Introduction to Importing

Introduction to Importing

Introduction to Importing
Importing 101

Deciding What to Sell

Selecting Suppliers

Paying Suppliers

Arranging Freight

Clearing Customs

10

Fulfilling Orders

11

Common Costs of Importing

12

Importing Checklist

14

Supplement: Tradeshows

16

Importing 101
How to Import Products from Another Country
Importing products from overseas remains a mysterious way to make a living. Most people have gotten the
urge to bring home some awesome international product they discovered while traveling or surfing the web.
Yet navigating the payments, logistics and customs clearance processes seems so complicated that most
dont dare try.
Our mission at Flexport is to use the web to make the import-export process easier than ever before. As the
first licensed customs brokerage built around a modern web application, we save importers time and money
on every shipment, while helping them avoid some of the major annoyances and pitfalls of doing
business globally.
Weve created this brief guide to the importing process to shed some light on the importing process for
businesses and individuals whove considered getting into the game but dont know quite where to begin.
Although weve created this content for novice importers, our team brings over 50 years of experience in the
import-export and logistics industries, and weve done our best to provide tips that even the most seasoned
global trade veterans will find useful.
For too many people, importing is a black box. Those on the inside, especially in the freight and logistics
industry, jealously guard their secrets from new importers. The entire industry seems to pride itself on its
ability to price discriminate, gouging at the little guys while reserving their best deals and service for the big
companies that know the game.
Our mission at Flexport is to empower importers of all sizes with the knowledge and tools to compete in
the global market. We want to help make a world where any two humans can trade with each other without
regard for geographic, cultural, regulatory, or logistical boundaries.

Introduction to Importing

Importing 101
How to Import Products from Another Country (continued)
We cant promise youll make money. We cant teach you how to find great products from other countries
that will sell well in your home market. But we can shed light onto a process that is far too confusing, and
help you avoid pitfalls and setbacks that can be painful--even catastrophic--when youre first setting out.
In our view, the process of importing goods is actually quite simple. The money is made in selecting the
right goods, at a price that leaves sufficient room to cover all your costs and then some, while building up
the distribution channels you need to move the product in sufficient volume. Thats just basic business, and
theres nothing easy about it. But the actual importing part? Thats pretty easy.
If you still have questions, let us know, we can help.

Introduction to Importing

Deciding What to Sell

The first step in the importing process - deciding what to sell - is the hardest for us to help you with. If youre
not sure what to import, but just like the idea of getting into the import-export game thinking youll make a
lot of money, youre probably not ready to get started.
Many of our clients have been importing products for years and turned to us to streamline their supply chain
operations and save them money on customs and freight. Others are new to importing but have been selling
products from drop shippers or wholesalers for years, either online or in retail channels. Some of our favorite
clients have deep domain expertise in an industry and have designed a new product that they want help
importing from production facilities overseas.
We always advise clients to avoid taking on financial risk wherever possible. Start with small, low cost
experiments. Avoid capital investments. Accept the lower margins that come with tiny operations as the
cost of minimizing downside risk. And know that you can and will increase your margins as you scale the
operations.
There are indeed big opportunities in the importing business if you can find the right products to meet an
unfulfilled or unacknowledged need in your home market. Here are some ideas to help you identify the right
product:

Dive deeper in a few product categories that are close to your heart, preferably where you have true
domain expertise.

If you dont have any domain expertise in any product category, you may want to focus on learning
about an industry before you try your hand at importing. Relentlessly interviewing industry thought
leaders could be a good shortcut to learning that which might normally have come through a job in
the industry.

Introduction to Importing

Deciding What to Sell

Ask your friends from other countries which products they miss the most from back home. See if they
know anyone who wants to help you bring it in.

Take a few long trips overseas to attend trade shows and visit suppliers in the quest for cool products we
dont have in the U.S. yet.

Search the web endlessly looking for suppliers. Alibaba, GlobalSources and ImportGenius are great
places to start.

Reach out to drop-shippers liked Doba.com to find out what products are selling the best. Find out what
it takes to get listed on their platforms.

Always check prices for similar products on Amazon, eBay and Google (both the paid ads and organic
listings).

