Your China wholesale efforts can be a success if you do your homework. Here are some tips on how to get started.
This blog article was first published on www.sourcingallies.com
Importing low-cost products from countries like China can be extremely profitable for your business. For those who are new to China sourcing, it may sound complicated and risky. However, those who are familiar with it know that it can be quite easy.
If you are planning to start or have just started your China wholesale business, remember to always consider shipping costs. An item that you are importing from China may have a wholesale price of $1, but the freight charges might be $10. So, in reality, you are paying $11 per item instead of $1. Paying more for freight than the actual product is definitely not a smart business move.
Heavier, bulkier items typically incur higher freight costs. It may be a good idea to start by importing small, lightweight items at the beginning of your business.
If you want to start your China wholesale business, here are some steps that you can follow:
Starting a wholesale business with products from China requires some amount of planning. Before starting your business, figure out the following:
Do you need a wholesale license?
To import certain wholesale items from China, you may need a wholesale license. It may not be required for all items, but it is better to check if your business needs one. You must check your local laws regarding the licensing requirements.
What will be the location of your business?
Different areas have not only different laws and regulations but also different potential niches. Before you take a step forward, you must find out if your wholesale business is legal in the area that you live in.
What type of wholesale business do you want to run?
The term ‘wholesale business’ is an umbrella term and can be broadly divided into two types:
- You buy bulk items from wholesale suppliers and sell them directly to consumers.
- You buy in wholesale from a supplier and then sell it to retailers.
If you are new to the wholesale business, selling directly to consumers is recommended, as there are fewer risks. However, if you have experience in the wholesale business and have distribution channels and business scale, you may choose any one of the two.
What products do you want to deal with?
If you have not yet decided what products you want to sell, here’s a tip. You should always consider importing products that have a high demand. It could be a product that, even though high in demand, is not easily available in your home country. Or it could be immensely popular and locally available, but sourcing it at a cheaper rate from China makes it more profitable.
To know which products are high in demand, the rule of thumb is to look at the current trends. Some of the product categories that are very popular in China wholesale are:
- Home décor
- Mobile phones
- Fashion accessories
- Gift boxes
- Hair and cosmetics accessories
- Pet supplies
Where will I store my wholesale inventory?
You would need a safe, secure place to store your wholesale inventory. If you already have a warehouse, then you probably don’t need to worry. For those who don’t, you may want to rent a warehouse where you could directly have your goods shipped from China.
Set up your wholesale business
Now that you have figured out the basics about your wholesale business, you need to take the necessary steps to set it up.
- Get your wholesale license
The items you plan to import from China may not require a wholesale license. Why then should you apply for one? All state governments levy sales tax, and you surely would not want to be taxed multiple times from getting your goods from the manufacturer to selling it to local consumers. A wholesale license allows you to buy products in bulk with the intention to resell, without having to pay tax. You may also need a sales tax license for your business.
- How can you apply for a wholesale license?
You can begin by logging on to the US Customs website to know about the requirements of a wholesale license. Different government agencies have different licensing requirements. For instance, if you are importing skin care or hair care items from China, you may need to fulfill the FDA requirements.
Here’s how you can get your wholesale license:
- Log in to your local official website
- Understand the wholesale license requirements
- Set up your business as a legal entity
- Apply for a sales tax ID
- Submit your application
What is the cost of a wholesale license?
The requirements for acquiring a wholesale license is different for different states. Hence, the cost of a wholesale license may be different in different states.
- Find the right China wholesale suppliers
The most important part of setting up a China wholesale business is to find the right wholesale suppliers in China. You could either take the next flight to China and start looking for the right manufacturers and suppliers or do the next best thing. Hire a sourcing agent.
What is a sourcing agent?
A China sourcing agent works in close collaboration with you to search, identify, and negotiate with wholesale suppliers and manufacturers in China. China sourcing agents can also help you with market research, quality control, pre-shipment assessment, custom clearance, and supplier growth.
A good China sourcing agent is:
- Fluent in both Mandarin and English
- Has in-depth knowledge of Chinese business culture
- Has extensive experience in handling Chinese suppliers
- Experienced in quality control
- Experienced in audit and logistics
Partnering with the right sourcing agent and the right wholesale suppliers can be a total game changer for your business. A good China sourcing agent can help you source high-quality products at extremely affordable rates that enhance the cost-effectiveness of your business.
Grow your China wholesale business
Once you have the right products from the right suppliers in China, your business is in motion. It is now time to think about growing your China wholesale business.
