Case Study: How I Saved over $2000 on a Single Shipment

18

money jar

There are essentially 2 paths to creating “more money” in your pocket- you either make more or you spend less or BOTH!

I am VERY excited to share about a decision I made that saved me thousands- and will continue to save me thousands every time I make this decision!  This could easily add another $20,000 to my yearly profit!

I do my best to diversify niches, products, and suppliers.  I currently use 6 suppliers from China or Hong Kong (the rest are from the U.S. or Canada in case you’re wondering).  As you’ve probably heard, the process of shipping large quantities of goods from one country to another is called “importing.”  When I started out, ALL of my suppliers were U.S. based.  The idea of “importing” was quite intimidating to me.  I can clearly remember my experience connecting with my first overseas supplier (and as usual, I only pushed myself out of desperation- my U.S. supplier had run out of stock and I needed to find another source).  The first thing that concerned me was the supplier asking for a wire transfer of funds.  I was so used to dealing with Credit Cards or Paypal that this idea scared me.  I heard all kinds of stories about wires being untraceable and people getting scammed.  I did the research until I felt moderately comfortable with the supplier and the process and initiated the wire (there are things you can do to “safeguard” yourself, but this is a topic for a post of it’s own)

The next step was deciding how to import.  I was hit with questions about seaports, security filing, bill of lading, “FOB” and other terms I had never heard of!  I tried to educate myself as much as possible with the information I could find on the internet and ultimately opted for a courier service that I was FAMILIAR with (like UPS, or DHL).  I’ve been shipping this way ever since.  These couriers generally take care of the customs process for you (though I’ve gotten phone calls and have had to provide information from time to time) and the shipment is quick and fairly painless (most of the time.)

I always knew there was a cheaper option (a LOT cheaper) but it sounded WAY too complicated!  The cheaper option is to ship by sea- yup- the goods are LITERALLY “shipped” (on a ship).  This process takes a LOT longer, but if you plan right, the cost savings can be massive!  I am getting ready to replenish my inventory of the brand I talk about HERE.  Since I have recently educated myself on the process by reading “Import Direct From China” I decided to ask for a quote by air OR by sea.  Here was the difference:

By air (through courier) I was paying $4,495.  At 1000 units, this is adding $4.49 to EACH unit (each costs about $8.00 so this brings me to about $12.49- plus a bit of customs tax.  Since my target sale price is $39.99, this is still plenty of profit and I’ve always been happy to ship my products this way… however…

By sea the total is:

…wait for it….

$490!  Yes, this is a SIGNIFICANT savings.  Now- before you get TOO excited, I did go and hire a company to handle customs clearance and final delivery to Amazon.  Those charges were quite hefty!   After agreeing to their service, I was hit with total charges of $2,113.18!

So, let’s do the math: $2,113.18 + $490 = $2603.18

$4,495 (by air) – $2603.18 (by sea) =  $1891.82 in savings!

I know what you’re thinking… “uh… but wait… this isn’t “over $2000″ in savings!

Here is the best part!  I was SO thrilled with the $1891.82 in savings and then I received an email from my supplier saying (paraphrase) “we received a call from the customs broker and we’re confused.  They are telling us that they will be handling the shipment, but you already PAID US for this- they only need to clear the shipment through customs!”

I called the broker and confirmed this.  This was my mistake since I didn’t completely understand who would be handling the actual shipment.  The broker assumed they would be and charged me for it.  I was told that the payment will be refunded to me except for what is needed to clear customs and deliver to Amazon.  If I’m reading all of the charges correctly from the invoice, this will amount to only $592.19!  This means my total savings will be:

$3412.81!

($490 + $592.19= $1082.19  |  $4495- $1082.19 = $3412.81)

You’ll notice this is SIGNIFICANTLY more than $2000 in savings.  However, I don’t know for sure that I’m correct about the amount of adjustment from the broker.  They are holding this until the shipment arrives (with my permission) and will refund the difference after everything has cleared.  Nonetheless, I think it’s safe to say that I’ve saved well over $2000.  If I could save this much 10 times in the year, I would add $20,000 to my profit!  It is exciting thinking about the possibilities.  I hope this helps give YOU confidence as you start thinking about importing- or even if you’ve already been doing it “the easy way”, to consider shipping by sea!

As I mentioned, the book that really simplified things for me was “Import Direct from China.”  I would HIGHLY recommend picking it up if you are thinking of importing.  $50 could easily save you $2000 as it did me!