Research the cost per click on Google AdWords for keywords related to your product. High prices indicate
lots of competition.

TIP Build a simple e-commerce web site and get some sales before you outlay major money on inventory. Use
products drop-shipped from other importers and sell them break-even if you have to. Youll want the experience
of successfully selling and delivering a product to a customer. If you cant get a simple site built and driving sales,
youre going to struggle to move a ton of inventory that you purchase from overseas.

Introduction to Importing

Selecting Suppliers
Whether youre buying off the shelf or commissioning custom-made products, selecting the right supplier
is one of the two most important functions of an importing business (the other being sales, of course). The
Internet is naturally the place to start (and here you are, good job). Here are some ideas to get you started:

View profiles of every company offering the products you want on Alibaba, Global Sources, Made-InChina, HKTDC, Good Factories, IndiaMart and others.

Visit trade shows in the U.S., Europe and China looking for great products. EventsEye.com and
TSNN.com have the most comprehensive trade show listings.

Follow up with the companies you like the best to arrange factory visits and begin discussions on pricing
and other terms.

Ask for advice and connections from the Embassy and Consul Generals of the country you want to
import from. This will be a fun experience in and of itself.

Sign up for ImportGenius.com to identify suppliers of the brands you admire most.

Order samples from as many companies as you can and see if you can sell them through the Web.

TIP If you get a chance to visit a factory, always visit the bathroom used by the line workers. If they arent
bothering to create a quality work environment for their employees, you have no reason to think theyre going to
treat you much better.

Introduction to Importing

Paying Suppliers
Paying new suppliers is the scariest part of global trade. How do you know if you can trust these guys? There
are a few ways to mitigate risk in buying from companies overseas.

Use a letter of credit from a US Bank. Your funds are held in escrow until the supplier fulfills their end
of the bargain. A local bank will lend money to the supplier against letters of credit from US banks, so
almost all suppliers will accept it.

Switch to paying a 30% deposit only when you really trust your supplier not to run off with the money
(e.g., after youve done a couple deals with them or once youve met them in person)

Credit Card Payments: Due to the high fees involved, credit card payments are rarely used in global trade.

Wire transfers are by far the most popular way for importers to pay their overseas suppliers. But dont
be fooled into thinking the $35 bank fee is their only cost. Youre also going to pay several percent on
currency exchange fees. As your business grows itll be worth doing some research into transfer methods
with lower fees.

Among alternative international payment methods, Xoom.com stands out as particularly convenient,
though they likely wont save you money. The ability to manage the process via the web instead of waiting
in line at the bank is probably worth any extra currency transfer fees they tack onto your payment.

Bitcoin payments are an area were particularly excited about. As bitcoin exchanges emerge in more
countries, a global system of convertibility may emerge that allows you to transfer between any two
currencies by making a (very brief) hop into bitcoin. Assuming the fee of going in and out of bitcoin is
lower than between the two currencies directly, this could be a big win for importers and exporters. For
payments to Europe at least, this appears to be the case already. Were watching this space carefully to
see if companies like Buttercoin and CoinBase can help fulfill the cryptocurrencys promise.Take a few
long trips overseas to attend trade shows and visit suppliers in the quest for cool products we dont have
in the U.S. yet.

TIP Track the currency exchange rates youre getting from your payments processor and along with the going
rate shown by Googles currency converter. When your operations have grown enough to justify finding a provider
with better currency conversion rates, youll have a clear picture of the benchmark you need to beat.

Introduction to Importing

Arranging Freight
In the era of Expedia and Kayak, its surprising just how difficult it can be to arrange freight services for
your import-export operations. While big companies have the option to book directly with the major ocean
carriers, smaller businesses are forced to book through opaque layers of middlemen. Freight forwarders are
notorious for price discrimination, offering far better rates to clients with bigger shipping volumes. Youll be
well served to shop around frequently to negotiate better freight rates.

Bigger companies get better rates on freight. Take steps to professionalize your companys web
presence before you enter discussions with freight forwarders. Check out the Flexport guide to making
your importing business seem much bigger than it is for ideas on how to do this.

