Bill Gates Foundation
You might not know this, but one of the very first profitable businesses I ran was an importing company. From the age of 13 til the age of 18, I imported a whole bunch of random stuff and sold it on various websites. It was really difficult when I was getting started, partially due to my lack of experience, and partially due to the fact that there was nobody there to help me.
My friend Devan Earle is thinking about getting into the import arbitrage business and emailed me with some questions last night…
Our conversation made me remember how impossible it seemed for me when I first got started, and how many questions there were that needed answering…
Where do you find suppliers? How do you know what’s going to sell? When you know that, how do you know what to determine to sell? How do you eliminate the risk of scams and bad shipments? Where do you even begin to research?
Our conversation got so in depth that I decided to turn it into a blog post.
So this is basically going to be an A-Z guide on what I would do, step by step, if I was going to start over again at importing products from Asia and selling them online. I’ll also include some insights on what made me choose these steps. If you plan on trying this out, I would suggest bookmarking this blog post and referencing it in the future. I am planning on it being a complete guide and will be continually adding to it based on questions I get from readers.
I encourage you to go through step by step and not jump around, as I put it in this order for a specific reason. This is the order I would do things in, and the order that I learned them in.
I will also tell you the story of my rise and fall in the importing industry – or at least the interesting parts 😀
Note – I have since written a follow up to this post called
Knowing What to Avoid and the Basics
You have to understand going into this business that it is a risky one. Dealing with Asian businesses is very, very different than dealing with American ones. If you go into this not knowing that there is a lot of risk involved, you will probably end up with $1, 000 worth of iPhone 2 knockoffs in your garage, or $1, 000 worth of nothing at all…
That being said – if you are careful, understand what you’re doing, and know what to avoid, you can make a KILLING with a relatively small amount of work.
Understand what you are doing
As with any other project you are trying, make sure you have a really clear understanding of what you’re going to be doing before going into it. Like I said above, if you aren’t careful, it is really easy to end up with a hilariously absurd amount of worthless product you will never sell. I still have a box of worthless imported crap I was never able to sell, I should probably throw that out…
What you are trying to do here is this –
- Find a good product – I always hate when this is the first step of something I am reading, but unfortunately it is here too. Luckily, picking niches for this is pretty easy and quick, and doesnt involve pouring through monotonous keyword data.
- Find a good supplier – There are a handful of great suppliers in every niche. It really takes some digging to find them (along with a little luck), but there are some things you can do to make sure you avoid the scams and increase your odds at finding an awesome supplier.
- Sell and build – After you have a good product, and a good supplier, you just have to start selling it. If it were me, I would leverage existing sales channels (eBay, Amazon, etc) to both sell my product, and build up my own recurring customer base. So that is what I am going to focus on.
Things not to do
- Don’t buy in bulk from a factory until you have their samples in your hands and you LOVE them.
- Don’t let any supplier convince you they can’t ship single samples, they are trying to scam you.
- Don’t pay with any other method but PayPal for the first 6 months with your supplier. This eliminates a ton of risk.
- Don’t buy from a company that won’t accept PayPal. What it really means is that they had a PayPal, and it was shut down due to complaints.
- Don’t buy counterfeit crap. Not that there isn’t money to be made there, it is just a bad business to build.
- Don’t buy a lot of inventory in the beginning. I started off buying 1-5 units at a time until I built up the money to reinvest into inventory.
- Don’t give these suppliers your personal email. The email will be effectively nuked and unusable for years, trust me…
Well, I hope that gets you in the right mindset. Let’s get into the beef of it. BEEF.
Step 1 – Finding a Good Product and Potential Suppliers
This is really going to be the most important part of all of this. This is where you find the opportunities and start developing relationships.
I will tell you how to find good products and good suppliers, but first let me tell you how I initially broke through and succeeded with this method.
When I first got started, I went right to counterfeit purses, shoes, and P90x’s. I made a KILLING selling these through Craigslist, Amazon, and eBay, but quickly decided to get away from them. I didn’t want to build a business on foundations of questionable legality, and you shouldn’t either. I handed these businesses off to my friends – one of which made something like $60, 000 in 3 months JUST selling P90x’s on Craigslist and hand delivering them around NYC.
The other friend was making around the same amount with shirts and shoes, but got cocky and soon found all of the trademark owners coming after him (like coming to his house in black tinted cars watching him and his family after him). He ended up paying out a sizable settlement, right around the industry standard of 3x earnings. Needless to say, he had to liquidate all the fancy toys he bought with his earnings.
And that is why you should avoid counterfeit designer crap. I won’t say it won’t make you money, because I know it will. But it is like dealing drugs, you are building a business that is contrary to the law, and it will end up biting you. Bad…
After I got out of that market, I found I could source competitive Katana swords and sell them on eBay for an unreasonable markup. However, I soon figured out that high ticket items required a lot more capital and are inherently riskier to sell after getting a few returns and bad shipments, so I got out of that and into knives, airsoft guns, mace, and other self defense equipment. I found there was profit to be made on these when looking around for places to sell my swords.
Airsoft guns quickly became my bread and butter. Right after I found my supplier I listed on eBay and immediately started selling 15-30 airsoft guns a day, easily undercutting all my competition and still coming away with a clean $10-20 profit per sale. And best of all, I didnt even touch the product after a while. I finally found an AWESOME supplier who handled all the returns for me with no questions asked, gave me a generous payment structure, and handled all shipping. It was a dream supplier.
Your goal is to find a dream supplier for ANY product you are making money on, because then you can focus on growing the sales of your business rather than on customer service and shipping.
It isn’t easy, but if you follow my advice below you will greatly increase your odds of finding a great supplier and product.