How to import from China and sell on Amazon
Importing from any country including China can be overwhelming. But actually, importing from China and sell on Amazon isn’t as difficult as you might think.
I have been importing from China and selling on Amazon for over 3 years as at the time of writing this article.
In this article, I am going to take you through my step by step process of importing from China and selling on Amazon.
Step 1: Find a product
This is the most important step for an obvious reason. Without a product you intend to sell, there is no point thinking about importation.
One of the most challenging parts of selling on Amazon is finding a product.
Your success on Amazon depends on finding a product that people want to buy. There is no point importing a product that people are not interested in.
To succeed on Amazon, you must do a proper market analysis and come up with a unique product that you will bring to the market place.
I wrote an article about how to find a product to sell on Amazon, perhaps you might be interested in reading it after this one.
Step 2: List the product for sale on Amazon
Listing a product is important for many reasons.
It will give you the assurance that you are allowed to sell the product on Amazon.
If you are new to selling on Amazon. They don’t trust you yet so they will not allow you to sell in all the categories. For example, if you are a new seller, you might not be allowed to list a product in the health and personal care category.
I know a lot of people who think they can just list any product for sale on Amazon. Before you go and contact a supplier, make sure you check that you will be able to sell the product.
Step 3: Validate your product idea
After listing the product for sale on Amazon, the next stage is to validate your idea.
There is nothing new under the sun. The chances are that the product you want to sell already exist on the shelf in a shop somewhere.
Obviously, you want to make yours different and unique. You don’t want to go and copy the exact product someone already have for sale on Amazon. However, you can use an existing similar product from retailers to validate your idea.
Part of my process of bringing a new product to Amazon marketplace is to test the product on Amazon.
I usually check on Amazon if customers are interested in buying the product.
I would buy between 5 to 10 units of the product from a retailer in a high street or online shop. List it for sale on Amazon. I would send the product to Amazon fulfilment centre.
I will then run an advert on Amazon. The advert will help to put the product in front of customers. After a few days, I would check how the advert is performing.
There is a chance that some of the product will be sold through the advert.
The advert report will show me, how many people on a daily basis were searching for that product on Amazon.
The report will also show me the exact keywords customers typed for searching for the product.
This stage is crucial and very important in making the decision to go further to find a supplier that will supply the product.
Stage 4: Find a supplier
This stage is very important in your process of importing from China.
There are various platforms you can use to investigate and choose a supplier to manufacture your product in China.
The platform that is by far better than all the rest is Alibaba. I have personally used Alibaba to find supplier since I began importing from China in 2017.
Some of the things that are very important to check when choosing suppliers on Alibaba are
1. Gold Supplier
This is also very important.
Suppliers with Gold supplier symbol are the ones Alibaba have verified and earned their trust.
In some cases, the supplier with Gold status has been doing business for a good number of years and have good integrity.
2. Alibaba Trade Assurance
Make sure a supplier you choose has Alibaba Trade Assurance.
The is like insurance against supplier not keeping to their promise.
If you pay a supplier and they fail to deliver the goods. You can report them to Alibaba and they will pay you the money back.
Make sure all your transactions go through the trade assurance especially when you are just starting off.
Stage 5: Sample for Quality Check
After finding a reputable supplier. You can now place an order for a sample.
Seeing photos on Alibaba is not good enough.
You need to ask them to send you a sample. In most case, they don’t charge for the sample. However, you will need to pay for the shipping cost.
The sample is an opportunity to check that the factory will be able to meet the standard of the quality you want.
You want a product that is of high quality so you will not be getting a complaint from customers.
If there are any changes you will like to make to the product, you can communicate with the supplier after you have seen and assess the sample.
Stage 6: Find a Freight Forwarder (Sea or Air)
Before you make payment for the initial deposit. It is important to ask questions about shipping. At this stage, you need to understand the shipping terms.
There are three major terms namely FOB, EXW and CIF.
The first two are the most common
FOB (Free on Board)
The supplier will be responsible for getting your goods to the seaport.
Your supplier will be responsible for transportation of the goods to the port of shipment and the cost of loading.
It worth mentioned that the FOB quote usually will be more than EXW quotes where you will be responsible for the local transportation cost to the port of shipment.
EXW (EX Work)
In this case, you will be the one responsible for the cost of transporting your goods from the supplier factory to the port of shipment. It’s basically opposite of FOB.
I usually prefer FOB term for my shipment.
Importing your goods from China to the UK through sea freight is far cheaper than air freight.
I remember vividly my first import from China was via air freight through a courier. It was very expensive and that leads me to ask my supplier the cheapest way to ship to the UK from China.
My supplier suggested to me to look for a freight forwarder who can help ship my products to the UK by sea.
While preparing for my next shipment, I found a company called Shippo through google search.
Shippo has been very helpful for my business since I found them. They simplify my shipping process and make it cheaper.
