Experts Guide Importing From China Global Sources

IMPORTING
FROM CHINA
THE EXPERTS GUIDE
3-day Conference for
Online & Amazon Sellers
27-29 October 2018, Hong Kong
6 reasons to attend:
✓ Up your eCommerce game with actionable content
✓ Source your next best-seller at co-located trade shows
✓ Avail free supplier matching
✓ Network with serious (yet fun!) sellers & experts
✓ Work hard, play harder in cosmopolitan Hong Kong
✓ Get thousands of dollars’ worth of freebies and offers
Learn more:
GlobalSources.com/Summit
Apply discount code BOOK100 for $100 off your ticket
EXPERT SOURCING,
MEET EXPERT FREIGHT
Global Sources user?
Save $100 on your first shipment with Freightos
COMPARE RATES FREE

https://www.freightos.com/globalsources
freightos.com/globalsources
https://www.freightos.com/global-sources/
Use code EXPERTSOURCING100 at checkout to receive $100 off your first

order of $1,000 or more. Offer valid on all Freightos providers.
Expires December 31, 2018.
TABLE OF CONTENTS
ABOUT THIS GUIDE 4
PART 1: PRODUCT 10
Product Research 11
Safety Standards & Labeling 15
Importer & Customs Responsibilities 19
Customs Duties 24
OEM & ODM Manufacture 27
PART 2: SOURCING 30
Types Of Suppliers 31
Sourcing Channels 34
Attending Trade Shows 39
Supplier Marketplaces 43
PART 3: SUPPLIER 46
Supplier Process Steps 47
Negotiating Strategy 49
Ordering 53
Quality Control 59
Payment Methods 63
Relationship Building 67
PART 4: FREIGHT QUOTE 70

Freight Process Steps 71
Freight Forwarders 73
Request For Freight Quote 79
Mode Selection 83
Cargo Insurance 86
PART 5: SHIPMENT 88
Shipping Basics 89
Shipment Process 97
Customs Process 100
Packaging 105
PART 6: FULFILLMENT 108

Overview Of Fulfillment Options 109
Direct Fulfillment 113
Third-Party Fulfillment 117
Drop-Shipping 120
Cross-Docking & Crowdfunding 123
PART 7: AMAZON FBA 126

Amazon Shipping & Receiving Requirements 127
Amazon Europe 131
THE FINAL WORD 135

About Freightos 136
About Global Sources 137
ABOUT THIS GUIDE
As an entrepreneur, you know that doing the research is crucial, but there’s also a time
for throwing yourself into a task. But, with the input from over a dozen experts, this
guide gives you what you need while you’re making it happen at each step from idea to
inventory.
It’s never been easier for an aspiring entrepreneur to sell almost anything to
anyone. In 2017, Toys R Us were still struggling to stock fidget spinners, while just
about every small business in America had sourced their own. Agile sourcing is a
game-changer. Here’s why:
• There’s plenty of demand. With close to 2 billion online shoppers

https://www.smartinsights.com/digital-marketing-strategy/online-retail-sales-growth/
worldwide, that’s phenomenal growth given Amazon only started selling
https://purple.ai/blogs/the-history-of-online-shopping/
online in 1995.
https://purple.ai/blogs/the-history-of-online-shopping/
• There’s plenty of supply. Over the past thirty years, China has evolved
into being the “factory for the world”.
• There’s plenty of sellers. There are literally millions of online sellers in
https://www.quora.com/How-many-online-sellers-or-retailers-do-we-have-worldwide#
the world. Online sales is evolving too. Five years ago, most Amazon
sellers were selling generic products. Now it’s mostly private label selling,
customised colors, packaging, etc. More recently, sellers are looking more
toward customizing product features.
• There’s plenty of support services. You’re not alone. There are
hundreds of support services to connect your supply and sales chains,
letting you focus on what you do best – selling.
Why this guide?

• It‘s more extensive than other guides.
• It doesn’t shy away from one of the most mystifying stages in the
process — freight.
• We collected a broad team of experts in their field to draw on advice.
Speaking of which...
4
Meet The Experts
This book is brought to you by some of the best in the business. Read their
articles, learn what you can, and then check out their companies. They make it (a
lot) easier to bring your product to life.
Greg Mercer, CEO, Jungle Scout

Greg is the expert who wrote the Product Research chapter.
Founded by Amazon sellers for Amazon sellers, Jungle Scout offers a suite of
Amazon product research tools and free resources on everything Amazon to
educate users about launching a successful and sustainable Amazon business.
They deliver the most accurate data industry-wide to uncover profitable niches
and track competitors.
Fredrik Gronkvist, Co-Founder of Chinaimportal

Fredrik is the expert who wrote the Safety Standards & Labeling
chapter.
Chinaimportal, based in Hong Kong, provides free online courses, covering
product regulations, supplier sourcing, quality assurance, and much more. Their
digital platform guides step by step from logo creation, to supplier sourcing,
quality control, shipping, and customs clearance.
Andre LaMorgia, Co-Founder & COO, INLT

Andre is the expert who wrote the Importer & Customs
Responsibilities chapter.
INLT is a technology-focused US Customs brokerage and trade compliance firm
that works with freight forwarders and importers to add visibility, compliance, and
operational efficiency to their supply chains, while reducing cost. They built the
first fully cloud-based brokerage interface with US Customs and have open APIs
that support all integrations.
Gail Cole, Editor, Avalara

Gail is the expert who wrote the Customs Duties chapter.
Avalara is a leading provider of tax automation software They help businesses of
all sizes achieve transactional tax compliance for sales, excise, VAT, and other tax
types, including customs duty and import tax.
5
Dave Bryant, Co-Founder, EcomCrew
Dave is the expert who wrote the OEM & ODM Manufacture chapter.
Learn the secret techniques and marketing strategies million-dollar sellers use to
build profitable eCommerce brands. EcomCrew is a blog and podcast devoted to
helping entrepreneurs start and grow their own seven-figure e-commerce product
brands.
Nathan Resnick, CEO & Co-Founder, Sourcify

Nathan is the expert who wrote the Types Of Suppliers chapter.
Sourcify is the fastest growing sourcing platform backed by Y Combinator that
helps hundreds of companies manufacture products around the world. If you
have a product you’d like to manufacture, use Sourcify to streamline your
sourcing.
Meghla Bhardwaj, Head of Content Marketing, Global

Sources
Meghla is the expert who wrote the Sourcing Channels and
Attending Trade Shows chapters.
Global Sources helps global importers, including Amazon & online sellers, find and
meet reliable suppliers in China and the rest of Asia. They organize sourcing trade
shows in Hong Kong every April and October with eight events annually, including
the world’s largest electronics and mobile electronics shows.
Gary Huang, Founder, 80/20 Sourcing

Gary is the expert who wrote the Supplier Marketplaces chapter.
80/20 Sourcing helps importers scale and systemize their online businesses,
saving time and money when sourcing products from China. They offer video
courses, masterminds, coaching, and free content, and have been featured in
NPR, Bloomberg, Global Sources Summit, Webretailer.com, and Jungle Scout’s
Million Dollar Case Study.
6
Ash Monga, Founder & CEO, IMEX Sourcing Services
Ash is the expert who wrote the Negotiating Strategy and
Relationship Building chapters.
IMEX Sourcing Services is a technology-driven sourcing and product development
company in China, helping large and mid-sized e-commerce sellers outsource
manpower intensive sourcing operations like sourcing, quality control, and
production management, so that they can focus on scaling their businesses. Ash
also blogs about sourcing from China at The Sourcing Blog.
Renaud Anjoran, General Manager, Sofeast

Renaud is the expert who wrote the Ordering chapter.
Sofeast assists companies manufacturing in China with quality assurance, supply
chain management, and engineering (new product introduction) solutions. Started
in 2006, owner-operated, and helping 200+ SME clients worldwide become
successful in China.
Mathieu Labasse, Chief Marketing Officer, AsiaInspection

Mathieu is the expert who wrote the Quality Control chapter.
AsiaInspection is a leading quality control and compliance service provider that
partners with brands, retailers and importers from over 120 countries to secure,
manage and optimize their global supply chain.
Richard Gilbert, Director, Payoneer

Richard is the expert who wrote the Payment Methods chapter.
Since 2005, Payoneer’s cross-border payments platform has empowered millions
of entrepreneurs across the world to expand beyond their borders and grow
successful, sustainable businesses. Thousands of leading companies and
marketplaces including Airbnb, Amazon, Google, and Upwork rely on Payoneer’s
services to send funds to their merchants worldwide.
7
Michelle Mondonedo, Content Marketer, Easyship
Michelle is the expert who wrote the Overview Of Fulfillment
Options chapter.
Easyship is an all-in-one shipping tool for e-commerce sellers looking to sell
worldwide. Access 100+ solutions, get complete visibility on taxes, and duties,
couriers, and shipping costs from one account, and achieve up to 70% discounts
on shipping rates.
Mark Cohen, Partnerships Account Manager, TradeGecko

Mark is the expert who wrote the Direct Fulfillment chapter.
Founded in 2012, TradeGecko is a cloud-based inventory and order management
platform for SMEs, serving B2B wholesalers, distributors and eCommerce
businesses. TradeGecko now has a global customer base in over 90 countries
serviced from their offices in Singapore, Canada and the Philippines.
Rachel Burns, Content Marketer, Shipbob

Rachel is the expert who wrote the Third-Party Fulfillment chapter.
ShipBob offers simple, fast, and affordable order fulfillment. With a network of
fulfillment centers across the US, ShipBob lets you split inventory across locations
for 1-2-day delivery. ShipBob's software seamlessly integrates with the leading e-
commerce platforms to automatically fulfill orders as they are placed online.
Greg Elfrink, Content Marketer, Empire Flippers

Greg is the expert who wrote the Drop-Shipping chapter.
Empire Flippers removes the friction out of buying and selling online businesses,
taking care of everything from vetting, helping you with negotiations, and
transferring digital assets. Empire Flippers is an Inc. 500 company that has won
multiple International Business Brokerage Association awards, including Top
Global Producer.
8
Analisa Sande, Digital Marketer, Floship
Analisa is the expert who wrote the Cross-Docking & Crowdfunding
chapter.
Floship has fulfilled more international Kickstarter and Indiegogo shipments than
any other logistics company. Being headquartered in Hong Kong means they can
provide fast worldwide shipping at the low prices. Their system integrates with
most e-commerce platforms. Other services include quality checks, re-packs, etc.
Thanks to all the contributors, and a special shout-out to Ash Monga from IMEX
Sourcing and Renaud Anjoran from Sofeast for going the extra mile and helping
re-shape the four chapters that cover the supplier process. The steps involved in
this process were the most challenging to get right.
9
Your first step is finding a product niche. But, first ensure there are no barriers
to importing your product. Potential barriers include not complying with US
safety standards, high customs duties which make importing unprofitable, and
restrictions to shipping the product by plane.
10
PRODUCT RESEARCH
Greg Mercer, Jungle Scout
If you are just starting out in business or looking to expand your product range,
this chapter covers how to research for a product that will be profitable for you.
Irrespective of whether you sell on Amazon or not, it provides many great
opportunities for product and market analysis.
Product research can be challenging but it is crucial. If you can identify what that
product is and get it manufactured with improved specifications, you will be able
to capture the demand and sell successfully. Finding a successful product to sell
takes time and patience.
Product Criteria Checklist

Generate product ideas with the highest potential by first focusing on a specific
niche and then searching product trends for hidden gems.
When you’re gathering a list of product ideas, an ideal product should meet the
following basic criteria:
• A price point in the range of $20 - $50. Any lower, you might face
profitability issues. Any higher requires more money upfront, and also
risks greater scrutiny in reviews.
• Low seasonality. You want a product that will sell all throughout the year
and not just during certain seasonal periods.
• Small (fits in a shoebox) and lightweight. For fast and easy shipping,
you want something that won’t be too expensive to import.
• Simple to manufacture. You don’t want to run into quality control or
manufacturing challenges. Avoid glass, electronics, or highly complex
products if you can.
Using these key characteristics as a guide, let data direct your product discovery
process using Amazon product research tools, like Jungle Scout. These tools allow
you to filter different sets of criteria so you can drill down until you’re left with a
curated list of products with low competition and high sales volume.
11
Product Research
A different approach is looking at keywords to unlock niche products. You can

search keywords in a specific marketplace and category, to get all of the viable
results showing the metrics for that keyword’s top five sellers.
But is it a good niche overall? After you have a few product ideas, you can search
keywords related to each of those products directly on Amazon to scope out the
competition. Based on the results, you can focus on a specific feature or
function of a product that you might be able to improve on in manufacture.
Find Hidden Gems

Now that you’re taking a look at the competition on Amazon for your product
ideas, there are a few advanced research methods to dig even deeper in your
search for prime opportunities. Look for products with:
• Sufficient demand. A minimum of 2,000 sales per month (the total sales
among the top ten sellers of a given product idea) is ideal.
• Limited competition. Look for listings where the top competitors have
less than 200 reviews (preferably less than 100 reviews) as an indicator of
room for new entrants.
• Poor ratings. If they sell well but have a low rating, read the bad reviews
to see if there might be an opportunity to come up with a better version.
• Poor listings. The LQS (Listing Quality Score) is Jungle Scout’s proprietary
system that evaluates and scores a product listing based on the Product
Title, Description, Product Images, Keywords, and more. It is a scale of
0-100, so products with an LQS below 40 leave a lot of room for
improvement.
You can also validate demand by conducting keyword and competitor research,
tracking sales activity, inventory, Best Seller Ranking, and pricing over a period of
time. Tracking a product’s performance for a few weeks.
Check For Shippability

When analyzing your product search results, use the following list to assess
whether the product may have issues shipping:
12
Product Research
• Avoid clothing brands and licensed products.

• You don’t want anything fragile that can easily break, including anything
that is glass or electronics.
• Look for small, lightweight products that will make for easy shipping and
won’t be too expensive to import.
• Research any potential issues with IP or import. These issues are covered
in depth in the following three chapters.
• Many seemingly innocuous products, like some camping gear, cosmetics,
perfumes, and frozen foods are actually restricted on planes or ships. Use
this Hazardous Materials table as a first step to check out whether this
https://www.freightos.com/portfolio-items/freight-shipping-hazardous-material-table/
might affect your product.
Expert Tip
Are you are planning on shipping hazardous materials? Here’s what you’ll
need to do:
1. Work with your supplier to identify and classify your dangerous
goods.
2. Determine with your freight forwarder which transportation methods
will accept your goods, which hazmat regulations apply, and complete
any application or qualification process required.
3. Work with your supplier to package your goods properly. There are
three degrees of protection with dangerous goods during transport:
• Group I. Greatest danger, most protective packaging required,

• Group II. Medium danger,
• Group III. Least danger, least protective packaging required.
4. Get your supplier to provide a Material Data Safety Sheet (MSDS),
provide a detailed description of the goods on all other relevant
shipping documents, like the freight quote, commercial invoice, bill of
lading, and shipment packing list.
5. Work with your supplier to mark and label everything properly,
including, if required, a placard with designated classification, and the
four-digit UN number (more on this in the Safety Standards &
Labeling chapter).
13
Product Research
• Steer clear of products that may have quality control issues when getting
produced, such as food, beauty products, toys and games, etc.
• Avoid products that don’t work (like plastic bags that help you lose
weight!) which will give you bad reviews.
Summary
• Good product research is crucial for success, and you should get the right
tools to help you.
• Based on the product criteria checklist, gather a list of product ideas, then
let data direct your product discovery process.
• Drill deeper and research demand, competition, ratings, and listings to
find hidden gems.
• Check that your potential choice is shippable.
Further Reading
How to Sell on Amazon FBA for Beginners: The Complete A-Z Guide (2018)
https://www.junglescout.com/how-to-sell-on-amazon-fba/?utm_source=Freightos
https://www.junglescout.com/how-to-sell-on-amazon-fba/?utm_source=Freightos
Jungle Scout Web App for discovering product ideas. Use the Product Tracker
https://www.junglescout.com/blog/web-app-feature-updates/?utm_source=Freightos
feature to validate demand.
Jungle Scout Niche Hunter feature that uses keywords to unlock niche products.
https://www.junglescout.com/blog/find-product-opportunities-on-amazon-niche-hunter/?utm_source=Freightos
Jungle Scout Chrome Extension evaluates keyword, niche, and provides an
https://www.junglescout.com/the-chrome-extension/?utm_source=Freightos
Opportunity Score right on Amazon.com.
Founded by Amazon sellers for Amazon sellers, Jungle Scout offers a suite of
https://www.junglescout.com
Amazon product research tools and free resources on everything Amazon to
educate users about launching a successful and sustainable Amazon business.
They deliver the most accurate data industry-wide to uncover profitable niches
and track competitors.
14
SAFETY STANDARDS & LABELING
Fredrik Gronkvist, ChinaImportal
Before you progress too much further with your potential import product, you
should ensure that it complies with US safety standards and labeling
requirements. Incidentally, the same principles also apply to the EU, Australia,
Canada, and many other countries.
Several government agencies are involved in product compliance, which will be

referred to by their abbreviation with links to their website.
This chapter covers the basics, and is not an exhaustive list of all applicable
regulations. If you have any doubt, you should get legal advice.
The Risks Involved

Often importers, even those who have been importing for many years, get a
surprise when Customs rejects their shipment because of a product compliance
breach. Many don’t realize that compliance is not the supplier or forwarder’s
responsibility.
Customs only check a fraction of all incoming shipments. But, if they do find
issues, they will halt your shipment. If this happens, it’s likely already too late to do
anything about it.
You also face a severe risk of your products injuring people or damaging property.
Your liability might bankrupt or imprison you.
Another risk is that your product might be included in a CPSC recall. Amazon and
other platforms are really stepping up their game by standardizing compliance
document submission procedures, and removing sellers with non-compliant
goods. So, forget “I can get away with it”.
Obviously, there is more risk with importing power banks than tee shirts, but there
are regulatory requirements covering both, and many other products too.
15
Safety Standards & Labeling
Common Regulatory Requirements

Country of Origin Labels
The country of origin label, “Made in China”, is mandatory for most products
(watches are a common exception) sold in the United States.
Apparel & Textiles

Apparel and textile products imported and sold in the United States must comply
with all https://otexa.trade.gov/
mandatory OTEXA textiles labeling requirements:
• Fiber composition,
• https://hts.usitc.gov/current
Care instructions/symbols (must be ASTM symbols),
https://www.astm.org/
• English language.
When you import apparel from overseas, it’s critical that you provide your
manufacturer with a digital label file, in .ai or .eps format.
Children’s Products (CPSIA)

Imported children’s product must comply with the Consumer Product Safety
Improvement Act (CPSIA). In essence, this means that the importer must:
• Confirm all applicable safety standards (ASTM F963),

• Submit a product sample for testing (only to a CPSIA accredited test lab),
https://www.cpsc.gov/cgi-bin/labsearch/
• Issue a Children’s Products Certificate (CPC),
• Affix a permanent tracking label on each product and the packaging.
Electronics Products
Electronics products are regulated by the FCC’s standards on wireless
https://www.fcc.gov/
communication. Some products must carry an FCC mark.
You should also ensure compliance with some voluntary electrical standards,
such as those developed by UL or https://www.labconco.com/standards-and-certifications/ETL
https://www.ul.com/ ETL.
Chemicals & Heavy Metals

At a federal level, the CPSC regulates some substances, such as formaldehyde in
https://www.cpsc.gov/
products made for children.
Some state-level regulations, such as California Proposition 65, also covers

products not made for children.
16
Kitchen appliances
All products that are in contact with food or beverages must comply with all
mandatory food contact materials regulations. In particular, materials and
https://www.chinaimportal.com/blog/fda-certification-labels-importing-china/
articles that come into contact with food must not transfer substances, or
otherwise affect smell or taste.
General Safety
Product safety always starts on the drawing board. You must assess if your
product, when used in any predictable way, is still safe for the consumer, even
where no specific standards apply.
If your product does prove to be unsafe,https://www.cpsc.gov/

the CPSC and other government
agencies https://www.cpsc.gov/business--manufacturing/recall-guidance
have the right to issue a recall.
This means that you must order your customers to return the product, and
refund them.
Expert Tip
So, what does it actually mean to make a product compliant? For most
products, it’s a lot simpler than you might think.
1. Technical compliance/Chemical regulations.

