You might not know this, but one of the very first profitable businesses I ran was an importing company. From the age of 13 til the age of 18, I imported a whole bunch of random stuff and sold it on various websites. It was really difficult when I was getting started, partially due to my lack of experience, and partially due to the fact that there was nobody there to help me.
My friend Devan Earle is thinking about getting into the import arbitrage business and emailed me with some questions last night…
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Our conversation got so in depth that I decided to turn it into a blog post.
So this is basically going to be an A-Z guide on what I would do, step by step, if I was going to start over again at importing products from Asia and selling them online. I’ll also include some insights on what made me choose these steps. If you plan on trying this out, I would suggest bookmarking this blog post and referencing it in the future. I am planning on it being a complete guide and will be continually adding to it based on questions I get from readers.
I encourage you to go through step by step and not jump around, as I put it in this order for a specific reason. This is the order I would do things in, and the order that I learned them in.
I will also tell you the story of my rise and fall in the importing industry – or at least the interesting parts 😀
Note – I have since written a follow up to this post called “Step-by-Step Guide on How To Find A Profitable Product To Sell”
Knowing What to Avoid and the Basics
You have to understand going into this business that it is a risky one. Dealing with Asian businesses is very, very different than dealing with American ones. If you go into this not knowing that there is a lot of risk involved, you will probably end up with $1,000 worth of iPhone 2 knockoffs in your garage, or $1,000 worth of nothing at all…
That being said – if you are careful, understand what you’re doing, and know what to avoid, you can make a KILLING with a relatively small amount of work.
Understand what you are doing
As with any other project you are trying, make sure you have a really clear understanding of what you’re going to be doing before going into it. Like I said above, if you aren’t careful, it is really easy to end up with a hilariously absurd amount of worthless product you will never sell. I still have a box of worthless imported crap I was never able to sell, I should probably throw that out…
What you are trying to do here is this –
- Find a good product – I always hate when this is the first step of something I am reading, but unfortunately it is here too. Luckily, picking niches for this is pretty easy and quick, and doesnt involve pouring through monotonous keyword data.
- Find a good supplier – There are a handful of great suppliers in every niche. It really takes some digging to find them (along with a little luck), but there are some things you can do to make sure you avoid the scams and increase your odds at finding an awesome supplier.
- Sell and build – After you have a good product, and a good supplier, you just have to start selling it. If it were me, I would leverage existing sales channels (eBay, Amazon, etc) to both sell my product, and build up my own recurring customer base. So that is what I am going to focus on.
Things not to do
- Don’t buy in bulk from a factory until you have their samples in your hands and you LOVE them.
- Don’t let any supplier convince you they can’t ship single samples, they are trying to scam you.
- Don’t pay with any other method but PayPal for the first 6 months with your supplier. This eliminates a ton of risk.
- Don’t buy from a company that won’t accept PayPal. What it really means is that they had a PayPal, and it was shut down due to complaints.
- Don’t buy counterfeit crap. Not that there isn’t money to be made there, it is just a bad business to build.
- Don’t buy a lot of inventory in the beginning. I started off buying 1-5 units at a time until I built up the money to reinvest into inventory.
- Don’t give these suppliers your personal email. The email will be effectively nuked and unusable for years, trust me…
Step 1 – Finding a Good Product and Potential Suppliers
This is really going to be the most important part of all of this. This is where you find the opportunities and start developing relationships.
I will tell you how to find good products and good suppliers, but first let me tell you how I initially broke through and succeeded with this method.
When I first got started, I went right to counterfeit purses, shoes, and P90x’s. I made a KILLING selling these through Craigslist, Amazon, and eBay, but quickly decided to get away from them. I didn’t want to build a business on foundations of questionable legality, and you shouldn’t either. I handed these businesses off to my friends – one of which made something like $60,000 in 3 months JUST selling P90x’s on Craigslist and hand delivering them around NYC.
The other friend was making around the same amount with shirts and shoes, but got cocky and soon found all of the trademark owners coming after him (like coming to his house in black tinted cars watching him and his family after him). He ended up paying out a sizable settlement, right around the industry standard of 3x earnings. Needless to say, he had to liquidate all the fancy toys he bought with his earnings.
