For every story of success, there are perhaps a thousand stories of failure. This article is not meant to deter anyone from trying to enter the foreign trade market, but rather to give a better insight as to what one should expect.
From the outside (and to many on the inside), foreign trade is simply finding a product for a very low cost and marking it up a bit finding a buyer. Sounds simple. This is why so many try it.
Finding a product at a very low price is easy. Finding an honest supplier is very time consuming and is often a matter of trial and error. Quality is another issue you must be concerned with. Regulations concerning imports and exports is an area which you must become familiar with. Finding customers is not always as easy as you think.
Let's look closely at each area - Let's use Costume Jewelry as our target product-
1) "Finding a product at a very low price is easy." Simple, search keywords such as 'costume jewelry suppliers' Look what Google search found -
- Results 1 - 10 of about 2,300,000 for costume jewelry suppliers.
Look what Yahoo search found -
- 29,700,141 results for costume jewelry suppliers.
Ok, we found the price we like.
2) "Finding an honest supplier is very time consuming and is often a matter of trial and error. " Do you realize more than half of the listing which claim to be "manufacturers" are actually very small trading offices run out of peoples homes? Did you do any background checks on the supplier? Did you call them and actually speak to a person? How are they requiring payment?
3) " Quality is another issue you must be concerned with." - Not long ago, a well know retailer recalled millions of dollars in costume jewelry. Was it the fault of the supplier (manufacturer) or the buyer (famous retailer)? ANSWER- BUYER! In this case, the buyer had the resources to ensure the quality of the product leaving the factory was safe but chose to look the other way. The safe product would have cost more thus reducing corporate profits. So it was not an issue until a third party made it public.
4) "Regulations concerning imports and exports is an area which you must become familiar with." Here is where so many get into trouble. You pay a factory $50,000.00 to ship 20,000 electric bikes to the USA. EASY! Contract signed, payment made. Product shipped. Factory has filled their legal obligations. Problem was, the contract did not state what certificates were required. You choose the product and said ship it. They did. Now customs has 20,000 electric bikes that they are not releasing due to lack of documents which you may or may not ever receive.
Keep in mind, you ARE the buyer from the factory. It is your responsibility to set the quality standards and be willing to pay for that extra measure of quality. Sadly, some very big corporations today put public safety behind profits. The factory will sell you a product very very cheap, but this will force them to use very very cheap materials.
As I have been in this business over 20 years, I will never have the lowest price, but quality issues resulting in a safety concern has never happened to us. Don't allow profits to be the master, you reputation and the safety of your customers must always come first.