• Assess which of CPSC, ASTM, UL or other standards apply to your
products, for instance, internet search for "ASTM standard for baby
strollers”, or check out the regulations directly.
https://www.cpsc.gov/Regulations-Laws--Standards/Regulations-Mandatory-Standards-Bans
• Check whether the product design is compliant by purchasing an
https://www.astm.org/
ASTM standard file (which lists technical requirements).
• Try to anticipate how the product could injure the consumer, even
with improper use of the product.
• Confirm which chemical or heavy metal regulations in CA Prop 65
apply to your product.
• Specify with your supplier that your product must comply with
certain standards, and have that included in the contract.
2. Labels. Create a label file in .ai or .eps format that you send to your
supplier before production.
17
3. Document. Buy CPC, GCC, test reports, and other templates,

online (for examplehttps://www.astm.org/
from ASTM). Complete them, print, sign, scan,
and then store for at least 10 years.
4. Lab testing. Submit samples for testing to an accredited

https://www.cpsc.gov/cgi-bin/labsearch/
compliance testing company, to
https://www.cpsc.gov/cgi-bin/labsearch/check that the product is truly
compliant. The test report usually takes about a week, and you
can use it as proof of compliance.
Summary
• Compliance is neither your supplier nor your forwarder’s responsibility.
• Only the most encountered product safety requirements are outlined in
this chapter. If you have any shadow of doubt that your product may not
be compliant with safety or labeling standards, you should get legal advice.
• Some of the steps that you should take to ensure compliance are listed in
the Expert Tip.
Further Reading
https://www.chinaimportal.com/blog/united-states-product-regulations/
Product Regulations In The United States
https://www.chinaimportal.com/blog/product-regulations-european-union/
Product Regulations In The European Union
http://www.chinaimportal.com
Chinaimportal, based in Hong Kong, provides free online courses, covering
product regulations, supplier sourcing, quality assurance, and much more. Their
digital platform guides step by step from logo creation, to supplier sourcing,
quality control, shipping, and customs clearance.
18
IMPORTER &
CUSTOMS RESPONSIBILITIES
Andre LaMorgia, INLT
The previous chapter covered product safety, compliance, and labeling issues. But
that isn’t all that Customs officials may be looking for when you import a product.
US Customs (Customs & Border Protection, or CBP) is responsible for enforcing US

customs regulation, and also acts on behalf of more than 20 other agencies. They
collect duties, taxes (like with alcohol or tobacco), and fees.
Customs strongly recommends that you consult with a US licensed customs

broker or trade consultant early on, because US import regulations are complex.
This chapter provides only a very high-level introduction to Customs and your
regulatory responsibilities.
Your Responsibilities As An Importer Of Record

Unless the supplier is making the import declaration, you will be the Importer of
Record (IOR). Your importer number will be your Social Security Number (unless
you are a corporation or non-US resident).
As the IOR, it’s your responsibility to be correctly informed and take ”reasonable
care” to provide the correct information that Customs needs to do their job
(without necessitating examinations). It’s customary for the IOR to authorize a
customs broker to file on their behalf, but, there are some links in the Further
Reading section if you are still thinking that you might decide to go it alone.
Another IOR responsibility is that you must have a bond to cover any shipment
valued over $2,500. Customs bonds are covered in more detail in the Customs
Processes chapter.
19
Importer & Customs Responsibilities
Your Responsibilities With Shipments

Classification
If you are importing goods into the US, it is your responsibility to accurately
classify the product. This is done through the ten-digit code Harmonized Tariff
Schedule (HTS), which is an extension of the six-digit international HS code
system. Your product’s HS code helps determine how much, if any, customs
duties apply, and is used for enforcing other import regulations.
The Customs Duty chapter covers product classification in more detail.
Customs Value
As an importer, it is your responsibility to accurately declare shipment value.
Usually, it’s the price listed on your commercial invoice, but valuation can get
complicated. For instance, Customs may require that selling commissions, non-US
design or product work costs, and royalty or licensing fees, be included in the
invoice value. On the flipside, you may deduct post-import transport,
construction, assembly or maintenance charges, and buying commissions.
Expert Tip
Undervaluing your shipment value to reduce or avoid duty payments is a
risky game. Ethical values and insurance payouts aside, you may get away
with it a few times, but when Customs eventually catches you, you will face:
• Examination charges and costs of transportation and storage, which
can dramatically increase the cost of a shipment.
• Fines and penalties for all under-valuations made over the past five
years.
• Criminal penalties and bans from further importing (for egregious
behavior only).
To steer clear of trouble, make sure your commercial invoice:
• Is written in English and accurately describes your merchandise in

layman's terms. Provide sufficient detail about what your product is
made of, what it is used for, etc, and avoid using abbreviations or
technical slang,
• Correctly states the country of origin,
• Accurately reflects the price you paid.
20
Country Of Origin
Getting your product’s country of origin right is important, because it determines:
• If your shipment is exempt from duty because of a free trade agreement.

• Whether your shipment is held back because of quota rules.
• If your product is subject to anti-dumping or countervailing duties.
Also, make sure that the country of origin is clearly listed on your commercial
invoice, and that you follow any marking and labeling requirements.
Intellectual Property (IP)

IP covers inventions, literary and artistic works, as well as symbols, names,
images, and designs used in commerce. If your product infringes IP rights,
Customs can seize your shipment.
If you are importing goods or packaging bearing trademarks, make sure the
marks are genuine and not counterfeit, and that you have written permission
from the trademark holder to import goods bearing the trademark, or copyright
holder if the copyright has been registered with the US Copyright Office.
So how do you find out if a trademark or copyright applies?

• If the product, label, even wording, is similar to a name brand, check that
company's site for IP details.
• If you are worried that a product may be counterfeit, confirm with the
supplier that they have a license from the trademark holder to
manufacture or sell products with that trademark.
• If you’re unsure about anything to do with IP, engage a regulatory
consultant or get legal advice.
Customs Responsibilities
Customs has a number of regulatory responsibilities, that affect you as an
importer, including the following.
Customs Duties
All products imported into the US are subject to a duty percentage (although
some are 0%). These duty rates are commodity-specific but apply across every
country (except North Korea, Iran, and Sudan), unless that commodity and
country are included in a US free trade agreement.
21
Punitive Tariffs
This tariff is applied to punish a country for unfair trade practices (or, sometimes
for national security) by imposing additional tariffs on specific products. These
tariffs can even override free trade agreements.
https://ustr.gov/sites/default/files/files/Press/Releases/301FRN.pdf
The proposed 25% retaliatory tariff response on a range of imports from China is
an example of a punitive tariff. The US considers that US companies applying to
do business there often have to provide details that result in Chinese authorities
gaining access to confidential technologies and other information.
Anti-Dumping & Countervailing Duties

Anti-dumping and countervailing (AD/CVD) duties are applied when the imported
products are considered to have been unfairly subsidized, or be priced below fair
market value. These tariffs apply on specific combinations of HTS code and
specific countries of origin.
Many very common imports from China, like colored pencils, notebooks, and wire
hangers, have these additional duties. The amount of duty can even make it
unprofitable to import. Consult a customs broker, or do your homework. Active
AD/CVD investigations and orders are listed on the ITC website.
https://www.usitc.gov/trade_remedy/731_ad_701_cvd/investigations.htm
Unauthorized Entry Of Restricted Imports

Beyond Customs regulations, your product may be regulated by one of over
twenty Partner Government Agencies (“PGAs”), such as the FDA, CPSC, Fish &
Wildlife Service, and the APHIS. The Customs site has links to each PGA’s import
https://www.cbp.gov/trade/basic-import-export/e-commerce/partner-government-agencies-import-guides
regulations guide.
https://www.cbp.gov/trade/basic-import-export/e-commerce/partner-government-agencies-import-guides
These agencies are on the lookout for specific commodities, and they can show
up in unexpected places. Take, for instance, the FDA who regulate a wide range of
products including food, cosmetics, drugs, medical devices, and anything that
might come into contact with food or drugs. They have a broad definition of what
constitutes a medical device, including everyday products like toothbrushes,
dental floss, non-prescription sunglasses. Likewise, lip balm, sunscreen, and hand
sanitizers are regulated as drugs.
If you are planning to import a restricted product, check with the manufacturer
that their products are registered with the FDA, and ask for proof.
22
Summary
• As the importer, you are responsible for accurately declaring your
products to Customs. Consult an expert to make sure you get it right.
• Learn everything possible about your product to find out what
regulations it is subject to.
• Make sure you have all commercial, licensing, and other documentation
in order.
Further Reading
https://www.cbp.gov/trade/rulings/informed-compliance-publications
CBP Informed Compliance Publications
Customs Rulings Onlinehttps://rulings.cbp.gov/
https://rulings.cbp.gov/ Search Service covers CBP rulings on a variety of topics.
INLT’s Bond Information
https://inlt.com/bonds https://inlt.com/bonds
https://inlt.com/bonds
Page
Harmonized Tariff Schedule of
https://hts.usitc.gov/current https://hts.usitc.gov/current
https://hts.usitc.gov/current
the United States
https://hts.usitc.gov/current
https://inlt.com/
INLT is a technology-focused US Customs brokerage and trade compliance firm
that works with freight forwarders and importers to add visibility, compliance, and
operational efficiency to their supply chains, all while reducing cost. They have
built the first fully cloud-based brokerage interface with US Customs and has open
APIs that support integrations of all types.
23
CUSTOMS DUTY
Gail Cole, Avalara
More than $500 billion worth of products ranging from cordless drills to
collapsible umbrellas were shipped from China to the United States in 2017, and
more than $200 billion of those were subject to tariffs. Before you commit to a
purchase agreement, you should be sure you can profitably import the products.
This chapter covers an essential component of that, getting customs duty and
import taxes right.
Customs Duty
Customs’ schedule (HTS) lists the tariff code associated with each product. Every
tariff code is associated with an import tax rate (typically 0% - 18%) in a highly
http://www.pewresearch.org/fact-tank/2018/03/28/u-s-tariffs-vary-a-lot-but-the-highest-duties-tend-to-be-on-imported-clothing/
organized system with idiosyncrasies. For example, one Santa outfit containing
nine different items and codes (from hat to shoe cover) has four different tax
https://www1.avalara.com/us/en/blog/2017/12/santa-suits-snuggies-holiday-tax-treat-wacky-tax-wednesday.html
rates and five duty-free items. If the tariff code isn’t properly assigned, your
https://www1.avalara.com/us/en/blog/2017/12/santa-suits-snuggies-holiday-tax-treat-wacky-tax-wednesday.html
shipment may get held up at Customs.
In many countries, the value for customs duty is assessed on the price of the
goods, along with the cost of international insurance and freight (CIF). However, in
the United States, it is on purchase value only.
Customs duty doesn’t apply if the shipment value is below a minimum value
called the de minimis threshold. The threshold is currently $800.
Customs Duty Estimation

Calculating customs duty can get complicated, especially if you are importing
several products, or importing to other countries (especially where taxes are due
at import too). There are several ways to find out how much customs duty may be
due:
• Tough it out yourself. If you rarely make international shipments, and

you enjoy databases and spreadsheets, you may be able to handle
compliance yourself. This method is more prone to error than the
alternatives.
24
Customs Duty
Expert Tip
When you are first considering importing a product, check out the likely
https://www.freightos.com/harmonized-system-code-finder-hs-code-lookup/
classification with an HS code lookup tool, and get an estimate on customs
https://www.freightos.com/portfolio-items/import-duty-calculator/
duties with an import duty lookup tool.
• Outsource to your forwarder. Some forwarders may look up and assign

tariff codes, calculate the customs duty, and determine taxes, fees, and
other import costs for clients. However, you’ll be on the hook for any
errors.
• Engage a consultant. You can rely on international tax consultants such
as private customs brokers, from simply having them check that you’re
doing it right, to having them map your inventory to tariff codes or even
setting up your international shopping cart.
• Automate. Automated solutions for assigning tariff codes and duty rates
is a quick, accurate method for calculating duty. There are even apps for
integrating international tax calculation with your shopping cart.
Expert Tip
There’s no one right way to handle customs duty and import tax, and it
depends on your needs and resources. But the more goods you ship, and
the more countries you deal with, the more complex customs duty and
import tax compliance will be. Whichever option you choose, be sure to
periodically check that it’s still providing the right results.
Avoid These Mistakes

Even seemingly small mistakes can lead to big and costly headaches. Here are
eight customs duty and import tax mistakes you can’t afford to make:
https://www1.avalara.com/us/en/learn/whitepapers/10-import-tax-and-duty-mistakes-you-cant-afford-to-make.html
1. Assuming you don’t have to worry. If you’re liable for duties, taxes, and
fees, you should take ownership.
2. Failing to account for other costs. Having the right tariff and rate of
duty is only half the battle. Shipping costs, cargo insurance, and
transaction taxes all contribute to landed cost. This is covered in more
detail in the Shipping Basics chapter.
25
Customs Duty
3. Making last-minute guesses. Trying to handle international tax

compliance on the fly is risky and can cause costly mistakes.
4. Passing the buck. Asking freight forwarders to estimate the correct rate
of duty may be convenient, but unless they’re customs brokers too, they
won’t be penalized if they get it wrong.
5. Misdeclaring or undervaluing. Customs is on the lookout for importers
who lowball shipment value to get under the de minimis threshold, or
misidentify products to pay a lower tariff.
6. Being casual with documentation. If you can’t readily find your import
paperwork, you may end up with significant delays when your shipment
is processed by Customs.
7. Using outdated information. Tariffs and tax rates change all the time.
Information that was valid in Q1 2017 may not be in Q3 2018.
8. Doing it all yourself. You probably don’t have the expertize or time to
deal with it properly.
Summary
• Check out how much customs duty you will be liable to pay when
selecting a product to import, so that you don’t commit to an unprofitable
purchase agreement.
• Take customs duty and import tax by the horns and find a solution that
correctly calculates customs classification and duty, as well as landed
cost. There are reliable and low-cost automated solutions for small
businesses.
Further Reading
https://simplify.avalara.com/taxes-for-dummies/
Customs Duty & Import Tax for Dummies. Avalara partnered with Wiley to create
this free guide to help you better understand the challenges and benefits of cross-
border selling, including how to correctly calculate the total cost of shipping goods
to customers in other countries.
https://www1.avalara.com/us/en/about.html
Avalara is a leading provider of tax automation software. They help businesses of
all sizes achieve transactional tax compliance for sales, excise, VAT, and other tax
types, including customs duty and import tax.
26
OEM AND ODM MANUFACTURE
Dave Bryant, EcomCrew
When you are sourcing products you are likely to come across the terms, OEM and
ODM. These terms refer to different approaches to manufacturing. This chapter
covers what these terms mean and helps you decide which is the best option for
you.
OEM (Original Equipment Manufacturer)

OEM manufacturing is normally best suited for people and businesses with new
and innovative products.
OEM is essentially when a company designs a product from the ground up and
then contracts another company to manufacture it for them. This happens, for
instance, when you design a brand new widget, launch it on a crowdfunding site
and need to get it produced. Apple uses OEM for producing the iPhone. They
come up with the design, then contract a number of third-party manufacturers to
handle the mass production.
The minimum order quantity will be higher than with ODM, because of the higher
level of capital expenditure and technical understanding of the product required.
ODM (Original Design Manufacturer)

This type of manufacturing is often also referred to as private labeling. With ODM
you contact a manufacturer of an existing product, often through a site like
Alibaba, and have the product branded with your brand and company
information. Sometimes, you can request modifications. Many suppliers are only
prepared to make minor changes like product size, color, and packaging.
Many of the sellers and entrepreneurs you hear about importing from China and
selling on Amazon are essentially following this method. The most popular place
to find ODM manufacturers, especially in Asia, is Alibaba.com. Other sources
include Aliexpress.com, GlobalSources.com, and Made-In-China.com. These
sources are covered in more depth in the Supplier Marketplaces chapter.
27
OEM & ODM Manufacture
The minimum order quantity will be less than with OEM because there are fewer
set-up costs to recoup.
Expert Tip
If you have a new product don’t worry so much about copycat artists. Most
cases of infringement are by the original supplier or manufacturer.
This isn’t really surprising, since they went through the hard work of product
development and getting the product into manufacture, and probably have
a sense of their buyer’s business model.
If you do not want your supplier to turn into your competitor, you should
take a few precautions.
• Seek legal advice.

• Register your trademark in China before production starts.
• Have your supplier sign a non-disclosure/non-use/non-
circumvention agreement.
Advantages And Disadvantages

The following table lists some of the common pros and cons of both forms of
manufacturing.
OEM Manufacturing ODM Manufacturing
Exclusivity to sell that product. Little or no product

Pros Near complete customization development costs.
available. Lower minimum order quantity
requirements
Expensive development costs. No product exclusivity.

Cons High minimum order quantity Fewer opportunities for
requirements. customization.
28
OEM & ODM Manufacture
Summary
• If you have a great idea for a new and innovative product, then OEM
manufacturing is likely for you.
• If, on the other hand, you want to import a pre-existing product and
brand it under your own name with few or no product changes then you
want ODM manufacturing.
Further Reading
https://www.ecomcrew.com/8-secrets-to-picking-the-perfect-product-to-wholesale-from-china/
How To Find The Perfect Product To Import And Sell Online
Learn the secret techniques and marketing strategies million-dollar sellers use to
http://www.ecomcrew.com/
build profitable e-commerce brands. EcomCrew is a blog and podcast devoted to
helping entrepreneurs start and grow their own seven-figure e-commerce
product brands.
29
SOURCING
After deciding on product, your next step is to find suppliers. For most
importers, the go-to supplier marketplace is Alibaba, but there are several other
great sourcing channels. First up, though, you need to know about the different
types of suppliers.
30
TYPES OF SUPPLIERS
Nathan Resnick, Sourcify
Many new importers assume that the supplier they are talking to is actually the
manufacturer who owns the factory. But if you’ve found them on Alibaba, chances
are they are probably a wholesaler or trading company. This chapter covers the
advantages and disadvantages of dealing with each of these suppliers.
Trading Companies
Trading companies, or traders, are similar to wholesalers. The main way that
traders differ is that they typically don’t take ownership of the goods. Importers
typically want to go directly to the manufacturer, but this isn’t always practical.
Advantages
• Traders will have much better English language skills.
• They do the direct dealings with factories, and usually have good working
relationships with several of them.
• You can source across multiple product categories, as they often deal
with disparate factory types.
• Trading companies usually accept lower minimum order quantities than
manufacturers.
Disadvantages
• You don’t know who the actual factory producing your product is.
• Traders don’t accept liability for defective products.
• They have a higher (but still unlikely) chance of “disappearing” or evading
communication.
• You are paying their markup, which is usually 5% or higher. But, they may
not be more expensive, because they get discounts for buying in bulk.
“Trade” in this Alibaba company’s name makes it easy to identify as a trading company. Check out the
common thread tip in the Supplier Marketplace chapter for another way to identify traders.
31
Types Of Suppliers
Wholesalers
This type of supplier differs from a trading company in that they buy the products
and often also import products themselves.
Advantages
• Wholesalers often have western representation, making communication
much easier than with most Chinese factories.
• If they have a warehouse in America, your lead time and shipping costs
could be reduced.
Disadvantages
• You are often paying a 20-50% higher price when buying through a
wholesaler than through a trading company or factory.
• Wholesalers generally only deal with standardized products and usually
can’t arrange customization.
Manufacturers
A manufacturer is the actual owner of the factory or factories.
Advantages
• When you’re looking to manufacture a product, you should always try to
go directly to a factory. You will get more control over production than
with other types of suppliers, and get a better profit margin.
• Dealing directly with the manufacturer gives you the best price and the
most choice for customizing your products.
• You have more control over quality standards.
Disadvantages
• It can be difficult determining how reliable they are.
• Their sales reps often have only rudimentary English language skills.
32
Types Of Suppliers
Expert Tip
The “paper trick”. To find out if a supplier has direct access to the factory,
tell your sales rep that you want to see what the production facilities look
like. Ask them to write your name and date on a piece of paper and have
them take photos of the factory with that piece of paper in the image.
Summary
• Although experts generally advise importers to deal directly with the
factory, this approach has its downsides. You may find it advantageous to
dealing with a trader or wholesaler instead.
• The best approach to working which type of supplier you want to deal
with is to weigh up each option’s advantages and disadvantages as they
relate to your situation.
Further Reading
https://www.freightos.com/portfolio-items/ensuring-smooth-sourcing-for-your-ecommerce-store/
Ensuring Smooth Sourcing For Your E-Commerce Store
https://www.freightos.com/portfolio-items/ensuring-smooth-sourcing-for-your-ecommerce-store/
https://www.trysourcify.com/5-must-follow-rules-sourcing-products-overseas/
Five Must-Follow Rules When Sourcing Products Overseas
https://www.trysourcify.com/5-must-follow-rules-sourcing-products-overseas/
https://www.trysourcify.com/
https://www.trysourcify.com/
Sourcify is the fastest growing sourcing platform backed by Y Combinator that
helps hundreds of companies manufacture products around the world. If you
have a product you’d like to manufacture, use Sourcify to streamline your
sourcing.
33
SOURCING CHANNELS
Meghla Bhardwaj, Global Sources
After you have identified a product you want to private label, where do you find
a suitable Chinese supplier? This chapter explores the most promising channels.
Online Sourcing Marketplaces

Using online sourcing marketplaces (or directories) is the most common way e-
commerce sellers, especially those just starting out, find suppliers. There are
three main sourcing marketplaces for Asian, specifically Chinese, suppliers:
• Alibaba. The biggest online sourcing marketplace,

http://www.alibaba.com
Alibaba has a wide
range of products and suppliers. They offer a Trade Assurance for
payment assurance, Alipay for online payment, as well as product-
quality and on-time shipment protection. Alibaba owns AliExpress,
which can also be a good sourcing option if you want to test a new
product with a small order quantity.
• Global Sources. The oldest sourcing marketplace,
http://www.globalsources.com/
Global Sources has a
focus on verifying suppliers and curating new, innovative products. They
are strong in electronics products, and will be launching a payments
service in mid-2018. They are the only marketplace that also runs trade
shows.
• Made In China.https://www.made-in-china.com/
The Made In China marketplace is strong in machinery
and hardware-related products.
Advantages Of Sourcing Online

• It’s low-cost and quick. If you’re starting with a small budget, sourcing
from an online marketplace is the obvious choice. There’s no travel cost
involved and you can source products from a supplier and send to FBA
directly, without ever seeing the product.
• There are a wide variety of products and suppliers. You have access
to a large number of suppliers across China and elsewhere in Asia.
Products popular on Amazon or on-trend categories crop up within a
few days or weeks on online marketplaces.
34
Sourcing Channels
Disadvantages Of Sourcing Online

• It can be difficult to identify new products. Due to the sheer number
of suppliers and products online, identifying products that are really new
can be difficult. With online suppliers copying product images from any
source, it is sometimes difficult to determine who the manufacturer is.
• It can be difficult to identify manufacturers. Often, it’s difficult to

distinguish trading companies from manufacturers, unless the online
marketplace verifies manufacturers or the supplier is transparent about
their business type on the website.
• The end to end sourcing process can take longer. Receiving samples
from multiple suppliers can a few weeks or even months, which makes
the sourcing process longer.
• There is a higher risk of scams and other trust issues. While most
China suppliers are in business for the long haul, there certainly are bad
apples out there. When sourcing online, you have a higher risk of getting
scammed or encountering a fly-by-night-operator.
While it is easier than ever to inquire about products online, trade shows have
some advantages that online sourcing can’t beat. Whether you decide to visit a
show mainly depends on your business model, scale of business, and availability
of financial resources.
Trade Shows
Advantages Of Visiting A Trade Show

• It can be easier to find new product ideas. Sourcing fairs are a great
way to discover new products to source. Walk down the aisles and you
might find an exciting new product you wouldn’t have thought about
sourcing.
• There are more opportunities to be the first to source a new

product. Many suppliers launch new products at trade shows, which
won’t be posted online until the shows are over. You get a first-mover
advantage by discovering these products.
35
Sourcing Channels
• You can speed up the process. When sourcing online, you have to wait
for the supplier to send you samples before you can decide whether or
not a product is suitable for you. At trade shows, you can shortlist
products much faster by seeing the product and asking all your
questions. You can select products manufacturers are displaying, or
have them custom make a product for you. Most of the manufacturers
will do custom work.
• You get to see the products. Viewing, touching, feeling, and otherwise
generally experiencing the products gives you a better understanding
than anything that a computer screen can deliver.
• It helps you research a product category. If you are starting to source

a product that you are not familiar with, trade shows help you do the
research and determine the right questions to ask prospective
suppliers.
• It helps deepen current supplier relationships. If your current

suppliers are attending a trade show, this is a great opportunity to meet
up with them and deepen your relationship.
• You can find suppliers you won’t find online. Some suppliers feel
they get higher quality leads at trade shows, and will only market
themselves there, rather than online. Buyers sourcing online only won’t
find these suppliers and their products.
Expert Tip
Attending a trade show makes it easier to find manufacturers. Some of
the largest online websites have become very crowded with agents and
trading companies, making it more difficult to go directly to the
manufacturer.
While trading companies also attend trade shows, it’s much easier to identify
and find manufacturers there. The best way to tell is that manufacturers
tend to deal in a single product line, while agents usually carry several
product lines based made from different raw materials that use different
manufacturing processes.
36
Sourcing Channels
Disadvantages Of Visiting A Trade Show

