Your eBay & eCommerce Questions Answered #36

Welcome to our 36th Questions & Answers – a weekly blog post where I personally answer questions sent in by my blog readers!

Summer is nearly behind us now as we head into September and everyone gets back to full work. Quarter 4 is the most important of the year for most companies so it’s time to really ramp up your business so you can hit Christmas with a bang. Jeez Andrew, thinking about Christmas already!? I know, I know – I plan things too far in advance! 🙂

Today we’ll be covering the following questions:

• Do you need a registered company to import from China?
• Why does my eBay account have selling limits?
• Why do my competitors’ listings get ranked higher on eBay’s search?
• At what stage are VAT & import duty payable on imported goods?
• What to do with under-valued imports from China?
• Is it worth starting a new online clothing shop?
• How to compete with people who copy what I do?

Let’s get started!

Hi Andrew,

I read your recent article and found it very informative and I was hoping you could help me with a quick question – I’ve been in touch with a supplier and they’ve asked for my company name.

Do I need to have a registered company to import from China?

Many Thanks!
James

Hi James,

No, you don’t have to have a registered company to import products from China, not at all.

The reason why they asked for your company name could just be that they want to know you’re seriously interested in doing business as Chinese suppliers have to deal with many time wasters on a daily basis who ask for prices, samples, and other info but never make an actual order.

So occasionally a supplier will ask some questions about you and your business so that they better understand your intent.

Also, some Chinese companies will have exclusive distributors in the UK, USA and other countries – in which case they won’t sell to you directly but will ask you to go to the distributor instead.

It doesn’t happen often though – in most cases Chinese suppliers don’t really care who buys their products and as long as you can meet their MOQs, they’re fine doing business with you. It’s definitely much easier than when dealing with UK/USA wholesalers who often don’t want to work with small time traders at all.

Hi Andrew,

I opened a seller account on eBay 4-5 months ago and was initially given a limit of 10 listings. After a lot of hard work I now have a limit of 500.

However my business partner opened an eBay account a month ago and got a limit of 500 listings right away! Why is it that he got 500 listings as soon as he opened an account but I had to wait months for it?

My second question is about search results, as when searching for the items we sell, his listing is the first result on the first page!? I really don’t understand how this is happening… he only opened his account a few weeks ago and it has 0 feedback yet he comes up on the first page.

To me this is really mind boggling and I have no idea how or why it’s happening – any chance you could shed some light on this?

Thanks,
Sonu

Hi Sonu,

Yes, I have also noticed that eBay gives different account limits to some people. Why? I don’t know to be honest…

It’s probably some kind of algorithm that evaluates the risk of a new account?

Maybe they take into account PayPal account data (how old it is, what’s the history etc.) or they’re simply testing various limit levels to see what works and what doesn’t. So I’m afraid I can’t say for sure why they do this.

As for listing rankings – this one is also hard to answer because it depends on so many factors like:

• The specific tem for sale (the amount of competition for it);
• Listing format (auction or fixed price – often auctions will be higher by default);
• Listing title, description (keyword placements);
• Sales history, conversion rate.

And then there could be the LUCK factor or simply a pure glitch in eBay’s search algorithm. So there’s no easy way to tell why some listings from a new account rank higher in search than yours.

On the whole eBay’s search is a mystery and only they know how it works. But I wouldn’t read too much into individual results as sometimes it’s simply a glitch or something behaving strangely and you get unexpected listings at the top of search results.

Hi Andrew,

Thanks a lot for the information about importing and selling on eBay.

But I am a little bit confused, do I need to have a registered business to import goods in bulk from China or any other country?? Do I pay VAT and tax before ordering the goods or when I receive the goods?

Your help will be much appreciated.

Thank you
Bishal

Hi Bishal,

No, you don’t have to be a registered business to import goods from China or any other country for that matter. Unless you deal with specific kinds of products that require special licensing or permits. Most everyday products won’t fall into this category though.

You pay VAT and import duty only when your goods arrive in the UK, not before. If you ship goods via a courier company for example, they will take care of the customs clearance procedure and simply send you an invoice for the taxes you need to pay. But that only happens when the goods physically arrive in the UK.

Hi Andrew,

Hope you are well. I think this may be a good question for the blog.

I have ordered $1200 worth of goods from China, including delivery. I was very clear with the supplier to put the correct value on the documents but have just received a bill for £17 from DHL, not the approximately £200 I was expecting.

For a rough calculation I divide the $s by 1.5 (today’s rate is 1.55 but this way I usually end up slightly better off) and then times by 1.25 to give me 20% VAT and around 5% for import duty. Sometimes the items I buy are slightly more or less so it balances out. As long as I make my margin overall this is a quick way to calculate.

My question is how do I make this good with the tax man? Should I contact DHL and ask them to adjust or should I be paying it directly to HMRC either now or at the end of the year?

Thanks for your help as always.

