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These little known hacks could be your 2020 game changer If you’re serious about getting the lowest prices from China, outsmarting your competitors, and protecting your brand from being hijacked by Chinese savages!
When brands and online sellers are looking to source products from China, they would typically go to sites like alibaba, search for products using specific words or phrases, randomly select few suppliers with products that look like what they’re looking for, send out a bunch of inquiries and then sit and wait for price quotes to start pouring in. Sounds like you? You’re not alone. Hundreds of thousands of businesses make the same mistakes everyday.
If you think you’re getting the best prices from your supplier, sourcing agents or even your shipper, what we’re about to reveal here will shock you! We apply these hacks all the time and have been consistently getting prices lower than what sourcing agents and trading companies were quoting. Almost all our clients have used sourcing agents, trading agents and middlemen before and none of them could beat the low prices we buy and ship our products for. None of them!
So if you spend or plan to spend $50,000 or more buying products from china, we guarantee we can save you tons of money…or even millions almost instantly if you’re a larger business!
Think about it, what could you or your business do with an extra $10,000, $15,000 or even $20,000 in your pocket without having to do much at all? You could certainly buy more inventory, invest more dollars in advertising or even rent a bigger space.
Let’s jump in.
NEVER CONTACT SUPPLIERS ONLINE OR THROUGH A WEBSITE!
It’s ok to research suppliers on online sourcing websites like Alibaba, but never never contact them, get quotes or negotiate prices through these platforms. Why? Because you’re a foreigner and you’ll always get foreigner prices. All these platforms are designed for foreigners to do business with chinese suppliers. Any price you get from suppliers on these platforms are already inflated 20-30%.
We discovered this secret when we hired our first employee in our China office. When we asked her to speak to some chinese suppliers on our behalf, to our surprise many of these suppliers refused to talk to her. we asked her why, she said “because I’m chinese. They know I know their secrets so they will not like to talk to me. They prefer to talk to foreigners so they can sell at higher prices”. To an average chinese supplier, foreigners are clueless and certainly don’t know the pricing game.
Remember how expensive souvenirs are at tourist centers in foreign countries? It’s the same with these platforms, the only way you get the best deals is when you buy as a local – When you go to china’s local markets and buy as a local shopper! Wouldn’t you like to access language restricted markets only chinese people can buy at? Wouldn’t you like to pay the same prices chinese locals pay as well?
Most times we save our clients over 30% on prices they get on alibaba by going through the back door and buying directly from the factory or in china’s underground markets…in some cases we buy at half the price quoted on Alibaba. Shocking, right? What are these underground markets? They are simply factories and chinese platforms where chinese people buy from each other.
In case you don’t know, most sellers on Alibaba are not real factories; in fact most real factories in China don’t have english speaking staff. Most companies posing as suppliers on sourcing websites are brokers, middlemen, and trading companies. They put up a nice profile on Alibaba but they’re not the main factories, this explains why Alibaba prices are severely marked up, sometimes by up to 50%
There are many types of factories and suppliers in china. We find gold in the ones WHO DON’T HAVE LICENSE TO EXPORT OUT OF CHINA. In fact many trading companies you find on Alibaba buy from these factories and resell to foreigners like you on Alibaba. In order to find the best deals and prices in China, you should buy as a chinese local; buy from suppliers that don’t SPEAK OR WRITE in ENGLISH. Disguise yourself as a chinese local company and buy under the radar. We simply buy from these underground suppliers through our chinese company and mandarin speaking staff in China.
NEVER BUY PRODUCTS ON FOB PRICE TERMS.
Never allow your supplier to quote you FOB price; FOB price simply means your supplier has already added the cost of putting your products into a container and transporting them from their factory to the seaport. Always get EXW price, it’s way cheaper. This is ex works price; it means you will assume the responsibility of transporting your finished product from your supplier’s factory to the sea port. It’s really cheap and easy to transport products from factories to seaports. You could pick up over $5000 in savings just from this hack.
Below is a similar product our client was paying $1.85 each FOB . Guess what? We were able to make a better quality version for just $1.23 EXW. That’s over 33% in savings! If we buy 10,000 pieces of this product how much savings do you think I got for her? $6,200 to be precise!
You’re probably thinking, “Should I just go back to my suppliers and tell them I want EXW price” Right? NO, not that easy, your supplier will suspect you just discovered his game and he will not want to part with his profits that easy. But there’s a way around this; we have our way of going through back channels and forcing suppliers into an EXW pricing.
