Profit margins on imported items

[Maughanez]

Hi,

I am planning to import hardware items such as locks, handle sets and door closers from a reliable source in China. I have had preliminary discussions with UK hardware stockists who are interested in the products.

The products I am buying are roughly 1/3 the price of the UK retail value.

I am new to this line of business and I wonder if anyone can advise me on what a sensible mark up percentage would be to:

A: Make a worthwhile profit
B: Enable trade customers to make a worthwhile profit on re-sale

Any advice will be much appreciated

Cheers
Kris

 

[Deleted member 226268]

China ..... the UK's supermarket.

But isn't that where all the UK hardware stockists already obtain their stock from ?

How are you going to compete with the UK stockist's bulk purchase discounts from China
.....and think you will make any money by selling items to them,
similar to what they are already buying ?

.

 

[Paul Kelly ICHYB]

The products I am buying are roughly 1/3 the price of the UK retail value.

Does this include import costs, duty, VAT etc?

What is the normal UK margin for these products and supply prices?

For these types of products, doesn't sound like a great margin!

 

[Maughanez]

Thanks for the reply!

I am aware that Chinese imports are common although quality can be questionable (in hardware).

I disagree that all stockists import from China, especially those lower down in the food chain. The practicality of sourcing a reliable Chinese supplier + logistics means that some prefer the relative simplicity of a UK based supplier.

I do also intend to sell to the public via Amazon/EBay (another forum topic) as well as attempting to move larger volume to trade where possible.

This business is to be a side line to my existing full time job

Cheers
Kris

 

[Maughanez]

Thanks for the reply!

The duty for the items is 1.7 percent, I am not VAT registered at present, as advised by accountant (yet).

I assume that the the overall re-sale v purchase price (66% more) would pay for the shipping and duty (approx 15%?) and allow for profit

I have exclusivity on the range of products in question (no direct UK comparable). They are high quality products made under recognised brands in US and NZ.

The buying price in US dollars is also negatively effecting potential profits due to the pounds low value against it.

I really appreciate all of the members advice and comments as I am still obviously assessing the feesability of this venture.

Cheers
Kris

 

[MBE1]

I would think most retaillers would look to at least double the wholesale cost, and imagine many wholesalers would want at least 50-100% mark up themselves, but each industry is different with varying levels of mark up.

So based on your buying at approx 1/3 of retail, I don't think you are buying well enough to allow all parties to make a decent mark up, including yourself. Only you can decide, never dealt with hardware myself.

 

[Root 66 Woodshop]

In order to compete with the market you'll need to go VAT registered before you even consider a purchase... simple reason being is that once you start selling the product you'll hit that threshold very... very quickly.

Make sure though that all the products meet the relevant EN and BS requirements in the UK... unlike one company which I shall refrain from mentioning... don't get the cylinders stamped or any of the products for that matter stamped with a BS marking without having them tested... you'll fall flat on your face at a very costly price to you.

With regards to selling price - that's entirely up to you...

Who are you competing against exactly?

What companies based in the UK will be your main breadline?

Who will you supply directly to?

Will you be contacting Locksmiths to sell to?

If yes to the latter - add me to your list and send me a PM.

I have some good contacts in this industry... your competitors and your customers

I can guide you with pricing - but it'll cost you

Furthermore: Security products such as locks - are never... I repeat never priced in the same concept as a normal "retail" product... simply put this is your home or business that this is securing - do you really want to put a £3 lock on your door when it doesn't have the correct testing or would you put a £30 lock on your door with the correct testing... BS marks etc are a very important role on our home and business insurances.

 

[Maughanez]

Hi Haunted Worlds,

Sorry for the late reply, I had an email notification for the other messages but not for yours!

When I talked about UK stockists in my initial thread message above I was referring to a couple of businesses local to me in Sunderland.

I intend to supply to hardware/locksmith shops/businesses yes!

I am currently awaiting samples (to punt to businesses) of residential door handle sets and fire rated door closers from Taiwan.

I also currently work in construction and hope to use a few well placed contacts to move some product.

The products are manufactured to Grade Certified Standards for the NZ market in Taiwan.

If you want to check the range out it is manufactured under the EZSET brand. I'd send you a link but this forum does not allow me to post one.

Thanks for the response and I am certainly interested in further advice and discussion on future business opportunities.

Cheers
Kris

 

[Maughanez]

MBE1

Thanks for your comments,

I think there is profit in the stuff!, but as you say profit margins may be tight for trade custom. It certainly needs further investigation.

Cheers
Kris

 

[VBerardi]

I looked in to a similar industry and the mark up they wanted in retail was 100% of price I paid - so half of what it costs to the shops.

At 1/3rd of retail it would be tight and there are always other costs incl shipment, customs, packaging etc.

Why wouldn't they go direct and go mega bulk?

I would look for more niche items or try to sell myself if possible.