Your supplier can often arrange freight for you. Know that they are likely sharing in the profits from that
booking. Even so, the price may be competitive with anything you can book yourself, so if they make it
easy, go for it.

You can use different freight providers for the air or ocean portion and the land portion of the voyage.
While combining services from different companies can add to the hassles, the savings may be
significant enough to justify the inconvenience.

Flexport works with any freight provider. In fact, we specialize in helping you combine services from
different providers to save money. We collect all the documents you need directly from your supplier and
freight providers, with a dedicated Global Trade Advisor serving as the air-traffic controller to ensure all
your imported shipments arrive without delay.

TIP Coming soon youll be able to get the worlds best freight rates on Flexports freight search. Were
negotiating on behalf of our growing client base to get you the best deals on ocean freight, air freight, trucking,
warehousing and other services.

Introduction to Importing

Clearing Customs
Clearing a shipment through U.S. Customs has historically been one of the more complicated and annoying
parts of the importing process. Depending on what product you are importing and from which country, there
are 120 different forms that may need to be filed involving 10 different government agencies. And the bad
news is that the legal responsibility for understanding these regulations lies with the importer. The customs
brokerage profession exists to help importers ensure compliance with all the various laws and regulations,
while ensuring their goods arrive smoothly at their destination.

Flexport is the first customs brokerage built around a modern web application. Our online dashboard
makes it simpler and cheaper for businesses to import products from overseas, get them cleared
through US Customs, and delivered to their destination.

We show you exactly which documents and information you need to clear customs, then help get that
information from your suppliers and freight providers.

Your dedicated Global Trade Advisor supervises the entire process, providing immediate answers to your
questions, and making sure your goods arrive without delay.

We are almost the most affordable, transparent, and easy-to-use customs brokerage in the industry.

TIP Join today to see why Flexport is the fastest growing customs brokerage in the country.

Introduction to Importing

10

Fulfilling Orders
Youve found a great supplier, imported your products, and cleared them through Customs. Where will you
store the goods though? And how will you ship them out when you get an order? If youre just starting out,
and for a considerable time thereafter, youll be much better off working with a third party logistics provider
to provide these functions. Until you have considerable scale, the overhead of renting your own storage
space and shipping out each order as its received is just too high. Thankfully there are affordable warehouses all over the country that provide this service, charging you a flat storage fee per item per month, along
with in-out charges for any items coming and going. These services are crucial to helping you run the low
cost experiments required to launch a new importing venture.

You can find third party warehouses on Google Maps but keep in mind that you dont need this
warehouse to be anywhere near your operations. In fact, you may be best off finding a warehouse near
the port where you import, even if thats far from where you live.

More importers are moving their goods away from Californias warehouses because of an annual inventory tax imposed by the state. Nevada and Arizona, with their low land and labor costs are increasingly
attractive locations for fulfillment centers.

Many warehouses offer web-based inventory management and fulfillment solutions that can save you
time when you need to fulfill an order. Though quite expensive relative to its competitors, Fulfillrite and
Shipwire in particular have really set themselves apart from others through their innovative use of the
web. The extra price may be justified from the time savings from directly integrating with your
e-commerce store, so orders get shipped out from the warehouse automatically.

TIP Flexport can work with any warehouse you want, managing the entire process to ensure your goods arrive
at the facility without delay. Youll never lift a finger.

Introduction to Importing

11

Common Costs of Importing

1

The Product (Varies)

a. Paying for the product should represent the majority of the importing cost.

Fumigation Certificate (Varies)

a. Customs requires fumigation against insects if your product is made of wood or contains wood
packaging.

Quality Inspection ($300/day per man-day)

a. Problems are much cheaper to fix before the goods have departed from your suppliers facility, so
quality inspections often pay for themselves.

Freight Services (Varies)

a. Freight prices vary dramatically based on the size of your shipment, the mode of transport, the delivery
terms, and the origin and destination.
b. Take great care to understand exactly what you are paying for whenever you book international freight.

i.

Is the shipment going by air or ocean?

ii.

Does the freight include pickup from the factory and delivery to the door?

iii.

Are arrival agent and warehouse fees included at destination?

iv.

Is there any on-time delivery guarantee?