• It comes with a high cost. Attending a trade show halfway across the
world is not cheap. The hotel, flights, and other expenses will all add up,
probably to several thousand dollars.
• It takes more time. You will need to spend at least three or four days
attending a trade show. Many buyers spend one to two weeks in Asia
attending trade shows and visiting factories.
The next chapter, Attending Trade Shows, goes into more detail about this channel.
Sourcing Agents
If buying directly from a China manufacturer sounds like too much trouble, you
can get help from a commission-based sourcing agent. They can help identify and
verify suppliers, as well as facilitate communications.
Their fees range from 3% to 10% of the purchase price. Be aware that sometimes
agents get paid by both the supplier and the buyer.
Service Providers
These are companies that take over the entire sourcing process from end-to-end,
including supplier identification, price negotiation, quality control management,
logistics, and shipment management.
Many of these companies are managed by westerners, which makes

communication more efficient than with most local manufacturers. Some
specifically cater to the needs of Amazon sellers or Amazon FBA sellers.
This service comes at a cost. They usually work on a flat-rate model rather than a
commission. They, too, might also be getting a kickback from the supplier.
Sourcing Magazines & Catalogs

Until relatively recently, most importers found China suppliers and products
through reading magazines and catalogs. While the use of print magazines has
been dwindling, electronic versions of a few sourcing magazines are still
published.
37
Sourcing Channels
The advantage of a catalog or magazine is that you may come across new
suppliers and products you hadn’t thought of sourcing.
Global Sources still publishes periodical magazines, which are distributed at their
trade shows.
HKTDC is another company that publishes catalogs tied to their trade shows.
http://www.hktdc.com/en-buyer/
Referrals
If you are already importing from China and want to source a new product, ask
your current supplier to refer companies to you. They may be open to
recommending suppliers they know If it’s a product they don’t manufacture.
You can also ask for referrals in Amazon seller Facebook groups, or other
communities you belong to.
Summary
• There are a number of ways to source products from China for your
private label, and there’s no right or wrong.
• Depending on your specific business needs and requirements, you can
choose just one channel, or use a combination of them.
Further Reading
http://www.globalsources.com/NEWS/SIC-how-to-find-the-right-china-supplier.HTM
How To Find The Right China Supplier
Sourcing From China 101 Part 1: Do You Need A Sourcing Agent?
http://www.globalsources.com/NEWS/SIC-sourcing-china-101-part-1-need-sourcing-agent.HTM
Sourcing From China 101 Part 2: How To Identify Potential Suppliers
http://www.globalsources.com/NEWS/SIC-sourcing-china-101-part-2-identify-potential-suppliers.HTM
Global Sources helps global importers, including Amazon & online sellers, find
and meet reliable suppliers in China and the rest of Asia. They organize sourcing
trade shows in Hong Kong every April and October with eight events annually,
including the world’s largest electronics and mobile electronics shows.
38
ATTENDING TRADE SHOWS
Meghla Bhardwaj, Global Sources
The previous chapter covered sourcing channels, one of which was trade
shows. This chapter looks at working out which show to visit, and what you
should prepare beforehand.
Work Out Which Shows To Visit

First, decide which product categories you are most interested in sourcing, and
then see which shows cover these categories. Most Asian sourcing trade shows
are held every April and October, on the same dates in both months.
Since both Hong Kong and Guangzhou have trade shows for many of the
product categories, and the two cities are only 70 miles apart, it comes down to
convenience, time, cost, and personal preference which shows you should
attend. Here are some options to consider.
Attend Hong Kong Shows

There are two sets of shows in Hong Kong, Global Sources shows (who also host
http://www.globalsources.com/TRADESHOW/CSF/INDEX.HTM
a conference for global Amazon and online sellers, co-located with the Hong
Kong trade shows) and HKTDC shows. Here are the most common reasons why
http://www.hktdc.com/info/trade-events/EX/en/Exhibitions.htm
some buyers prefer to visit only the Hong Kong shows:
• Convenience. Traveling to Hong Kong is more convenient and less

hassle than going to mainland China, where most nationalities need a
visa to enter. That’s not the case for Hong Kong.
• More export experience. Generally, suppliers at the Hong Kong shows

are more export focused. There are plenty of export-focussed suppliers
at the Guangzhou shows, too, but most exhibitors are smaller suppliers
and trading companies.
• Higher quality products. While the Guangzhou shows are bigger, the
Hong Kong shows focus more on higher quality and more innovative
(and potentially more profitable) products.
39
Attending Trade Shows
• English speaking. Most people in Hong Kong speak English, including

most taxi drivers, so getting around is easier. Many more signboards,
restaurant menu cards, and other types of information are in written in
English than in Guangzhou. All suppliers at Hong Kong shows have
English speaking sales staff at their booths. This isn’t always the case at
the Canton Fair (Guangzhou), especially with the smaller exhibitors.
That said, some smaller suppliers hire students with some English skills,
but then they lack the product knowledge.
Attend Hong Kong & Guangzhou Shows

Some buyers looking for even more supplier options like to visit shows in both
locations. The shows are scheduled so that buyers can do just that.
For example, HKTDC Electronics Fair (April 13 to 16) overlaps with Global Sources
Electronics phase 1 (April 11 to 14) and also with Canton Fair phase 1 (featuring
electronics), which starts a day later on April 15.
There are many options for traveling from Hong Kong airport and the city to
Guangzhou including trains, buses, and limousines.
Attend Only Guangzhou Shows

Canton Fair is larger than the Hong Kong shows so some buyers prefer to only
attend this show. There are also several wholesale markets in Guangzhou that
buyers looking to buy small quantities find appealing. Increasingly, Canton Fair
is attracting more buyers from emerging markets and developing countries.
Prepare For A Trade Show

Regardless of which shows you attend, you should make these plans before you
board the plane:
• List products you are interested in. Start listing the kinds of products
you want to source. This will help you focus and save time when you’re
at the show.
• List product features and your requirements. If you already source
certain kinds of products or know what you want to source, make a list
of specifications, product functions and features, quality standards,
certifications, and other important information (refer to checklist
below).
40
This is especially the case if you are looking to buy OEM products. Don’t
worry about being “too detailed.” Manufacturers will not necessarily know
what you want and, most likely, they will not provide anything that wasn’t
specified.
• Get price estimates. For products you are interested in, get reference
prices from online suppliers beforehand. This will help you quickly
determine if prices quoted by exhibitors at the show are suitable for you.
• Shortlist exhibitors online before the show. Search for exhibitors

online and email them for information as per the above list. Their
responses will help you shortlist exhibitors that meet your requirements
and keep you from wasting time talking to suppliers who don’t.
• Get a map of the show floor. These shows are massive and they can be
distracting or even intimidating. It pays to get some familiarity with the
layout in advance, especially the location of the halls where your products
of interest are exhibited.
Expert Tip
Use the map to plan your walking route, so that you can get you straight to
work when you reach the venue.
• Print business cards. Business cards are a critical means of introducing

yourself in China. You should have 150 to 200 cards with you at the
beginning of the show.
Expert Tip
To avoid getting flooded with emails from suppliers that you are not
interested in working with, don’t put your personal or primary business
email address on your cards.
41
• Prepare your wardrobe. The climate in Hong Kong and Guangzhou is

warm and humid, however, the conference centers are air-conditioned
and they can be much colder than outdoors. Most business people dress
pretty casually while doing business in China. That’s fortunate because
suits and dress shoes become uncomfortable when you spend many
hours walking around. So, pack comfortable, business-casual clothes and
footwear.
Here’s a checklist of other items you should bring:
• Products, specifications, and prices,
• Writing pad,
• Tablet or smartphone for taking notes,
• Pens,
• Stapler,
• Power bank,
• Company brochure,
• Trolley or wheeled suitcase to carry brochures.
Summary
• Work out which shows are best for you to visit. There are pros and cons
to attending shows in both Hong Kong and Guangzhou or one city only.
• Prepare before attending the show(s). In particular, prepare lists of
product specifications, reference prices, and exhibitors you want to
meet.
Further Reading
http://www.globalsources.com/NEWS/SIC-importers-find-right-suppliers-trade-shows-china.HTM
How Importers Find The Right Suppliers At Trade Shows In China
Sourcing Expert Shows Best Way To Walk A Trade Show [video]
http://www.globalsources.com/NEWS/SIC-sourcing-expert-shows-best-way-to-walk-a-trade-show-video.HTM
Global Sources Summit Recap: Key Takeaways From 20+ Amazon Experts
http://www.smartchinasourcing.com/global-sources-summit-april-2017-recap-key-takeaways-20-amazon-experts/
Global Sources helps global importers, including Amazon & online sellers, find
and meet reliable suppliers in China and the rest of Asia. They organize sourcing
trade shows in Hong Kong every April and October with eight events annually,
including the world’s largest electronics and mobile electronics shows.
42
SUPPLIER MARKETPLACES
Gary Huang, 80/20 Sourcing
Most importers find their suppliers on online marketplace searches. For Chinese
suppliers, Alibaba is the biggest marketplace, but Global Sources and 1688.com
are also very large. This chapter assesses these three marketplaces, and also
covers the first two steps in the supplier process, namely Search For Suppliers on
Alibaba and Request Quotes.
Search For Suppliers On Alibaba

Alibaba is rather like the yellow pages, a listing and grouping of businesses. You
want to find trustworthy suppliers who can manufacture your product at the
quality, at the right price, and deliver it on time. Here’s a great way to do this:
1. Enter search terms. Start by entering the same search term your
customers use, and then consider synonyms and other phrases.
Remember, too, that English is a second language for most Chinese
suppliers so you may need to think creatively to find the right keywords.
2. Sift search results. Skip past the first results. Like Google, these are
sponsored ads. You can filter down to “gold suppliers” if you have too
many results.
Expert Tip
Don’t put faith in filtering by gold supplier alone. It is an advertising badge
suppliers buy from Alibaba, and, contrary to popular belief, doesn’t mean
that they have been pre-approved or even that they are a trustworthy
supplier. Not that that makes them a scam artist either.
A better way to filter suppliers is to is find established suppliers (filter for

gold suppliers with more than two years standing).
3. Search visually. Scan through images in the search results to find

products similar to what you’re looking for.
43
Supplier Maketplaces
4. Apply the “common thread” test. If you want to work with factories
rather than trading companies, check their catalog of products. If there’s
a common thread running through them, for example, they are selling
products in a certain material like silicone, then that usually means they
are a factory. But, if they selling everything under the sun, they are
probably a trading company.
Request Quotes
1. Create a request for quotation (RFQ) letter. The Further Reading
section at the end of this chapter includes a link for a free RFQ template.
2. Structure the letter for success.
Expert Tip
• Start your RFQ letter with a short company introduction telling them
about your business, where it’s located, how long you have been
doing business and anything else that would make you look more
professional.
• Then, include product details such as measurements, material,
specifications, pictures, packaging, and any modifications you’d like to
make.
• Provide volume estimates in your RFQ letter, so that the supplier
understands that you have a purchasing plan. You should provide an
attractive annual purchase volume, and the initial trial order should
be for at least 500 units. Otherwise, if they think you are just trying to
work out the cheapest price and the smallest order, they may skip
past your email.
• Ask for their price quotation.
3. Track responses. Use a spreadsheet so you can see the price spread,
who is responding quickly and who’s slow. You can also use this sheet to
make sure you follow up quickly.
44
Supplier Maketplaces
Don’t Just Look On Alibaba

Many buyers http://www.globalsources.com
search on Global Sources instead. They have less suppliers, but
they tend to be better in terms of quality, company reputation, and service.
The Alibaba-owned 1688 markeplace is targeted towards the domestic Chinese

https://www.1688.com/
market. Here’s why you will probably find it difficult to find suppliers:
• The platform is entirely in Chinese.
• The suppliers there are catering to the domestic China market, which
may mean lower quality standards.
• Most suppliers probably don’t have an export license, and therefore
can’t legally export to the US. You can get around this, at a cost, if you
use a trading company as an intermediary. Trading companies also list
on 1688.
Summary
• Alibaba and Global Sources online marketplaces are great sources of
suppliers and products.
• Follow the steps outlined in this chapter to use Alibaba to shortlist
quality suppliers for your product.
• Be specific in your requests to look more professional and improve the
response rate.
Further Reading
http://www.8020sourcing.com
Sourcing Bonus Pack (At the right, there is a link to download a RFQ template)
How To Find Suppliers Beyond Alibaba:

https://www.8020sourcing.com/how-to-find-suppliers-beyond-alibaba-part-one-yellow-pages/
Part 1: “Yellow Pages”
Part 2: Online Sourcing For Small Volume Orders
https://www.8020sourcing.com/how-to-find-suppliers-beyond-alibaba-part-two-online-sourcing-for-small-volume-orders/
Part 3: Online, Offline, And Thinking Outside The Box
https://www.8020sourcing.com/how-to-find-suppliers-beyond-alibaba-part-three-online-offline-and-thinking-outside-the-box/
http://www.8020sourcing.com
80/20 Sourcing helps importers scale and systemize their online businesses,
saving time and money when sourcing products from China. They offer video
courses, masterminds, coaching, and free content, and have been featured in
NPR, Bloomberg, Global Sources Summit, Webretailer.com, and Jungle Scout’s
Million Dollar Case Study.
45
SUPPLIER
With an understanding of how to source suppliers, your next steps are
negotiating with suppliers, make an order and everything else you need to do
until the order is ready for shipment. First up, though, all the steps in the
supplier process are brought together on the next page.
46
SUPPLIER PROCESS STEPS
These are the most common steps for getting from supplier search to shipment
ready. The links go to the respective page where the step is covered in detail.
PREREQUISITES: Product and import restriction research (PART 1: Product), and

understanding your options for finding suppliers (PART 2: Sourcing).
1. Search For Suppliers Supplier Marketplaces
2. Request Quotes Supplier Marketplaces
3. Negotiate With Shortlisted Suppliers Negotiating Strategy
4. Approve Sample Ordering
5. Agree To Terms Ordering
6. Formalize Agreement Ordering
7. Pay The Deposit Ordering
8. Confirmation Sample Supplier Process Steps
9. Monitor Order Ordering
10. Pre-Shipment Inspection Quality Control
11. Pay The Balance Owing Quality Control
NEXT STEPS: Freight Process Steps.
47
Supplier Process Steps
Common Variations
• Supplier search. The link goes to searching on Alibaba, but you can also
search on other channels (Sourcing Channels, Attending Trade Shows).
• Requesting samples. Instead of requesting samples from all shortlisted

suppliers, you could request from just the preferred supplier, or (rarely)
only request a sample after signing the purchase order.
• Negotiating. You could negotiate with all shortlisted suppliers

(Negotiate With Shortlisted Suppliers and Agree To Terms as one step).
• Trial Order. You may be able to negotiate a low minimum order as a

trial to see how well your product sells.
• Purchase Order. You could sign a purchase order earlier in the process,
say to motivate the supplier if samples need to be prepared) as long as
you don’t pay the deposit.
• Formalizing Agreement. The paperwork may be a purchase agreement

only, purchase order only, or both.
• Confirmation Sample. If the factory doesn’t have the materials at hand,

which is common, you may request a second sample after paying the
deposit. This step is common in some product categories, like apparel.
Once the materials arrive, the factory makes a confirmation sample for
the importer to approve before bulk production begins. This supersedes
the IPC and DUPRO inspections (Quality Control).
Names For Samples

• The first sample may be an off the shelf or a made to order sample.
• Should that sample be approved, it becomes the approved or golden
sample.
• The confirmation sample is more commonly referred to as the pre-
production sample, although that term sometimes also refers to the
approved sample.
• At a pre-shipment inspection, the sample may be referred to as a
production or shipment sample.
48
NEGOTIATING STRATEGY
Ash Monga, IMEX Sourcing Services
This chapter covers the key negotiating components of dealing with suppliers and
getting your negotiating strategy right. Cultural aspects that may come into play
when dealing with Chinese suppliers are covered separately in the Relationship
Building chapter.
The previous chapter covered the first two steps in the supplier process, namely,
Search For Suppliers and Request Quotes. This chapter covers the next step,
Negotiate With Shortlisted Suppliers.
Key Negotiating Components

Here are the four key negotiating components of a purchase agreement:
• Price. By far the most important element.

• Payment Terms. These refer to how and when you will pay. The
standard payment terms for most importers, especially importers doing
smaller volumes (below $10,000/order), tends to be 30% in advance and
70% when the goods are ready. Once you have three orders under your
belt, you are probably in a good position to re-negotiate more favorable
payment terms.
• Lead Time. This is a point most importers negotiate on and even use as
a key criterion for selecting suppliers.
Expert Tip
Many importers negotiate too hard on lead time and end up with quality
problems (because some steps were skipped to save time), or late delivery
(because an inadequate lead time was knowingly committed to, so as to win
the order).
A better strategy is to find out the industry standard production time for the
product and stick to that as much as possible.
49
Negotiating Strategy
• Contract Terms. It is important to think these through and have clauses

on inspection standards, lead time, and penalties for delays, and clearly
defined dispute resolution mechanisms. The freight term is also
important in contract negotiation and is covered in the Placing Orders
and Shipping Basics chapters.
Size Negotiating Power

It’s very important in negotiation to assess where you stand relative to the other
party. Some factors that influence your negotiation position include:
• Value of your order. Value is by far the most important factor for your
supplier. The higher your order value is, the more leverage you have in
terms of getting preferable price and payment terms.
• Purchase history with the supplier. Once you have placed a few repeat
orders, you are most likely to get better terms.
• Scale of the supplier. Large suppliers, monopolies of any size, and
state-owned companies tend to be a lot less flexible about prices or
payment terms.
• Your company’s scale, brand, credit rating. The scale of the buyer
relative to the supplier is also a crucial factor. Disney or Coca-Cola can
literally dictate payment terms to suppliers.
• Local presence in China. Having a local presence in China often helps
you get better payment terms, especially with decreasing the upfront
deposit or extending credit.
• Industry competition. Payment terms tend to be more negotiable in
industries with high fragmentation, like furniture and computer
accessories, primarily because of excess supply.
Formulate Negotiation Strategy

When negotiating with Chinese factories, it’s crucial to know your end goal. For
most importers, the goal is to get the best possible price and payment terms for a
“defined quality standard”.
The most common strategy a lot of new importers employ is to get twenty quotes
on Alibaba, look at the cheapest three, and then negotiate further to get the best
deal or cheapest price. This is usually a recipe for disaster. That’s because the
shortlisted suppliers may not have the resources and capabilities to deliver a
quality product.
50
Expert Tip
A better strategy to shortlist suppliers is to:
1. Make sure you really know your product, and that you have clearly
defined quality standards in as much detail (material, components,
specs) as possible, to give you leverage in negotiations.
2. Request quotes.
3. Shortlist the suppliers who confirm that they can meet those
standards.
4. Ask more detailed questions so that you can work out the three
suppliers who are most responsive, meet your requirements, and
satisfy other criteria, like client references and production capacity.
Negotiate With Shortlisted Suppliers

At this point, move the conversation to email, which is easier to track invoices,
agreements, and other important documents. For even quicker communication,
especially if your emails are going unanswered, use WeChat (some suppliers also
have Skype). WeChat is great for sharing short videos and free calls.
If it isn’t becoming too expensive, request samples from all three suppliers.
Suppliers don’t necessarily carry stock, and often don’t even have samples on
hand. It normally takes one or two weeks for them to make one up and ship it to
you. You will usually have to pay for the international courier shipping unless they
know that you are serious and there is a large order behind this. Your supplier
should be able to provide a quote and ship with their account. If the cost is too
high, request photos or videos, but after you have decided on one supplier, make
sure that they still send you a sample.
While negotiating, find out for each supplier how many days there will be between
their starting production and the goods being ready for shipment. Check out how
that varies between busy and non-busy periods and when those periods are. Add
a three-week buffer into your planning timeline for a new supplier (half that for a
regular supplier).
Negotiate for their best prices, but be mindful that you are already at market rate.
If you push them too low you risk them cutting corners and your quality suffering
accordingly. That said, you may be able to negotiate a further 5% discount.
51
Summary
• For most importers, the price is the most important negotiating
component on a purchase agreement, whereas suppliers are generally
looking at how much and how often you will be ordering.
• Size your negotiating power against their negotiating power and set a
realistic negotiating strategy.
• You shouldn’t shortlist suppliers based on price too early. Leave price
negotiation until you have established each supplier’s capability as they
relate to your quality standards.
Further Reading
Minimizing Risk Through Payment Terms Negotiation With Chinese Suppliers
http://www.thesourcingblog.com/minimizing-risk-through-payment-terms-negotiation-with-chinese-suppliers/
Eight Ways To Pay Your Chinese Suppliers & Their Risks

http://www.thesourcingblog.com/8-ways-to-pay-your-chinese-suppliers-their-risks/
http://www.imexsourcingservices.com
IMEX Sourcing Services is a technology-driven sourcing and product development
manpower intensive operations like sourcing, quality control, and production
management, so that they can focus on scaling their businesses. Ash also blogs
about sourcing from Chinahttp://www.TheSourcingBlog.com
at The Sourcing Blog.
52 52
ORDERING
Renaud Anjoran, Sofeast
The previous two chapters covered the first steps in the supplier process, namely
Search For Suppliers, Request Quotes and Negotiate With Shortlisted Suppliers.
This chapter covers the next four steps, Approve Sample, Agree To Terms,
Formalize Agreement, and Pay The Deposit. It also covers negotiating minimum
order requirements.
Approve Sample
Review the samples against your product quality criteria.
Most small importers don’t check the sample with sufficient care. Take the time to
review it carefully. Check the look, function, performance, fitness, etc, as the
supplier will try to make exactly what you confirmed. Consider what tolerances
you would accept on measurements, what stress testing should it be able to
withstand, how should it be packed, etc. All this extra information should go into
your specification sheet.
In some cases, you will be asked to approve a sample that is not 100% as you
need it to be. There might be good reasons for this, such as it not being practical
to dye a few yards of fabric in the exact color. Or there might be poor reasons,
such as their being confident they will work out how to fix a glitch before they
start production. Don’t let them take shortcuts.
Expert Tip
Don’t be persuaded by any assurance that there is little risk of delay or of
quality issues. As the buyer, you are the one taking on most of the financial
risk.
At some point, make sure that you check the packaging as well.
Once you have reviewed the samples, make a final call based on quality and final
quotes. The sample from the supplier you select is the approval sample, often
53
Ordering
called the golden sample.
Don’t burn your relationship with the other shortlisted suppliers. Something
might go wrong with your preferred supplier, or you might need them in the
future for another product.
Negotiate Low Minimum Order Quantity