The three factors that determine the cost of your shipping are
- volume (in cubic meters (CBM)
- and weight (KG), of your shipment.
Obviously shipping by air from China through courier like UPS, DHL and FedEx can be quicker. However, you will be saving a lot of money by shipping through sea freight specialist like Shippo.
For people who are just new to selling on Amazon and their product is lightweight. You might consider air freight.
If you want to use the traditional courier, in most cases your supplier will help deal with them in China to get a quote for you.
For sea freight, it is better to find freight forwarder in the UK.
Sea shipping is not right for every product. The general rule of thumb is that if your goods are too small or you need it urgently, the sea shipping will not be right, so consider air freight.
Door to Door Delivery
I must not forget to mention this one.
Door to Door Delivery means that your supplier will help you appoint a freight forwarding company.
Every task involved with shipping will be handled by the appointed freight forwarder.
With Door to Door Delivery, you won’t need to worry about taking the product from warehouse or factory to port or airport.
As well, your supplier in conjunction with the freight forwarder or the courier will take care of all the paperwork and taxes.
The product will arrive at your door or your chosen location.
Stage 7: Bulk Order
After you have received the sample, satisfy with the quality and agreed on price and shipping term. You can now proceed to place a bulk order.
Obviously you need to ask for a formal quote in writing. This will usually be sent to you via email.
Don’t be scared to haggle. Quality is very important to you so don’t ask for too much discount which will make the supplier compromise on the quality of the sample you’ve seen.
You can get a few cent or pence off the price they quoted you and that can save you a bit of money.
You will usually be required to make payment for the initial deposit which in most cases is 30% of the total cost.
For example, if your product will cost £2,000, you will be required to make a payment of £600 as an initial deposit.
Stage 8: Inspection
There are companies in China that you can appoint to help inspect your products before leaving the factory.
There have been stories of supplier compromising on quality. That is the reason why there are inspection companies in China.
They that can help check that your goods have been produced to the standard you agreed with the supplier.
Personally, I haven’t used any of the inspection companies so am unable to recommend one.
My suppliers have never disappointed me in terms of the quality of the products. For this reason, I have not had any need to use inspection companies for quality check.
Perhaps, it is better to be safe than sorry. If you have a large order, you might consider inspection company service.
Stage 9: Import your goods
Once you have placed bulk order and chosen a freight forwarder or courier. The sea freight forwarder or a courier will deal with your supplier to handle the process of importing your goods.
They will be responsible for importing your goods to the UK.
In my case, I use Shippo for my sea freight and they are efficient and effective.
The freight forwarder will give you the estimated date they expect your goods to arrive in the UK. Sometime the date might change. In that case, they will communicate with you.
Shippo which I use does have tracking on their website that I can use to track the shipment.
Stage 10: Goods Arrival, Custom Duty and Value Added Tax (VAT)
When the goods arrive in the UK, you will get notified by the forwarder.
You then are asked to make payment for the cost of shipping, customs duty, and VAT. All of these will be in one single invoice. The freight forwarder is collecting the Duty and VAT on behalf of HMRC from you.
Because you are importing from China which is outside the EU area, you will need to pay VAT on your goods.
It makes a lot of sense to calculate the Duty and VAT before your goods arrive so you can be well prepared.
Duty is basically calculated using a percentage of your product tariff code. The tariff code depends on the type of product.
|Tariff codes are mostly between 2% and 5%, it could be higher but you can check the tariff classification on the UK Government website.
As at the time of writing this post, VAT is standard 20%.
VAT on Taxable Import = 20% of (goods cost) + (UK Duty) + (Insurance & Shipping).
For example, if the cost of your goods is £3,000 with 3% on the tariff code and the shipping cost is £300.
Your duty will be 3% of £3,000 which should be £90.
VAT will be 20% of £3,000 (Cost to buy your goods) + £90 (UK Duty) + £300 (Shipping Cost & Insurance).
Your VAT should be £678.
Your Duty + VAT will be around £779
If your business is VAT registered, you will be able to reclaim the VAT back from HMRC.
For most people who are just starting Amazon business, you won’t be able to collect the VAT back. However, you will not be paying VAT to HMRC on each item sold like a business that is VAT registered.
Usually, HMRC will send you a C79 certificate to prove you’ve paid import VAT which you can claim back.
My freight forwarder Shippo has a calculator on their website which you can use.
Stage 11: Send to a fulfilment warehouse
If your aim of importing from China to the UK is to sell on Amazon. You can ask your freight forwarder or courier to send the goods to Amazon fulfilment centre as soon as the goods are cleared from custom.
Usually, you would have created carton and pallet labels from Amazon Seller Account which should be stick on the cartons and pallets if your goods come in pallets.
If you want to merchant fulfil your products, you can ask for the goods to be sent to your chosen address.
I created a YouTube video on how to import from China and sell on Amazon.
You can watch the video below.