And that is why you should avoid counterfeit designer crap. I won’t say it won’t make you money, because I know it will. But it is like dealing drugs, you are building a business that is contrary to the law, and it will end up biting you. Bad…
After I got out of that market, I found I could source competitive Katana swords and sell them on eBay for an unreasonable markup. However, I soon figured out that high ticket items required a lot more capital and are inherently riskier to sell after getting a few returns and bad shipments, so I got out of that and into knives, airsoft guns, mace, and other self defense equipment. I found there was profit to be made on these when looking around for places to sell my swords.
Airsoft guns quickly became my bread and butter. Right after I found my supplier I listed on eBay and immediately started selling 15-30 airsoft guns a day, easily undercutting all my competition and still coming away with a clean $10-20 profit per sale. And best of all, I didnt even touch the product after a while. I finally found an AWESOME supplier who handled all the returns for me with no questions asked, gave me a generous payment structure, and handled all shipping. It was a dream supplier.
Your goal is to find a dream supplier for ANY product you are making money on, because then you can focus on growing the sales of your business rather than on customer service and shipping.
It isn’t easy, but if you follow my advice below you will greatly increase your odds of finding a great supplier and product.
Where and how to find suppliers
Your best friend in the importing business is AliBaba. I have used it for every single product I have ever imported. I use it for my own businesses, I use it for clients, and I know a ton of people that use it. It is an awesome resource.
Don’t fall into the traps of Doba, WorldWideBrand, Volusion, or whatever other scam solutions are out there to find suppliers. I made the mistake of trying all of these when I first got started, and just ended up wasting hundreds of dollars for little to no value. Just stay away from these, trust me.
With AliBaba, you will be looking at only Gold members. I don’t care how awesome of a deal you get from a non-gold member, or how many factory certifications they have, you DON’T buy from non-gold members. Just following this rule will help you to avoid 98% of the scams and bad suppliers. Any other certifications or whatever are just icing on the cake.
You really want to find a supplier that will do cheap samples, offers PayPal payments (even at an increased rate, use PayPal), and seems to respond to your communications quickly and effectively.
Open up AliBaba for now, as you will be jumping back to it frequently while researching product to know if you can make a profit.
Where and how to find products
There are a few limits on what kinds of items you want to sell –
- It needs to be small and light – Trust me on this, you don’t want to deal with the headaches that come with shipping furniture or kitchen appliances around the world. You want something that is going to be cheap to ship around, because shipping is going to eat your profit margins alive.
- It needs to be a simple item – What I mean by this is you want something that is simple to manufacture and has a relatively high margin of error. Most of these factories are not going to have the highest quality standards in the world, so the greater the margin of error you can put up with while keeping your customers happy the better. Competitive katana swords did not have a great margin for error before customers started noticing, as they were vigorously slicing sh*t with them all day (slicing rolled up Tatami Mats to be specific).
- Keep it in the $10-200 range – In my experience, it becomes very capital intensive and much riskier if you are selling items any higher than this. Higher ticket items are usually harder to ship, require higher quality control, and really magnify your mistakes when first starting out in importing. I have yet to find success outside of that price range, so I cant suggest you take any chances in it, but of course use your own judgement.
- Don’t sell what you buy – Devan made a great point when I was speaking with him that you can’t sell items that you buy. Most of us buy electronics, clothes, food, and other essentials. I can tell you right now that you are not going to compete in any of those markets. You really have to niche down in this and find a nice little nook for you to sit in.
- Don’t go seasonal – You want to find items that have a consistent base of buyers. I am sure there is a bunch of money to be made in selling Christmas stuff and winter clothes from Asia, but it is going to be extremely seasonal, and you are probably going to end up with a ton of worthless inventory.
What I would do is go onto a few sites and browse around –
- Alibaba – You should have this open already, but I often look around AliBaba to see what items are being promoted and check around the sites below to see what kind of margins I could get. For instance, right now there is a 4 year Gold company (online now!) selling LED Light Bulbs for $2.65/unit. Even better, they do Escrow, and have onsite inspections from Alibaba. I can quickly go over to Amazon and see these same bulbs selling for $9.50 – 11.99, a VERY healthy margin! And that’s just the first thing I looked at! There is a niche right there.