Ideally, you would prefer to arrange a small first order just in case the product just
doesn’t sell, or you get negative reviews and want to make changes.
Another reason to keep the production run small is if the factory hasn’t previously
manufactured your product, or made it to your specs. You will want to validate the
production process. Imagine if the dimensions are wrong, the two parts of your
product won’t fit, and you need to scrap the entire batch. It happens! In this
scenario, using the confirmation sample is also a good idea.
However, suppliers often have a minimum quantity, below which they don’t
accept orders, called an MOQ (minimum order quantity).
Expert Tip
If you are more concerned about reducing risk (by reducing order size) than
price, then make that your negotiating strategy. Smaller factories may be
prepared to bargain. Try to get your supplier the MOQ from whatever number
they start from.
If the MOQ is otherwise holding you back, you may be able to overcome this by
first finding out why it is being applied:
• Sub-supplier constraints. A common example is a fabric mill having

minimum length requirements for dyeing. You could overcome this by
using the dyed fabric over several styles, or you could buy more than you
currently require and hold as inventory for future orders.
• Constraints with the final manufacturing process. Manufacturers
won’t, for instance, entertain starting an assembly of mobile phones for
just 1,000 pieces. However, you may be able to convince them to produce
below their MOQ, at least for the first order, if you can demonstrate that
54
Ordering
you already have some signs of success. An example might be, that your
product has been selected for selling in Apple Stores, but it needs to be
tested in the marketplace.
• You’re too small. An MOQ might also be the supplier’s way of driving
small customers away. That happens, too.
Agree To Terms
Make sure that you get written responses, if possible from a manager, as you
reach agreement on each of the following items:
• Size of order.
• Unit price of product and the price of tooling (if any).
• Payment terms, like “30% after approval of golden sample, 70% after
shipment”, and currency terms. Tie payments to approvals of quality and
on-time readiness.
• Quality criteria, if possible in the form of an inspection checklist. Spell out
what is not acceptable, for example, delays of more than 10 days, the
proportion of major defects above AQL 2.5%, failure in a lab test that
establishes compliance.
• Shipping terms, including incoterm, such as “FOB Ningbo”, loading port
and receiving port (for sea shipments), lead time, for example, “40 days
after deposit is received”, and penalties for late shipment.
• Important product specs, including labeling and packing requirements
(like shipping marks on export cartons). If you have written a product
checklist, refer to it in the purchase order (PO).
• That you expect the supplier to complete certain tasks during production,
such as sending a sample, and forwarding their own QC inspection report
with photos when 10% of the shipment is produced.
• The buyer’s right to send inspectors at any time.
Have these points included on a purchase order, along with the standard:
• Your full contact information including company name and logo,
• Supplier’s full company information,
• Unique PO number, and corresponding PO if applicable,
• PO date,
• List of the products by ordered quantity, unit price, and total price.
55
Ordering
Formalize Agreement
Here are the steps to follow:
1. https://qualityinspection.org/wp-content/uploads/2012/12/PO_template.xlsx
Complete and send a purchase order (PO) form. Use this Sofeast template
if you don’t have one.
2. Receive a pro forma invoice (PI) from the supplier. Verify that the
information reconciles with the PO. The pro forma invoice will eventually
become the commercial invoice.
3. Have the PO and the PI signed by both parties and chopped by the
supplier.
4. Send the deposit as per the terms you agreed on. This is covered in more
detail below.
Expert Tip
Alarmingly, many smaller importers don’t issue POs. They simply sign the
supplier’s PI.
At the very least, you should arrange a purchase order. In China, any type of
written business agreement is only binding the parties if their legal
representative signs and then chops it (stamps it with their company’s red
seal). This goes for POs too, adding weight to the commitment, although, in
the unlikely event litigation, having a PO alone may not stand up in court.
https://www.chinalawblog.com/2015/08/contracts-in-china-enforce-it-or-go-home.html
Currently, only a small minority of importers draft a formal legal contract

when buying in China. This contract is commonly known as a purchase
agreement, manufacturing contract, purchase contract, sales contract or
supplier agreement.
A contract is signed once and may be valid for several years. A purchase
order is only valid for one order, and usually refers to the contract. In some
cases the contract also acts as a frame agreement that makes POs
unnecessary.
Don’t ask your supplier to propose a contract. You should work with a lawyer
specializing in China business law on this. The contract must include a clause
to the effect that litigation is to happen in China and that China law applies.
56
Ordering
You should absolutely get a formal legal contract if you are planning on buying a
substantial amount from a given supplier over time. And, of course, there are
even more legal formalities involved if you want to IP protection.
Pay The Deposit

You will likely need to make an intitial payment of 30%. Note that it is called a
“deposit” but is very seldom returned should something go wrong. You should
have approved the sample, completed the specification sheet, signed off the PI,
etc, before you make payment.
Many suppliers request payment to their personal account. This is not wise, even
for small orders. Be sure that you only send money to the company that is
mentioned in the contract and on the PI.
Call your supplier for confirmation first. This is because there have been instances
of hackers infiltrating a supplier’s email system and then phishing for payment to
their own bank account.
Generally speaking, the larger your order, the more favorable payment terms you
can negotiate, like the first payment being very small, or splitting payments into
three, with the third payment coming after you receive the goods. Unless you are
a large buyer (in which case paying in RMB might make sense), it’s easier to pay in
https://qualityinspection.org/rmb-settlement
USD.
The most common ways to make payment are covered in the Payment Methods
chapter.
Monitor The Order

Make sure the supplier knows that you are paying attention. You are less likely to
experience long delays if you establish a follow-up process with them and hold
them accountable for their promises. Don’t just send emails only when problems
come up, or they will avoid releasing information to you.
Here is an example of the tracking sheet Sofeast uses with some clients.
57
Ordering
MILESTONE TARGET ACTUAL COMMENTS
MILESTONE TARGET ACTUAL COMMENTS
All components purchased Oct. 6 Oct. 9 +3 Buyer’s deposit received on Oct. 8
All components received Oct. 12 Oct. 17 +5
Start of mass production Oct. 14 Oct. 24 +10 Our workshop is very busy
Production samples sent Oct. 21
20% of pieces are completed Oct. 21
Packing 80% done Oct. 25
Final inspection Oct. 28
Shipment date Nov. 5
Summary
• There are often ways to convince the supplier to start with a trial order,
especially relevant if that product has never been made in that factory.
• Get written confirmations on the most important terms before you issue
an order, let alone pay a deposit.
• Set the right incentives by tying payments to approvals of quality and
on-time readiness.
• Approving a sample is not a sufficient guarantee. You must also
document all important specifications, tolerances, etc.
• Show that you are paying attention to timing.
Further Reading
http://www.qualityinspection.org/purchase-order/
What Should Be In A Purchase Order (PO)?
https://qualityinspection.org/leverage-china-supplier-factory
Keep Some Leverage With Suppliers
https://www.chinalawblog.com/2015/08/contracts-in-china-enforce-it-or-go-home.html
China Contracts: Make Them Enforceable Or Don’t Bother
http://www.sofeast.com
Sofeast assists companies who are manufacturing in China with quality
assurance, supply chain management, and engineering (new product
introduction) solutions. Started in 2006, owner-operated, and helping 200+ SME
clients worldwide become successful in China.
58
QUALITY CONTROL
Mathieu Labasse, AsiaInspection
Forget the internet buzz about fraud. It does happen, but it’s rare. Your biggest
concern is product quality, which can be a problem, even with simple products.
This chapter covers the fundamental principles of inspection and managing

product quality. Two of the sections, Pre-shipment Inspection and Pay The Balance
Owing, are the last two steps in the supplier process.
Define Product Quality

These key concepts will help you define and communicate product quality:
• Product defects. In the quality control (QC) world, it’s common to

classify defects as minor (largely cosmetic), major (impairs a product’s
function), and critical (may harm your consumer). Armed with these
definitions, you can set a threshold of how many defects of each type are
acceptable per your product lot. Make sure that you clearly state this in
your purchase agreement.
• AQL levels. AQL stands for ‘acceptable quality limit’, the maximum
allowed number of defects per batch based on ISO 2859 statistical
standard. For consumer goods, typical AQL values are 4.0 for minor
defects, 2.5 for major defects, and 0 for critical defects.
• Safety regulations. Make sure you’re familiar with the standards and
regulations that apply to your product in your chosen market. The EU
uses REACH or RoHS Directives, but the US uses standards issued by
ASTM, CPSC, FDA, etc. The Product Safety Standards & Labeling chapter
covers the tests and certifications you need to prove compliance.
59
Quality Control
Expert Tip
Product quality isn’t the only thing you should be checking out. It is now
common for retailers to have a supplier/vendor code of conduct, which lists
a set of ethical and social requirements for any factories looking to supply to
them. These requirements usually include safe working conditions, zero
tolerance for forced labor and child labor, fair labor policies, wages, worker
representation, pollution controls, etc.
Corporate social responsibility (CSR) should not be an afterthought, but an

important factor influencing your choice of supplier. Before you place your
order with a new supplier, youhttps://www.asiainspection.com/ethical-audit
should order an audit of their facilities to
check whether they meet your standards for ethical and sustainable sourcing.
It is also a good practice to carry out a follow-up audit at least once a year.
Get Expert Help

You can choose either for the factory to conduct inspections, or work through a
QC provider. There are several advantages to engaging a third-party QC provider:
• No conflict of interest. QC providers are independent of your supplier.
• Fast response. Leading providers have offices in each major

manufacturing region and can usually get inspectors to your factory in
under 48 hours.
• Expert advice. They can assist at every stage of your sourcing, including
defining your quality standards, developing an audit program for your
supply chain, and factory audits investigating the real working conditions
in your supplier’s factories.
But there are also a couple of potential disadvantages:
• Additional costs. Getting product quality right is crucial, but having

expert help comes at a cost. Discuss all available pricing plans and check
for any extra charges.
• Product knowledge. It’s unlikely that an inspector will know your product
as well as you do, so think carefully when setting up quality control
protocols.
60
Quality Control
Pay The Balance Owing

With your products inspected at the manufacturer’s facilities, you can demand
rework to your specifications if required, or confidently approve your order for
shipment.
If approved, you will also authorize final payment. Ideally, you only pay after the
goods are shipped out, but suppliers generally don’t accept this arrangement.
The Best Times To Inspect

1. Initial Production Check (IPC). A preliminary inspection of all machinery
and materials to be used in your production, conducted before your
production begins.
2. During Production Inspection (DUPRO). An on-site product inspection
that checks whether the factory is continuing to follow your specs, and
whether production is on schedule. It is conducted when 20%-80% of
your order is completed.
3. Pre-Shipment Inspection (PSI). The final opportunity to take corrective
action before your order is finished and packed. It is conducted when
your production is at least 80% complete.
4. Container Loading Check (CLC). One final check when your order ships, to
make sure the quality, quantity, labeling, and packaging followed your
instructions.
5. Production Monitoring (PM). Not a separate stage of quality control, but
rather, a continuous process, where an on-site inspection is performed
every day of your production. This type of check is best for sensitive and
challenging orders, when you want everything to be perfect.
After the first shipment, you will be gaining more trust with your supplier and
probably won’t need to be as stringent with QC. But, it’s not uncommon for
production standards to slip over time, so you will want to periodically check and
help prevent “quality fade”.
61
Quality Control
Summary
• To manage product quality, clearly define your standards and be aware
of any applicable product safety regulations.
• Checking your product’s quality before it leaves the factory will save you
a lot of time and money. This is a situation where it pays to get
professional help.
Further Reading
https://www.asiainspection.com/whitepaper/5-golden-rules-for-successful-QC
Five Golden Rules To Outsourcing Quality Control
https://www.asiainspection.com/whitepaper/omnichannel-retail-risk
Omnichannel Retail And Quality Control Risk
https://www.asiainspection.com/whitepaper/speed-to-market-and-consumer-safety
In The Fast Lane: What Does Speed To Market Mean For Consumer Safety?
https://www.asiainspection.com/
AsiaInspection is a leading quality control and compliance service provider that
partners with brands, retailers, and importers from over 120 countries to secure,
manage, and optimize their global supply chain.
62
PAYMENT METHODS
Richard Gilbert, Payoneer
The Placing Orders chapter covered most aspects of payments, but not the
options for making a payment. This chapter goes through the most common
options you will consider for paying international suppliers.
Expert Tip
Be sure to specify the method of payment when you agree to payment
terms. Prevent any last minute arguments by putting it in writing in the
purchase agreement.
Advance Payment
Your supplier probably wants you to pay in advance to give them assurance that
you won’t pull out of the deal, especially if you’re ordering a small shipment
(under $1,000). If you have a good relationship with your supplier, you might be
able to agree to other terms.
Here are your options for advance payments for your shipment.
Credit Card
Making a credit card payment with an international credit card is very convenient,
but you will generally find resistance to using them in China. Many suppliers don’t
accept them, because they are exposed, you could cancel the payment after
receiving the goods. Also, many smaller factories are not set up to handle credit
card processing.
Credit card payments tend to come with expensive charges for both you and the
supplier. And, another downside for you beyond card charges is that the supplier
could fold before sending you the goods.
Paypal
Paypal can be useful for very small quantities and with paying for samples, but it’s
not the best choice for paying for most shipments. Many Chinese suppliers refuse
63
Payment Methods
Paypal payments or charge an extra 5%, to cover the risk that you’ll cancel the
payment after the goods have been shipped.
Because Paypal charges a 3.5% fee, you’ll end up paying high fees for large
transactions. Together with the cost of currency conversion, this can put a serious
dent in your profit margin. Paypal also doesn’t have particularly good buyer
protection policies for international transactions.
Alipay & Other Online Escrow Services

Online escrow services like Alipay, offered by Alibaba, are similar to Paypal. You
send payment to Alipay and they will assure your supplier that the funds are
available. The supplier ships the goods and Alipay releases the funds to your
supplier.
Alipay is a good choice for shipments from companies that trade on Alibaba, and
for transactions up to about $5,000. Alipay offers Alibaba Assurance, which
means that you’ll be refunded if the shipment is delayed beyond a certain date or
if the goods don’t meet quality standards. Check, though, if your supplier is
included in Alibaba Assurance.
.
Western Union
Western Union is well known as a safe, secure way to send funds across the
world. It’s fast and the fees are low. It’s very popular with suppliers.
But there’s a downside. You carry all the risk. Western Union requires you to send
funds to an individual, not a company, and there is no way to get your money
back once the payment has gone through. So, only consider this method for
transactions up to $10,000 where you really trust your supplier.
Online Payment Services

Other online payment options like Payoneer offer secure international payments.
Payments of any size to other users are usually free and only take a few hours to
clear, and you won’t be stung for high foreign exchange costs. It’s attractive to
your supplier since they don’t need to pay any fees to withdraw their money, so
you’ll find that even small factories will accept this payment method.
64
Payment Methods
Check, though, that the service provider offers a dispute resolution mechanism,
or you’ll have no way to get your money back if your supplier pulls out after
you’ve paid.
Cash
Paying in advance with cash is popular in China, especially among smaller
factories. If you have a local representative, you could pay in cash and get a
discount on it. However, you have no way to get your money back if something
goes wrong.
Post-Production Payment
Paying after the goods are produced, or, better still, after you receive your goods
is much better for you, since you’ll have a way to pressure the supplier if they
send you low-quality items. However, it’s very unlikely that a supplier will agree to
this.
Wire Transfer
A wire transfer, also called a Telegraphic Transfer or TT, is still the most common
way to send money for freight shipments. It sends the funds directly from your
bank account to your supplier’s bank account and takes between two and five
business days for funds to clear.
It can be expensive, but online brokers usually have lower fees and better
exchange rates than your bank. It’s generally used for larger shipments and is
usually split (advance payment and the balance due when the goods are ready).
Expert Tip
For wire transfers, take care to check that the name on the receiving bank
account matches the name of your supplier’s company so that you aren’t
defrauded by a crooked employee.
65
Payment Methods
Letter Of Credit/Documentary Collection

These two very similar methods are very rarely used these days because they are
expensive, complicated, onerous, slow, and unforgiving of even the smallest error
in the paperwork.
Consider these options, only if you are ordering a very high-value shipment.
Open Account Transaction/Consignment

In this method, you send payment only upon receipt of delivery. It’s one of the
most secure options for you, but it’s the riskiest option for your supplier.
Therefore, you’re very unlikely to find a supplier that will agree to this, unless you
have built a very good relationship with them.
Summary
• Most small importers will use one of the six methods listed above to pay
for goods in advance.
• Each option has its advantages and disadvantages. You should choose
the payment option that your supplier will agree to, that is the most
secure for you.
Further Reading
https://blog.payoneer.com/how-to/pay/save-time-and-money-payout-with-payoneer/
Save Time And Money. Payout With Payoneer
https://blog.payoneer.com/how-to/general/4-tips-for-sending-and-receiving-money-online/
FourWays To Pay Your Global Service Providers
https://blog.payoneer.com/how-to/pay/everything-you-need-to-know-about-wire-transfers/
Wire Transfers – Everything You Need To Know About Sending Money Internationally
Since
https://www.payoneer.com/main/
2005, Payoneer’s cross-border payments platform has empowered millions
of entrepreneurs across the world to expand beyond their borders and grow
successful, sustainable businesses. Thousands of leading companies and
marketplaces including Airbnb, Amazon, Google, and Upwork rely on Payoneer’s
services to send funds to their merchants worldwide.
66
RELATIONSHIP BUILDING
Ash Monga, IMEX Sourcing Services
Stephen R. Covey’s groundbreaking book, “The Speed of Trust”, lists the many
advantages that trust brings to business. E-commerce sellers tend to put this into
practice with their customers, but not so much with their suppliers. This chapter
covers how you can get a lot more in terms of pricing, payment terms, and
service quality, simply by investing in the supplier relationship.
Don't Question Intent From The Outset

The internet is full of stories of people having bad experiences importing from
China, and directly blaming the supplier’s intent for the problems. But these
complaints are more often a result of the importer’s poor due-diligence, lack of
experience with importing and QC processes, rather than the supplier’s intent.
Don’t let yourself get influenced by these stories and approach a supplier with
suspicion. It will likely to be reflected in your tone, and you will probably kill any
chance of building a good working relationship from the outset.
Expert Tip
Going in too hard when negotiating is not a sustainable strategy. What you
win on price, you will probably lose on quality. You’ll probably lose on trust
as well, and that can have long-term ramifications.
Think win-win. The ROI on building solid supplier relationships multiplies as

your brand grows. So make win-win an important strategic priority.
Communicate Simply And Unambiguously

Great communication is the key to all great relationships, but when importing
from China, language and cultural barriers can significantly multiply
communication issues.
The vast majority of issues that importers have with Chinese suppliers have their
roots in communication gaps, whether that’s product requirements, expectations,
67
Relationship Building
quality standards, penalties or, most importantly, dispute resolution. Here’s an

example. When a supplier responds with “okay” it doesn’t necessarily mean they
have understood what you just said.
Try to communicate requirements in writing as much as possible. Having

someone in your team or a partner in China who can communicate your
requirements in Chinese is the best way to get your message across.
Have Realistic Expectations

Often, importers incorrectly expect factories in China to have similar systems,
processes, and technology in place as in the US. That is, an environment set up to
consistently produce a flawless product. Bear in mind when you’re selecting a
supplier that there is usually a clear trade-off between price and quality (both
product and service quality).
Make Timely Payments

Most small and mid-sized suppliers in China work on really tight margins, and
factories often have a tight cash flow. So, agreeing to reasonable payment terms,
and being prompt in payment, will go a long way to building a good relationship
with your supplier.
Play Good Cop/Bad Cop