If you want to learn more how I use importing as part of building a 6 figure a year (profit) income, please sign up below for free:

 

18 thoughts on “Case Study: How I Saved over $2000 on a Single Shipment

  1. Whichever shipper you choose, do not use Forest Shipping! Here’s how I got screwed over by them for about $4,000 USD. Yea before they get your money they’re all friendly and fast to reply, but once they get your money, they’re going to do things that is most convenient for them, NOT what is best for you! Unless you are 100% sure your products will move without a hitch, then go ahead and use them but don’t say you weren’t warned.

    So I was shipping a shipment of goods into the US, and it got detained by the FDA because it had health claims and was classified into a medical device. FDA issued an official notice with specific instructions to register 3 entities in my supply chain (which I only found out after this was all over), each registration costing about $4,000 USD. Instead of passing the document to me so I could follow the instructions myself, Forest Shipping decides they can email me the instructions with their version of English (and if you’ve communicated with them through email before, you will already know that only about 70% of their English is understandable). And so they advised me to register my own device, paid $4000 to the FDA, only for them to come back and tell me the registration is not done! Obviously I had no confidence in the communication anymore and stopped the shipment. When I contacted FDA directly, I was unable to be issued a refund for making a wrong/incomplete registration because it was my fault I did not understand FDA instructions. But yet, I had never even seen FDA’s document at all!

    And guess what when I approached Forest Shipping about this? Basically their reply was “nah sorry, it is not our responsibility to forward any documents to you, too bad you lost money”. Oh really, an official document containing material information, from a government authority with instructions for registration that is worth more than $10,000USD, and Forest Shipping does not think its important enough for me to see it myself, and that I should rely on their interpretation of what FDA wants.

    Guys, when you’ve handed your shipping money over (especially if you use TT), they will do whatever is most convenient for them from then onwards, which may not be what is best for you! STAY AWAY FROM FOREST SHIPPING! Tons of better shippers out there, like Shapiro and fbaforwarder, I was lazy to research on my own before and simply relied on this shipper that my supplier had connections with. Paid a heavy price for it, and I can’t sue them for it because even if I had 100% of winning, the legal costs would overwhelm my claims of $4,000USD.

    If you’re like me and have lost money because of Forest Shipping’s negligence, drop me a message and we may be able to work out a feasible lawsuit claim together.

    Don’t say you weren’t warned!

    Disclaimer: All views expressed are my own and are true to the best of my knowledge.

    1. So sorry to hear about your poor experience John! Thanks for the warning! This is valuable to me and to my readers! I’ve used Shapiro consistently without any trouble. I highly recommend them. They are fast, professional, reasonably priced, and since they are based in the U.S, there is not language barrier. They are also available for phone calls which is helpful. They have handled dozens of shipments for me and they take care of everything.

  2. Hi sorry if this not apropriate to comment on a post this old but i have a very important question to ask regarding fba.
    When you import an item to the us from.china do you need sometimes to get government approval for your products?
    Like fda for vitamins or some agency for children’s safty?
    Is there any regulation ?
    Tnx in advance .

    1. Hi Din,
      It’s never too late to comment or ask questions. I get notifications when a comment is made, so feel free on any post.

      Yes, you do sometimes need to get approval to import products. I’ve unfortunately learned this the hard way- once my items were already in customers I was contacted to fill out numerous documents and wait for approval which significantly delayed the process. In my case, I would never have guessed the product needed FDA approval (it was not a food product and not made for human consumption) but if you suspect that it will, I would encourage you to do some research and reach out to the appropriate government agencies for your product. Posting on Amazon seller forums can be helpful too if you’re willing to disclose your exact product. Hope this helps!

  3. Hi Daniel,
    Quick question about setting up a shipment in the Seller Central account. The shipment will be coming in from China. Would the “Ship From” address be the supplier’s in China or would it be the Port in the US that the shipment would be arriving at?

    Thanks!
    Brent

    1. Great question Brent!
      I always set the shipping address as the supplier’s address. This way, customs or Amazon can contact them if there is any problem. Good luck!

  4. Daniel,

    What are the most important questions to ask the Chinese supplier when you are ready to place the FIRST order? The sample has been tested and is great. Need help to proceed.

    1. Hi Kofi,
      Thank you for writing! It will be a bit different for everyone, but I find the best questions are:

      1. What is the lead time (time between initiation and completion of production)
      2. What is the complete cost with all services (are you having logos printed, custom packaging? Be sure to check shipping charges, ask for options- UPS, Fedex, DHL, by air and by sea)
      3. If you are shipping directly to Amazon, but sure your supplier understands FBA requirements (if shipping by sea, the merchandise will need to be paletized for instance- stickers may be needed on each product- shrink wrapping or bagging may be required depending on the product)
      4. Be sure you’ve verified your supplier before sending funds. There are numerous ways to do this. Thankfully, due to the countless scams on the internet, there are whole websites that are dedicated to finding scammers. For starters, just google “name of supplier” followed by “scam” or “customer reviews” etc. Be sure to look at their trade history and certifications if possible. That’s a good start!

