February 13, 2015 by Andrew Minalto - 4 Comments

Your eBay & eCommerce Questions Answered #19

questions-answers-19Hello & Welcome to yet another weekly Questions & Answers session!

If this is the first Q&A post you’re reading, this is how it works – you (my blog readers) can send in questions related to eBay, importing, or any other general online selling topic using this contact form and each week I pick the best questions and answer them publicly on this post. Rest assured, even if I don’t publish it here, I do personally answer every question via email.

So if you have a question or two you want me to answer for you, click here to submit a support ticket and I’ll do my best to get back to you within 24 hours, Mon-Fri.

Today’s questions are:

  • What happens when a Chinese supplier under-declares the value of goods?
  • How to re-brand products to increase their value?
  • Can I sell copies of “patent pending” products?
  • Best way to sell mobile phone cases on eBay?
  • Where to host your website for maximum speed and reliability?
  • Why are shipping costs from China that high?
  • Are import duty and declaration fee two separate fees?
  • Can I use Western Union to pay a 9 year Gold Supplier on Alibaba?

Let’s get started!

Hey Andrew,

I read your blog post on importing from China and was wondering if I could ask a couple of questions?

I recently made a couple of orders from china after having a successful run with products, totalling £750.

I have been shipping with EMS even though there is a 2-4 week delivery time as it’s cheapest by far and via courier the profit margins are nowhere near as good.

One thing I came across is that though the supplier asked me for the value to declare and I said just put the total of all items, once in my trial run it was put as much lower.

Do you know what happens if your Chinese supplier under-declares the value of the goods being sent? And also I was wondering if it would actually be cheaper for my supplier to send 12 units individually rather than as a lot? As each one is under $20 they do not receive import VAT. I’m guessing import VAT is payable on the whole package rather than each unit inside?

Is this illegal, importing separate packages?

I’m in a learning process at the moment and want to ensure I do it correctly and your blog was very helpful.

Thanks,
Matt

Hi Matt,

Yes, absolutely – import duty and VAT are payable on the total order/shipment value; it really doesn’t matter how many boxes are used or how many items are in each box. If it comes in one shipment, value is calculated on the whole order.

If your supplier undervalues goods, there are two scenarios that can happen:

1) Customs stop the shipment because they think the declared value is too low. Then they contact you and ask for proof, such as invoice and payment receipt, to verify the actual order value. This is a very common procedure and doesn’t involve any fines against you.

2) The shipment goes through customs without you paying any taxes. In this case you, as a business owner, need to contact customs and basically tell them that the package was marked with the wrong value and ask them for instructions on how to declare it properly and pay the taxes due. If you don’t do this, basically you can’t get your books right as there won’t be import duty/VAT paid on these goods. Also, it’s of course illegal to under-declare such imports on purpose.

Hope this helps!

Hey Andrew,

How are you? I wanted to know the steps I need to follow to rebrand (customize, repackage with a new logo etc.) products from China. I want to offer unique, high quality products for a premium price but I don’t know how to go about it. Could you help me? I am a newbie and I need someone with expertise and experience, such as yourself, to guide me along the way to success. Thanks a lot; I look forward to hearing from you.

Thanks,
Jason

Hi Jason,

Branding and re-branding is one of my favourite topics! 🙂 I’m a huge fan of creating my own brands and selling goods for higher prices as a result of a proper branding strategy.

The principles of it are very simple actually:

1) You create your brand (logo, packaging design)

2) Contact manufacturers in China who offer the products you’re interested and ask them for OEM options. OEM simply means that they put your logo on the products and do custom packaging if needed.

Most genuine manufacturers in China (and not only in China) will happily do OEM orders as long as you meet their minimum order requirements for OEM. This number will depend on the supplier, goods involved etc., but usually, for cheaper items, it’s around 1000 units.

If you want to learn about how this process works in detail, check out my Ultimate Branding guide for eBay sellers.

Hi Andrew,

I have read your informative blog along with some others as I am hoping to start a buying and selling business using Alibaba as a resource.

I just have a question in regards to what products can actually be sold.

I’ve found a product which is a gadget that is basically a beauty quick fix – small, light, can be taken out with you in your bag and can enhance a part of your face for a short period of time and can be used continually. I really like the product and it isn’t largely known in this country at the moment.

The product is patent pending although essentially it is a piece of rubber material with their logo.

There is a picture of the product on Alibaba so I contacted the seller about it. I had a message back, saying they would be interested in designing a new, similar product and asked for a sample (they are a rubber moulding company).

Therefore am I able to do this with a factory? Or do I have to purchase the exact product directly from the company?

To make a comparison – I am also interested in another product, waist trainers, and from my understanding, in relation to this item, I believe it would be fine to contact a lingerie company in China and come to an agreement to make these. Therefore isn’t this essentially the same for all products?

Another example to compare, eye lash curlers – a gadget to enhance your face – this must have been invented by an individual but obviously there are numerous different makes/types of eyelash curlers etc. and this isn’t a problem.

I would really appreciate your thoughts.

I look forward to hearing from you.

