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International Product Sourcing, Step by Step, Part 1

Laying the groundwork

Just when the economy has made it imperative that you find ways to run your business more profitably, along comes the U.S. emergence of sites such as Alibaba.com, which make international product sourcing possible. With such a tremendous selection of suppliers—now equaling millions worldwide—finding the right partner, in terms of pricing and everything else, is easier than ever.

We first made the case for importing as a way to source for less in a previous article, “Sourcing for Online Sales? Think Globally.” In that article we described some of the sites that you could use to find suppliers, such as Alibaba.com and Global Sources. But now it’s time to roll up our sleeves and discuss international product sourcing process step by step.

We admit this process can seem scary. There’s a lot of arcane language (called Incoterms) that comes with this territory, such as FOB (Free on Board), DEQ (Delivered Ex Quay) and so forth. So you have to learn what these terms mean. Plus, you have to go through the process of paying your supplier carefully and correctly, and having your inventory shipped in the same manner. Then you have to “receive” the merchandise. Yes, all this can be bit intimidating. But what isn’t the first time you do it? So let’s get started.

1. Decide what you want to sell

This is the most difficult part of the process and the most important. A crystal ball would help, but short of that you need to go through the same steps you would go through to determine the market for any product idea, whether it’s sourced domestically or internationally. These steps include market research on the Web, perhaps library research using online databases, and asking close friends and family members for their thoughts about your ideas.

As part of this, you have to decide if you want to import a commodity-type item (pocket T-shirts, for example) or a custom product (say, a shirt you design yourself). Of course, it’s easier to bring in off-the-shelf products. In that case you don’t need to create a prototype for your new partner to copy. But many people who source internationally do work with suppliers to create unique products. An estimated 60 percent of the people who use Alibaba.com use the site in this way, according to the company.

2. Find a partner

This is where sites like Alibaba are indispensible. Millions of suppliers have, in essence, put their product catalogs online for you to peruse. It’s almost too much of a good thing. So locating suppliers for any item you can think of will not be a problem.

3. Ask for quotes

Here you need to spell out clearly and concisely what you’d like a quotation for. Remember, you may well be dealing with someone for whom English is not their first language, so keep your message simple.

4. Do due diligence on these companies

How long has the company been in business? Make sure it has a physical location—and reach the company at that location

You’re likely to receive a dozen or more quotes, and quickly, too. Now you need to do some due diligence on the companies that responded. Look at their Web sites. Do they appear professional? Are the products well described and photographed? How long has the company been in business? Make sure it has a physical location—and reach the company at that location (call the company using Skype, for example).

It’s also worthwhile to note how long the company has been on the business-to-business site you may have used to find them. Some of these sites will remove suppliers from their database if they get complaints about them. So if a supplier has been on the site for a couple years, that’s in their favor.

5. Discuss payment terms

This is where it can really get hairy. Not only are you and your trading partners strangers, but a different type of currency—and perhaps 10,000 miles—may also separate you. Just as you’ll be careful to protect your interests, your new supplier will want to protect his. So you can’t expect suppliers to send you any part of your order without receiving part of their payment. But you’ll reassure one another by carefully laying out the payout of these payments and the use instruments such as a Letter of Credit to ensure both parties are protected.

6. Settle on shipping

How will the items get from the supplier’s facility to yours? Depending on what you’re importing, this may be relatively simple—and a surprising number of importers find they can easily work with a company like TNT, which is similar to DHL.

But many items will need to be shipped and, in those cases, working through the right port is important. So is filling out the necessary paperwork. These are areas where your trusted supplier can offer advice and help.

In International Product Sourcing, Step by Step, Part 2we’ll discuss more about how to get your new inventory to your doorstep. We’ll also discuss the common things that seem to trip people up the first time they import an order and how to resolve those issues. Finally, we’ll give advice about how to get expert help with any part of the importing process.

About the author

Brad & Debra Schepp
Brad and Debra Schepp are the authors of 20 books, including eBay PowerSeller Secrets and The Official Alibaba.com Success Guide: Insider Tips and Strategies for Sourcing Products from the World's Largest B2B Marketplace. Their most recent book is How to Find a Job on LinkedIn, Facebook, Twitter and Google+. Brad is also a literary agent for Waterside Productions. For further information, visit the couple's website, bradanddeb.com. Opinions expressed here may not be shared by The Online Seller and/or its principals.



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