Sponsored by Best Exchange Rates:
Everyone in business knows that three-word mantra: Profit, profit, profit. And what’s the big profit killer? Costs.
Underestimating those costs, or not then keeping a lid on them, is probably the biggest business killer.
So cutting the costs of supplies, materials, and inventory is one of the easiest ways to maximize profits in order to stay afloat, grow, and thrive. And among the most cost-effective ways to do that is by purchasing wholesale.
A wholesaler is simply a business that sells in bulk to businesses like yours. And buying wholesale from an overseas supplier can be even more cost effective.
Unfortunately, when it comes to purchasing wholesale from overseas, it’s not quite as simple as picking up the phone and placing an order.
Here’s how to do it in 10 steps:
1. Find Your Market
Before you understand how purchasing wholesale can work for you, you first need to understand if there is sufficient demand in your market.
This means identifying your target customers and seeing if there is sufficient demand to justify going into the import trade. If demand is insufficiently large, it might make more sense to buy locally and grow steadily rather than buying in bulk and sitting on stock you struggle to sell.
2. Know the Law
While some initial market research is a great idea, you won’t want to proceed much beyond that until you understand the law.
Look into whether the goods you’re intending to buy wholesale and bring into your country are actually even legal here, or whether they can be efficiently imported or have restrictions placed on them.
3. Understand the Costs
As we’ve suggested, buying wholesale from overseas isn’t just a matter of picking up the phone and placing an order. While the cost benefits will eventually flow, there are all sorts of costs and charges that you’ll need to understand and then pay.
They include transport costs, insurance, duties, tariffs, levies, finance charges, and the cost of customs brokers and freight forwarders – and more.
4. Make it Cost Effective
Understanding the costs is one thing, but getting a firm grasp on whether importing is actually cost-effective for you is something else.
All of those extra charges contribute to the eventual cost per unit, which is more difficult to calculate than if you bought locally. So you need to get a clear idea of whether the return on investment benefits your bottom line.
5. Do You Have the Money?
If it sounds like we’re obsessing about the costs here, you’d be right! That’s because there’s no point understanding the costs in total, and the cost per unit, if you don’t actually have the money in the bank to make it happen in the first place.
Wholesale importing may make financial sense overall, but it’s still very cash intensive in the moment. To make it work, you’ll want to be placing larger orders rather than smaller orders, and that means having a big chunk of money at purchasing time.
6. Understand the Risks
Again, while importing is ultimately more cost-effective, buying locally is not as risky.
Your goods are going to travel long distances, so once they get to you, it can be too late to start to negotiate over manufacturing and quality control issues – and too much money can be tied up in that order to consider a ‘plan B’. Underestimate the risks at your peril, because being under pressure to put to market a product you’re really not happy with can endanger your entire business.
7. Learn the Lingo
To import wholesale, you’ll need to agree and sign an import order, so you’ll need such a good grasp on all the language of the trade.
In fact, you’ll need to know the lingo so well that you can even overcome the language barrier when it comes to communicating directly with your foreign supplier. Not sure what EX, FAS, FOB and all the rest stand for? It’s time to brush up.
8. Watch out for Exchange Rates
One significant but commonly underestimated risk of purchasing wholesale overseas is the exposure to exchange rate fluctuations. When you’re buying goods that are made and sold in a foreign currency, you need to understand how that converts to your currency. It can really make a difference.
Major banks like the CBA offer extensive Forex services that are convenient if you’re making smaller or occasional transfers. But once you get into regular international money transferring, you’ll want to look into specialist providers that can offer much better deals than CBA exchange rates.
9. Get the Right Supplier
Those new to the wholesale importing game might be tempted to pick the cheapest supplier they can find. But often, the problem you’ll face with their low prices is that they’re not the best supplier to deal with.
It’s much better to secure a reputable supplier that isn’t scamming you, won’t go out of business before they deliver, and will stick to the specifications and quality that you’ve agreed upon.
10. Learn How to Deal with Your Supplier
Once you’ve found a good supplier, it doesn’t end there. While not exactly rocket science, wholesale importing does involve a steep learning curve beset with challenges.
These involve language, culture, and value barriers as well as the risk of misunderstandings and miscommunications.
Ready to Get Started?
All sound good? As long as you understand the complexities and potential pitfalls just as well as you know all the upsides, purchasing wholesale goods from overseas can really work for your growing business. Good luck!