5 Tips for Finding High Profit Margin Products from China
You can certainly find high profit margin products in China. Make sure you know your market so you’ll go for the right products.
This blog article was first published on www.sourcingallies.com
Sourcing products that yield high profits from China can be an overwhelming process when you are starting out as an Amazon seller. Inexperienced importers who may not have a clear sourcing strategy can run into multiple issues such as communication problems, penalties, shipment delays, and poor product quality, all of which not only disrupt their chances of making a profit but can even cause a shutdown of the business. Here are five tips that can help you find high profit margin products from China.
#1: Do Your Research
Before you embark on the process of finding high profit margin products to source from China, undertaking extensive market research is a crucial first step. You can’t neglect research if your aim is to maximize your profits. The research should include: a detailed analysis of the market, a breakdown of various products that are in high demand, the import-export process, the Chinese business market, and finally a list of suppliers in China who can meet your quality and timeline specifications and the projected product price points.
Try to determine your niche as this will help you prepare a detailed sourcing strategy and establish the price points for your products.
Research the standards and legal aspects that you have to follow to import products from China. Study the shipping process which includes different transportation modes and their costs as well as the time it takes for your Chinese supplier to manufacture your products. Staying ahead of these aspects will help avoid potential delays in shipment which can affect your product pricing.
The more you know about the supplier market in China, the better your sourcing process. The specific areas that you need to research include:
● Your rights and responsibilities with respect to importing from China — This includes understanding whether you can legally source the particular product in your country and ensuring the product is not on the list of restricted or prohibited items on Amazon. You need to also understand the quality standards related to your product. Failing to meet these standards can attract a fine from customs or can also lead to destruction of your products at customs.
● Economic map — Knowing China’s geography will help you identify the best places within the country to import your products depending on shipping options and manufacturer locations.
● Import licensing — Delays in importing can be prevented by having the necessary licenses.
● China business culture: Understanding the business culture in China will aid in fostering the right relationships with your suppliers. The benefits of cultivating the best deals will enable you to derive maximum profits.
● Language barrier: Working with a sourcing agent who has an office in China is one of the best ways to overcome the language barriers that can lead to misinterpretation of product quality standards, measurements, timelines and so on.
#2: Find profitable products
As an Amazon seller, the key to a profitable business is to determine your niche and find the right product to sell. You will be better positioned to make a decision after you go through the research phase where you gather crucial information regarding the market you are looking to enter. You will need to research, brainstorm and select a product to source from China.
When importing products wholesale from China, starting with low-risk goods is one of the best strategies particularly if you are new to the Amazon selling business. Once you get familiar with this process, you can later upgrade to high value merchandise. Product categories that are typically mass produced and are of low-risk include
● Plastics and items made of plastic
● Premium skincare products and accessories
● Small kitchen appliances
Clothing — A 2018 Statista research showed that the Chinese fashion market has continued to maintain rapid and steady growth with a turnover of USD $ 193.9billion. By 2021, the turnover in the fashion industry in China is expected to reach USD $285.3billion. Chinese clothes have traditionally been found to be profitable by Amazon sellers and are one of the low risk product categories. The only caveat is that you need to find a high-quality manufacturer who complies with your quality, design and measurement specifications.
Shoes — Another niche that many sellers find profitable is the shoes category. With sophisticated technology being used and an increasing focus on comfort, cushioning and style; this niche market generates handsome revenue.
The other specialty areas that sellers have focused on include jewelry, cosmetics and consumer electronics. Although you need to do your own research into your niche area, here are some of the specific products that other sellers have found to be profitable:
Wireless Phone Chargers — Phone chargers are always in demand thanks to this product’s convenience and mobility. Wireless phone chargers will continue to be in demand as almost all brands are coming up with newer phone models that are designed with wireless charger compatibility in mind. The typical wholesale price for 100 wireless chargers units is $340 while the average retail price is $12.99, which translates to a potential profit of $959.
USB Desk Lamp- Lighting products such as the USB desk lamp benefit off the ever growing demand from customers across markets. This innovative product provides lighting without the need for a switch or a wire. Plugging the lamp into a USB slot is all that is required to illuminate the surroundings, making it a perfect product for camping, outdoor activities and road trips. The average retail price is $ 0.59 while the retail price is $ 5 that means a Gross profit margin of 900 percent excluding logistics.
Video doorbells- With increasing crime rates in urban zones, there is a growing demand for video doorbells. These can be used as security cameras and when connected to the internet, can be viewed remotely using a smartphone. If you can find video door bells at a low wholesale price in China such as $2,100 for hundred units, you can make a potential profit of $3,898 as the average retail price is $59.98.