 

[LondonSW]

My wife run her biz, import/distribution of a Luxury product.
In her industry there are some "standard", importer buy at 30, sell to shop at 50 and shop sell to retail at 100.
She has some obligation in term of advertising (5% of what she buy, and the producer match with a contribution of further 5%), further obligation to repair product under warranty etc.
She pay cash, while shop pay 30-60 days, plus she has stock, hence very working capital intensive!
Overall she has 40% gross margin, and nice net margin after all the cost, since the goods are quite expensive and nice turn over.
You need to consider working capital, and all other costs and obligation related that would put under pressure your gross margin etc

 

[Maughanez]

LondonSW, Hi,

Thanks for the figures, that's really helpful. Those figures also seem to add up in respect to my venture

Kris

 

[Root 66 Woodshop]

Hi again...

Ezset... appears to be a copy of Weiser lock... probably the worst lock in the world for any locksmith to install - once it's on the door, you can't replace it with anything but it's counterpart - i.e. Weiser or ERA locks... they're awful to use and to fit... Personally, I wouldn't bother if I were you - I think you're throwing good money at crap... that doesn't even conform to BS standards.

Door closers appear to meet basic ANSI requirements - but nothing regarding a CE mark as far as I can tell... unless you've been given certification of this product conforming to CE then again, I honestly wouldn't bother... i.e. these EZSET closers conform to the same standards as Stanley Security Solutions (who also own PAC)- but Stanley's, although crappy... have a CE mark as well.

Again though, personally... you'll be competing with the likes of ALLEGION (who also own LEGGE and BRITON) and ASSA ABLOY even Hoppe couldn't compete with them when they brought out the ARRONE products in the UK... they're dwindling now these days...

I'm all for new products coming into the UK especially security products - but please save your money... these are not going to help you at all. (My personal opinion - sorry if it's not what you want to hear - but it's true).

Take Zoo hardware for instance - a direct copy of Eurospec products... they've brought the same products over manufactured to the same standards according to them... yet they're nothing like it at all.

 

[Root 66 Woodshop]

Sorry to sound negative in my last post... I just think that you with all due respect are wasting your money, and trying to compete in an overly already saturated... and I mean completely saturated industry.

Sure you might get a bite of a very large apple but what it would cost you to even make teeth marks would be millions...

The likes of Assa Abloy for instance is a multi billion pound company... world wide, some even say astronomical... personally I think they've killed the lock industry... if it's good they'll buy it, if it's crap they'll destroy it and if it's mediocre they ignore it...

Going back to my previous post... EZSET looks like a direct copy of Weiser... even their electronic locks look virtually the same... the UK have some weiser products imported by distributors, but it's not even 1% of the UK market... much the same as Master products... we're about near to purchasing 2% in the uk of Master... there's a lot about don't get me wrong... but is 1% of the industry worth it? Can you really afford to fail with this product?

 

[Maughanez]

Haunted Woods,

I appreciate the advice, no need to sugar coat it, thanks.

I've obviously got a bit to ponder!

The supplier has agreed to meet payment terms from UK orders which would mean limited capital outlay from me.

Initially from this venture my aim is to supplement mine and my wife's income. Any growth beyond that will be welcome but not vital

I am a joiner by trade and I fully appreciate the troubles inferior quality hardware can cause during installation and beyond in service.

Do you think moving enough of this product to turn a modest profit is unlikely

EZSET is just one product line that the supplier produces. A very well known Tool brand is also produced for which I am awaiting prices, does this represent a better bet??

Cheers

 

[Root 66 Woodshop]

If you can compete with prices by the main distributors of the brand here in the UK then they'll use their buying power to ensure that you're shut down... why would this manufacturer supply a one man band (no offense) better prices on the product that are already in the UK than the leading distribution companies in the UK?

If they can't give you a better purchase price then you've got some seriously tough competition... as soon as you start selling the product you're competition will spot it and ask the question... what's going on?

Send me a pm if you want with the brand and I'll be brutally honest with you... as it stands I'd say no.... I think you're looking at a seriously mind boggling cash flow killer... both products are going to bleed you dry. Sorry.

If you've got deep pockets, go for it... if not... seriously don't.

The supplier has agreed to meet payment terms from UK orders which would mean limited capital outlay from me.

What are they exactly saying to you here...

 

[Gecko001]

Have you looked on ebay and similar sites to see what is selling there? Many people do not expect to pay more than what they can get on ebay or the internet in general. Often goods are sent direct from China to the private customer here in UK. I have bought items costing say £5 in the shops here, direct from China for £0.92. I mean I have goggled the item I have wanted, clicked on the lowest advertised there and ordered it and two weeks later hey presto it has arrived in the Post with customs label in Chinese etc. The item was an ordinary set of brushes for a circular saw. Maybe not hardware - just springs with a chunk of graphite on the end of them so hardly sophisticated.

 

[Root 66 Woodshop]

I've been speaking to a contact of mine through the MLA (Master Locksmiths Association) as of which the company that I work for is a member of... I've told him about the product, i.e. ANSI rating but no apparent CE - and the EZSET furniture and he's in the same frame of mind as me unfortunately... door hardware is the toughest industry to get in on... unless your closers and other furniture has a CE mark - no one will touch you.