      The bottom line is, don’t send funds until you’re 100% comfortable. Ask as many questions as you need to so that you feel good about the transaction! Unless your overseas supplier accepts Paypal (most don’t) you really have no easy way of getting your funds back once sent- that can be scary. With that said, I’ve never once been scammed- even back when I had no idea what I was doing (maybe I just got lucky?) Don’t let fear stop you- just do your homework and you’ll be good! I’m excited to hear that you’re on your way!

  5. Hi, daniel
    I love reading your posts I check you site on a weekly basis to see if there is a new post (I subscribed to you email list,)

    I don’t understand why you need the broker to ship it to amazon, why can’t the manufactor put amazon shipping address , and the broker will just clear the customs ?

    1. Hi Martin,
      Thanks for the kind words! This is a great question! I’m not an expert, but as I mentioned, I learned a TON reading “Import Direct From China” which explains this a lot better than I’m about to.

      From what I understand, when shipping by sea, the merchandise ships from one seaport to another. DHL, Fedex and UPS have what is called “door to door” delivery meaning they handle the service of picking it up on the supplier’s side and delivering it on the receipient’s side. When shipping by sea, this service is not included- it literally gets loaded and unloaded at a seaport. It is necessary to hire a separate company to deliver the goods from the port to the destination. This is where the broker comes in. Technically, you could also pick it up yourself and deliver it, but you’d need all of the right forms and Amazon would not ultimately allow you to do this as they require merchandise to be delivered by courier or by Shapiro (their preferred broker). Hope this helps!

  6. Hi, daniel
    I love reading your posts I check you sure on a weekly basis to see if there is a new post (I subscribed to you email list,)

    I don’t understand why you need the broker to ship it to amazon, why can’t the manufactor put amazon shipping address , and the broker will just clear the customs ?

  7. Thanks, Dan! And good luck with your shipment by sea. Keep us updated on how it goes. I’m sure there will be lessons to be learned.

  8. Thanks for the reply, Dan.

    My current operation is pretty “high touch”, with all inventory coming to my warehouse first, then sorted and labels applied, then shipped to FBA. I would love to eliminate that labor intensive middle step.

    I wasn’t going to ask the name of the broker, but I’m glad you shared! Thanks, I’ll check them out.

    1. Yes, that was exactly why I moved to this “straight to FBA” model. I used to have products shipped directly to me and would actually spend hours not only stickering them, but repackaging and rebundling them. I now have the suppliers do all of this for me and is saves an enormous amount of time! Good luck with your endeavors! Hope this helps!

  9. Great article Dan. Glad to see you saved some cash on your imports.

    Are you having your customs broker ship directly to Amazon for you? I’ve thought about doing that, but I have concerns about quality control and ending up with a load of defective or mislabeled merchandise in the Amazon warehouse. Will the broker be doing quality control for you before forwarding the inventory to Amazon?

    1. Yes, the broker ships straight to Amazon. There is only one broker that Amazon “approves” which is Samuel Shapiro & Company (if you’re not shipping straight to Amazon, you may use any broker you’d like of course). I would recommend giving them a call (or email) as they provide a variety of services. They may provide a quality control service (I’m not sure about this). I personally have never done this (I have everything shipped either directly to Amazon or directly to my business partner/outsourcer) and I rarely run into problems. Worst case scenario, Amazon will find a couple units that have been damaged in transit and ship them back to me. This has never exceeded 5 or 6 units out of 1000, so the risk is worth the savings for me.

      It is also very important to provide detailed instructions to the supplier on labeling and Amazon’s requirements. Most are unfamiliar with the process. Sending pictures helps- this is why it’s great to do this yourself for a while first like I did (stickering, labeling etc) so you know exactly what to ask the supplier for. I’ve had a couple of mislabeled product, but it happens very rarely and in very small quantity (1 or 2). Amazon has caught this every time. They charge a small fee of course (unplanned service fee) but it is about 40-80 cents per unit. In the end, I’ve found this to be the best solution. However, depending on what type of products you’re looking at, quality control could be a great option to put your mind at ease. Give Shapiro a call and let me know if you do end up finding out if this is offered!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>