When working with suppliers in China, you want to have a great relationship. But,
without adequate systems and processes in place, factories do tend to take
shortcuts and make mistakes, so you also want to make sure that they are
adequately monitored. Having a partner on the ground, like a sourcing company,
https://imexsourcingservices.com/china-sourcing-services
who plays the bad cop imposing strict quality standards and negotiating hard on
prices, terms and contracts, means you can focus on building the supplier
relationship.
68
Relationship Building
Summary
• The ROI on building solid supplier relationships multiplies with the
growth of your brand, so make it an important strategic priority.
• Have realistic expectations, be clear with communication, and don’t start
off questioning intent.
• Help build the relationship by not negotiating too hard, by making
timely payments, thinking win-win, and by using the good cop-bad cop
strategy.
Further Reading
https://youtu.be/s-8FnYB1SNw
How to Talk to Suppliers GS Oct 2017 [video]
How To Get Suppliers In China To Respond To Your Emails
http://www.thesourcingblog.com/get-china-suppliers-to-respond-to-emails/
IMEX
http://www.imexsourcingservices.com
Sourcing Services is a technology-driven sourcing and product development
manpower intensive operations like sourcing, quality control, and production
management, so that they can focus on scaling their businesses. Ash also blogs
about sourcing fromhttp://www.TheSourcingBlog.com
China at The Sourcing Blog.
69
FREIGHT QUOTE
About two weeks before the order is ready for shipment, you should start
arranging the freight. It’s time to understand what a forwarder does, and
how to find the right one for you. First up, though, all the steps in the
freight process are brought together on the next page.
70
FREIGHT PROCESS STEPS
Once you’ve completed sourcing your goods and are done with the supplier
process steps, here’s how to move forward on the international freight front (refer
following chapters for expansion to abbreviations).
Restrictions
Before you select what product you are importing, check out potential
customs or carrier restrictions on your product.
Shipping Requirements
Conform to Amazon’s palletizing and labeling requirements.
Incoterm
When negotiating with your supplier, define your incoterm (freight term that
drives accountability during the shipment). Then negotiate your buy price based
on landed cost.
Documentation
Get copies of the documents you’ll need for the shipment from your supplier,
that is the CI, packing list, and, in some cases, also the COO, MSDS, and
fumigation certificate.
RFQ Info
Check out the RFQ prep list. Consider whether you require the forwarder to
cover customs broking and cargo insurance.
Mode
Decide between shipping by air or ocean. Air is quicker and ocean is cheaper
(except for small shipments). Ocean freight splits to full container load and
less than a container load.
Price vs Time
Assess the price point that you would swap to a different mode to get your
goods in quicker. This is especially relevant if you are not near a major port.
71
Freight Process Steps
Selection
From the responses, decipher the surcharges and fees (like fuel, canal
surcharges, piracy charges), ensure it’s all correct, and choose the right quote.
Engagement
Complete required forms, like T&Cs and POA. Then complete the Shipper’s
Letter Of Instruction and provide other documents so that your forwarder
can confirm the plane or ship’s booking.
Customs Bond
Choose between a continuous bond and a single entry bond. For single entry
bonds, you’ll also need an ISF bond with ocean freight.
Payment
What method will you use to pay the order? Also, if you’re importing regularly,
it’s cheaper to set up ACH payment with Customs.
Document Check
Carefully check all documents that are to be lodged with Customs, because
even a tiny mistake might become costly for you.
Communication
Make sure your forwarder is keeping you up to date with shipment tracking
and early notification of issues. Coordinate drop-off, and make sure you are
resourced for unloading.
Receiving Requirements
If the shipment is to be delivered to a 3PL warehouse, make sure that your
forwarder is conforming to their shipping and receiving requirements.
72
FREIGHT FORWARDERS
A freight forwarder is a service provider that arranges international freight
shipments. Think of them as travel agents for freight, stitching together carriers,
customers, regulations, and more. This chapter covers what services they
provide and what to consider before selecting one. There are several ways that a
shipment can be managed, and this chapter also covers those.
Forwarder Service And Support

Freight Forwarders come in all shapes and sizes. Some smaller forwarders are
essentially domestic trucking companies or trucking brokers with little or no
involvement in international freight movements. Some specialize, for instance in
either ocean freight or air freight.
Here’s what a freight forwarder will do for you:
• Provide expert guidance and explain what you will need to know about
the shipment,
https://www.freightos.com/portfolio-items/key-freight-documents/
for instance explaining how the key freight documents
that they are asking you to provide or sign, fit in with the shipment. They
will take you through available shipment options and provide advice.
• Prepare all paperwork, make bookings, and arrange payments for each
shipment sector that they are responsible for.
• Act on your behalf with the many other parties involved in the shipment,
such as cargo carriers, other freight forwarders handling part of the
shipment, and trucking companies. Most forwarders also provide a
customs brokerage service and can act on your behalf with customs.
• Troubleshoot if something goes wrong, or is at risk of going wrong.
• Keep you informed of shipment status, and inform you if any risks of
delay come up.
73
Freight Forwarders
Forwarders & Customs Brokers

If you don’t have a customs broker already, you won’t necessarily need to
arrange a separate one as many international freight forwarders can handle the
customs process in-house as part of their service. Others work with licensed
customs brokers as agents.
Some importers do have a preferred customs broker, and, as an importer, it’s

reasonable to ask your forwarder to work with them.
Occasionally, some importers manage customs for their own shipment (in-house
or through an agent), which raises the important issue of who should be
managing your shipment.
Shipment Management
1. Do It Yourself
If forwarders are like travel agents, and fewer people use travel agents these
days, then presumably more importers should go it alone. But, this is where the
travel agency analogy breaks down. There are few opportunities for smaller
importers to arrange international freight directly with ocean or air carriers. But,
more importantly, it’s not a good idea. Many things can (and do) go wrong with
international freight, creating a risky game for non-specialists to play.
2. Supplier’s Freight Forwarder (Entire Shipment)

A second option is to let the supplier handle the freight. Many Chinese suppliers
have an arrangement with a local freight forwarder, and a few Chinese
forwarders will manage the entire shipment. Only accept this arrangement on
DDP incoterm (or DDU if your warehouse is specified as the “Named Place For
Delivery”). Incoterms are covered in more detail in the Shipping Basics chapter.
This option may look attractive because you don’t have to arrange the shipment.
However, you lose any control of the shipment, which is risky given that you are
the most impacted player. Besides, it’s unlikely that a Chinese forwarder
managing the whole shipment could come in with a much cheaper cost than a
US forwarder would charge.
74
Freight Forwarders
3. Supplier’s Freight Forwarder (To The US)

Having the supplier and their forwarder manage the shipment as far as the US
port of entry might sound attractive, and it is a common arrangement. However, it
also often a disaster waiting to happen for the importer.
Here’s how. It’s quite common for suppliers to offer this option with the forwarder
offering ridiculously low rates that importers gladly accept. Sometimes, too, there
is someone in the factory getting a kickback from this forwarder.
When the ship arrives at the US port, the forwarder recoups his margin, lost with
those ridiculously low rates, by presenting the importer with a ridiculously high bill
for local port costs. The forwarder is effectively holding the shipment as hostage,
so the importer is forced to pay.
4. Your Freight Forwarder

In this option, your forwarder manages most or all of the shipment. That is, they
take over from when the ship or plane is loaded, from the foreign port, or from
the factory floor.
This is the best option for you because you have better control of both the
shipment and the freight costs.
Most importers work through a US forwarder, but in theory, you could use a
Chinese forwarder.
Whichever of these four options you take, you should consider how the incoterm
changes how much freight cost you’ll have to pay and how you should negotiate
based on landed cost, not on buy price alone. The Shipping Basics chapter
explains how to do this.
Forwarder Selection
With over 100,000 freight forwarders worldwide, you need to define your key
selection criteria. Here are the most common factors to consider.
75
Freight Forwarders
Specialized Shipping
Many forwarders don’t deal with vehicles, household removals, bulk commodities
like wheat or oversized shipments. You probably won’t be looking to import any of
these things, but you may be looking to import a product that air or ocean
carriers define as hazardous cargo. Don’t be fooled by the name, because it
includes seemingly tame products like toys with batteries.
Check out the forwarder’s geographic coverage. Larger global forwarders can
cover the world, but smaller forwarders typically limit their reach to a few popular
countries where they have a working relationship with a local forwarder. That
said, most of the smaller international forwarders you will come across will
manage shipments going from China to the US.
Forwarder Size
Name-brand global forwarders have the muscle to secure good rates and
preferential treatment from the big air and ocean carriers, as well as a broader
physical global footprint. That means they attract larger customers, who naturally
get preferential treatment. Take the most recent Freightos annual mystery
https://www.freightos.com/state-of-online-freight-sales-2018-customer-centric-freight/
shopping survey. All of the top twenty forwarders were requested to quote, but
https://www.freightos.com/state-of-online-freight-sales-2018-customer-centric-freight/
only seven bothered to quote to a small business. You should probably avoid any
larger forwarders where your primary point of contact is going to be a 1-800
number.
In contrast, smaller forwarders typically have more time to spend on smaller

shipments and with their smaller clients but they may have less attractive prices
or fewer technological tools to help manage or track your shipment.
Price
Making a decision on price alone can be a flawed strategy, particularly when
you’re trying to save $200 on a shipment of $200,000 worth of goods. For
instance, some forwarders discount the first shipment to win the sale but make
it back on subsequent shipments. Also, some forwarders hide charges in the
terms and conditions to make their quote price look more attractive than those
from more honest competitors.
Forwarders who lead on price, almost certainly do so at the expense of service.

That may not be a problem, if, for instance, they are services you don’t need.
76
Freight Forwarders
But that will be a problem if general customer service levels are cut. If something
goes wrong with your shipment, you want your forwarder to be on top of your
shipment. So, if one quote comes insignificantly cheaper than the others, be
very wary and see if you can find out why.
Service
Your shipment grows your business, so you want someone you can trust in
charge to coordinate airlines, ocean carriers, and (especially) customs agents
don’t take favorably to incorrect, incomplete or late paperwork. If your forwarder
isn’t on top of your shipment, you risk having to pay more than you bargained
for. Smaller forwarders also tend to provide fewer support tools. As a result,
nearly 50% of importers still use spreadsheets to track shipments.
A good early indication of a forwarder’s customer service level is how long it

takes them to respond to your quote request. If that takes a week or longer, it
doesn’t bode well for regular and transparent communication during the
shipment.
Expert Tip
A great partnership entails each partner knowing what is required of the
other. Meet up with your new forwarder to discuss what you both expect in
the way of communication.
They should ensure you stay on top of any documentation they send your
way.
You’ll probably want to know more about the process, what documents are
required, and at what points along the shipment you will get updates.
Discuss how early you will be notified of potential issues that might come up
during the shipment.
Keep your forwarder astride of how your business is going. It will help build
the relationship and help them help you. Discuss short-term changes to
sales projections, long-term sales projections, potential new markets, even
changes in product design. They can all impact your shipping requirements.
77
Freight Forwarders
A few startup forwarders have based their business model on process

automation. Their integrated customer-facing systems definitely make for a
great user experience. They’re new and still building capability, including their
geographic coverage. As of mid-2018, only two digital forwarders can currently
manage China-US door to door shipments, but more are joining the game.
In addition, while it may not be apparent, most large providers have

sophisticated tool stacks for shipment visibility. However, these may be reserved
for larger customers.
Multiple Selection Criteria

That makes for quite a few selection criteria. However, assessing forwarders has
been difficult until now because freight forwarding is still largely offline.
But, that’s changing fast. With instant online freight marketplaces, the details on
the quote act as the filters for some of your selection criteria, and the simple
quote selection features add the rest. Using a freight marketplace takes the time
and guesswork out of selecting freight quotes and forwarders.
Summary
• Freight forwarders are experts that understand how the full shipment
process works and provide a broad range of services and support.
• When negotiating with a supplier, ensure that the forwarder manages the
shipment, at least from the foreign port.
• In addition to price, consider service, forwarder rating and any special
requirement your shipment may have when selecting freight quotes and
forwarders.
Further Reading:
The Ultimate Guide To Choosing A Freight Forwarder
https://www.freightos.com/freight-resources/freight-forwarder-ultimate-guide/
International Freight Crash Course
https://www.freightos.com/portfolio-items/international-freight-crash-course/
Get Better Freight Service With These Ten Tips From Professionals
https://www.freightos.com/portfolio-items/get-better-freight-service-with-these-10-tips/
78
REQUEST FOR FREIGHT QUOTE
This chapter covers how to go about requesting a freight quote (RFQ) and then
selecting which quote to accept.
Prepare Before You Request A Freight Quote

The right time to start requesting quotes is about two weeks before the shipment
is ready for pickup. You will want to be able to compare several quotes, but also
make an allowance for some forwarders not getting back to you with a freight
quote.
Get your supplier to email you copies of the commercial invoice and packing list.
While you’re at it, if applicable, get them to send the certificate of origin, MSDS,
and fumigation certificate. They’ll be needed soon after you accept a quote. That
said, some forwarders will chase these documents up for you. All of these
documents are covered in the Shipping Basics chapter.
Forwarders should all be requiring the same basic information, starting with your
and your supplier’s contact details, and the pickup and delivery contact details.
If the shipment is door to door, you’ll need both end’s address details. Zip codes
are sometimes sufficient at this stage, but the more detail you give, the better. If
the origin https://www.freightos.com/portfolio-items/world-airport-code-finder/
or destination address is an airport, use this airport code locator, and
check for seaport codes with this seaport code locator.
https://www.freightos.com/portfolio-items/seaport-code-name-finder/
Here’s what else you should prepare before quoting. You can also use this as a
checklist when you are requesting quotes:
Shipment Weight
This is recorded on the packing list. If you get freight quotes back for a
different weight, read up on dimensional weight in the Shipping Basics
chapter.
79
Request For Freight Quote
Shipment Volume
This is also on the packing list. If the quote request form has a total volume
https://www.freightos.com/portfolio-items/cubic-meter-calculator-cbm-shipping-free/
field, use a cubic meter calculator that converts from inches (if required) to
calculate the “CBM”.
Shipment Ready Date

Once you supplier confirms this, you can determine when you should start
requesting quotes.
Mode
Freight quote forms expect you to know whether you want an air freight or
ocean freight quote, and if you want LCL or FCL. The Mode Selection chapter
covers this in detail.
Official Product Description

This is recorded on the commercial invoice.
Shipment Value
Forwarders need this if you are taking out cargo insurance with them.
HS Code
The Importer & Customs Responsibilities chapter explains why this code is
relevant. Your product’s HS code should also be recorded on the commercial
invoice.
Cargo Insurance
You should request cargo insurance when you request a quote. This is
covered in more detail in the Cargo Insurance chapter.
Incoterm
This is the freight term, for instance, “EXW” or “FOB Nanjing”, recorded on
your purchase order or purchase agreement.
Shipment Delivery Date

This helps forwarders filter out options that will take too long.
80
Use the form’s comments field to let them know that you are looking for a
competitive price or a speedy shipment. Let them know if you have a hard
deadline for delivery.
Forwarders act as agents for providing cargo insurance. They also act as agents
for customs brokers (or provide the service in-house). Their forms should ask
whether you want them to arrange both services. The Freight Forwarders chapter
goes into forwarding and customs broking in more detail.
Request A Freight Quote

It’s hard to find reviews of forwarders online. So instead, start networking. Ask
other smaller businesses you know of who make international shipments whether
they recommend their forwarder for both price and service.
• Online Form. Check out your shortlisted forwarder’s website for an RFQ
form, or failing that a basic contact form. Mark your checklist as you go
through completing their form. If there’s anything still left on the
checklist, add it to their comments field.
• Email. If they don’t have an online form, there’ll be a contact email
address somewhere on their corporate site. If instead, you phone them to
request a quote, you should still follow up by email. Simply copy and
paste quote your prep list (above) straight onto the email. Finish by asking
them to confirm receipt of your email, so you’re not left waiting.
Expert Tip
Instant online freight marketplaces are a new way to request a quote
once but receive responses from multiple forwarders. Better still, you don’t
have to wait for a response because the forwarders rates are already loaded
into the system and they are all in the same format. Some marketplaces
have features that make it simple to choose the best quote, by price, transit
time or forwarder rating.
Select The Right Quote

As each quote comes in, carefully check that they got your details right. Freight
quotes can take a bit of getting used to because each forwarder has a different
81
quote layout, some charges go by different names, and charges are rolled up
differently.
Check that the transit time is for the entire shipment and not just the main transit
leg. Work out whether the transit time adequately fits your schedule. You should
build a bigger buffer for delays for ocean freight than with air.
If you want to understand the line items on your quotes, use this guide on
common freight charges.
https://www.freightos.com/portfolio-items/freight-information-tips-and-advice-on-common-freight-charges/
Confirm The Booking

Once you accept a quote with the forwarder, they will book a space, or “slot”, on a
ship or plane. Your forwarder will need you to have completed the shipper’s letter
of instruction document, although, in practice, forwarders often complete this for
you. This is where those other documents mentioned at the beginning of this
chapter comes in. The Shipping Basics chapter covers the shipper’s letter of
instruction and those other documents.
The forwarder will also need you to sign their forwarder contract (“T&Cs”) so that
they can start work on the shipment, and a power of attorney (POA) form so that
they can represent Customs on your behalf.
Your supplier should do this, but also, as a courtesy, let your supplier know.
Summary
• Request the commercial invoice, packing list, and potentially other
documents, from your supplier and make a quote prep list before
requesting freight quotes.
• Approach several forwarders for quotes so that you can compare quotes.
Allow for some forwarders not responding to your request.
• Ask around for recommended forwarders, then request quotes from
each forwarder’s online form or by email. Alternatively, use an online
freight marketplace.
Further Reading
https://www.freightos.com/freight-resources/freight-forwarder-ultimate-guide/
The Ultimate Guide To Choosing A Freight Forwarder
82
MODE SELECTION
This chapter covers
https://www.freightos.com/portfolio-items/air-freight-rates-cost-prices/
the three freight modes for importing shipments (express, air
https://www.freightos.com/portfolio-items/ocean-freight-explained/
and ocean) together with guidance on how to choose which mode is best for your
shipment.
Modes For Shipping From China

Express Freight (International Courier)
Shipping with express freight basically means replicating the same courier
experience you get every time you have an e-commerce delivery at home. While
this means convenience, speed, and an easier customs process, you’ll pay a price,
express freight is limited to small shipments only. Weight and size restrictions vary
by courier.
While there are many resellers, the market is dominated by a few large players,
namely UPS, FedEx, and DHL.
Air Freight
Air freight means leveraging almost the same speed as courier shipping but with
processes optimized for international freight. Air freight processes are more
complex and less automated than express freight but are less painful than ocean
freight processes.
Shipments are less likely to get damaged going by air than by sea but are more
expensive and more prone to restrictions on hazardous products (as covered in
the Product Research chapter).
Ocean Freight
Ocean freight is generally cheaper than air freight.
But it’s also slower (check out the difference by using this transit time calculator)
and less reliable (delays caused by port congestion, customs holdups, bad
weather, etc). That makes it a risky choice if you have a hard deadline. Ocean
freight is becoming more reliable, though. Some ocean carriers even offer a
premium service. “Expedited freight” works by streamlining processes and only tie
83
Mode Selection
in with faster ocean and trucking services.
Another advantage is that CO2 emissions are minuscule compared to air freight.
Selecting The Best Mode For Your Shipment

The following table provides general guidance, not definitive advice.
Mode Transit time* Cheapest Drawbacks
Express Freight 3-5 days < 50 kg Courier weight and

(International Courier) size restrictions.
Planes have a longer

Air Freight list of restricted
7-14 days 50 kg <> 500 kg
cargo than ships.
Ships are more prone to

Ocean Freight 25-40 days > 500 kg delays (bad weather,
port congestion, etc).
* For a less than container load, China-US West Coast door to door. Each mode has a quicker
premium option: express freight (1-2 days), air freight (5-8 days), ocean freight (18-30 days).
The rules of thumb in the table gloss over the many variables in freight, like the
points ofhttps://www.freightos.com/portfolio-items/freight-rate-calculator-free-tool/
origin and destination, and current freight rates. The Freightos freight
https://www.freightos.com/portfolio-items/freight-rate-calculator-free-tool/
rate calculator is a more accurate way to select mode because it takes these key
variables into account. It uses live freight rates and real points of origin and
destination.
If your shipment has a ballpark weight of 500 kg, assess the price point that you
would swap modes to get your goods in quicker. This is especially relevant if you
are not near a major port, or are East Coast importing from China.
If you are looking for even more accurate rates, you can instantly find and select
https://www.freightos.com/instant-freight-quotes-freightos-marketplace/
binding quotes on the Freightos Marketplace.
84
Mode Selection
Summary
• As a rule of thumb, air freight is quicker and sea freight is cheaper,
however, smaller shipments are often cheaper by air than sea.
• Speed and cost are important but other factors may play a part in
determining which mode is best for your shipment. They include courier
weight and size limits, carrier restrictions, carbon footprints, and whether
there is a drop-dead delivery date.
Further Reading
https://www.freightos.com/portfolio-items/need-to-know-shipping-from-china/
Shipping From China: Everything You Need To Know
including the option of using the postal service.
Ocean Freight vs Air Freight: Making the Decision
https://www.freightos.com/freight-resources/air-freight-vs-ocean-freight-making-the-decision/
Ocean
https://www.freightos.com/portfolio-items/ocean-freight-explained/
Freight Explained: Calculating Costs And Price Trends
International
https://www.freightos.com/portfolio-items/air-freight-rates-cost-prices/
Air Freight Explained: Calculating Costs and Price Trends
https://www.freightos.com/portfolio-items/is-your-cargo-flightworthy/
Is Your Cargo Flightworthy?
85
CARGO INSURANCE
At this stage, you might not be thinking about cargo insurance, but many
importers only realize the value of cargo insurance after something goes wrong
with their shipment. It makes even more sense given how easy cargo insurance is
to procure. This chapter covers the range of cargo insurance options.
Option 1: Don’t Buy Cargo Insurance

You may choose not to take out cargo insurance, and instead rely on filing a claim
against the carrier if something goes wrong. This might seem like less hassle and
cheaper but if something goes wrong it will be anything but.
• Under carrier terms and conditions, you will get a minimal compensation,
around $2.00/kg (2.2 lbs) for air freight and $500 per customary freight
unit (which can vary from one container to one pallet) for ocean freight.
• In some scenarios, like general average, carriers may not be legally liable,
https://en.wikipedia.org/wiki/General_average
even if they caused the loss.
• Making a freight claim is time-consuming, cumbersome, and has no
guarantee of success. It can easily become a nightmare if the forwarder,
insurer, and/or carrier is incompetent, uninterested, or enjoys playing
hardball.
All in all, relying on carrier terms and conditions is only a good option if the value
of your shipment is very low, or if you like living on the edge (and can afford the
hit).
Option 2: Insure Your Cargo

In this option, you take out an insurance policy to cover the actual value of your
goods. If you don’t think twice about insuring your business, home or car, then
you shouldn’t think twice about insuring your international shipment, which is far
more accident-prone.
Frankly, cargo insurance is so cheap, why wouldn’t you buy it?
86
Cargo Insurance
The best way to buy cargo insurance is when requesting freight quotes:
• You don’t need to shop around, because forwarders rates as agents
compare favorably with the rates you’ll get going directly to the insurer.
• You won’t be getting much difference in the cost of taking out insurance
by shopping around. Frankly, though, there are much meatier charges on
a freight quote to worry about.
• It’s almost effortless to add in cargo insurance when requesting a quote.
• You are guaranteed that your insurance was purchased before the goods
are loaded.
Go for comprehensive “All Risk” cover, rather than loss coverage only, or basic
risk. Some forwarders also offer cover for freight costs and “plussage”. Be mindful
though, that even comprehensive cargo insurance has its limits because you
won’t be compensated for any loss of sales.
Processing an insurance claim is much easier than lodging a freight claim with a
carrier, and much more likely to provide satisfaction. Also, the insurance
company, not you, will be doing most of the work.
Expert Tip
Ask your freight forwarder to forward you a copy of the policy. This makes
sure the forwarder doesn’t forget to book insurance. Besides, you will need
the policy if you have to make a freight claim.
Summary
• Take out cargo insurance rather than rely on carrier liability.
• Ask for comprehensive cargo insurance, and check that you get it.
Further Reading
https://www.freightos.com/portfolio-items/freight-insurance-cover-your-bases/
Freight Insurance: Why You Need to Cover Your Bases
https://www.freightos.com/portfolio-items/make-freight-claim/
How To Make A Freight Insurance Claim
87
SHIPMENT
Now that you have a freight booking, the next step to getting your product
back home is the shipment. Time to learn about the key players in the
freight industry, the basic jargon you’ll need to get by, customs processes
and the shipping process from pickup to delivery.
88
SHIPPING BASICS
This chapter covers some of the fundamentals of shipping, like key players,
terminology, documentation, Incoterms, and how they can not only affect the
shipment but also seriously affect your markup.
Meet the Key Players