Backpacks — Sturdy backpacks used for hiking, camping or school are typically expensive. If you find the right Chinese supplier who sells backpacks in bulk, you can land a decent profit. While the retail price is $24.99, getting them from a China supplier at a wholesale price of $9.75 can help you make a good profit.
Orthopedic pillows — With consumers increasingly becoming health conscious, the demand for healthcare products’ is on the rise. One such product in high demand is orthopedic pillows made of special fillers and fabric. For a hundred units of orthopedic pillows, it is possible to find a supplier in China who sells at a wholesale rate of $800, and while the average retail price is $25.99, your potential profit would yield $1,799.
Cosmetic Brush Set- Professional cosmetic sets are appealing as influencers and makeup tutorials show how to do their own makeup. With the right kind of research, you can find the right China manufacturers who sell these products at very low prices, such as $390 per one hundred sets.
What are high risk products?
Experienced sellers recommend starting out with low value and low risk products particularly for inexperienced Amazon sellers. Although the sky’s the limit as far as the product range you can source from China, some products are considered risky, such as those vulnerable to damage in transit and complex products with intricate technical specifications. For instance, some sellers who have sourced patio furniture that were priced very low in China found that some units were damaged during shipping. This can cause a huge dent in profits. Others who tried to source toothbrushes found that there were no takers for non-branded toothbrushes in the U.S. markets. Entering markets that have proven brand loyalty may not be a smart idea when you are looking to make good profit.
#3: Find the best supplier for your products
Once you do your research on the market, the demand and the right products to sell that can give you high profit margins, the next step is to find the best supplier in China. It takes time and some research to find the right ones. It is extremely important to ensure you do not fall prey to scams or counterfeit products.
Most sellers start their search for China suppliers on Bing, Yahoo and Google. The other China sourcing platforms include Alibaba, Made in China and Global Sources which connect you to suppliers in China.
While you can make a list of suppliers that you want to further validate, it is important to know the difference between a reseller and a manufacturer. Many businesses that are listed on sourcing platforms and search engines could be resellers. While it may be safe to source low risk products such as toys, clothes or low value electronics from resellers, if your product category has stringent quality and technical standards such as industrial molds or is a high value consumer electronics and so on, the ideal strategy is to work directly with a manufacturer in China. This can also help reduce overall costs and boost your chances of deriving a good profit.
Needless to say, you need to partner with China suppliers who are honest, legitimate and have proven quality compliance standards. Ensure that the manufacturer not only has verified testimonials and export experience but that they also have a legitimate factory address in China with the required licenses.
You can also evaluate their ratings on Global Sources and Alibaba to finalize your list. One of the signs of reliability could be the ‘gold’ ratings that Alibaba provides. Keep in mind that Alibaba designates the gold rating to any supplier who acquired premium membership simply by paying the annual fee.
If you can afford to visit the location, you can perform in-person quality inspections which is the best way to know if you can enter into a partnership with the supplier. However, visiting the location can be expensive and eat into your profits. The other problem related to visiting in-person is the language barrier. Depending on the manufacturer’s location, you may need to know Mandarin or other local dialects such as Cantonese or Xiang,
Most Amazon sellers benefit by partnering with a reliable China sourcing agency who have a team in China and can meet the manufacturer/suppliers. Doing this helps establish a strong communication channel because the sourcing agency is fluent in local dialects and can perform inspections by visiting the factory. These services are invaluable when you are looking to build a long-term relationship with a genuine supplier in China and maximize your profits.
#4: Be smart about pricing
Low manufacturing costs in China are the primary reason most Amazon sellers are in the business of sourcing from China. While your initial research would have given you an idea of the price point for your product on Amazon and the wholesale cost of manufacturing in China, it is important not to focus only on low wholesale cost. Many times the assumed advantages of striving for the lowest cost, get cancelled out due to lower sales/profit because the lower cost resulted in poorer product quality.
Before you enter into a contract with a manufacturer, it is also important to factor in other costs related to transportation, import duties and other fees you might incur. Ensure you fill the necessary import forms in your country and pay the duties ahead of time. This ensures there are no hassles of delayed shipments, custom penalties or import detainments that can disrupt your profit margin.
#5: Partner with a sourcing agent
An experienced China sourcing agent can help you maximize your profits as an Amazon seller. They can provide you with a list of documents that you need to prepare or provide when importing from China. These can include customs forms, invoices, the inward cargo manifest, packing lists, bill of lading, certificate of origin and so on. They can also help you understand the import duties and typical transportation costs involved so that you get a clear idea of your profit margin.
The sourcing agent will have a local office in China and is well-versed in Chinese dialects. This will give you a distinct advantage when negotiating the price, communicating the product specification, drawing up a contract, and inspecting the manufacturing process.