Hey, guys. It's me, Sarah, the video editor here at Wholesale Ted. And in this video,
I'm gonna give you the five big mistakes that people first make when they start importing
goods from China.
Now, some of these are mistakes that I have personally made, and some of these are mistakes
that my friends have made. In fact, a friend of mine recently made mistake #3, and it cost
him a lot of money in unexpected fees which massively ate into his profit margin. It was
actually this incident that inspired me to make this video.
Now, just a quick disclaimer. Most of my subscribers here at Wholesale Ted are looking to import
products from China into the USA. So there is going to be a lot of USA-specific advice
in this video. But I will do my best to give everything a worldwide context as well. And
another disclaimer, this video, at times, may get a bit technical, but I'll do my best
to explain everything as completely as possible. So to find out what these mistakes are and
how to avoid making them for yourself, keep watching this video.
Mistake #1, assuming that shipping by sea will be the cheapest option. Now this is a
classic mistake that I see a lot of new sellers make. They assume that if they ship by sea,
then they will get a leg up on their competition. And they'll often tell this to me, as though
they've cracked some super-secret code, "Ooh, I'm gonna be different. I'm gonna be better.
I'm gonna ship by sea. I've found the secret! I'm gonna be really rich!" Yeah, it doesn't
work that way. The truth is unless you're shipping in large quantities outside of China,
it is usually cheaper to ship by air.
Now, shipping by sea is, on the surface, cheaper than shipping by air. You see, if you ship
by sea, it will normally cost you around 60 cents a kilogram, whereas shipping by air
carrier will normally cost you around $7 a kilogram, so that is a huge difference. And
I can imagine that you're sitting there behind your computer thinking, "Sarah, what are you
talking about? You just said that shipping by sea is cheaper. How can it even be cheaper
to ship by air?"
Well, the thing is is that for you to be able to get it that low price, you need to be shipping
by container, and the containers are very large. This means that you're gonna be shipping
hundreds of kilograms. And if you can't fill a container by at least 60% to 70%, then,
again, it will usually be cheaper to ship by air rather than by sea. Now, a lot of my
subscribers here at Wholesale Ted that are interested in importing goods from China will
be private label manufacturers for Amazon FBA. And for most of you guys out there, you
are not gonna be shipping in large enough quantities to make it worthwhile shipping
by container.
Now, let's talk about shipping by air. When it comes to shipping by air, you have two
options: one, air freight; and two, air carrier. A lot of people hear this, and they get confused.
I mean, aren't they the same thing? Well, they are not.
Carrier is door-to-door shipment. So some carrier companies that you probably recognize
are FedEx, UPS, and DHL. These companies have their own fleet of cargo planes which ship
items all around the world. Cargo carriers will pick up your items from your supplier,
and then drop them off at your location of choice. So again, for a lot of my subscribers
here at Wholesale Ted, this is gonna be an Amazon warehouse.
On the other hand, air freight is when you simply have your cargo flown from one airport
to the other. You see, airlines like Air China don't just carry cargo for their passengers.
They also carry commercial cargo as well. And sometimes, this can be almost half the
price of having your items taken by cargo. But like with all things in life, there is
a catch.
You still need to pay someone to pick up your cargo from your Chinese supplier and then
drop it off at the airport. And you will need to source an independent customs broker to
handle the documentation at the border. And you will also need to organize freight forwarding
so that your cargo can be picked up from the port and dropped off at your location of choice.
And again, for my subscriber's here at Wholesale Ted, it's probably gonna be an Amazon warehouse.
There are oftentimes, unfortunately, hidden fees in this that you don't account for on
your very first time, which is why if you're importing for the first time, and you're doing
this, you need to allow a buffer. Now this all sounds, probably, a bit expensive, and
yes, it can be, but it gets a lot better in larger quantities. The reason is that when
it comes to air freight and forwarding companies, there are a lot more fixed fees. And obviously,
these fees scale as you ship larger quantities. Ultimately, if your shipping is something
that is 50 kgs or less, it is most certainly cheaper to ship by carrier rather than by
freight. And believe it or not, depending on the item that you are shipping, it may
still be cheaper or comparable to use carrier rather than freight.
The most important thing to do to avoid this mistake is to do your research ahead of time.
There is a website called Freightos that lets you compare freight rates from different companies.
I'll have a link to it in the video description below. Please be aware that is an affiliate
link. Here at Wholesale Ted, all of the our YouTube videos are free and affiliate links
help us keep our videos free.
Mistake #2, not using the metric system when working with Chinese suppliers. Now, this
is just a quick note for my subscribers here at Wholesale Ted that have not evolved to
use the metric system like we have here in New Zealand. In China, they use the metric
system as well, and not the imperial system. So when you're working with your supplier,
be sure to us kgs instead of pounds, and be sure to use centimeters instead of inches.
And this is just a general note to anyone that wants to work with Chinese suppliers.
When you're working with a Chinese supplier, you need to be aware that they expect you
to work on their terms, and not on your terms. This means working on their time frames and
their schedules. As a foreigner, it is not culturally acceptable for you to be late to
a meeting. But it is culturally acceptable for them to be late to ta meeting. Now, is
this fair? No, but you're getting your items ridiculously cheap, so truthfully, I wouldn't
really complain too much. Make things easy. Work with them, rather than against them.
Mistake #3, using Less than Container Load as your shipping option. Now, unfortunately,
this can be a very costly mistake to make. And as I said at the start of this video,
I have a friend of mine that made this mistake and again, it cost him a lot of money. So
remember how earlier, I was telling you that if you ship by sea, then you need to ship
using an entire container. Well, a quick boring fact, this is called FCL, which stands for
Full Container Load. The truth is is that this isn't the only option. You can also ship
by renting basically a portion of a container. And this is called LCL, which stands for Less
than Container Load. You and other importers rent a portion of a container so that collectively,
it makes it worthwhile to ship by sea.