NEVER BUY IN US DOLLARS OR ANY OTHER FOREIGN CURRENCY.
Think about this for a minute…
If a chinese lady walks into a grocery store in China and picks up a bottle of coke. upon getting to the cash register to pay, will she pay in US dollars or in Chinese local currency? of course in Chinese currency. So, if a chinese local gets a fixed price when buying inside china, why should you pay more for the same products simply because you’re a foreign business?
Do you think prices of goods in China’s local markets change based on how the US dollar is doing against China RMB? Nope. Prices of locally produced goods in china remain the same irrespective of what’s going on in forex market.
You may find this hard to believe, but an average Chinese supplier makes more money trading foreign exchange with your money than he makes selling products to you. The moment your supplier knows you’re a foreign buyer, he will immediately add up to 30% to the price he quotes you as a forex buffer. This is one secret your chinese supplier is definitely hiding from you.
So what’s a forex buffer? It’s simply a safety cushion your supplier adds to your price due to daily fluctuations in foreign exchange rates. For instance, if the exchange rate of US Dollars to chinese RMB is 1:6 on the day your supplier gives you a price of $2 per piece for a product you’re buying from him. What happens if 2 days later the chinese RMB loses 10% of its value and the exchange rate is now 1:6.6?
This means your supplier just lost 10% on that transaction if he sold to you at the price he quoted you 2 days earlier. No one likes to lose money, so does your supplier. So in order to avoid this loss due to the instability of foreign currency exchange rate, your supplier typically adds 10-30% to his price.
The simple solution to this is to get quotes in RMB currency and also pay in RMB. You’re probably thinking, “So I should just tell my supplier I only want to pay RMB and I will get a cheaper price?” NO. Your supplier will fight and resist this idea. In fact he may just quote you a RMB price based on current Forex rate of US Dollar to RMB to just to make you shut up. Is this a good deal? No. Does this mean you’re getting a lower price, NO. The good news is we can start helping you buy your products in RMB, the price he would normally sell to a chinese local buyer.
NEVER GET YOUR SHIPPING QUOTES FROM ONLINE FREIGHT PROVIDERS OR YOUR SUPPLIER.
Everything is negotiable. Including your shipping cost!
This is one of the biggest mistakes small businesses make when shipping their goods from china. They tell their supplier to help them arrange or book the shipping of their products to their country of destination. Your supplier is not a shipper, he will probably outsource your cargo to a broker who will then give it to another broker and to another broker. This will eventually cost you a fortune!
Simply tell your supplier you will take care of your door to door shipping. We buy bulk shipping allocations at the beginning of the year directly with ocean liners and then pass the savings on to our clients. This is why it’s almost impossible for any forwarder to beat our prices.
If you want to get the lowest shipping rates, Never ship through shipping websites or online platforms that display instant shipping quotes from competing shippers. All of these quotes have been fed into a website and they are expensive and non negotiable!
An amazon seller was bragging about how much he saves on shipping by using one of those instant quote websites such as flexport, freightos and CH Robinson. He was super excited to be able to track the ship carrying his products from china to the US. He loved the fact that he logs into a fancy dashboard and tracks a ship. We later found out he paid over $600 more to his fancy shipper to ship his container from Shanghai to Los Angeles port. I guess they charged him $600 to be able to track a ship!
Always remember this tip, there’s nothing like INSTANT shipping rates, everything is negotiable. We usually buy our shipping rates in bulk and transfer the savings to our clients. Negotiating your shipping rates can save you up to $500 per single shipment! If you do 12 shipments per year, that’s $6,000 in savings back in your pocket.
What many entrepreneurs don’t realize is most of the instant shipping brokers do advertise low shipping rates just to draw you in, where they get you are the hidden fees! Look at your shipping quote, the fees to watch out for are “destination charges”, “origin charges” and “warehouse in and out”. 9 out of 10 forwarders hide these costs from you until your goods arrive at the US port…then they sting you with them!
We are masters in negotiating and haggling on your behalf. In life you don’t get what you deserve, but rather what you negotiate. Wouldn’t you rather wait 24 hours to get a better rate?