- eBay – Check out the completed listings on eBay to see what kind of prices you can consistently sell items for. I often use eBay auction descriptions also to gain some knowledge on a product if I see it is the exact same. Prices are the main thing here though, you get a really reliable indicator of demand. You have to click on the side bar menu to get to completed listings, here is a picture.
- Amazon – I go to this page and check out all of the different tabs for “Movers & Shakers” and whatnot. I click around the categories and drill down to find things I think may not have a lot of importers in already. Again, typically weird items, like LED bulbs, skateboard parts, and katanas do well, so I try to find weird things that catch my eye and compare them against stuff on Alibaba.
- Other tools – mySimon Top Searches, Shopzilla Top Searches, Kaboodle Hot Picks
Indentify & Mail Key Suppliers
Now that we have a product, we can start sorting through suppliers and contacting the ones that look promising.
All I would do is –
- Search for LED light bulb in Alibaba with the correct filters – You should have already been doing this before to check your product costs in the previous steps. At this point though, we want to switch to searching for “Suppliers” rather than “Products”, as seen in the picture below. I typically start with filtering by “Gold Supplier” and adding “Onsite Checked”, “Assessed Supplier”, and “Escrow” in that order until I am down to 20-30 suppliers. If there are still a ton, that is fine. Just try to find some way to narrow it down to the very best and take the 20-30 top ones.
- Contact the good ones – Now that you have a list of the prime suppliers for your product, you want to contact them and get some additional information. I usually just ask about their MOQ (Minumum Order Quantity), payment and shipping policies, sample policy, and a price list or product spec sheet. They usually have all of this on hand. IMPORTANT – Don’t use your personal email for this stuff, as it will be spammed into oblivion for years! Asia is not quite as serious about their emails as we are 🙂
- Converse, get a feel for things – Now see who messages you back and how serious it seems they are taking your business. Keep in mind that they are competing for your business at this point, and have no idea if you are looking to put in a $100 order or a $10,000 order. Their customer service at this point is a good indicator of where it will be in the future. Don’t be afraid to haggle and engaging in some price warring, they are much more used to that in China. It isn’t uncommon to see an item start at $200 and be sold for $20 in a Chinese tourist market. I could write a whole post on price negotiation, but the main thing with this is you have to low-ball your first counter offer to anchor the price possibility window at a lower level. You should get by fine with that.
- Samples! – Ah, finally….the fun part! Now we get to put in some small orders to get samples shipped directly to us. I usually get samples from 2-5 suppliers I am considering, but never just one. SERIOUSLY go over these samples when you get them. Also take note of shipping times, costs, damage, etc. Put the items through some stress, check every last nook and cranny of them. Think about how customers will be using them and push the item harder. You need something that is going to stand up if you are going to put your name behind it, so find something to be proud about selling.
The minimum order they list is generally not concrete, and is most of the time their average or desired order size. There is no way to know for sure without messaging the suppliers directly, which is why I go for 15-30 initially.
In my experience, Chinese factories will go through many hoops to work with you on order sizes, unless they are a MASSIVE factory that only ships via sea. If they use normal air shipping at all, they shouldnt mind sending out even a single item via air (which is what they do with samples anyways).
Again, with some items it will be different than other. For instance I looked into selling LED lighting that attaches to the sides of buildings, and the margins looked great, but the MOQ ended up being somewhere around $5,000 of lights due to the purpose of the item (to run down entire high rise buildings). I skipped over that one.
Another option is AliExpress.com, Alibaba’s site for smaller orders. You will generally get better prices for the same amount on Alibaba if you are willing to put in the effort to communicate with suppliers, but AliExpress is always an option.
Step 2 – Selling Your Product Through Existing Sales Channels
Step 3 – SCALE!
After I had my airsoft guns up on eBay and Amazon, all I had to do was keep track of inventory and shipping. Being 15 at this time, I was ecstatic.
I slowly started to add more products to eBay and Amazon, started sending out promotional materials with my shipments, began advertising, and started a brand name behind my business. My 20 order per day average quickly swelled to 30, 40, 50 sales per day.
