I’ve written in the past about how certain types of products are more difficult to import than others, such as custom electronics.
Today’s article is dedicated to those who intend to import from China with a reduced investment. In particular, I will talk about:
- Which products are best to avoid importing when you are on a tight budget and why
- How it is possible to achieve success starting from a minimal initial investment: we will see the case of Daniel Wellington, who by importing watches from China and investing, initially, less than 5,000 Euros has built an empire that today is worth millions
- How and what to import from China when you are on a budget
Product customization
Products that have a high rate of customization usually require a high MOQ. The reason for this is that the manufacturing company will be forced to purchase materials and components from a large number of suppliers, each of which will impose its own MOQ constraints.
Instead of importing a custom product, you can start by buying a standard product and get some sort of “personalization” through one or more of the following strategies:
- Printing your brand on a standard product
- Custom colors
- Custom packaging
- Adding extra accessories
- Increased product quality through the use of better materials and components
Certifications
Toys, electronics, food, and chemicals are just a few examples of goods that require a specific certificate. Only a minority of Chinese suppliers have the ability to make a product that meets European and American certification standards. These products are usually more expensive and subject to a high MOQ as they require specific materials and components, i.e. different from those used for the Chinese market.
However, there are many products that can be imported without the need for any certificate. Here is a list of the most common:
- Textiles
- Wristwatches
- Furniture (for some types you must present a certificate of fireproof properties)
- Leather goods
- Jewelry shop
- Wooden objects
- Art objects
- Mobile phone and PC accessories (excluding electrical components)
- Some cookware and kitchen accessories
- Some sports products
Choice of supplier
Many novice importers attempt to close a deal with several suppliers at the same time. This is why it is almost always a mistake:
- If you buy from several companies at the same time, you will be forced to divide your budget among the various suppliers. This means that you will have to settle for buying very small quantities for each type of product. In this case, you cannot claim any customization
- Administratively, this is a nightmare. The process of importing from China is long and complicated: you will have to prepare the list of specifications, buy the samples and negotiate the price. It could take months to close every deal. And a startup usually doesn’t have the time and money to start a discussion with more than one vendor at a time
- Transport costs have a significant impact on the final price. And, if you consider that each supplier will require a different shipment, minimizing the number of suppliers is equivalent to getting a better price from the shipping companies.
A great example of a company that, starting from a minimal investment, has managed to build a successful brand that is now worth millions of dollars is Daniel Wellington, who is in charge of importing and marketing wristwatches online.
I don’t know exactly what the founders’ original budget was, but I can guarantee you that using their strategy 5,000 Euros is more than enough to get started. Let’s see how.
Watch case (customized)
First of all, you will need the watch cases. Most suppliers will require you to have a MOQ (minimum order quantity) of 300 units. If you opt for a custom crate, you will also have to pay for the design of the “mold” needed to make it. Here are the prices in detail:
- MOQ for watch case: 300 units per model
- Number of models purchased: 1
- Mould price: 240 Euro per model
- Case price: 12 Euro per unit
- Total price: 300 units x 12 Euro + 240 Euro = 3.840 Euro
Watch strap (standard)
The speech for straps is simpler as they are mass-produced. So the MOQ is much less as they can be purchased from any wholesaler. Here are the details:
- MOQ for watch strap: 50 units per model
- Number of models purchased: 6
- Price of the strap: 1.4 Euro per unit
- Total price: 50 units x 6 models x 1.4 Euro = 420 Euro
The end result
This means that you can create a collection of 300 custom wristwatches that contains six different models (as the strap is different) with 4,260 euros of investment.
The key to limiting your budget to less than 5,000 euros is of course that, to start, you will have to settle for just one model for the watch case, while still getting a collection of six different pieces using different types of straps (for which the MOQ is much lower).
What if you decided to request six different watch cases instead?
- MOQ for watch case: 300 units per model
- Number of models purchased: 16
- Mould price: 240 Euro per model
- Case price: 12 Euro per unit
- Total case price: 300 units x 6 models x 12 Euro + 6 moulds x 240 Euro = 23.040 Euro
- Total price straps: 50 units x 6 models x 1.4 Euro = 420 Euro
- Total price: 23.460 Euro
Since the MOQ of the watch case is 300 pieces per model, if you decide to buy six different models you will need to buy at least 1,800 watches to meet the MOQ. Not that there is anything wrong, but in this case the investment becomes a minimum of 23,460 Euros.
The lesson of this case study is that, by intelligently exploiting components that have a limited MOQ (the straps in this case) you can buy a customized and varied range of products while maintaining a more than acceptable budget.
Ultimately
If you have a very limited budget, in my opinion the best way to invest it is to follow Daniel Wellington’s example: create a brand that initially maximizes the number of products through a very simple form of customization (straps, in the case of watches). Here are some ideas:
- Rugs made of the same material but sold in different colors and shapes
- iPhone 5 cases with the same shape but different colors
- T-shirts of the same model and fabric but with different sizes, colors and graphic details
Normally, a simple modification to the product does not imply an increase in the MOQ. Always try to put yourself in the supplier’s shoes to understand that changes can be made easily and without having to buy different materials, i.e. without being forced to increase the MOQ and therefore the initial investment.
- Don’t try to buy too many products from different suppliers at once
- Avoid products that require a certificate
- Avoid products that require a high degree of customization
- Place your brand on a standard product (this is not a problem for Chinese suppliers)
- Invest in quality and offer a product that can be perceived as medium or high quality. That is, focus on a market that guarantees you a high profit margin instead of competing on price with large wholesale import companies
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