NEVER PAY EXTRA FOR YOUR SHIPPER TO PACK OR LABEL YOUR BOXES FOR DIRECT FBA SHIPPING
This applies to Amazon sellers; many forwarders and shippers will usually charge you extra to put your products on pallets and label your boxes for shipping directly to FBA. This cost can range from $0.15-$0.30 per box and $20/pallet. Don’t fall for it. There’s a way to avoid this; always ask your manufacturer or factory to apply your labels to your products before the shipper picks it up. All our clients’ products come sorted, labelled and palletized at no extra cost. This usually saves roughly $25-$50 per cubic meter when shipping direct to FBA
USE YOUR SUPPLIER AS YOUR WAREHOUSE!
Don’t let your supplier know about this. But do you know you can save a lot of amazon storage cost by cleverly using your supplier’s warehouse in China?
Instead of shipping all your goods to the US all at once and incur thousands of dollars in FBA storage fees, you can simply ask your supplier to help you store your products for 1-3 months.
Say something like this, “Hello Mr Supplier, even though we want to order 1000 pieces (replace this with a desired lower number) but if you can help us store our products in your factory until we are ready to pick up, we are thinking of ordering 2000-3000 units. Would you like us to do this?”
In most cases, your supplier will agree to this so he can make more money. Storage is cheap in china so he’d rather make more money upfront making products than worrying about storage.
NEVER RELY ON JUST ONE SUPPLIER TO MANUFACTURE YOUR PRODUCTS
Always use two or more or atleast have a backup! Don’t let your supplier hold you ransom!
One of our greatest weapons when dealing with suppliers is our internal reverse bidding system. This system creates a bidding war among several suppliers bidding for your products. No sourcing agent or trading company does this. When multiple suppliers bid for your project you will always win!
It’s a good thing to let your supplier know he’s not the only one you’re using or considering; this will make him more flexible and accommodating with his pricing. Think about these possibilities before you rely solely on your current supplier; what if he goes out of business? What if he keeps raising prices on you? What if his products start having quality issues? What if your main sales rep at that company leaves? What if your sales are increasing and your current supplier’s factory can’t keep up?
It’s better to be safe than find yourself in a tough situation should one supplier bail out on you. We always put a plan B in place just in case something like this happens in the future.
NEVER RELY ON YOUR SUPPLIER TO GIVE YOU ACCURATE CUSTOMS HTS CODE FOR YOUR PRODUCTS
In the light of President Trump’s new tariffs on Chinese imported goods, it’s now more crucial to know the perfect import duty codes with which to import your goods from china. Inaccurate HTS code is one of the worst money suckers when importing products from china. Wrongly classifying your products for import can cost you up to 30% MORE in tariffs at your country of destination.
So what are HTS codes? it’s simply Harmonized Tariff Code. These are classification codes every product and material is grouped and a duty rate is assigned to each code. Giving an inaccurate code to the US customs when your product is about to enter the US can result in fines or you overpaying in duties and charges.
We have seen a situation where a supplier gave inaccurate HTS codes that could have made an amazon seller pay over $21,000 in duties. Upon checking the paperwork we quickly saw that the codes given by the supplier were wrong, our client only needed to pay $1361, not $21,000. That’s over $19,639 we saved this amazon seller!
It’s difficult for most suppliers to rightly interpret your product classification simply because they don’t speak much english. Why would you trust a non english speaking person to translate an english paperwork? Having an experienced customs brokerage firm will save you thousands of dollars year after year.
NEVER BUY YOUR PACKAGING FROM THE SAME SUPPLIER MAKING YOUR MAIN PRODUCTS.
If your product requires a box or any special packaging, postcards or flyers, it’s usually better you order those from a separate supplier.
If your main product supplier is also the one supplying your boxes, then you should expect him to mark up the price. Best practice is to have box manufacturers make your boxes and ship them to your main supplier’s factory.
We have dedicated suppliers that do 100% packaging and nothing more. This is definitely one of our favorite money saving hacks.
ALWAYS HAVE MANUFACTURING AGREEMENTS WITH YOUR SUPPLIERS
Ask yourself, what stops your supplier, sourcing agents and trading companies from pitching and making your products for another buyer? If you look on Alibaba you will see a lot of suppliers displaying product photos claiming to be the factories making them. 80-90% of these are false. This is one of the reasons I will not advise any brand to use china based trading companies or sourcing agents to make their products.
