squeezed there, so AdWords isn’t quite as profitable as it once was, but you can still definitely run some pretty profitable campaigns on there.
Google shopping is really where all the money is in terms of our ROI. So Google shopping is just becoming a huge avenue in some regards. I think if anybody was kind of trying to sell their own products through their website, first thing I would do is make sure you are on Google shopping.
Steve: What about organic search?
Dave: Again, it’s one of the things where all the big brands Google tend to be favoring more and more. We still get probably half of our sales are through organic search, but like everything, it’s becoming more and more competitive even for boat anchors.
Steve: Amazing, boat anchors.
Dave: I know.
Steve: Do you guys do anything on Facebook or…
Dave: Facebook, because of our audience we tend to be kind of an older clientele, they don’t tend use Facebook a lot, so we don’t use a lot of Facebook, compare to some shopping engines, things like Nextag and…
Steve: Does that work for you?
Dave: And [inaudible 00:54:29] and Shopzilla.
Dave: They actually, they bring quite a bit of traffic.
Steve: Do they really for boat anchors? Okay.
Dave: Yeah, again it’s just– I think again because of our older clientele, it’s just, if they have a search and maybe Shopzilla is their default search engine. So that’s how they find it.
Steve: I stopped using Shopzilla because I was getting really high volumes of fake clicks.
Dave: Yeah, it’s hard to say. I mean there’s some products where we make a killing on, and there’s other products where they are outnumbering Google in terms of clicks and you get to wonder how is that possible.
Steve: Well, I actually stalked a few of these people and they are clearly butts.
Steve: Yeah because I was annoyed, because I contacted them and I said, “Hey these are clearly boughts, and I have logs to show for it.” He was like, “No, we do a great a job of filtering out clicks.” Anyway that’s why I stopped using them.
Dave: Yeah, I know. That’s been our experience. You really have to monitor the campaigns, because you can dump a lot of money on a product, get out so there’s no conversions from it. But if you do monitor, you can actually get some pretty profitable campaigns.
Steve: Cool. Hey, Dave, we’ve actually been chatting longer than I was planning. I understand you got a pretty cool website. Where can people contact you? First of all, what is the website and where people can contact you at?
Dave: Yup, so the best way is chineseimporting.com, we get a lot about how to use [inaudible 00:55:57] and importing from China. So it’s a really good way if you are a beginner import, a lot of useful information there. If you are even a more experience importer there’s a lot of good information there for you too. On Facebook, facebook.com/chineseimporting.
Steve: And you have a book, right?
Dave: We do. It’s Importing is Easy: How to Make a Million Dollars Importing from China. You can buy that through the website chineseimporting.com, or you can find it on Amazon.
Steve: Awesome. Thanks Dave for coming on the show.
Dave: Yeah, thank you for having me.
Steve: All right take care.
Dave: You too.
Steve: Hope you enjoyed that episode. Dave is the perfect example of a business that does extremely well in a very narrow niche. Like boat anchors would probably the last thing that I would think to import from China, but Dave makes it work. For more information about this episode, go to mywifequitherjob.com/episode110.
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