Have you ever dealt with sellers on Alibaba.com? Are their "golden suppliers" trustworthy?
Why do the sellers and suppliers on the website insist on bank or wire transfers? That makes me very suspicious.. Why wouldn't they like to be paid through paypal?
2009-03-29 16:55:19
Answers
2 Answers
ThatsWhy
Inquisitive, I have dealt with alibaba in years past so my info is first hand. Regarding "golden" suppliers, they are trustworthy in that they have been verified as legitimate and existing. This doesn't mean that they will produce a good, quality, regulation (US) conforming product. Fully 50% of Chinese factories have shut down since early last year. This has spurred lower costs and (in some cases) better quality as surviving factories struggle to remain competitive. You will want to get a sample and if you move forward, will want to employ your own 3rd party inspection firm to oversee pre-production, production, pre-ship and container loading inspections. This is one step you cannot afford to skip.
Regarding the bank wire issue, the reason the factories have switched mostly to that is because they were getting screwed with the L/C (letter of credit) process. With an L/C, your bank holds the funds and acts as an intermediary until the production is finished and you approve payment. So, factories were getting stuck with produced inventory if the buyer (you) decided to pull out. With the wire transfer method, the buyer must pay 30% upfront (known as 30% T/T) so if you changed your mind or refused the shipment, the factory at least had their costs for producing your 10,000 widgets covered. They don't accept credit cards or PayPal for the reason already mentioned......they don't want to pay a 5% fee on a $50,000 transaction.
If you employ a 3rd party inspection firm (as mentioned above), the most you will be out is 30%. You could also pay your inspection firm to perform a pre-production audit of your chosen factory before you plop down any money. There is one other option to buying 10,000 widgets at a given time. You could go through a trading company. Trading companies are intermediaries who will sell you smaller lots of various items at a markup. So, they buy the 10,000 widgets from the factory and you buy 1,0000 from them, along with 500 dolls or whatever else you want. You also don't have to fill an entire 20'/40' container (known as FCL), but rather could share space in a container with other companies (known as LCL). Your cost per unit is higher but cheaper as a whole if you dont' have a full container load.
Someone mentioned tariffs, customs fees, shipping fees, etc. and this is accurate. You will want to factor this into your costs. Also, you will want to research all regulations regarding your product to make sure it meets safety/labeling standards or else your product will sit in Customs (incurring additional costs each day) until you can modify your product to meet US standards. One last note (and it's a huge one): CPSC has enacted some new regs this year and next that affect import testing and certification requirements. This can add huge cost to your import. You had better get familiar with these new regs before you proceed to ensure your product can withstand the additional cost.
I could go on and on. Message me if you need further advice.
2009-03-30 05:19:35
Ranger
Because you are dealing with the factories in China that produce the goods. They are not going to give 12% to EBAY and 5% more to Pay Pal.
By the way are you aware you will have to purchase a large number of the items, like 150 - 500? And you have to arrange for an import license from customs, pay shipping to get your products here, and then pay for customs inspections and the import duties, and storage until it can be shipped to your ware house.
Very few items can be bought in small numbers, and they still require you to be an importer with the proper permits.
On the good side, the conex that your 500 widgets came in is duty free. Customs does not consider it to have a value.
