6 Ways to Save Money Importing
How to Be a Competitive Force in the Global Marketplace
Got a great product idea? Then get ready to source and import it. The whole point of importing is to broaden your selection of suppliers worldwide, lower prices and increase profit margins, all part of a global strategy to become a competitive force in the marketplace. Let's take a look at how to do that.
Order It on the Cheap
Let's say you ask a United States manufacturer to make hammers for you to complement your already existing line of hardware products; they cost $1/unit based on a minimum order of 10,000 units. You ask a manufacturer in Korea to make the same hammer and it's 25 cents a unit based on a minimum order of 5,000 units.
Even after adding transportation, your markup, tariffs, duties, exchange rates, and insurance fees to your price, you will still net a cheaper price per unit going with the Korean supplier versus the U.S. supplier. Shop around. This may not always be the case, but you'd be surprised at how manufacturers in countries with low labor costs can produce goods at remarkably cheap prices. And the quality is acceptable provided you keep your eye on it.
Buy Large Quantities to Keep Your Transportation Cost Down
There is a huge difference between ordering 1,000 units versus 10,000, and it's not just in the number. It's also in the freight savings. Say it costs $500 to ship 1,000 hammers, or $.50/unit. From the same manufacturer, to ship 10,000 units, its $700, or $.07/unit. It pays to negotiate larger orders to save money on freight costs. Oftentimes, the price per unit also goes down when you order larger quantities.
Import From a Country Close to Yours to Save on Transportation Costs
Are you based in the United States? Then think about importing from Mexico or Canada. The proximity shortens the transportation route, reduces the freight expense and allows for faster deliveries. Plus, NAFTA offers some nice international trade incentives.
Purchase the Same Product in Different Colors
On those hammers, most likely you will pay a one-time investment for the design and the manufacturing mold to produce it. Ask your supplier to make it in five different colors. Spread the investment over many SKUs (standard stock-keeping units) to save money. Besides, your customers will be happy with so many choices.
Track Your Imports with Online Software
There are a variety of software packages available online that will help you track your sales, inventory and order fulfillment in real time and all with the goal of boosting the delivery speed of your shipments while saving on transportation. Check out Visco Software for Importers and Industrious Software.
Establish Creative Payment Terms
Instead of paying for goods in full upon delivery, ask your supplier for a time payment, usually, 30, 60, 90, or even up to 180 days to pay the amount in full after title to the goods is transferred to you. Importers prefer this payment method, but obviously, it will compromise your supplier's cash flow. Negotiate until it is a win-win for both parties.