Kind Regards,
Anna

Hi Anna,

Patent pending (if used legally) means that someone has filed a patent application for that product and their application has been accepted. But the patent hasn’t yet been issued which means that in this period, between the application submission and patent approval, you can actually buy and manufacture such products with no consequences.

Without knowing the product itself, it’s hard to say what kind of patent has been submitted – it could be the product’s functionality, materials used, shape or anything else. You’ll only find this out when (IF) the real patent is issued, which usually takes 2-4 years from application.

Though usually if the patent application is accepted, it means that patent will be granted. So while you can sell these products for now, you have to be prepared that when the patent is officially issued, you’ll either:

1) Need to stop selling that product completely if you can’t come up with an agreement with the patent holder

2) Pay royalty fees to the patent holder, for the right to use it for your own product.

3) Buy the product through the patent holder (and pay a premium price for it).

In any case, if the patent is issued, you won’t be able to simply buy these products from China and re-sell them on your own, without paying something to the patent holder, as that would be illegal.

Hi Andrew,

I have been meaning to do this for long time but after reading your blog I finally managed to put things in place and get started. I contacted the supplier, placed an order and am now waiting for it to arrive. I have decided to sell mobile phone cases.

However sometimes I feel a bit negative about it as if I look on eBay there are more than 100,000 listings for phone cases. I knew there would be competition but mobile cases seemed to be the top-selling items when I did my research on Terapeak.

Can you please advise me on what to do? One thing I have planned is to be the cheapest UK seller, but still don’t know how to stand out other than that? And the same issue applies to Amazon as well.

Are there any tips you can share?

Thanks,
Ash

Hi Ash,

Ah, mobile phone cases…. the best product to sell on eBay, right? 🙂

Demand is obviously huge for these but the competition is beyond extreme. If you’re not a TRS, you’ll find it very, very hard to make any sales AT ALL. You can of course use £0.99 auctions in the hope of making some sales, but it certainly won’t be a steady stream, unless you have hundreds of various designs and types which you can run numerous auctions for at once. And even then, you won’t be making any money from these sales.

If you are a TRS, you have to use GTC listings and simply start with the lowest price possible, get the first 100 or so sales in and then start thinking about increasing the price slowly.

Your listings should be perfect of course and product pictures amazing to make this work in the first place. If you take a look at first page search results on eBay for mobile phone cases, you’ll see what kind of quality I’m talking about. The best sellers create 3D images of the cases, making them look even better than they look in real life. Plus of course they have huge inventory and sell those cases for very, very small profits.

Anyway, Good Luck with this Ash and let me know how you get on!

Hi,

I sell on eBay Australia and have been told to choose a host based there for speed, what do you advise?

Regards
Jason

Hi Jason,

If you’re based in Australia, then yes – use a locally based company or at least a company who has Australia based servers as that will give you the best website speed and response times.

These days many hosting companies have regional data centres so it doesn’t have to be an Australian company, just one with a server in Australia. I’m pointing this out only because I imagine that Australian hosts would be more expensive that say American companies.

Hi Andrew,

I saw your blog and it was really interesting. I live and work in Shanghai as a Psychology teacher but I have recently started importing to the UK. Just small novelty items through China post.

I now want to step up my game and ship around 30-50 boxes of around 15KG each. The products are just luggage tags, tooth brush holders and small, fun items for kids. I have a supplier with a low cost price and have spoken to a couple of companies, inc. shippo.co.uk who can pick it up in SH and deliver it in the UK for around 350-400GBP. This does not include the duties or tax.

This seems a little high to me when I was quoted only 1,500GBP for an entire container?! Does this sound about right to you? Will shipping companies negotiate?

Finally do you know the duty or tax prices for importing these items? Is it as high as 20% of the sale price or just the cost price I pay in China?

I’m new to this but about to invest around 5,000GBP as a first shipment. Time is fine and I am happy to wait for the sea freight to arrive.

Thanks in advance for your time,
Scott

Hi Scott,

£350-£400 is totally ok for a 500kg shipment that probably takes 2-3 pallets. That is via sea freight of course. Yes half container loads and full container loads cost much less per pallet, that’s just how it works in this business as freight companies also need to make money and they do that by combining these smaller orders into full container loads and then distributing the cost accordingly.

You can of course try negotiating this price but I doubt they will go down on it. If they’re very small goods that fit in just one pallet, then you should look for alternative companies as that’s about double the norm, but as I said, it really depends on the size and how many pallets they take up.

As for taxes – you’ll pay 20% VAT on the total value of your order. This means product COST price of course, not re-sale value. Import duty various from product to product but is usually around the 3-5% mark, with some exceptions where it goes up to 10% and more. You can get the exact duty rate for each product you import using dutycalculator.com

Hope this helps Scott & Good Luck!

Hi Andrew,

I have a few questions regarding importing from abroad:

1-When importing an item with a declaration value lower than its actual cost, are there any inspectors to check this or do they just work out the taxes based on the info provided?

2-Also, are import duty and declaration cost 2 separate fees?