 

[HFE Signs]

The problems I see are as follows:
Low pound, supply continuity & quality (as above CE mark). If you can overcome these and you have factored in all the costs you could do ok, but what if you order it and the quality is too poor for UK sale? Generally with China you pay 100% at point of shipping, so its very risky

 

[Maughanez]

I don't presume that I have a better buying price than some of the prominent UK distributors.

I have a contact (good friend) well placed within the manufacturing company of said products who has attempted to secure a decent buying price on my behalf. Just how decent that price is remains to be seen, and the feesability of this venture is obviously coming under some welcome scrutiny.

I supposed that if my purchase price is on the high side, being a one man band I can settle for less profit, as long as the profit makes it worthwhile. Worthwhile is obviously subjective matter.

Harking back to the original thread topic, I need to establish workable percentages that I am comfortable with, for resale to the public and local business (if possible)

Regarding the CE mark, I agree that this will be of significance for primary security items such as locks, but I feel the requirement for this is diluted for residential use, especially with regard to the handle sets.

I bought all of my household door furniture (faux crystal handles etc) from eBay and did not consider if it was stamped and I'm in the trade.

Agreed, the lack of stamps may make the products less appealing to trade

Once the sample products arrive I can assess the quality of them and hopefully, apart from being a bugger to fit/replace they are aesthetically appealing and of sufficient quality to sell. I am certainly not interested in punting Micky mouse gear.

I appreciate all of your comments but I still hold hope that there is some money to be made somewhere in all of this..... God loves a trier!

Cheers

 

[Maughanez]

Hi HFE signs,

I am due to receive samples of the products so hopefully the quality issue will be determined way before any order goes in.

As stated above I have a well place contact in the supplying company who I am confident will protect my interests in this regard.

Thanks for the comment

 

[Rob2012]

How did you find stockist? Did you just go to shops selling the stuff?

I am in completely different industry and need to start getting it into shops, no idea where to start

 

[Maughanez]

Gecko001 Hi,

Yes I totally agree that my competition (for the public market) lies in Amazon and eBay.

Personally I never order anything from Asia on either eBay or Amazon unless it is of very low value due to the potential non arrival, damage in shipping etc. Add to that the complication of returns, long delivery times, poor quality issues, lack of customer support and I believe people in the UK still would rather pay a premium to buy from a UK dealer.

I think the low price of the Asian goods reflects the risk you take, although I don't discount that people may be becoming more willing to take the risk?

Cheers

 

[Root 66 Woodshop]

Kris,

I'll be more than happy to help you with your pricing... send me a PM about this and I can help you with it.

Regarding the CE mark, I agree that this will be of significance for primary security items such as locks, but I feel the requirement for this is diluted for residential use, especially with regard to the handle sets.

I bought all of my household door furniture (faux crystal handles etc) from eBay and did not consider if it was stamped and I'm in the trade.

The main point being with what you've said here, is that you're in the trade - you know the market - it was your choice... likewise it would be your customers choice... However, with regards to Door closers... personally if I were you - you'd be throwing all your money at a big wet fish... you wouldn't sell any here in the UK for the main reason of the CE mark... get them tested - then pending on the price, they'll probably fly!

 

[Maughanez]

Rob2012 Hi

I'm at the same point as you, I am awaiting samples and if the money side adds up I am going to punt the products to local dealers as well as the public through online sale (eBay and/or Amazon).

I have contacts in my industry (construction) who I'm hoping will take a shine to the products, but I have no clear strategy until I know the whole thing is feesable and who my market is.

I'd love to help you further but unfortunately I can't

Cheers
Kris

 

[Rob2012]

I have strong experience on ebay and amazon, its very easy. If I were you I would make the listings right now to see the demand even before you have the product.

 

[Maughanez]

Haunted Worlds,

Yes, door closers, especially commercially the stamps may be required for insurance purposes, building control etc. Again though this is not always the case. As long as no details are hidden then again it becomes a matter of choice.

I will request some documentation from the supplier (which he has offered) which details the exact standards the products meet.

Testing, yes that's certainly an idea for a bit further down the line,if moving them as they are proves as difficult as you suggest.

I'm certainly not for chucking large quantities of money at anything until I'm sure is a goer

Regarding the pricing I am still awaiting the costs for logistics etc before pricing comprehensively

Thanks again for the advice

 

[Maughanez]

Rob,

That's a really good shout. As soon as the samples drop I will do just that.

I have sold only bits and pieces on eBay and although that was relatively simple I've heard a few horror stories about it, Amazon and PayPal.

What are your experiences with the above if you don't mind sharing??

Cheers
Kris

 

[Rob2012]

can be a horror story, there are a lot of fees involved too

you will probably have to price your product a lot higher than you think

but if there is demand then its well worth it

I would get some experience and then try to build a brand few years further down the line