What is the best margin profit to make if importing goods from china ?

[alwane]

Hello Folks,
I want to import some products that are used in my field of work,
I'm in an advanced stage of negotiation with a manufacturer in china.
How do i know if i'm making a good deal with those products ?
I made all my calculation and after paying all charges and taxes I still can have 50% of profit in those products.
I want to reduce my margin to 40% or 35% to get more clients.

Is it a good deal ?

Thank you all.

 

[MBE2017]

Hard to say.

On fast moving items it is good, on slower to sell more specialised items you might be able to improve the rates. I have managed to sell 70p items for £10 each in the past, but times might have changed.

 

[DontAsk]

Impossible to answer without knowing a lot more about the business.

What does your market research tell you about price elasticity for your customers?

 

[alwane]

Hard to say.

On fast moving items it is good, on slower to sell more specialised items you might be able to improve the rates. I have managed to sell 70p items for £10 each in the past, but times might have changed.

Hello Dear,
Thank you for your reply,
The products are more specialised and slow to sell, but it's raw materials, we can sell it for years not just trendy products that goes as fast it arrives.
Thank you.

 

[alwane]

Impossible to answer without knowing a lot more about the business.

What does your market research tell you about price elasticity for your customers?

Thank you for your reply,
What do you mean by price elasticity (I know the meaning of the term, but i want to make sure what do you mean in this context) ?

 

[alwane]

Impossible to answer without knowing a lot more about the business.

What does your market research tell you about price elasticity for your customers?

The products : Acrylic sheets and PVC Foam, Field : Advertising industry

 

[fisicx]

You can reduce your profit but people buy from suppliers they trust. What’s your marketing plan to convince businesses to switch to you? Especially as they may consider cheaper materials to be inferior.

 

[Mister B]

Have to ask:
Where are you based?
What's your marketing budget?
Are you B2C or B2B?
Is your 50% nett of all costs or gross?
What will your existing customers think when you lower the price? Will you match it for them, and if so, how will that impact the business?

 

[alwane]

You can reduce your profit but people buy from suppliers they trust. What’s your marketing plan to convince businesses to switch to you? Especially as they may consider cheaper materials to be inferior.

Thanks for your reply,
We are a trustable supplier.
From my experience in my area, when there is products, there is sales.
As there is out there so many references and it's impossible for one supplier to have them all, so your customers are also other suppliers customers. Our USP is free delivery (as the items are big, you can easily spend 10$ in delivery).
I already used those products myself and are very good.

 

[Paul Kelly ICHYB]

The first thing to do is ensure you know your costs - a majority of first time importers I speak to get this wrong and wipe out most of their planned profits.

Also, do not think that reducing profit automatically increases sales. Sell at similar prices and offer a better service. Starting a price war means nobody wins.

 

[alwane]

The first thing to do is ensure you know your costs - a majority of first time importers I speak to get this wrong and wipe out most of their planned profits.

Also, do not think that reducing profit automatically increases sales. Sell at similar prices and offer a better service. Starting a price war means nobody wins.

Thank you Paul for your reply,
I spoke to my Customs clearance agence and couple of other big importers, they give me some advices, and I 'guess' I know all the costs.

Yes, you are right about the price decreasing and sales, they are not walking hand to hand.
As i said in my other response, I will offer :
• A free delivery service (items are big 1,2x2,5m)
• Training (as we have already a workshop)

Thank you.

 

[pentel]

Acrylic sheets and PVC Foam

Is the intention to compete on the day to day materials ( clear acrylic / white PVC foam) or are you going to specialise in the harder to find products? There is a definite gap in the market for specialised materials (1mm,1.5mm or 2mm coloured acrylic anyone?)

If its the day to day then be aware that a lot of fabricators have been bitten by the offer of cheap materials.

Especially as they may consider cheaper materials to be inferior.

This.

Our USP is free delivery (as the items are big, you can easily spend 10$ in delivery).

There is no such thing as free delivery, delivery can be built into the unit cost. a single sheet of 3mm foam PVC (3050 x 2050mm) will cost a lot more than 10$ or £10 to have delivered.

 

[alwane]

Is the intention to compete on the day to day materials ( clear acrylic / white PVC foam) or are you going to specialise in the harder to find products? There is a definite gap in the market for specialised materials (1mm,1.5mm or 2mm coloured acrylic anyone?)

No, just day to day materials ...

The material is good enough and acceptable, I used it myself for my workshop.

There is no such thing as free delivery, delivery can be built into the unit cost. a single sheet of 3mm foam PVC (3050 x 2050mm) will cost a lot more than 10$ or £10 to have delivered.

So, what I understand from you is that the free delivery is very valuable. I can offer this service and still be the same price as the market.

 

[fisicx]

Free delivery can bite you. A single sheet delivered to the other end of the country could wipe out your profits.