Kind regards,
Seb

Hi Seb,

Yes, indeed – this is one of the most common practices by Chinese suppliers – to undervalue shipments.

As far as I know what value they put on the export documentation does actually affect them somehow (in regards to tax I presume?) and that’s probably the reason why they keep doing this.

I always remind them to put the correct value on custom’s forms (just like you did) but even then, from time to time they still under-value shipments.

As I understand, you haven’t received the package yet, right? If so, simply contact DHL and say that there’s a mistake in the customs declaration and that you want to correct it. Then you usually just email the correct invoice to them, along with proof of payment, so they can re-calculate the taxes and make it right.

If you have already received the goods, you will want to contact HMRC directly. They have a special form you need to fill out in situations like this in order to get it sorted. Hope this helps Seb!

Dear Andrew.

I am currently looking into setting up an online clothing store. I am 20 years old and studied fashion at college and having a clothing shop is something I have always dreamt of, and I have come to the reality that if I really want it to happen, I need to start now. I plan to start with a website and after 3-5 years, once I have a name for myself, I aim to open a store.

For the past few weeks I have been heavily looking into dropshipping. It sounded as though it could work for me as I am unable to quit my job straight away, but have family support to help me along. I also understand that using dropshipping would not be very profitable, however as my aim is to get my site known, this is not a big problem for me at this stage. However I have just read your article on dropshipping (…along with many others) and I feel as though it may not be worth the risk. My only problem now is I am in need of advice and am seeking as much as I can. I wonder if you can help me?

I am now looking to use standard wholesalers to set up my business. I have a few questions, which I hope you are able to assist me with, or refer me to the correct place to get the answers I need.

1) How much time and money does it realistically take to set up an online business?
2) Whilst starting off, I will probably not have anywhere to stock the products, except my bedroom and the spare bedroom in our house. Is this realistic?
3) Is wholesaling the best method to go with?

I look forward to hearing from you and thank you for your eye-opening article regarding dropshipping.

Kind Regards
Jade

Hi Jade,

I don’t know the full story, like how much money you have to invest into this new venture, but chances are it’s not a lot as you were considering dropshipping…

With that in mind, I would personally recommend you look for a different niche/business concept as clothing is a SUPER COMPETITIVE market!

You’ll find it very, very hard to compete with established brands – companies who have massive buying power, a massive product range, and huge marketing and customer service scale.

Apart from that, there are some further negatives to consider:

• Returns. This is a massive headache in the clothing industry and can seriously damage your margins and profitability.

• Seasonal/trendy stock. You have to buy new stock all the time to keep up with new trends.

• Dead stock. It will be very hard to manage old styles so that you sell them completely, which means you’ll constantly be left with dead stock that you can’t shift for any profit.

• Sizes/colours. You always have to take a punt on which colours, styles, and sizes will sell best. Again, this can create lots of dead stock.

Considering all of this, I really don’t think building an online shop, for a new seller like you, is the best way to go. Too much drama for such little return.

Hi Andrew,

I’ve been selling a small number of hand made products, based on popular pop culture themes, which I’ve since managed to build up number 1 best match listings for. Just recently people have begun to copy and steal my designs.

It took me a long time to get where I am for these phrases, and to be cheaply copied (and in some instances literally stolen! My design lifted from the image and placed on theirs) is quite demoralising. These people ultimately end up selling cheaper and reaping the rewards of my hard work.

I know I can’t avoid this, it’s the nature of the business, my interest is in what I can get away with inside my listing in terms of advising people not to buy imitations etc. I saw you mentioned this was okay and actually endorsed doing so, but this was a while back. My number 1 listings have massive sales history, and I don’t want to run the risk of losing it all by eBay removing the listing.

Can you offer any advice for how I can continue to compete in these situations?

Thanks Andrew, great site by the way. I’ve never seen such a wealth of information. 🙂

Joe

Hi Joe,

Well, there’s not much you can do in situations like these apart from being the BEST!!!

So that means having the best looking listings, the best/highest quality products, the best images, the best descriptions, the best customer service etc. etc. So that your offer screams QUALITY & makes it clear to all prospective buyers that you are the BEST option!

As you said, there will always be people who copy, that’s life. The key is to continue with what you’re doing and don’t become distracted by them! These types of sellers simply don’t have what it takes to compete with you and be the best as they’re stuck in the copy mindset!

So just try doing the best you can and work for your customers, not to fight your competitors.

***

And that brings us to the end of today’s Q&A!

We had a very interesting array of questions today, on a variety of topics.

For me personally August has been an incredibly busy month as some of my other businesses are growing faster than I expected (I’m not complaining mind you!). I expect to get even busier as the year continues which means it’s even more important to take some needed time out – with family and friends etc. – otherwise all the hard work just becomes too overwhelming.

So with that in mind, have a great, enjoyable weekend and I’ll see you next week!

All the best,
Andrew