What costs people usually overlook but should be considering when sourcing from China?
Depending on the product type, you might need safety testing. For example kids clothes, kitchen gadgets, lotions, beauty serums. All need testing to make sure that they are safe.
You are also going to need liability insurance. When you import you are not only the seller of record, you are also the manufacturer. So if you get sued – you have a lot more liability. (In this vein, if you are going develop products from China – I recommend that you also invest in an LLC – especially if you already have assets you could lose in a lawsuit).
I think you should budget for bad buys, low-quality items that have to be redone. This is especially true if you aren’t used to negotiating with people in other countries and you haven’t set up the contract carefully. (I am no expert in this area, but I have seen the effects of this not being done).
Also, you need the cash to sustain your other inventory buying through delivery including delays. If you place an order without knowing how some holidays like Chinese new year or the Fall holidays you might not get your items as quickly as you want. On top of that communication during this time isn’t exactly ideal.
Most of my family is Chinese from Shanghai and Shenzhen. My stepmom and uncle both have connections with factories there. I am also an experienced seller. There is no way I would PL without having done a lot of research and working really closely with someone who has a lot of experience. I would budget that expertise into my buy. (Honestly, I think people overlook great PL and white label opportunities in the US).
I would look for someone who is a trainer with a similar risk tolerance, that has PL business that has produced items in the niche I want to work in, that has the “heart of a teacher” and has a history of sourcing and producing safe and profitable items.
If you want to go to China – go to China. But don’t blindly jump into a complicated business model to justify the cost of an amazing trip. We spent three weeks in China – we didn’t buy anything to resell. It was great. Over the years coaching- I would say I have heard at least 40 people say they regretted running off to China and starting a PL. They got caught up in the excitement and didn’t finish their research. Some of these people went on trips with people I respect and like. Some went with fly by night “experts”.
Most of the people I know that have done well at PL did it from the US without ever going to China. Going yourself will not always get you a better price.
Sorry to rant but PL is a VERY different model than arbitrage. You need to really make sure you are thinking clearly.
Again, I am not a PL person. This is just my view who talks to a lot of people after PL goes wrong and they have to rebuild everything they worked so hard for.
Robyn Johnson is a world renowned Amazon Consultant and expert.