5 Ways To Save Money Importing
Many businesses have been forced into looking at importing as a means of survival. Individuals who sell merchandise via online auctions, mail-order or in brick and mortar stores have found importing directly can help them keep their prices low and also improve their profit margins.
Some of the primary savings that can be derived from importing are:
- Savings from cutting out the middle levels of logistics - instead of buying from a wholesaler who may have purchased from an importer, you are saving by eliminating those additional levels of cost.
- Foreign exchange rate savings - when the Euro was at it's highest value ratio to the US Dollar a few years ago, may European used car dealers and individuals found USA automobiles cost much less to purchase and ship to European countries, in some instances the savings were $10K or more per vehicle.
- Eliminating various levels of shipping costs - this ties in with the number one reason because each time an item is shipped to a different location or level of distribution, it adds shipping costs to that item's cost and reduces the available profit margin - by importing and having the goods shipped direct to your storage facility, you save those costs.
- Lower labor costs - importers are often faced with a tough choice, stay with their domestically produced product and conceivably price them out of business or take advantage of the much lower labor costs offered in a foreign country.
- Overall cheaper production costs - many foreign production facilities are not subject to the higher taxes and regulations that domestic producers are often saddled with - in the area of regulations, importers must weigh the cost savings against potential safety and quality issues that can quickly devalue any savings this aspect may provide.
Having multiple manufacturers competing for your business means you have the opportunity of negotiating the BEST price and fastest delivery.
Savings by importing a finished product is often an issue of survivability.
A few years ago, the CEO of a Midwest manufacturing company called to inquire about moving the manufacturing of their products to China. This was a family owned business that literally abhorred the thought of having to make this move but they basically had no choice if they were going to stay in business.
(For confidentiality reasons, the type of commonly used consumer products they manufactured will not be mentioned) The CEO told me that their competition had moved all of their production to China and were bringing the “finished products” back into the USA for a price that it was costing his company just to purchase the raw materials necessary to “begin” production.
Overall, importing can provide substantial savings but one should never be blinded by the potential for increased profit margins by sacrificing safety or quality. Due diligence is important in all buying decisions and is extremely important in making the decision to import.