Carriers
Freight doesn’t move itself. Carriers are the companies that own the ships, planes,
like Maersk and American Airlines. They typically don’t arrange the movement of
freight beyond the port to port (or airport to airport) segment of the shipment.
Carriers sell bookings on their vessels, typically through third-parties (although

they will offer services directly to very large companies). In the US, some non-
carriers also sell bookings through a legal arrangement called NVOCC (non-vessel
owning common carrier).
Forwarders
As the Freight Forwarders chapter described them, “think of them as travel agents
for freight, the experts who understand how the end to end shipment process
works.” Some forwarders do sometimes also act as carriers, most commonly by
also operating a truck fleet. Similarly, the big international couriers also own and
fly cargo planes.
Customs Brokers
Customs brokers specialize in customs filing and clearing, as explained in the
Customs Process chapter. Freight forwarders either work with a customs broker
as an agent or handle customs broking in-house. See more in the Freight
Forwarders chapter.
Third-Party Logistics Providers

Third-party logistics providers (3PLs) take on some or all of a company’s
distribution and fulfillment services. Many larger forwarders also provide this
service. This form of outsourcing is covered in the Third-Party Fulfillment chapter.
89
Shipping Basics
Shippers
The only key player left is you. Whatever you call yourself, the freight industry calls
you a shipper. For outsiders, this seems rather confusing but as forwarders and
carriers set it, you are the person wanting to “ship” the goods.
Key Freight Terminology

Door To Door & Port To Port
This basically describes whether the shipment service provided is between ports
or from/to another destination that requires trucking or railing services. The
shipment leg between the export country and the import country is called the
main transit or main leg. If the forwarder responsible for arranging this leg is also
picking up the shipment at the factory, the shipment is called door to port.
Similarly, port to door covers the main transit from the foreign port to final
delivery. In door to door, the forwarder is handling the entire shipment.
Multimodal
The humble shipping container not only revolutionized international freight, it also
revolutionized international trade and global economic growth. Multimodal simply
means shipping by container. Once a container is “stuffed” with a shipment, it
moves by road, ocean and/or rail until it is finally opened somewhere in the US.
The whole process is so streamlined that inland cities like Denver or Chicago can
act as ports, complete with customs clearance, deconsolidation (we get to that
soon) and as the named place for some Incoterms (ditto). These “inland ports” are
usually referred to as inland freight interchanges.
Some key multimodal terms that you should know are:

• FCL (full container load). This means that you are paying for a whole
container which, depending on your load size, may be cheaper than a
less than container load The load doesn’t have to fill the container, as
for, say ¾ loads booking FCL is cheaper than booking LCL.
• LCL (less than container load). Booking LCL means that your shipment
is taking up only a part of the container and will almost certainly be
shared with other shipments in that container.
90
Shipping Basics
• Consolidation/Deconsolidation. Consolidation is the process managed

by the forwarder or carrier whereby the LCL shipments sharing a
container are “stuffed” together. Deconsolidation is the opposite, that
happens near a port at the end of the port to port leg.
• Intermodal. This term is often used interchangeably with multimodal,

but there is a difference. With intermodal more than one forwarder is
used, meaning there will be more than one bill of lading, and more
communication required.
Trucking
FTL and LTL are the trucking equivalents of FCL and LCL, namely a full truckload
shipment and a less than truckload shipment. US regulations require truckloads to
be charged by a complicated method called freight class. Most products get
classified
https://www.freightos.com/portfolio-items/freight-class-density-calculator/
by density. This freight class calculator estimates the freight class for
density products. It also goes into detail about how freight class works.
Dimensional Weight
Freight class may be complicated, but other modes of transport can get that way
too. Very light shipments that take up much more space than their weight would
indicate are charged by dimensional weight, that is the weight at which your
shipment’s dimensions would be reasonably profitable to carry. Each mode,
ocean, air, trucking in other countries, have their own formula. In fact, every
shipment is charged at the greater of actual weight or dimensional weight. That
weight is called the chargeable (or billable) weight. Dimensional weight is also
called dim weight, volumetric weight or cubed weight.
You don’t need to understand how it works, but don’t be perturbed if your
shipment is very light and your requested freight quotes come back charged at a
very different weight than you requested. Use this chargeable weight calculator to
https://www.freightos.com/portfolio-items/chargeable-and-volumetric-weight-calculator-freightos/
find out the freight class for density products, and to learn more about how
freight class works.
91
Shipping Basics
Key Freight Documents
• Commercial Invoice. This is the normal proof of sale, provided by the

supplier to the importer, and in itself is not a freight document. It
becomes one because Customs requires it for clearance. The Ordering
chapter covers where this document fits in with negotiation.
• Certificate of Origin (COO). Your supplier will prepare this in conjunction

with their chamber of commerce. This document is also required by
Customs for clearance because it helps identify banned items and duty
payable. Your forwarder will require this when the Shipper’s Letter Of
Instruction document (below) is prepared.
• Material Data Safety Sheet (MSDS). This document only applies to

hazardous goods and is usually provided by the supplier. Again, your
forwarder will require this when the Shipper’s Letter Of Instruction
(below) is prepared. This document is covered in more detail in the
Product Research chapter.
• Fumigation Certificate. This document is only required if wood, and

some other natural products, are included in the shipment. This most
often applies to pallets and crates. Your supplier must arrange for this.
Again, it required for customs clearance, and your forwarder will need it
when the Shipper’s Letter Of Instruction (below) is prepared.
• Freight Forwarder Contract (“T&Cs”). Like any other agreement that

you sign with a service provider, you are required to sign off on their
standard terms and conditions before they work on your shipment.
• Power Of Attorney (POA). Like the commercial invoice, this is a widely

used document outside the freight industry. By your signing one of these,
your forwarder can deal with Customs on your behalf. You’ll sign a POA at
the same time you do the T&Cs.
• Shipper’s Letter of Instruction (SLI). With the above forms ready to go,
this document kicks off the shipping process. It is your order form, proof
92
Shipping Basics
that you are purchasing from the forwarder. This document is covered in
more detail in the Request For Freight Quote chapter.
• Booking Confirmation. This is your receipt for the main transit, whether
ocean or air. The carrier provides it to your forwarder, who should
forward it on to you. In some cases, the booking confirmation number is
also the shipment tracking number.
• Bill of Lading/Air Waybill. These very similar documents used for ocean
freight and air freight respectively, are the contract of carriage for the
main transit leg. Like any other contract, it has terms and conditions
which limit forwarder and carrier liability. Your forwarder prepares the bill
of lading. This document also provides proof of ownership of the goods in
case of damage, theft or loss. Some forwarders add the shipment
tracking number on this document. There usually isn’t the same formality
with booking pickup and drop-off. There’s a lot more flexibility in making
arrangements with a local trucking company than with container ship or
airline carriers. Emails are usually the only documentation required.
• Packing List. This is your receipt of goods at delivery. It is attached as a

pouch on the goods and also emailed ahead. It is only required when
shipped goods are packed into larger units, like a container or an aircraft
console. The supplier completes this form, although the forwarder will
also complete one if the goods are re-packed at their warehouse.
The Key Freight Documents For International Shipping resource has more
https://www.freightos.com/freight-resources/key-freight-documents/
information on most of these documents.
Buy Price vs Landed Cost

Landed Cost
When you are negotiating a price with your supplier (covered in the Negotiating
Strategy chapter), it’s tempting to get fixated on the buy price. The lower the buy
price the better the markup. Right? But, there are two other costs to take into
account before those goods are safely in your inventory. They are customs
charges and freight costs.
93
Shipping Basics
LANDED COST = BUY PRICE + FREIGHT COSTS + CUSTOMS CHARGES
The Customs Duties chapter goes over how to get estimates for duty costs. And,
getting reliable freight cost estimates from a freight rate calculator is covered in
the Mode Selection chapter. But your freight charges will vary depending on how
much responsibility you are willing to take.
Your supplier will probably only arrange all the freight if they can make up for it
with a higher buy price. Similarly, you will only pay all the freight if you can make
up for it in a lower buy price. But it’s not uncommon for inexperienced buyers to
squeeze a better deal out of a supplier, but fail to realize the consequences when
the supplier accepts a lower buy price, in exchange for switching Incoterms. That
might seem harmless, but, switching from FOB to EXW, for instance, might have
wiped out all the gains made by the cheaper buy price. So what are Incoterms?
Incoterms
This gets a little boring but it’s really, really important. Incoterms are standardized
freight terms that are used in international sales agreements. There are eleven of
them in all, each differing in where, during the shipment, the responsibility
(arranging and paying) and liability (for resolving any problems) transfers from the
seller to the buyer.
Most suppliers have a preferred combination of incoterm and selling price. Often,
that’s CIF (Cost, Insurance and Freight), which means their responsibility for the
goods ends at the US port. It is commonly used, however, for smaller buyers this
incoterm (and the three other Incoterms starting with the letter “C”) are disasters
waiting to happen. This is explained in the Freight Forwarders chapter.
The safe (and more common) Incoterms that you should be negotiating, are:
• EXW (Ex Works), where you take full responsibility and liability from factory
pickup.
• FCA (Free To Carrier), where you take responsibility and liability once the
shipment is handed over to the carrier, typically for consolidation at
carrier’s premises near the port.
94
Shipping Basics
• FOB (Free On Board), where you take responsibility and liability once the
shipment “crosses the ship’s rail.” Technically FOB wasn’t designed for
freight that goes into containers or airplanes, but it does work well for full
container loads. However, it shouldn’t be used for LCL or air freight,
because they need to be consolidated before they are handed over to the
carrier. Also, for air freight, there is no “ship’s rail.”
Stick to this advice, and you probably won’t need to know much more about
Incoterms. They do get complicated. For more detail, turn to the Incoterms In
https://www.freightos.com/portfolio-items/incoterms-plain-english-freight-shipping-guide/
Plain English guide.
Calculating Landed Cost

So, bringing this all together, say you want to know what your target buy price is
for EXW and FOB:
• Use this freight rate calculator to quickly find this out. Work out the door
to door freight rate (for EXW) and the port to door freight rate (for FOB) to
get the two different freight costs.
• https://www.freightos.com/portfolio-items/import-duty-calculator/
Then, simply add your customs duty estimates to calculate landed cost
for both freight terms.
• Now you have your target buy prices for negotiating either incoterm.
Expert Tip
Here’s a relatively common scenario. Your supplier doesn’t lead with EXW, but
ends up agreeing to it. After pickup, the supplier complains about how
unprofessional your forwarder is. Don’t chew out the forwarder just yet. Many
times, this is simply because someone at the factory gets kickbacks from his
local forwarder, and they now have a solid reason to advocate for them (and
bash others).
You will find a host more key freight terms in this freight term glossary.
https://www.freightos.com/portfolio-items/freight-term-glossary-explanations/
95
Shipping Basics
Summary
• Knowing 10% of the right terminology can get you through 90% of a
shipment.
• With a grasp of Incoterms and landed costs, you can protect yourself
when negotiating with a supplier.
Further Reading
Here’s a list of useful freight tools included in this guide, and the chapter where
they appear.
Freight Shipping Hazardous Material Table - Product Research
https://www.freightos.com/portfolio-items/freight-shipping-hazardous-material-table/
https://www.freightos.com/portfolio-items/hs-code-harmonized-system-code-finder-lookup/
HS lookup table - Customs Duties
https://www.freightos.com/portfolio-items/import-duty-calculator/
Import Duty Calculator - Customs Duties
https://www.freightos.com/portfolio-items/cubic-meter-calculator-cbm-shipping-free/
CBM Calculator - Request For Freight Quote
https://www.freightos.com/portfolio-items/world-airport-code-finder/
Airport Code Finder - Request For Freight Quote
https://www.freightos.com/portfolio-items/seaport-code-name-finder/
Seaport Code Finder - Request For Freight Quote
Freight Rate Calculator - Mode Selection
https://www.freightos.com/portfolio-items/transit-time-calculator-for-international-freight-free/
Freight Transit Time Calculator - Mode Selection
https://www.freightos.com/portfolio-items/freight-class-density-calculator/
Freight Class Calculator - Shipping Basics
Universal Chargeable Weight Calculator - Shipping Basics
https://www.freightos.com/portfolio-items/chargeable-and-volumetric-weight-calculator-freightos/
https://www.freightos.com/portfolio-items/freight-container-pallet-box-dimensions/
Freight Containers, Pallets, And Boxes - Shipping Basics
Incoterms Guide - Shipping Basics
https://www.freightos.com/freight-resources/key-freight-documents/
Key Freight Documents Guide - Shipping Basics
https://www.freightos.com/portfolio-items/freight-term-glossary-explanations/
Freight Term Glossary - Shipping Basics
Freight Shipping Charges and Fees Guide - Request For Freight Quote
https://www.freightos.com/portfolio-items/freight-information-tips-and-advice-on-common-freight-charges/
96
SHIPMENT PROCESS
As the importer, most of your responsibilities for a shipment are covered in the
Request For Freight Quote chapter. Quickly and carefully check and sign all
documentation sent your way. Even a very minor discrepancy between any of the
key documents can lead to expensive delays. You also have some customs
responsibilities, which are covered in the Customs Processes chapter. But, from
now on in, the shipment is mostly the forwarder’s responsibility. This chapter
covers what actually happens during the shipment, from end to end.
Pickup Origin Main leg Distination Delivery
This diagram makes it look pretty simple. A shipment starts by being loaded by a
forklift onto a truck at pickup. It is taken for consolidation near a port, clears China
Customs and is loaded on the ship or plane. Once the vessel gets to the US the
process is repeated in reverse.
As simple as that sounds, a thousand things can (and do) go wrong. Sometimes,
seriously wrong. That’s why successful importers rely on freight forwarders to
manage their shipment.
The next section goes into more detail about each of these stages.
Shipment Stages
Pickup
Your forwarder, or their local agent, will only be involved in this step if your
supplier and you have agreed to the EXW incoterm in your purchase agreement or
purchase order.
97
Shipment Process
Expert Tip
One drawback of the EXW incoterm is that the supplier is not obliged to help
load the truck. This problem is easily solved if you include loading as a
requirement in your purchase agreement or order.
Origin
This stage covers the activities between pickup up and loading onto the vessel.
• Unless your shipment is a full container load, your shipment will go to a
specialized warehouse to be consolidated with other shipments.
• The shipment then clears customs. In most countries, China included,
exporting and customs clearance are simple, streamlined processes.
Chinese customs are only on the lookout for a few items.
• The shipment is taken by truck to the port, where the port authorities
(known in the freight industry as “terminal operators”) load the shipment
onto the ship or plane.
• The following diagram maps the three Incoterms you should select from,
and the point at which responsibility (organizing and paying) and liability
(following up if something goes wrong) for the shipment transfers from
the buyer to the seller.
EXW FCA FOB
Pickup Origin Main Transit Destination Delivery
Main Transit
This is the main leg of the shipment, where your goods are flown or shipped from
country to country. Confirm with your forwarder when you receive the quote
whether the transit time is just for this leg or for all shipment stages that they are
responsible for.
98
Shipment Process
Destination
This is the point where the process starts repeating, but in reverse, namely
unloading, deconsolidation, and customs clearance. Customs regulations are
more complicated when importing than importing, and the chances of customs
inspection increase.
Delivery
This is when the shipment is transported from the warehouse to your shipment’s
final destination, with a possible prepping stop in between. The shipment has to
be picked up soon after customs clearance (more on this in the Customs
Processes chapter). If the goods are going to a warehouse, the correct unloading
equipment and people on hand need to be on hand when the truck arrives. If it’s
going to an Amazon warehouse, this needs to be arranged well in advance.
Summary
• Your forwarder will handle most of the tasks in the shipment.
• Your main responsibility is to quickly and carefully check all
documentation as required.
Further Reading
Destination
This is the point where the process starts repeating, but in reverse, namely
unloading, deconsolidation and customs clearance. Customs regulations are more
complicated when importing than importing, and the chances of customs
inspection increase.
99
CUSTOMS PROCESS
Customs authorities are generally less interested in exports than imports, and
China’s customs is unlikely to have an issue with your shipment. But it can get
http://www.china-briefing.com/news/2013/03/11/import-export-taxes-and-duties-in-china.html
complicated for shipments imported into the US. This chapter covers customs
filing and clearance for US imports as broken down by the three major players
involved, namely the customs agency, your customs broker, and you.
Customs Agency Responsibilities

Entry
Several documents need to be lodged (filed) with Customs before your shipment
arrives at port. Customs also require an earlier lodgment (ISF filing), for ocean
freight only, which must be completed 24 hours before the ship leaves the port of
origin. Customs uses ISF filing information to sort shipments between those for
speedy clearance and those warranting further investigation.
Clearance
Unless there’s a problem, ocean freight is generally cleared within two days of the
ship landing in port (and can be up to four days before estimated arrival). Air
freight is generally cleared within one or two days of arrival.
Here’s how a customs official will process your shipment:

1. Inspect the paperwork,
2. Determine if duties apply,
3. Request duty payment,
4. Following confirmation of payment, release the shipment for pickup.
Some products can fit into more than one HS product description. You may not
agree with the customs official decision, especially if it exposes you to higher
customs duties, but they are the final arbiter.
If the shipment hasn’t been picked up 15 days it goes into storage, and you will
face storage costs. If it remains unclaimed, it will be auctioned off.
100
Customs Process
Inspection
An inspection is conducted at Customs discretion, but this is more likely to occur
when:
• The shipment contains food, drugs or animal goods.
• The shipment contains anything that might be construed as a threat to
national health, safety, and security.
• Your record with them is blemished.
• You are starting out and have little or no record with them.
You might just get caught up in a random inspection, too, or, more frustratingly,
another random encounter that affects your shipment’s clearance is if another
shipment in your container is singled out for inspection.
An inspection can take several forms. Non-intrusive inspections are fairly quick,
but an intensive exam could take more than a week.
Customs Charges
Your forwarder can’t on-charge (add to your invoice) the following Customs
charges, so you will be billed separately for:
• Customs Duty. Determined by the product, country of entry, and de
minimis level.
• Merchandise Processing Fee (MPF). This is a mandatory fee ($25
minimum, $485 maximum).
• Harbor Maintenance Fee (HMF). This small mandatory fee applies to
ocean freight only.
• Customs Fines And Penalties. Customs may impose a heavy fine on late
ISF filing. Non-intrusive inspections cost around $275 at major ports, but
an intensive examination costs around $800, not including third-party
transport and storage costs.
Customs Broker Responsibilities

As discussed in the Freight Forwarders chapter, you may engage a customs broker
directly, or leave that to your forwarder.
Entry
Your customs broker prepares, checks, and lodges ahead of time, all of the
documents required for filing.
101
Customs Process
Clearance
Customs brokers may liaise with Customs throughout the entry and clearance
process. Once the shipment is ready for clearing, there will be a limited window
(varying by terminal and carrier) to arrange payment and clear the shipment from
port.
Although Customs allows ten business days after filing for payment, customs
brokers usually expect the importer to pay them before they pay Customs. To
make sure that happens in time, customs brokers often give importers a three-day
window to arrange payment to them.
Customs Broker/Forwarder Charges

• Customs Clearance Fee. The standard rate customs brokers charge for
managing clearance is around $50 for China’s Customs, and several times
more than that for US customs. This fee is also known as customs
brokerage fee or customs entry fee.
• ISF Filing Fee. Some customs brokers will separate out costs associated
with ISF filing, but it is often incorporated into their customs clearance
fee.
• Telex Electronic Cargo Release Fee/EDI Fee. This charge to is cover the
cost of sending forms and messages to ports, customs, etc. It’s a dubious
charge because email has replaced telexes, and neither email nor EDI has
a variable cost. If this charge appears on your invoice, you should
challenge it.
Your Responsibilities
Before The Shipment
Here’s a recap of your customs-related responsibilities as they came up in
previous chapters:
• Check for import restrictions (Safety Standards & Labeling and Importer &
Customs Responsibilities chapters).
• Estimate customs duty (Customs Duties chapter).
• Provide standard documents at shipment booking (Request For Freight
Quote and Shipping Process chapters).
• Where applicable, provide other docs, like the COO, MSDS, and
fumigation certificate (Shipping Basics chapter).
102
Customs Process
During The Shipment

• Take out a customs bond. This is how US Customs ensures that they get
any money owing on your shipment. Depending on how many shipments
valued over $2,500 you are looking to make in a year, your customs
broker will advise whether you should take out a Continuous bond or a
Single Entry bond. If you take out the latter, you will also need to take out
an ISF bond for ocean freight. Bonds are the one Customs charge that
can be on-charged (added to your customs broker or forwarder’s invoice).
• Be honest with customs and advance cargo reporting requirements. Data
automation has given regulators better visibility, and offenders face stiff
penalties. The liable party usually ends up being the shipper (in other
words, you).
• Check all documents for accuracy before forwarding to your customs
broker.
• Pay customs clearance. Although customs brokers normally pay customs
on behalf of their clients. Customs encourages importers to set up set up
direct ACH (automated clearing house) payments. It helps speed up
clearance, and for you, it removes the risk of being penalized for late
clearance. If you start importing regularly you should consider ACH
payment.
Expert Tip
Another good reason for regular importers to consider ACH payments is
cost. Paying on your credit card with a 3% transaction fee each time, or $40
for a wire transfer (for commercial banking, add more dollars for personal
banking) quickly adds up. Do the math, and see how much it’s costing you
not to switch.
There is clearly a lot more to customs clearance with freight than with
international couriering. That’s because many shipments fall below the de minimis
threshold, and for those that don’t, the large international couriers also do the
customs brokering. Incidentally, by doing that they become carrier, forwarder, and
customs broker, all in one. Customs permits international couriers to on-charge
the customs costs to you, so they simply put your parcel through on DDP (Delivery
Duty Paid) incoterm.
103
Customs Process
Summary
• Customs Brokers handle entry (filing) and clearance (liaison, coordination
of payment and pickup).
• You still have some responsibilities, including taking out bonds and
arranging payment. You should also take time to carefully check all
documentation.
• Unless your shipment is caught in an inspection, clearance is, generally, a
relatively speedy process.
Further Reading
https://blog.easyship.com/explaining-the-customs-clearance-process
Explaining The Customs Clearance Process
https://www.cbp.gov/trade/basic-import-export
How To Import Commercial Goods Into The United States [CBP official guide]
xx
xx
104
PACKAGING
Most importers don’t consider packaging when negotiating a purchase agreement
as standard factory packaging is usually quite suitable. However, it pays to do
some research before hammering out a deal. If you’re looking at making several
shipments, the savings you make with reduced freight costs may far outweigh the
upfront costs of modifying shipment packing or product packaging. This chapter
covers some aspects of packaging you may want to consider.
Packaging For Protection