Cargo Insurance (Varies)

a. Purchase cargo insurance to protect against damages or theft in transit. Your freight carrier is probably
not going to reimburse you for these problems, but your insurance provider will.
b. Flexport provides cargo insurance for just 0.30% of merchandise value for shipments to and from
Europe and Asia and just 0.50% for most other regions.

U.S. Customs Bond & Customs Clearance (Competitive plans available)

a. Flexports customs clearance includes ISF and Customs Entry.
b. Continuous entry bond ($299) with customs clearance fee of $99 per shipment.

Introduction to Importing

12

Common Costs of Importing

c. Single entry bond with customs clearance ($300).
d. If your ISF is not filed on time, you risk a penalty from $5,000 to $10,000.
7

Arrival Agent Fee ($300 - $500 average range)

a. The arrival agent is the U.S. partner for your freight service provider.
b. If the arrival agent fees were not included in your shipping arrangements, youll need to pay the arrival
agent for arranging the U.S. side logistics.

U.S. Customs Exams

a. U.S. Customs may examine your goods at their discretion.

i.

Non-intrusive exams (or x-ray exams) cost ~$125.

ii.

Intrusive exams cost from $225 to $1,000+ depending on the quantity and volume of your goods.

Warehouse Fee ($50 - $150 average range)

a. If the warehouse fees were not included in your shipping arrangements, youll need to pay the
warehouse for holding your goods before pick-up.
b. Demurrage or late storage fees ($30 - $500 per day).

10 Drayage & Trucking Fee (Varies)

a. Be sure to schedule a drayage or trucking service to pick up your goods from the warehouse if you
are not picking up the goods yourself. Get this organized well in advance of your shipments arrival to
avoid costly delays.
11 U.S. Customs Duties and Fees (Varies)
a. The Customs duties owed on a shipment will depend on the HS Code(s) of your products.
Any content above that involves fees, prices, tariffs, valuation, or technical advice is being tendered to you based on the
information provided to us in our discussion or in your correspondence. The advice must be interpreted as an opinion and is
not binding in any way. Should you wish to secure a binding ruling, please advise of your request in writing so that we may
pursue securing concurrence of the position with Customs and Border Protection.

Introduction to Importing

13

Importing Checklist
1

Sign-up with Flexport & verify your account

a. Drivers License
b. Social Security Card or IRS Notice
c. Signed Customs Power of Attorney
d. Payment Method

Find your supplier or manufacturer

Buy your products or materials

a. Get peace of mind - Protect your investment - Insure your cargo

Set up freight shipping services

a. Email freight@flexport.com if you need assistance

Collect key documents before your shipment departs

a. Commercial Invoice
b. Bill of Lading or Airway Bill
c. Importer Security Filing worksheet (Ocean shipments only)

Flexport files your ISF with US Customs

Collect your Arrival Notice from your freight provider

Flexport files your Customs Entry with US Customs and checks if your goods arrived and have any
pending examinations
a. Pay any outstanding US Customs examinations fees to get customs release.
b. If your goods are held for customs exam it can add 3-20 days delay to your shipment. Be prepared
for this, it is not common but it does happen.

Introduction to Importing

14

Importing Checklist
9

Flexport coordinates with your Arrival Agent and Warehouse

a. Pay Arrival Agent to get freight release.
b. Pay Warehouse to get warehouse release.

10 Flexport helps coordinate pickup or delivery to final destination

a. Schedule shipment pickup.
b. If you need assistance setting up trucking email freight@flexport.com.
i.

Do you have a shipping dock?

ii.

Do you need a liftgate to get the shipment on the ground?

iii.

Do you need the driver to bring a pallet jack?

iv.

Do you require inside delivery?

v.

Are you located in a shopping mall?

Introduction to Importing

15

Supplement: Tradeshows
Below is a small list of the many trade shows or aggregators importers can attend to find quality
manufacturers and suppliers:

ASDLV

Canton Fair

China Exhibition

Consumer Electronics Show (CES)

Global Sources Tradeshow Center

Expo World

PPAI Expo

Trade Show News Network (TSNN)

If you are planning to bring in goods to a US Tradeshow please check out CBP Dos and Donts.

Introduction to Importing

16

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