These agents go around pitching your products to any one who will buy. When dealing with a reputable factory we always have a manufacturing contract in place that forbids that factory from making clones or knock offs of our products for other customers. These contracts are enforceable if they are between two chinese companies.
NEVER LET YOUR PRODUCT LEAVE THE FACTORY WITHOUT AN INSPECTION
Many sellers often skip this process simply because they don’t want to spend any extra money than they are already spending on an order. Guess what? Inspection and monitoring should be part of your cost of production. Why? Think about this, how much would it cost your business if you get a ton of 1 star reviews simply because a part is missing in your product or the supplier forgot to put an important piece in your packaging or there’s a foul smell or dirt on your product?
Product inspection is more than a necessity, it is your weapon to ensure your supplier complies to your standards. We use inspections as a way of sending a message to my suppliers to let them know we’re watching. Do you think your supplier will pay more attention to your products quality if he knows you can call for an inspection unexpectedly? Yes he will!
Now beware of crapping inspection services out there; the type of inspection I recommend is a whole day comprehensive one. It’s usually 30-50 pages long and covers all kinds of tests you can imagine e.g smell, altitude drop test, taste, wire connections, wheel alignment, and so on.
Use product inspection and monitoring to your advantage.
DO YOUR PRODUCT PHOTOGRAPHY IN CHINA
So you make your products in china, ship them to the US or Europe only to have them boxed up again and shipped to a photographer across the country. Why not have your factory ship a sample to a photo studio in China for next to nothing and have all the photos taken for a fraction of what you would pay in the US.
An average white background product photo costs at least $50 in the US, not including the shipping costs to send it back and forth to the studio.
Our china studio employs specially trained photographers and photoshop experts, processes over 5000 shots a month with a rich library of stock images and lifestyle images. This is a great way to save money. China is not only a great place to manufacture products, its also a top contender in imaging services.
SELL BEYOND BORDERS
Are you feeling the impact of chinese sellers rushing into US amazon marketplace and pricing everyone out of most best selling categories? If not you’ll soon feel it. Their game plan is to copy your products, listings, images and drive you out of the market.
When we tell our clients, don’t just sit comfortably in the oversaturated US market, venture out into other marketplaces such as UK, Germany, Spain and France, we get answers like, “well I don’t know much about these places…” “how do I ship my goods to the UK” “what about laws in this countries” “How do I get paid” etc.
Do you know there are tons of opportunities in other marketplaces? Do you know how easy it really is to clone your listings in European marketplaces and be up and running in just under 30 days?
We will help you setup your account, register for UK VAT and file your quarterly tax for less than $995 per year!
GET A CHINA ADDRESS. CONSOLIDATE YOUR SAMPLES
If you’re always sourcing for new products or looking to save on shipping to fewer FBA warehouses in the US, getting a Chinese address is a total cost saver. Shipping product samples from multiple suppliers from China to the US or European countries can quickly add up.
If you’re requesting a sample from 5 different suppliers, you would need to pay a separate courier shipping charge to each supplier. This could be $30-$150 per package. How about having all suppliers send their samples to your china address, our dedicated staff will consolidate everything and send them to you in one package. This could save you up to 70%
We have also found this to be extremely cost saving when sending shipments to FBA warehouses in the US. Using specific china addresses helps us force Amazon’s system to let us ship to fewer locations. Simply give us access to your inventory area and our logistics experts will work the magic to force Amazon to let you ship to fewer FBA warehouses. This hack alone can save you over $500, for some clients over $15,000 in just one shipment!
China address is also a great way to mask your supplier’s identity. Do you know it’s really easy for your competitors to find out who your supplier is by simply looking at US customs database? Every shipment coming into the US gets logged into the public US customs database thus exposing your information to would be competitors.
The best way to prevent this is to never let your supplier put his real information on the commercial invoice and customs document. We use our china company information and address to mask the real suppliers’ identity so when your competitors try to find out who your factory is, all they see is, guess what? Us! We help our clients protect their privacy using this hack and it works every time.
GET A CHINA TRADEMARK ASAP!
Lately, Chinese companies have been researching best selling brands on Amazon. They are starting to register US and European trademarks in China so they can obtain legal rights to them.
Why are they doing this? Why do you need to protect your brands before it’s too late?
Why you need to act fast:
Norman Farrar – is a serial entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.
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No resources.
Norman Farrar – is a serial entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.