I get what you are trying to do but you are a complete unknown. Nobody knows you as a materials supplier, which means you could spend thousands on marketing without getting a single order. Chap I know picks up the phone and has the materials delivered the next day. He knows and trusts the supplier. He is going to need a lot of convincing to buy from you.

 

[japancool]

Offering free delivery means you're still basically competing on price. It's not a strong USP -someone could just undercut you.

 

[alwane]

Free delivery can bite you. A single sheet delivered to the other end of the country could wipe out your profits.

I get what you are trying to do but you are a complete unknown. Nobody knows you as a materials supplier, which means you could spend thousands on marketing without getting a single order. Chap I know picks up the phone and has the materials delivered the next day. He knows and trusts the supplier. He is going to need a lot of convincing to buy from you.

Thank you dear fisicx for your engagement in this conversation.

I'm not unknown, a lot of professionals in my area know me or know my company name. As I have already a digital printing shop and a workshop for big signs. The new thing is re-introduce me to them as materials supplier.

Maybe I'm total freak, but I'm not planning to spend too much in marketing -> Printing a brochure and pay them a visit one by one to let them know about my new service, and then send by whatsapp some offers, training time to time.

Chap I know picks up the phone and has the materials delivered the next day. He knows and trusts the supplier. He is going to need a lot of convincing to buy from you.

I know a lot of suppliers on my area, that's not how the things are going :

• You must come yourself or send someone to the store
• Pay it cash, no check, no card
• Take the receipt yourself to the warehouseman
• Wait several minutes until he find what your are looking for
• Bring your truck or whatever to take the product
• and now you can go.

I did this myself several times.

 

[alwane]

Offering free delivery means you're still basically competing on price. It's not a strong USP -someone could just undercut you.

Yes Dear, totally agree with you,
We have many cards to play :
• Provide training
• Sell the product and then offering discount on making the final product (signs, 3d letters ...)
• Providing hard-to-find product later

...and keep improving the business

 

[pentel]

Chap I know picks up the phone and has the materials delivered the next day.

This is the service we get from several of our suppliers, including cutting to size if ordered in the morning.

Is the OP UK based?

 

[alwane]

This is the service we get from several of our suppliers, including cutting to size if ordered in the morning.

No doubt about that

Is the OP UK based?

No, Africa.

 

[fisicx]

No, Africa.

In which case this is the wrong forum for you. We can only advise on how business works in the UK. And this appears to be very different to the way you describe in Africa. For starters, almost nobody pays cash here anymore.

 

[alwane]

In which case this is the wrong forum for you. We can only advise on how business works in the UK. And this appears to be very different to the way you describe in Africa. For starters, almost nobody pays cash here anymore.

Thank you dear.
This why I don't like to say where I came from. Always immediately slamming the door lol^^.

I believe that business is the same everywhere you go :
• How many people go on a trip to another country, discovering a business in action, and when returning home, doing the exacte same business and it works.
• Here too, we start to pay with credit card and mobile, but for some 'historic' suppliers think "we always work that way" to avoid taxes and payment charges ...

 

[fisicx]

I believe that business is the same everywhere you go

Except it’s not. The way a business runs in each country will differ.

 

[pentel]

This why I don't like to say where I came from. Always immediately slamming the door lol^^

To get relevant responses it is important to be clear what the challenges are. These vary from country to country.

Very few people have an idea how business works in any of the African countries other than for import or export, and they are few and far between..

I have no idea at all of your market, but it seems that to offer a service where your customers order from you today, pay over the phone for you to supply cut to size pieces the next day (I don't know if this is even possible) would be a game changer for them.

In fact it would be worth paying a premium for to be able to have this service. Undercutting existing suppliers, whilst it gets you in the door, might not be the way to go.

 

[alwane]

Except it’s not. The way a business runs in each country will differ.

Thank you Fisicx.
In my town there is 3 MacDo, 2 Pizzahut, 2 KFC and bunch of other european multinationals and they are working just fine like they do at home !

 

[alwane]

To get relevant responses it is important to be clear what the challenges are. These vary from country to country.

The only effective way to know is to practice, I have nothing to lose, if I succeed as supplier, it's the goal, if not I will use the materials in my workshop.

I have no idea at all of your market, but it seems that to offer a service where your customers order from you today, pay over the phone for you to supply cut to size pieces the next day (I don't know if this is even possible) would be a game changer for them.

It's totally possible.

In fact it would be worth paying a premium for to be able to have this service. Undercutting existing suppliers, whilst it gets you in the door, might not be the way to go.

I don't have any problem to undercut other suppliers, offering a better services and keep improving. This will improve the field and everybody wins. Let a few suppliers do whatever they want is not good to anyone but them.

 

[Maple Sourcing]

It depends on the market, how are your competitors doing? Do they focus more on service or on prices?

 

[MOIC]

No, Africa.

A world of difference!

Not sure any of the replies will have much bearing on the OP's trade.

Perhaps I'm wrong.