Keep in mind that NONE of this would be possible if I didn’t find an awesome supplier in the first place. If you’re reading REALLY closely you’ll notice that I was 15 now, and it took a full 2 years of many mistakes and marginal success before I got to this point. Hopefully from reading this article, you can skip most of those mistakes and get right to the success.
I didn’t really know what I was doing and was kind of just throwing money at things and seeing what works. It was an awesome learning experience for me, and I learned a ton about what works and what doesn’t work in marketing and growing online sales.
Here is the stuff that I did to scale up my sales that will probably work for you –
- Advertising with Amazon and eBay – I always made a solid return with these advertising programs, specifically Amazon.
- Listing yourself on other sales channels – I eventually made an eCommerce store so that my products could be listen through the primitive versions of Google Shopping, Bing Shopping, and every other shopping venue I could find online. If I could put my items up and sell through them, I did. And each new channel gave me a little bit of growth for free.
- Brand yourself – The days of branding yourself as “GreatAirsoftCompany.com” are long gone. You have to find a good brand name that resonates with the crowd you are selling to, and it will exponentially reward you over time. You can read this post to see how I decide on brand names.
- Aim for recurring revenue – I started seeing solid growth from including coupons and promotional materials in each shipment. Eventually, I set up an email and SMS subscription that would send them deals and updates on airsoft items. I also set up a monthly subscription for airsoft pellets, which I couldn’t sell on eBay due to very small margins. The key here is to focus on siphoning off buyers from the pre-existing sales channels into your own lists and databases. That way, you can market to them for free on demand, rather than having no way to contact them after their first order.
- PPC Advertising – Advertising outside of where I was selling never worked for me very well on this, however I was also very young and didn’t know much about running PPC campaigns. If you are already good with PPC, then try it. If not, I wouldnt even try until you have some money to lose.
- Social Media – Just isnt going to work for importing. MAYBE you can find a way to do this if you are a really, really good social media marketer, but 99% of people are not going to get any sales from social media with this.
- Pretty much anything I didn’t mention above – If I didn’t mention it above, I didn’t make enough money with it to remember it. I would stick to just the things I know work, which are littered all over this article.
- Negotiate better terms with your supplier – Once my supplier knows I am a valuable contact who will make him solid, easy money day in and day out, I am his golden boy. Now you can start to negotiate prices and shipping terms. I usually try to get some price cuts, but my main thing is getting the factory to drop ship (generally through a US office or distributor). If the factory can ship to my customers for me and handle returns, my business is next to automated. This is where I got with the airsoft stuff, and I loved it. A true “4 Hour Workweek“.
- Start outsourcing the processes – If you cant get your factory to drop ship to customers for you, you are going to want to get rid of that aspect of your business somehow. You will be making enough money by now to hire somebody to do the shipping for you locally. Try to get somebody local (a friend or family member) to start, as it is much easier, safer, and cheaper to manage a friend than an employee. Hire a VA to send the orders to your friend, keep your listings running smoothly, respond to customers immediately, and order inventory.
The Fall of My Empire
At this point, there was very little that could go wrong. Short of some horrible unforeseen event taking place, I had a steady stream of automated income coming in – one of the first ones I had ever built.
Then there was a horrible unforeseen event…
I don’t remember the exact circumstances, but the Chinese ports suddenly stopped shipping airsoft guns out. For over 3 months, I couldnt get any airsoft guns out of China.
I know it was more than 3 months, because that is when I was forced to throw in the towel.
I searched around for a replacement supplier from anywhere I could, but the prices had just skyrocketed. On top of that, I had a bunch of orders I couldn’t fill and angry customers…
With many new projects sprouting up, and being only 16 at the time, I refunded everybody and moved on…
I did make enough money to invest elsewhere, most of which was lost on other ventures. I learned more than I did in my entire schooling career with this business, and I hope I communicated everything well enough to expedite your learning curve.
The only thing to do now, if you haven’t been this entire time already, is TAKE ACTION! If this strategy intrigues you, get out there and at least try to put this stuff into action. Make it happen!
Please comment below if you have any problems, questions, or suggestions with any part of this – I will be responding to everything immediately for the next couple of days.
Good luck, and talk to you below!
Note – I have since written a follow up to this post called “Step-by-Step Guide on How To Find A Profitable Product To Sell”