From 2004 through 2008, Thompson was on the Retail Advisory Board for the industry magazine, Home Accents Today. In “The Import Option,” a column he wrote for HomeAccentsToday.com, Thomspon advises readers about the trials and tribulations of sourcing and importing items from around the world.
THE IMPORT OPTION
by Thompson Lange
No matter what the merchandise, there is one thing all retailers have in common: the search. Our businesses live and die on our ability to find product and vendors that make us stand out from the store next door. The search leads some of us to local artisans, others to national Gift Shows and a growing number of us to hop planes and search the world.
As I prepared to open Homescapes in 1996, I had no idea what would make it special. I’d never worked in any aspect of retail before but my brother, Beau, wanted to join forces and open a business and he thought that my history of hitting the road with a backpack and no itinerary could be a useful asset.
One of the first mea culpa’s of this article: dumb luck is a wonderful thing to have.
There are a number of pitfalls to importing, and luckily they didn’t start hitting us until after our third or fourth container of product. So I want to take a moment and give a tip or two about what works for me (and to chronicle my mistakes as a friendly warning: Don’t let this happen to you.)
One of the first things people say to me when they hear I’m an importer is, “Oh, what a great way to write off a vacation.” I suppose that’s true for people whose store is a hobby. For me, however, a vacation has everything do with a beach and nothing to do with shopping.
The product from every country from which I’ve imported has gone through an “audition” in my store. No matter what a good price something is in its native country, it’s overpriced if no one in Carmel wants to buy it from me. And I certainly don’t want a 40-foot container of retail dogs.
Let the wholesale vendors at the Shows take that risk, it’s in their business plans. If they’re doing it right, they’re selling things to their demographic (i.e. us) that they think will make them money. And after I’ve tracked the turnover of any particular country’s product that I’ve purchased through multiple vendors, I’ll know what are the least risky and most profitable purchases for me to make when I’m standing in an overly hot warehouse in the countryside of Beijing.
Which leads to a mistake so many would-be importers make: attempting to cut out all the middlemen. Never have I bought a container without an agent.
Think about it. An agent’s livelihood is based on the quality of his contacts, his ability to get your purchases through customs on both ends and the arrival of your merchandise in sellable condition. To me it’s worth the 20% to 30% an agent adds to the original purchase. As a matter of fact, in my case, the higher the agent’s percentage, the better the luck I’ve had in the end. (And people think China doesn’t have capitalism). When I’m spending $25,000 up front for merchandise that’s supposed to carry 2nd Quarter, I better receive what I bought (which isn’t always a given) in sellable condition.
The trick, of course, is finding the right agent. I found one of mine at a Gift Show in Guangzhou, but you really don’t have to go that far. Ask any import vendor whose product you’ve auditioned if they will do it. Many don’t, but the benefit of finding one who does is that they already know the market-value of the product you’re going to purchase abroad. And actually, so do you. You’ve already been selling it in your store.
Homescapes, Carmel is in a very competitive town; our rents are high and our client base has a high percentage of tourists. Having auditioned my product, I know the going rate of domestically bought imports. So my more recognizable items are always priced a little lower than the store next door. Impulse buys are based on perceived value. Sure my cabinet may be $2,400, but if they saw it in San Francisco for $3,200 or down the street for $2,800, they may just snap it up. And with a warehouse filled with newly arrived items, “snapping it up” is fine by me.
Another service I always rely on is customs brokering. While I have friends who swear they save money by filling out the paperwork themselves, it has long been my contention that having the paperwork filled out by people who deal with the changing rules on a daily basis saves me money in the long run.
Case in point: I had a container from the Philippines with a bill of lading that was filled out incorrectly. I was using a U.S. based agent who was brokering it himself, and because of the errors, customs stopped the container and had it opened for inspection. Let’s just say after the inspection the agents don’t put the product back in with as much care as one would hope. Four years later and I’m still working my way through thousands of dollars worth of scrap wood.
Of course, scrap wood can also happen with consolidating freight (don’t even ask me about that stuff I bought in England last year), so for me importing has only worked when I buy a full container of product. It’s carefully packed with only my purchases, small things riding for free in big things, and other than the aforementioned mishap, usually arriving with me cutting the lock that was affixed at the exporting port. The fewer hands involved, the fewer chances for disaster to strike.
From a cost stand-point, 40 foot containers are the best value. The travel expenses are the same as for a 20 foot container (which last May cost about $3,200 in shipping from
Beijing), and you get twice the product for only about $600 more shipping dollars. But here’s the rub. You have twice as much product.
A good value isn’t the only thing that makes a profit. The product has to be special and sometimes I just can’t find 40 feet worth of things I want to sell. Why would I want to pay extra warehousing charges on slow moving product that I really don’t believe in? Better to go back in three months and try again. At least from my perspective.
But take what I say with a grain of salt. After all, I’m the guy who left my briefcase and the $9,000 in my wallet at a gift shop at the Shanghai airport. Yes, I got it back but only after a week of being broke and stranded in Tokyo, being politely asked to leave my hotel by the manager himself, flying home disgusted with my stupidity and having it confirmed by the United Airlines Customer Service Manager in San Francisco as he went to retrieve the items forwarded from China…”Oh, you. Yes we’ve heard about you.”
So take it from the guy who’s literally known around the world for being an idiot with money: there’s profit to be made from importing as long as you use your head.