My friend discovered this and he thought, "Yes! This is great! This is my solution.
I can still ship by sea, with a small shipment, and have rock-bottom prices. It is [inaudible
00:06:40] fantastic plan." He was gonna ship half of his cargo by air, so that it would
arrive in the Amazon warehouse as quickly so that he could start selling very fast.
And then he'd ship the rest of his cargo by sea, using LCL, so that he'd save lots of
money and make even more profit. A perfect plan, right? Until I got a phone call for
him.
"So Sarah, I purchased my inventory and I sent half of it by air and half of it by sea."
I was like, "Oh." And he's like, "So the half that I sent by air, well, that's been fine."
And I was like, "Well, no surprises there." "But the half I sent by sea has accrued these
huge charges at the port that I didn't expect, hundreds of dollars, and they are completely
destroying my profit margins."
Unfortunately, he wanted me to help him come up with a solution, but I didn't really have
one. The thing about these companies that offer LCL shipping is that they usually don't
make their money in the shipping process. Instead, they make their money at the port.
This is because you have to pay huge fees at the port as a result of shipping with them.
The reason for this is again, these companies don't make their money during the shipping
process. Instead, they make it at the port in the forms of commissions and kickbacks
for the additional fees that you, the importer, have to pay there. It's a super dirty thing
to do, and it preys upon new importers.
You see, every port has its own destination service charges. In the United States, these
usually are about $500 to $1000 per container. So you would assume that because you're only
renting a portion of the container, that you would be paying fees relative to the portion
that you were using, right? Well, that is not the case. When you ship by LCL, you usually
get slammed with a huge fee that instead of being based upon the container size is based
upon your share of the container in cubic meters. Essentially, you end up paying hundreds
of dollars at the port in charges. And these can often be comparable to if you had shipped
an entire container yourself. And then the company makes its money through commissions
and kickbacks which are called rebates.
And so like my friend discovered, if you had instead shipped by air, well, you would have
saved a lot more money and your inventory would have gone there a lot faster than if
you had shipped by LCL. It's a slimy business. Do not fall for it. Do not fall for something
that is too good to be true.
Mistake #4, not checking what duties you have to pay. First of all, I want you to not worry.
There is a simple solution to a seemingly complicated problem. And it's worthwhile doing
so that you don't get slapped with an unexpected bill. This was a mistake that another friend
of mine made. They did not correctly calculate what their duties would be. So when they got
their bill, it was a bit of a sticker shock. In their case, they had not set aside the
correct amount of money, so they had to scramble to get it together so that the inventory could
be cleared at the border.
Now, duties can be a bit complicated. For example, let's say that you are importing
woolen jackets into the USA. Well, there isn't just one tax supplied to all woolen jackets.
There are other factors to consider when working out what your duty rate would be. For example,
was the wool used for the jackets imported from Israel? Well, if so, Israel has a duty-free
agreement with the USA in relation to wool. So if the wool used for your jackets came
from Israel, then your duty rate will be cheaper. And here is another question. Do your woolen
jackets contain synthetic fibers or are they pure wool? If they contain synthetic fibers,
then your duty rate would be higher, because of the fact that in the USA, there are higher
duties applied to products made with synthetic fibers due to the additives used during the
creation of synthetic fibers. But you know, as the importer, it's unlikely that you are
going to know the answers to all of these questions.
But luckily you don't need to because chances are, your supplier does. All items imported
to the USA have what is called an HTS code slapped on them. And this HTS code has a duty
rate applied to it. These codes account for all of the weird quirks like what types of
fabrics were used. HTS stands for Harmonized Tax System. This is a huge manual containing
over 17,000 codes. People spend their whole lives studying this. They get PhDs in this.
Luckily, you don't need to. You just need to know what the HTS code is for the item
that you're importing, and most Chinese suppliers will be to give it to you. When they do, just
do a search for it, and figure out what your duty rate is.
Now, interesting fact, the system for classifying items is actually universal. So the chances
are that even if you're not importing items into the USA, that your local country of residence
has something similar as well. See, I told you that there is a simple solution to a seemingly
complicated problem, which leads me on to my final mistake.
Mistake #5, being afraid to import because you're scared of making mistakes. I understand
that it's easy to listen to this video and be afraid and put off from importing because
of the fact that you're afraid of making mistakes like the people I have mentioned as well and
also losing money. Because after all, if you screw up, that is going to cost you money
and nobody wants to lose any money. And I'm gonna be honest with you. Even if you follow
a step-by-step system, there is a reasonable chance that you may still lose money from
some unexpected fee that you didn't realize you were going to have to pay. And well, honestly,
this is just life. And unfortunately, like my friend from mistake #3, this could massively
eat into your profit margins.
Well, here is the thing, my friend, he made that mistake, but now, he knows. He has learned
from his mistake. Next time, he will use air freight for all of his cargo, saving a lot
of money and greatly increasing his profit margins. Sure, he lost some money the first
time, but since he's done it once, he knows what to expect now, and how to avoid those
same mistakes that he first made. And of course, next time, he'll go on to make a lot of money.
If he hadn't gone out there and tried, he'd be stuck in the same place, doing the same
old job, making no progress. The only way to guarantee failure is honestly, to not try
at all. But instead for him, he went out there, gave it a shot, know it wasn't perfect, but
the next time, he sends stuff up to massively succeed.
Mistakes are a part of entrepreneurship. Sure, learn from other people's mistakes and don't
make the same ones, but don't be afraid to make you own.
Thanks for watching this video. If you liked it, I'd appreciate if you gave us s a thumbs
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