3-Do you know whether there are any regulations and restrictions on importing sex tools/toys (e.g. sprays, vibrators etc.) and what is the average import rate, if you know?

Best Regards,
Mark

Hi Mark,

I will answer your questions one by one:

1) They do both. In most cases they just follow invoices/customs declaration form BUT in many cases they do check the package’s content, especially when it looks suspicious. What do I mean by suspicious? Well, for example a 30kg box with a declared value of $20. That instantly raises a red flag as they’re not fools – they know that a 30kg package is most likely worth many times more than $20. So they open the package to check its contents and if indeed it looks wrongly declared, they will contact you for proof of the real order value (invoice, receipt etc.) and other information (supplier details, website the products where purchased from…).

2) Yes, these are two separate fees. Import duty is a percentage charged on the value of the goods. For example if import duty for your product is 5% and your order is worth £1000, you will pay £50 import duty.

Declaration cost is usually a fixed fee that you pay to the courier company, post office or freight company for making the declaration and processing your order through customs. This usually costs £10-£30 depending on where you get it done, how big the order is etc.

3) No, as far as I know there are no restrictions on importing sex toys. Import duty for sex toys in the UK is 4.7%, according to DutyCalculator.com

Hi Andrew,

I’m intending to place a sample order before making my original order, from a 9 year old gold supplier on Alibaba.

It seems to be a legitimate company, and has almost all the criteria mentioned in your course, but they only accept TT & Western Union.

Do you think this company is reliable enough to transfer money to via these unsecured methods?

Best Regards,
Mark

Hi Mark,

Thanks for your email.

If it’s a 9 year Alibaba Gold supplier, chances of them being a scam are very small. And it’s not unusual for Chinese suppliers to only take bank transfer and WU, it’s actually quite common. The most important thing is to send money to the company’s bank account, not a personal one or via Western Union.

But did you ask the supplier about the payment methods they accept or just pulled this from their Alibaba profile/listing? As sometimes when you contact a supplier you can actually negotiate Escrow payment or even PayPal. Some suppliers may ask a small fee for these, but it’s still worth it for the protection you get in return.

Also, you want to double check that you’re actually in contact with the real company and not just some fake sales rep using their hacked email or whatever. This usually comes up though on the proforma invoice where it would show personal bank account details or WU only.

What I would suggest you to do is order samples first and see how it goes. And then, if all looks ok, you can do a 3rd party inspection for added peace of mind:

http://inspection.alibaba.com

If that goes smoothly, you can place the real order, making sure that you send money to the same (company) bank account, and not a personal one.

Hi Andrew,

For the last month I have been researching and looking for ways to start out on my own with a business. I came across your blog a few weeks ago and have been absorbing as much info as I can and putting things into practice. I must admit that at first when I saw you were selling information products, I thought that there would probably be little value in the free advice on the site, but I was very wrong.

Thanks for all the time and effort you have put in to share your experiences with us rookies. If anything I am considering buying your products just to thank you for all the free advice (once I am financially able I will).

Anyway, thanks again mate and keep up the great work you’re doing.

Dan

Thanks very much for your kind words Dan, it really means a lot to me! Most people don’t even realise just how many hours I put into this blog, creating new content and answering dozens of emails and comments every day. So thank you sincerely for taking the time to send this to me, as it really made my day! 🙂

***

Ok, that’s it for today! This was Questions & Answers number 19! Yes, that means next week we have another small anniversary with the 20th edition of this blog post series! Keep me busy and send those questions in using the contact form on this page!

Have a great weekend everyone!

Thanks,
Andrew

4 Comments
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  1. Hi Andrew,

    I have been trading online for 7 years now and am making the jump to a bigger warehouse, would it be better to buy or rent in your point of view?

    Thanks
    Paul

    1. Andrew Minalto

      Hi Paul,

      Thanks for your comment.

      It really depends on several factors, like:

      * What’s the rent VS buy out price? If say you can rent same place for 20 years and only then would payout full value, I would personally go with renting. ON the other hand, if rent is high and say you can BUY same place with 5 year rent cost, I would buy instead.

      * The size – does it have room for expansion when your business grows in future? Wouldn’t be wise to purchase a warehouse that will be too small for you after few years time.

      * Your cash flow/bank balance. Can you freely buy the unit without affecting your cash flow? Or it would be better to invest that money in expanding business?

      Obviously, if you can get a loan for it and pay roughly same amount each month you would pay in rent anyway, it’s a different story.

      But all in all, I would recommend just renting, unless you get an offer for unbelievable, good deal on the buy out.

      Thanks,
      Andrew

  2. Hi Andrew,
    Recently we purchased some fishing reels from Gallo ventures on Alibaba.We were quoted
    $600 USD to supply and ship to Australia.After we paid this amount they asked for a further $320USD for insurance so they can be released from customs,is this correct ?

    1. Andrew Minalto

      Hi John,

      You have been scammed John – you won’t see any goods or your money ever again. Check out this post for more details on this type of scam:

      https://andrewminalto.com/top-10-alibaba-scams/

      Thanks,
      Andrew

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