The job of your packaging is to protect your shipment. Fragile shipments should
be double-boxed, which not only adds an extra layer of cushion from rugged
handling but also reduces the chances of the product moving when the box is
jostled. Wrapping the first box with bubble wrap and peanuts will secure it even
further, but watch out, some fulfillment centers, like Amazon FBA warehouses,
won’t let you use packing peanuts.
Unless you have a very large shipment, your goods will be consolidated with
other shipments in a container for ocean freight, or be with other air freight
shipments in the hold for air freight. With all those shipments huddled together,
it’s easy for packages to get mixed up at unloading. So make sure that your
packages are clearly marked with carton count, gross weight, net weight, country
of origin, and tracking labels (like FBA shipment labels). If you are shipping
something attractive to thieves, you should remove any brand identification and
any other telltale labeling.
Packaging For Air Freight

There isn’t much space in a plane’s hold, so air freight costs are based on volume
more than weight. And that means that your goal should be to reduce gaps
between packaged products inside the carton, and between other cartons.
105
Packaging
Expert Tip
Here are some ways you can reduce volume and air freight costs:
• Consider palletizing in the US. Pallets take up a lot of costly room.
• If your cartons are light, have them packed together wherever
possible, and use non-bulging, lightweight but strong packing
materials.
• Check that packaging your supplier is recommending is using the
smallest possible box size. If not, use a dimensional weight
calculator to see how much extra you may be paying for the larger
box. The Shipping Basics chapter has more on dimensional weight.
Then you’ll know whether you should be insisting on a smaller box.
Packaging For Ocean Freight

Cargo ships have a lot more space than airplanes, but poor weight distribution
can make container ships buckle or lurch. That’s why weight more than volume
drives ocean freight costs, which lets you be more generous with packaging
material.
Remember though to stick with standard sized boxes. They fit nicely on pallets.
Standardization is what made it possible for shipments to smoothly move from
factory floors onto trucks, and onto ships.
There’s an extra cost with using pallets if you are importing from China. As for
other some other export and import countries, the wood will need special
treatment and a fumigation certificate before it can make it into the US.
Product Packaging
Product packaging may trap wasted space that can significantly increase freight
costs. But changing product packaging will be more difficult for your supplier than
changing shipment packaging, likely requiring changes to the machinery and
special production runs. Expect that your supplier may not initially be receptive,
but if your product sells well, do the math to see how soon you would recoup any
set-up costs.
106
Packaging
Expert Tip
If you are concerned about packing products closer together or using less
packaging might increase the risk of damage, or that changing product
packaging will hurt sales, get in touch with a local packaging company. See
what creative ideas to cut freight costs, keep the shipment safe in transit,
and have them looking great to buy.
Amazon FBA Packaging

Amazon FBA’s special packaging requirements are covered in the Amazon FBA
version of this guide.
Summary
• Avoid extra packaging, it’s an unnecessarily add cost, especially for air
freight, but double-box fragile products.
• Check that your supplier is using the smallest, standard box size, to
optimize how they fit on a pallet.
• Carefully label shipments because smaller shipments often get mixed up
at consolidation and deconsolidation.
• For fast moving stock, consider improving product packaging to reduce
freight costs.
Further Reading
https://www.freightos.com/portfolio-items/packaging-think-outside-the-box/
Packaging: Think Outside (And Inside) The Box
https://www.freightos.com/portfolio-items/is-your-cargo-flightworthy/
Is Your Cargo Flightworthy?
107
FULFILLMENT
Although not technically part of importing from China, one fulfillment
method, drop-shipping, is a combination of freight and order fulfillment.
Before you decide on that method, though, you should also know the pros
and cons of the other options for shipping to your customers.
108
OVERVIEW OF FULFILLMENT OPTIONS
Michelle Mondonedo, Easyship
This chapter introduces the four options for e-commerce order fulfillment
(covered in more detail in the following chapters). It also spotlights two major
fulfillment opportunities, Amazon FBA, and international shipping.
Order Fulfillment Options

• Direct Fulfillment (also called Self Fulfillment). You are responsible
for all aspects of fulfillment, such as stocking, taking orders, invoicing,
storing, and shipping.
• Third-party Fulfillment. A third-party logistics (3PL) provider is
responsible for storing your goods, processing your incoming orders
(pick and pack) and shipping everything for you.
• Drop-Shipping. You work directly with your supplier to distribute their
product. You take charge of accepting orders from customers and the
supplier is responsible for stock, packaging, and shipping to the
customer.
• Cross-Docking. Some 3PLs provide this service. When your shipment
arrives at their warehouse, it is unloaded and reloaded for sales
fulfillment, cutting the warehouse storage stage from the supply chain.
This service has recently become popular with crowdfunding and e-
commerce flash sales.
DIRECT FULFILLMENT freight courier
3PL freight courier
CROSS-DOCKING freight courier
DROP-SHIPPING international courier
109
Overview Of Fulfillment Options
• Deciding on your fulfillment strategy depends on your business goals:

• If you're just starting out and only process a few orders per month, direct
fulfillment is a good way to remain hands-on with your business and
learn along the way.
• If your business is starting to pick up, outsourcing your logistics to a 3PL
will help you save time and focus on more important areas.
• If you're looking to test the waters without investing heavy amounts of
capital, managing stock, or figuring out logistics, drop-shipping can help
you sell different products, understand your target market and hone your
marketing strategies.
• Some e-commerce sellers even use several fulfillment types at the same
time. One scenario is to use drop-shipping high margin products, 3PL for
low-margin, high volume products, direct fulfillment for trying out new
products and cross-docking for a flash sale.
Fulfillment By Amazon
Amazon FBA is a popular example of third-party fulfillment for e-commerce sellers
because it comes with access to the Prime shipping network. On Prime, customers
orders can qualify for free two-day shipping or free standard shipping. This
service clearly gives sellers an edge in closing a sale.
Other benefits include access to Amazon’s 24/7 customer service and returns
management, which takes most of the burdens of customer service from the
seller. Because FBA is known as being dependable, being an FBA seller can also
convince potential customers to trust that the seller will deliver.
However, Amazon has very high requirements for accepting products into their
warehouses. Amazon’s requirements are covered in a separate chapter in the
Amazon version of this guide.
International Fulfillment
Selling to customers in other countries and fulfilling orders around the world may
sound daunting, but it’s a great way to take your business to the next level.
In many countries now, you will find savvy customers who shop cross-border.
Small businesses can pick up on this opportunity with tools that offer discounted
shipping rates to any international destination, and that also help streamline
fulfillment and shipping processes.
110
There are fewer restrictions to shipping parcels to other countries than there are
with importing freight. But, before you start shipping internationally, you should
https://pages.easyship.com/international-shipping-definitive-guide
research:
• Shipping insurance.
• Whether your product is shippable by plane.
• Whether the target markets have import restrictions, tax and/or duty on
https://www.easyship.com/countries
your product.
• Whether those countries have special delivery requirements. In
particular, some countries, like Russia and India, require recipients to
provide additional personal documentation before they can receive
packages. You have to build an extra step into fulfillment so that your
customers in those countries can pick up their goods.
• You may need to prepare for slower delivery times into some countries,
like Brazil.
https://www.tradegecko.com/blog/choose-the-best-shipping-provider
When choosing a courier, think about your shipping goals and what you expect
from them, such as speed, cost, service quality, tracking.
Expert Tip
You don’t need to stick to one fulfillment strategy. It’s common for
businesses to choose third-party fulfillment for international customers, and
direct fulfillment for domestic customers.
Summary
• There are four options for order fulfillment, to be covered in more detail
in the following chapters.
• Amazon FBA is a popular third-party fulfillment service that provides the
opportunity to reach Amazon Prime customers, although it has stringent
requirements.
• International fulfillment is another major opportunity to reach new
customers.
111
Further Reading
https://blog.easyship.com/ecommerce-basics-order-fulfillment
E-Commerce Basics: Order Fulfillment
International Shipping: Definitions, Strategies, And Why It’s Important
https://pages.easyship.com/international-shipping-definitive-guide
Ten E-Commerce Destinations You Should Be Targeting
https://blog.easyship.com/10-ecommerce-destinations-to-target
https://www.easyship.com/
Easyship is an all-in-one shipping tool for e-commerce sellers looking to sell
worldwide. Access 100+ solutions, get complete visibility on taxes, duties,
couriers, and shipping costs from one account, and achieve up to 70% discounts
on shipping rates.
xx
112
DIRECT FULFILLMENT
Mark Cohen, TradeGecko
Of the four methods for getting stock from the factory to the customer, direct
fulfillment is the one that businesses usually start out with. This chapter compares
it’s benefits and drawbacks with another popular method, outsourcing to a third-
party logistics provider (3PL).
Because direct fulfillment, or self-fulfillment means doing it yourself, this chapter

also provides an overview of inventory management.
Advantages Of Direct Fulfillment

• You gain full control over your branding, inventory, and orders.
• It is easy to get started as long as you have the space, can print address
labels, pick and pack, and stand in line at a post office. That means you
can fulfill orders yourself!
• It works well if your core customers are local, the logistics are
manageable, and the shipping costs are minimal, especially when starting
out or when used with small order volumes.
• As opposed to most 3PLs, you can store and ship perishable or
hazardous (but still shippable) goods, like flowers or lithium batteries.
• You can get closer to your customers because this option comes with
more customer contact. It’s also simple to customize branding and
packaging.
Disadvantages Of Direct Fulfillment

• This method requires staff resources to manage customer service and
fulfillment processes. This is probably taking your resources away from
selling and growing the business.
• You need to have sufficient warehouse space to store products.
• It can be more difficult guaranteeing fast international shipping than
working through a 3PL.
• Human errors can happen when orders increase in size and complexity,
and especially if you are not using software to help with managing your
inventory.
113
Direct Fulfillment
Advantages Of Outsourcing
• There are no resource or skills prerequisites.
• It frees up space.
• Finding the right 3PL can save you time and money, through economies
of scale with bulk shipping rates, for instance.
• It works well with both local and international distribution, and you can
get speedier delivery by taking advantage of multiple storage locations.
• It works well for a fast growing business with large order volumes.
• You can still opt to control customer service and returns.
Disadvantages Of Outsourcing
• You have less control over your inventory and the customer experience.
• Finding the right provider who you can trust and rely on can be time-
consuming.
• 3PLs can be an expensive cost, especially when you only have small
quantities of orders.
• Generally, 3PL providers won’t allow perishable, hazardous, or flammable
goods.
Expert Tip
Another disadvantage of outsourcing is that their streamlined operations
may not work well for your product. For example, they may not be able to
repeatedly accommodate for a particular risk of breakage that your product
has.
Keeping deep product know-how in-house with direct fulfillment means that
you can make improvements on the fly to minimize future breakage
scenarios. This places you in a much better position for success.
Inventory Management Best Practices

Inventory management is all about having the the right amount of inventory, in
the right place, at the right price, at the right time, and through the right sales,
distribution and fulfillment channels that will move your stock. Here are some
best practices for inventory management.
114
Direct Fulfillment
• Calculate the “right amount” of inventory to stock. You need

inventory tracking at your fingertips to prevent ordering too little stock
and losing customers. Likewise, if you order too much, you will be stuck
with surplus stock that risks becoming obsolete if you don’t sell off at
discount prices.
• Figure out the right place to sell and distribute your inventory. Do
you sell on multiple channels? If you do, ensuring you’ve got the right
amount of products in the right place is probably a challenge you face
constantly.
The great thing about selling products online is that you’re fulfilling all
orders from the same pool of stock. So, you don’t have to think too
much about how many items you want to allocate to individual sales
channels.
But this can come with a whole different host of problems. For instance,
if your online inventory shows five items available, you want all five
ready for sale in your warehouse, not traveling the country in a mobile
shop or lying idle in your consignment store at the opposite end of the
country.
• Assess what inventory management tasks are better automated.

You will need to fix the right price, know the right time to reorder new
inventory, and have the right tool for managing your size of inventory.
Many small, start-up businesses manage their inventory through an
Excel spreadsheet. Once your business starts to grow and gain
https://www.tradegecko.com/blog/switch-from-excel-inventory-management-to-the-cloud
complexity, relying on spreadsheets for inventory management
becomes cumbersome and time-consuming.
That’s probably the time to consider an inventory management system

that tracks inventory movement across all your sales, distribution, and
fulfillment channels (whether direct fulfillment or outsourced) in real
time. Having an inventory management system will significantly reduce
your risk of overselling or understocking.
115
Direct Fulfillment
Summary
• For businesses starting out, direct fulfillment is often a better option than
outsourcing.
• As your business grows, you may consider outsourcing to a 3PL provider.
• Either way, you should automate inventory and order management by
choosing a suitable software solution.
Further Reading
https://www.tradegecko.com/guides/inventory-management-techniques
Inventory Management Techniques That Can Make Or Break Your Business
https://www.tradegecko.com/product-tour/inventory-management-system
TradeGecko - Inventory Management System
Founded inhttp://www.tradegecko.com/
2012, TradeGecko is a cloud-based inventory and order management
platform for SMEs, serving B2B wholesalers, distributors, and e-commerce
businesses. They now have a global customer base in over 90 countries serviced
from their offices in Singapore, Canada, and the Philippines.
xx
116
THIRD-PARTY FULFILLMENT
Rachel Burns, ShipBob
The previous chapter compared the benefits and drawbacks of direct fulfillment
and outsourcing. This chapter covers making the switch to a third-party logistics
provider (3PL).
Third-party fulfillment involves outsourcing tasks such as inventory

management, packing boxes, and shipping orders to a third-party logistics
provider (3PL). If you choose this option, inventory is sent to a 3PL’s fulfillment
center. When a customer places an order on your online store, the 3PL picks,
packs, and ships the order to your customer.
The Decision To Switch

https://www.shipbob.com/blog/sign-need-3pl-order-fulfillment/
There is one major sign that you can tell whether working with a 3PL is right for
you. That’s when your business is growing quicker than your operations can scale.
As your order volume grows, it can be hard to keep up. It increasingly requires
more labor, time and money because managing logistics in-house eventually
means larger warehouse space, warehouse management software, packing and
shipping equipment, staff labor, liability insurance, etc. Time spent fulfilling orders
yourself might be better spent on growing your customer base, developing new
products, and marketing your business.
Partnering with a 3PL can help your business ship orders more efficiently without
having to de-prioritize other aspects of growing your business. You won’t have to
deal with the expenses of managing logistics in-house. Also, you work with
fulfillment experts who have the experience, geographic footprint, and resources
necessary to drive more efficient, affordable, and faster order fulfillment.
3PL Selection
Here are the most likely factors you should consider when looking for a 3PL:
• Tailored levels of support. First, consider whether you want the

provider to take over all supplier and customer operations or just focus
on back-end operations. The first option may seem tempting, but square
117
Third-Party Fulfillment
up whether a 3PL can match your experience working with your

products, customers, and suppliers.
• Sales channel integration. Third-party fulfillment providers have

differing capabilities and their own unique features and services. If you
use a major e-commerce platform, such as Shopify or BigCommerce, look
for a 3PL that connects directly with your e-commerce platform. Orders
https://www.shipbob.com/blog/why-your-ecommerce-store-automatically-send-orders-fulfillment-warehouse/
and inventory data can be seamlessly synced between your third-party
fulfillment provider’s technology and your online store. This will help you
speed up deliveries, prevent stockouts, and improve order accuracy.
• Location(s). You should also consider a 3PL’s fulfillment center location(s)

before making your decision. If your customers are spread across the
country, a third-party provider with multiple fulfillment centers can help
https://www.shipbob.com/blog/2-day-shipping-myths/
you offer faster, more affordable shipping by shortening the distance
that an order has to travel.
https://www.shipbob.com/blog/how-shipping-zones-work-fulfillment/
Shipping out of one fulfillment center risks a much longer shipping
https://www.shipbob.com/blog/how-shipping-zones-work-fulfillment/
distance for some customers, more so if the warehouse is located in a
rural area.
Expert Tip
https://www.shipbob.com/resources/inventory-distribution-calculator/#.WtpBgdPwbq0
Use this inventory distribution calculator to analyze your order history and
calculate the optimal fulfillment center locations for your e-commerce
business.
• International shipping. If you plan to ship to international customers,

make sure that this service is offered by the 3PL you choose, regardless
of where their fulfillment centers are located.
• Transparency. Finally, choose a 3PL that values transparency throughout

the fulfillment process. Make sure you receive pricing that is tailored to
your business’s specific needs. You should not be beholden to hidden
fees or unnecessary costs.
118
Third-Party Fulfillment
A third-party fulfillment provider should also be transparent when it

comes to the status of your shipments. For example, work with a 3PL that
allows you to access shipment tracking information in real time, so that
you can pass that information on to your customers.
Summary
• Working with a third-party fulfillment provider can be a great choice for
your business if you find yourself outgrowing in-house order fulfillment.
• The right order fulfillment partner for your online store should offer
features and tools to help your business save money, become more
efficient, and grow faster.
• These features might include tailored levels of support, integration with
your e-commerce platform, a nationwide network of fulfillment centers,
and transparent pricing.
Further Reading
https://www.shipbob.com/blog/3pls-from-a-to-z-definitions-for-e-commerce-order-fulfillment/
3PLs From A To Z: Definitions For E-Commerce Order Fulfillment
https://www.shipbob.com/blog/self-fulfillment-vs-outsourcing-3pl-right-e-commerce-business/
Self-Fulfillment Vs. Outsourcing To A 3PL: Which Is Right For Your E-Commerce
https://www.shipbob.com/blog/self-fulfillment-vs-outsourcing-3pl-right-e-commerce-business/
Business?
https://www.shipbob.com/blog/2-day-shipping-myths/
Three Misconceptions E-Commerce Businesses https://www.shipbob.com/blog/2-day-shipping-myths/
Have About 2-Day Shipping
https://www.shipbob.com/
ShipBob offers simple, fast, and affordable order fulfillment. With a network of
fulfillment centers across the US, they can split inventory across locations for 1-2-
day delivery. Their software seamlessly integrates with the leading e-commerce
platforms to automatically fulfill orders as they are placed online.
119
DROP-SHIPPING
Greg Elfrink, Empire Flippers
This chapter covers the advantages and disadvantages of drop-shipping, one of

the four methods for getting stock from the factory to the customer.
Drop-shipping is a form of e-commerce in that you still need to set up your store,
upload your product listings, and start driving traffic to those product listings to
get leads and sales for your business. But, rather than sourcing all the products
yourself, you work with a middleman that has a catalog of products they can ship
out as you sell those products.
Drop-Shipping Advantages
• No upfront inventory costs. One of the big things that hold people back
from starting an e-commerce store is paying for the inventory upfront.
Drop-shipping solves this problem by drastically lowering the barrier to
entry. You’re only ever paying for the inventory that you’ve actually sold.
• Quick product testing. When you’re sourcing inventory for a traditional

e-commerce business, you should carefully research (refer Product
Research chapter) to make sure there is a real market demand for those
products. In drop-shipping, you can upload hundreds of products all at
once and test numerous marketing funnels on each product to see which
products are winners. This way, you can quickly populate your store with
products that people actually want.
• Quick test results. With drop-shipping, you’re paying higher costs for
each unit sold. However, once you have found out what sells best, you
can source your own (and hopefully better) versions of those products.
Drop-Shipping Disadvantages
• Uncompetitive pricing and low profit margins. Higher costs mean your
profit margins may be significantly lower with this model. The higher cost
also gives you less flexibility for setting price points to attract sales. You
can’t benefit from bulk ordering discount since you’re not paying any
120
Drop-Shipping
upfront inventory fees in the first place. But, if you achieve good sales,
your supplier is likely to be open to exclusive supplier relationships,
special marketing privileges, special terms like an increased margin, and
permitting you to discount prices.
• Competition from the copycats. Most of the time you won’t have an
exclusive agreement with your drop-shipping supplier. Other drop-
shippers will find your supplier, use their catalog, and start testing their
own marketing funnels on the same products you’re selling.
Ask yourself how easy is it for others to copy your business. If your
answer is “too easy,” then it is time to “dig a deeper moat.” Good
marketing like an email list of raving fans, fostering active online
communities for your customers to discuss your company and products,
and creating industry-related podcasts and webinars. Tactics like these
help build a quality brand that copycats can’t compete with.
• Lack of Control. Whereas traditional e-commerce businesses own every

step of the process, with drop-shipping a lot of the process is out of your
hands. There are more critical points of failure, such as a Facebook ad
suspension or losing your supplier.
If your supplier does a poor job with your shipping, it’s your store, not
them, that will get the bad review. And, it will be up to you to do the
customer service/remediation. You can mitigate these risks by making
sure your drop-shipping supplier is verified and has good reviews.
Expert Tip
Despite the cons, there are still plenty of hungry investors that see acquiring
a good drop-shipping store as an excellent investment. Building with the
mindset that you’ll be selling the business will often make the business far
more efficient and profitable even if you never sell the asset.
These two tips will make your business attractive to investors:

• Transferable Exclusivity. If you do secure special terms with your
supplier, make sure they are transferable to the new owner so it
becomes a unique part of your store.
121
Drop-Shipping
• Standard Operating Procedures (SOPs). As for any other business

model, a good set of SOPs can make your business much more
attractive to buyers. Develop good SOPs for product selection,
marketing campaigns, uploading new products to your store, and
any other routine tasks. An effective SOP is when someone else can
be about 80 percent as effective as when you’re doing the task.
Summary
• Drop-shipping gives you a lot of the benefits of running an e-commerce
business without some of the negatives, especially the upfront costs and
risks of untested inventory.
• You should rapidly test many products to find out the good sellers.
• On the downside, drop-shipping has low profit margins, a lack of overall
control and ultimately more critical points of failure.
• Investors are still hungry to acquire these assets. Build with the mindset
that you’ll be selling will often make for a better business, even if you
don’t sell.
Further Reading
https://empireflippers.com/dropshipping-business-model-explained/
The Dropshipping Business Model Explained
https://empireflippers.com/efp-40-branding-and-growth-strategies/
Branding & Growth Strategies For Startups
https://empireflippers.com/49-ecommerce-marketing-tips/
49 E-Commerce Marketing Ideas (That Work)
https://empireflippers.com/valuation-tool
Online Business Free Valuation Tool
https://empireflippers.com/
Empire Flippers removes the friction out of buying and selling online businesses,
taking care of everything from vetting, helping with negotiations, and transferring
digital assets. They are an Inc. 500 company that have won multiple International
Business Brokerage Association awards, including Top Global Producer.
122
CROSS-DOCKING & CROWDFUNDING
Analisa Sande, Floship
This chapter covers:

• Delivering the rewards promised to your crowdfunding backers, those
people to whom you have pledged money once you successfully
completed your campaign.
• Crowdfunding, one of the four methods for getting stock from the factory
to the customer, which is the most common order fulfillment method
used with crowdfunding campaigns.
Cross-Docking
In cross-docking, your products are moved from your manufacturer directly to
your third-party logistics provider’s warehouse shipping dock. Your products
aren’t received at the warehouse as they are already pre-sold. Instead, they “cross”
the shipping dock, and in a short time the individual shipments are sorted,
screened to identify their end destinations, and loaded into trucks for delivery.
Cross-Docking Advantages
The benefits of using this order fulfillment method include:
• Higher efficiency, as products spend less time tied up in inventory and
move more quickly from suppliers to end customers.
• Simplified inventory management, since products are not stored in a
warehouse.
• Lower warehouse labor costs, as the goods don’t need to be stored or
picked.
• Quicker delivery time and product turnover. Products usually spending
less than 24 hours in transit on the dock.
• Less handling of your products end to end.
• Higher customer satisfaction due to faster delivery times.
Crowdfunding also works well in several other scenarios:

• Running an e-commerce flash sale,
• Inventory with a very stable level of demand,
• With perishable products, like flowers.
123
Cross-Docking & Crowdfunding
Cross-Docking Disadvantages
There are several challenges to using this method including:
• High startup costs.
• It requires a lot of management attention and planning to set it up
effectively.
• By working to a tight timetable, there is more risk that the supplier, not
having much room for fixing errors, may not deliver as required on time.
Crowdfunding Fulfillment Tips

Include Fulfillment In Your Budget
It’s easy to forget fulfillment costs in your funding goals when planning your
crowdfunding campaign. If you don’t add an estimate for them, they will eat into
your operations budget. Consider packaging costs, postage, etc.
Expert Tip
Watch out for postage costs. It’s very common, even for experienced
crowdfunders, that postage expenses surpass original estimates. There are
often unexpected costs because of damage, lost packages, taxes, and more.
You should consider budgeting 20% of your total product cost to cover
fulfillment.
Create A Buffer For Unforeseen Expenses

Expenses usually creep up, because things don’t always go exactly according to
plan. Include a financial buffer in your budget to cover potential shifts in your
major costs, like input materials, production costs, and shipping.
Simplify Your Rewards

It’s tempting to get creative by offering many varieties of rewards to backers. But,
that comes at a cost, making the fulfillment process more complicated than it
needs to be.
Here’s a typical example. Apparel campaigns sometimes offer a variety of apparel

designs and colors as rewards. Combine these with a range of clothing sizes, and
they’ve suddenly got many different items for manufacturing and shipping.
124
Cross-Docking & Crowdfunding
A smaller set of choices of rewards makes the production and fulfillment process
much simpler and quicker.
Schedule Sufficient Time For Production, Packing, And Shipping

It’s not uncommon for production processes to experience bottlenecks. You don’t
want these to delay delivery to your backers. The best way to make good on your
promised delivery date is to bake in some additional time for production, packing,
and shipping. As a rule of thumb, allow from six months up to a year from the end
of your campaign to deliver to your backers.
Get Professional Help

You will need to work with one of the many 3PLs who offer cross-docking services.
You may also consider working with a specialist crowdfunding fulfillment partner.
They will look to simplify the process for you and otherwise help make sure that
you deliver to your backers on time.
Summary
• Cross-docking is the most popular order fulfillment method used in
crowdfunding campaigns. It is also a good option in other scenarios, such
as e-commerce flash sales.
• When budgeting, include shipping in your fulfillment costs and a buffer
for major expenses (inputs, production, shipping). Also, add an allowance
of extra time to cover production bottlenecks.
• For your order fulfillment to go smoothly don’t over-complicate your
rewards and consider getting professional help.
Further Reading
https://www.floship.com/category/crowdfunding/
Floship Crowdfunding Fulfillment Blog
https://www.floship.com/crowdfunding-challenges-ebook/
How To Overcome The Challenges Of Crowdfunding Fulfillment [guide]
https://www.floship.com/cross-docking/ https://www.floship.com/cross-docking/
Cross-Docking: The World’s Most Underutilized E-Commerce Logistic Hack
http://www.floship.com
Floship has fulfilled more international Kickstarter and Indiegogo shipments than
any other logistics company. Being headquartered in Hong Kong means they can
provide fast worldwide shipping at the low prices. Their system integrates with
most e-commerce platforms. Other services include quality checks, re-packs, etc.
125
AMAZON FBA
Along with some FBA-specific additions in the preceding chapters, this section is
unique to the Amazon FBA version of the guide. It covers the steps involved in
Amazon FBA shipping and receiving requirements, and explores the opportunity
of selling on Amazon Europe.
126
AMAZON FBA SHIPPING & RECEIVING
REQUIREMENTS
One of Amazon’s strengths is how well they optimize and streamline processes.
This chapter covers the additional requirements Amazon has in place for accepting
imported products as simply as they accept domestically sourced products.
Inventory Arriving From Overseas

Here’s Amazon’s requirements for inventory arriving from overseas:
• They will not serve as the importer of record on any of your imported
freight, and will only act as ultimate consignee if the name of the location
is followed by “in care of FBA."
• Your customs broker must contact Amazon before shipping to get the
EIN or Tax ID number required for customs clearance.
• They do not accept delivery with duties, taxes or other charges owing.
• You must arrange prepaid delivery to Amazon’s fulfillment center.
• Non-US based businesses have additional requirements.
https://help.freightos.com/hc/en-us/articles/115003584425-Importing-FBA-for-Non-US-Based-Businesses
• Amazon warehouses only accept shipments that conform to their
palletizing and labeling requirements (as covered in the following
sections).
Palletizing Requirements
Amazon requires that most shipments are delivered to their warehouses on
pallets. Air freight shipments are generally palletized in the US because, as
covered by the Packaging chapter, their weight can blow out air freight costs.
This isn’t the case with ocean freight costs, and they are generally palletized in
China, where the cost of palletizing is much cheaper. But make sure to use 48” x
40” pallets, and they must be wooden (Amazon doesn’t accept plastic pallets).
Remember, too, as for any other import from China, the supplier or factory must
include a fumigation certificate for the pallet.
127
Amazon FBA Shipping & Receiving Requirements
Expert
1. Tip it comes to shipping, it's always circumstantial, but we try to get
When
as much done in China as possible. That goes for pallets, too. If your
factory isn’t familiar with Amazon requirements, ask for detailed
photos.
2. You’re not allowed to have even one inch of shipment overhanging the
pallet’s width or length.
3. Also, keep in mind that Amazon will give you trouble if a carton weighs
more than 50 lbs. We've seen stuff flagged for being 51 lbs, right over
the line, getting rejected. When that happens, it's going to cost a lot to
pull it back and get it repackaged. So, take your time and do it right the
first time.
Don Skotnicki, Consultant, AMZ Transit

http://www.amztransit.com/
Labeling Requirements
Amazon’s labeling requirements are similar to general labeling good practice. An
additional stipulation, though, is that every carton in an Amazon shipment must
have the proper Amazon label attached in the right place. This is to ensure that
delivery goes to the correct Amazon fulfillment center. You can print shipping
labels from within the Amazon shipment creation workflow or, if you have already
created the shipment, from your Amazon shipping queue.
128
Be sure to read the Amazon specifications about label placement. For example,
the entire label must be visible and no other barcodes should be visible on the
carton. Also, labels should only be put on a flat surface of the box, like the side or
top. Avoid the seams or corners so that the barcode is clear. If you’re shipping
boxes, each box needs its own label. If you’ve got enough boxes to ship a pallet,
you need four additional labels, one in the center of each pallet side.
Your supplier, freight forwarder, or 3PL that is doing prepping for you in the US,
can label your boxes as long as they have the right Amazon labels and understand
the correct way to label the boxes. If this prepping is done in the US, after labeling,
the shipment will need to be palletized.
Receiving Requirements
Amazon requires that all FBA shipments be delivered to their warehouse at very
specific times (sometimes this is very late at night), and with a very narrow
delivery window. So, scheduling delivery should only be done after the goods
arrive at the forwarder’s warehouse in the US.
But be sure to promptly make the booking, especially in busy periods, such as the
lead-up to Amazon Day, Thanksgiving, and Christmas. Build a buffer in your
planning during these periods, just in case your shipment faces several days delay
waiting for the delivery appointment. Your forwarder should be taking care of all
of this.
The preceding information is provided as a guide only. You should check

requirements on Amazon’s Sellers Central, and only work with a freight forwarder
with experience arranging deliveries to Amazon.
Freight Quote Requests

Getting a freight quote request is covered in the Request For Freight Quote
chapter, and there is no difference with shipments destined for Amazon
warehouses. You can use these special tools though to help before you request a
quote:
https://www.freightos.com/portfolio-items/amazon-fba-fulfillment-warehouse-locations/
• Map of Amazon FBA Fulfillment Center Locations
https://www.freightos.com/portfolio-items/amazon-fba-freight-rate-calculator-free-freight-tool/
• Amazon FBA Calculator For Freight Rates
[built-in Amazon fulfillment center locations]
129
Summary
• Amazon has several rules in place so that they can accept import
shipments in the same way they accept domestic shipments. This
includes that they will not act as an importer of record or ultimate
consignee, and they do not accept responsibilities for any duties, taxes,
etc.
• Amazon will not accept delivery if their specific palletizing, labeling, or
receiving requirements are not followed.
Further Reading
https://sellercentral.amazon.com/gp/help/external/help-page.html?itemID=201030350&language=en-US&ref=efph_201030350_bred_200978400
FBA Policies And Requirements [Amazon]
https://sellercentral.amazon.com/gp/help/external/help-page.html?itemID=201030350&language=en-US&ref=efph_201030350_bred_200978400
Delivering Imports To Amazon [Amazon]

https://sellercentral.amazon.com/gp/help/external/200280280?language=en-US&ref=mpbc_200280570_cont_200280280
http://resources.freightos.com/container/show/shipping-to-amazon-fba
Shipping To Amazon Support On The Freightos Marketplace
130
AMAZON EUROPE
This chapter outlines the opportunity you have as an Amazon seller in Europe
and covers what you need to know to get started.
The Opportunity
• Amazon has five marketplaces and over 28 potential countries to sell to in
Europe.
• Europe is the second largest B2C e-commerce market, worth $770 billion
and https://services.amazon.com/global-selling/expandtoeurope.html
currently has over 340 million online buyers.
• Over 80% of consumers in the UK, Denmark, and Germany already shop
online.
The EU
28 countries in Europe are joined in a political and economic union (single market)
called the European Union (EU). These countries still have local governments and
laws, but many of the laws that apply in their country have been enacted by the
European Parliament and apply across the union. Beyond legislation, there are a
few aspects, though, that aren’t universal. For instance, so far only 19 countries
have adopted the euro, the EU’s common currency.
Not all countries in Europe are members of the EU. Switzerland, Norway, and
Russia are the most notable exceptions. It can get confusing, though, because
sometimes “EU” and “Europe” are used interchangeably.
131
Amazon Europe
Getting Freight Into The EU

US imports usually arrive in Le Havre (France), Felixstowe (UK), Antwerp (Belgium),
or Rotterdam, (The Netherlands), while most imports from China go through the
Suez Canal, and usually dock at Hamburg (Germany). Shipments then usually
travel inland by barge or rail to major distribution centers. Only urgent shipments
are usually delivered by truck.
Air cargo enters via the major passenger ports, like Frankfurt (Germany), London
Heathrow (UK), Paris (France), Milan and Rome (Italy), and Madrid and Barcelona
(Spain).
Air freight arrives about 10 to 15 days sooner than sea freight, but shipments over
about 100 kg will cost a lot more. Shipping by rail from China is becoming more
https://www.economist.com/news/business/21728981-new-silk-railroad-will-challenge-airlines-and-shipping-firms-new-rail-routes-between-china
popular, as it’s a middle ground between sea and air freight in terms of transit
time and pricing.
VAT
https://services.amazon.co.uk/services/fulfilment-by-amazon/vat-resources.html
Value-Added tax, or VAT, is an indirect tax (like sales tax). The big difference is that
VAT is collected at each stage of production and distribution, including customs
clearance at import. You can avoid paying VAT by enrolling in a duty deferment
program, but beginner importers usually find the program too complicated to
bother with. You may also be able to reclaim VAT, depending on the nature and
level of business you think your sales operations in the EU will expand to.
VAT in the EU is different from sales tax in the US in another way, too. Their rates
are surprisingly high. They vary from 17% to 25% of the good’s value, depending
https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf
https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf
on the country.
132
Amazon Europe
On the positive side, VAT processes are streamlined and transparent. All countries
have pretty clear and accessible processes for getting a local tax ID. Setting up for
VAT in one EU country has you covered for importing into any other country within
the union Furthermore, once your goods are inside the EU, you can freely
transport them from one country to another.
Customs Duties
Depending on your product and where it was produced, you may also have to pay
customs duties (plus the VAT on customs duties). However, unlike VAT, customs
https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-common-customs-tariff/taric_en
duties on a tariff code are the same across all EU countries. Duty structures are
usually around 5% to 10% of the shipment value, which includes freight costs
https://www.gov.uk/guidance/how-to-value-your-imports-for-customs-duty-and-trade-statistics#declaring-an-import-value
among other items, but, like importing into the US, many goods are duty-free.
And, again like the US, import tariffs can exceed 100% if anti-dumping rules apply.
Other EU Import Preparation

• EORI. You need an Economic Operators Registration and Identification
http://ec.europa.eu/ecip/help/faq/ens8_en.htm
number (EORI). This works like the IOR number does for US Customs.
That is, it is how customs authorities identify each shipment’s importer
(or exporter). The same number works across all countries in the EU.
Apply for an EORI with one of the local customs authorities before you
start importing.
• COO. Depending on the country of origin, you may need a Certificate of
Origin.
• CE Marking. Some products, like electrical appliances, toys, machinery,
and medicalhttp://www.ce-marking.org/what-is-ce-marking.html
devices require CE marking, which is proof that they meet
European Health and Safety Standards. Check whether your product is
affected, and confirm with your manufacturer whether your product is
CE accredited. Much of the information covered in the Safety Standards
& Labeling chapter applies as much to importing to the EU as it does to
importing into the US.
US Export Preparation
If you are exporting from the US into Europe, you will need to:
https://www.cbp.gov/trade/basic-import-export
• Arrange Electronic Export Information (EEI) filing for the Census Bureau,
• Secure an Export license,
• Become a Foreign Principal Party in Interest,
• Be classified as a “known shipper”.
133
Amazon Europe
Your freight forwarder will help with all of these. If you work with a freight
forwarder that deals extensively in Europe, they will help with what you on what
you need to export from the US, and import into the EU.
Summary
• You will need to do your preparation, but Amazon provides a lot of online
support. Make sure that you engage a freight forwarder that deals
extensively in Europe, who can help you jump the hoops.
• Don’t be discouraged, it’s not as hard as it seems. Many US e-commerce
sellers are now selling on Amazon Europe.
Further Reading
https://services.amazon.com/global-selling/expandtoeurope.html
Why Sell In Europe? [Amazon]
xx
134
THE FINAL WORD
At my last company, importing was a nightmare. And this would have helped.
If you’re smarter now, it’s because of the hard work of the carefully cultivated list
of experts that wrote this book, both within Freightos and outside. The
contributing experts were carefully selected based on their company’s role as top
service providers supporting importing entrepreneurs. I strongly recommend
taking a look at their websites to learn more.
That goes double for Global Sources. Firstly, because their Meghla Bhardwaj wrote
two of the chapters (Sourcing Channels and Attending Trade Shows) in the original
version. Secondly, because it has been fruitful working together to produce this
version of the guide. What you are reading is a composite of all chapters included
in other editions.
Within Freightos, I want a shout-out to the editor, John Edmonds (who also
contributed the chapters on international freight), Etan Efrati (for cherry-picking
the experts, getting them on-board, and spearheading distribution), and Amit
Tzemach (for the layout and design).
There’s more to successful e-commerce sales than importing, but we were forced
to keep this specific so topics like company management, sales, and marketing
were out of scope.
For the topics covered, this guide doesn’t go into everything about importing from
China in full detail, but it has brought together everything you need to get started
and make a great success of your new venture.
And, so, if there needs to be a final word or phrase … it has to be “Get Ship Done”.
Zvi Schreiber, CEO, Freightos
135
About Freightos
Freightos® makes global trade frictionless with the world’s online marketplace for
the trillion-dollar international shipping industry. The Freightos Marketplace helps
importers and exporters reduce logistics spend and save time with instant
comparison, booking, and management of air, ocean, and land shipments from
top logistics providers. The result is international shipping that’s as smooth as
booking a flight online.
Freightos has accumulated the world’s largest global database of multimodal

freight rates, providing industry transparency with the Freightos International
Freight Index. Founded by serial entrepreneur Zvi Schreiber, Freightos is a logistics
technology pioneer with a worldwide presence, and has raised $50 million from
leading venture funds, including GE Ventures.
https://www.freightos.com/compare-book-manage-freight-quotes/
See the future of freight at the Freightos Marketplace.
136
About Global Sources
Global Sources helps importers, including private label eCommerce sellers find

and meet manufacturers and suppliers in China and the rest of Asia.
We do this via our supplier directory at www.globalsources.com, and sourcing

trade shows held every April and October in Hong Kong.
Global Sources is the only platform that offers buyers the option to
source online and offline. Think of us as your Online-to-Offline or
O2O advantage.
For over 40 years, we have been dedicated to helping buyers source more
confidently from Asia. We offer comprehensive supplier pre-screening services to
help buyers reduce their sourcing risk:
Verified Suppliers
Suppliers and exhibitors whose business registration details have been
verified by independent third parties such as D & B (Dun & Bradstreet),
Ease Credit or Experian.
Verified Manufactures
Verified Suppliers whose business scope, as licensed by relevant
government departments, allows them to manufacture goods.
Supplier Capability Assessment

In partnership with Bureau Veritas, we enable buyers to audit suppliers
immediately across several key areas, including production facilities,
capabilities and product quality.
Find a reliable supplier online at www.globalsources.com, or meet your next

supplier at our trade shows: www.globalsources.com/exhibitions
137

Experts Guide Importing From China Global Sources

Caricato da

Informazioni sul documento

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Experts Guide Importing From China Global Sources

Caricato da

Copyright:

Formati disponibili

IMPORTING

✓ Up your eCommerce game with actionable content

✓ Source your next best-seller at co-located trade shows

✓ Avail free supplier matching

✓ Network with serious (yet fun!) sellers & experts

✓ Work hard, play harder in cosmopolitan Hong Kong

✓ Get thousands of dollars’ worth of freebies and oﬀers

COMPARE RATES FREE

Use code EXPERTSOURCING100 at checkout to receive $100 oﬀ your ﬁrst

PART 4: FREIGHT QUOTE 70

PART 6: FULFILLMENT 108

PART 7: AMAZON FBA 126

THE FINAL WORD 135

• There’s plenty of demand. With close to 2 billion online shoppers

Why this guide?

Greg Mercer, CEO, Jungle Scout

Fredrik Gronkvist, Co-Founder of Chinaimportal

Andre LaMorgia, Co-Founder & COO, INLT

Gail Cole, Editor, Avalara

Nathan Resnick, CEO & Co-Founder, Sourcify

Meghla Bhardwaj, Head of Content Marketing, Global

Gary Huang, Founder, 80/20 Sourcing

Renaud Anjoran, General Manager, Sofeast

Mathieu Labasse, Chief Marketing Oﬃcer, AsiaInspection

Richard Gilbert, Director, Payoneer

Mark Cohen, Partnerships Account Manager, TradeGecko

Rachel Burns, Content Marketer, Shipbob

Greg Elfrink, Content Marketer, Empire Flippers

Product Criteria Checklist

A diﬀerent approach is looking at keywords to unlock niche products. You can

Find Hidden Gems

Check For Shippability

• Avoid clothing brands and licensed products.

• Group I. Greatest danger, most protective packaging required,

Several government agencies are involved in product compliance, which will be

The Risks Involved

Common Regulatory Requirements

Apparel & Textiles

Children’s Products (CPSIA)

• Conﬁrm all applicable safety standards (ASTM F963),

Chemicals & Heavy Metals

Some state-level regulations, such as California Proposition 65, also covers

If your product does prove to be unsafe,https://www.cpsc.gov/

1. Technical compliance/Chemical regulations.

3. Document. Buy CPC, GCC, test reports, and other templates,

4. Lab testing. Submit samples for testing to an accredited

US Customs (Customs & Border Protection, or CBP) is responsible for enforcing US

Customs strongly recommends that you consult with a US licensed customs

Your Responsibilities As An Importer Of Record

Your Responsibilities With Shipments

The Customs Duty chapter covers product classiﬁcation in more detail.

To steer clear of trouble, make sure your commercial invoice:

• Is written in English and accurately describes your merchandise in

• If your shipment is exempt from duty because of a free trade agreement.

Intellectual Property (IP)

So how do you ﬁnd out if a trademark or copyright applies?

Anti-Dumping & Countervailing Duties

Unauthorized Entry Of Restricted Imports

Customs Duty Estimation

• Tough it out yourself. If you rarely make international shipments, and

• Outsource to your forwarder. Some forwarders may look up and assign

Avoid These Mistakes

3. Making last-minute guesses. Trying to handle international tax

OEM (Original Equipment Manufacturer)