Integrating the supply chain can make your business more profitable. In a traditional wholesale business, you buy from a China wholesale supplier and then sell it to a retailer who, in turn, sells it to the consumers. Removing the middle links and selling directly to the consumers could be an effective way to grow your business.
Your China sourcing agent can play a vital role in the growth of your business. Your sourcing agent can take care of the entire manufacturing process from finding the right manufacturers to shipping it directly to your warehouse. With the right partnership, you can concentrate on expanding your consumer base while the rest of the process is taken care of by your agent.
Use a feasible pricing strategy
The right pricing strategy can do wonders for your China wholesale business. With the right sourcing agent, you already have the right suppliers providing the right product at an amazing rate. Now, you need to adjust the pricing strategy that can help you grow your consumer base and your business.
Your pricing strategy must include:
- Your sourcing price
- Shipping costs
- Freight charges, if any
- Any other miscellaneous costs
The right pricing strategy can help you recover all these expenses and still provide a great product to your consumer at the right price.
Create your own distribution channel
If you want to grow and expand your China wholesale business, you must create distribution channels. With more and more people using the internet these days, you can either create your own e-Commerce website or sell your products on already existing ones. Selling on Amazon and Ebay could be a great way to expand your consumer base.
If you want to have your own website, you would need to purchase a domain name. Selling on Amazon or Ebay is easier, but there are already a huge number of sellers on these websites. For a newcomer, it may sometimes be tough to stand apart in the crowd of experienced wholesalers. However, selling on Amazon could be a good idea if you are just starting off your business. As it grows, you may think about investing in your own eCommerce website and open another sales channel.
Market your business
Whether you have set up your own eCommerce website or you are selling on Amazon, it is vital to market your business.
Your marketing plan must focus on the following:
- Bringing in new wholesale customers
- Getting more orders from your wholesale customers
- Increasing sales for your wholesale business
There are several ways to market your business like cold calling, email campaigns, and sending samples. If you are not entirely comfortable handling marketing on your own, it is recommended to seek the help of professionals. You can hire a marketing agency or even hire a freelance marketing agent if you are on a budget.
Tips to get your wholesale imports from China
China is often called the factory of the world, and there are thousands of products that you can choose from. For a successful China wholesale business, you must choose products that you can make a profit of.
Here are some handy tips for those of you thinking about starting a China wholesale business:
- You should know everything about your niche. When you know your niche well, you can create an effective marketing strategy, the right pricing strategy, and more engagement with your target audience.
- If you are new to the China wholesale business, start small. It is absolutely fine if you have big dreams, but in the beginning, a realistic approach will be more helpful in setting up your business. Pick a niche that does not have too many big players so that you struggle less in making a mark. A viable niche could be the one that most retailers don’t sell in.
- Start by dealing with low-risk products, meaning products that are least likely to cause an injury. By dealing with low-risk products, you safeguard yourself from any potential lawsuits in the future.
- Create a close working relationship with your China sourcing agent and Chinese suppliers. Developing an amicable relationship with both can play a key role in the growth of your business.
- Since you would be sourcing your products mostly from China, learning about Chinese business culture can prove helpful in the long run.
- Never compromise on quality. Getting high-quality products at affordable rates is the biggest upside of sourcing from China. However, the quality of your products is directly proportional to the price you pay. When you pay too cheap a price, suppliers may cut corners, which will result in an inferior quality product. If your sourced product does not comply with regulations and certifications, you may have to face legal repercussions.
- Be mindful when you sign the sales agreement with your Chinese suppliers. Make sure you include important points like terms of product specifications, quality control, and conditions for return so that you only get high-quality products.
Starting a China wholesale business, or any other business, for that matter, is not an easy thing to do. There are risks involved in sourcing from China, which can be mitigated if you partner with the right people and pay attention to detail. However, the benefits of sourcing products from China often outweigh the downsides.
China is an emerging marketplace, which means that there are excellent opportunities for new businesses. The right sourcing strategy can prove extremely profitable for your business. However, the language barrier and lack of knowledge about the Chinese business culture can often prove to be a hindrance to sourcing products from China.
The right China sourcing agent can take away the bulk of your worries about procurement from China. From finding reliable and experienced manufacturers in handling the quality control and logistics; they can help manage a huge chunk of your business. When you partner with the right sourcing agent, you can focus your energy on other aspects of the business to create a more successful and profitable China wholesale business.