Testimonials in Advertising Examples

Testimonials help you build trust. Customers who have used your product tell your new customers or visitors about the experience they have with your products and services. Customer’s testimonial is cost effective and more powerful to the audience. Today, testimonials, aren’t in just in text anymore, there can be in any variations. Video testimonial is just one of the variations. Other is audio. This kind of variations help you leverage channels like YouTube, to help you gain more customers.

Know Your Happy Customers

Make sure that you choose those happy customers to write testimonials for you. You are targeting positive testimonials in order to sell more and do that; you have filtered the ones that are not satisfied with your product and services. Most often, satisfied customers might not go out of their way to provide comments, but are often willing if asked. Don’t be afraid to ask them if you need. Collecting testimonials is time consuming but you’ll be able to help and tell the customers “the proof” of how effective your product and services is.

Use Testimonials When You’re Talking To People

Whenever you are doing business – let say networking or doing a sales pitch, include adding the list of positive testimonials of people you have in your business. This will give a plus factor and a “proof” of how well your business is doing.

Testimonial Filled With Benefits

Any positive comments would not do. You have to filter those customers’ testimonials that will provide a lot of benefit for your business. If a customer says “The product is great! I love it!” this is nice to hear but it doesn’t actually tell the visitors and new customers how they will benefit the product and services. A good example for this is “The book I bought helped me a lot. It doubles my business profit in just a month! ”

Video and Audio Testimonials

Video and Audio Testimonials provides more benefits and helps you attract more visitors and potential customers. This kind of testimonials can be uploaded into social media sites such YouTube which text based testimonials don’t.

 

 

Importance of Testimonials

Just before the internet, testimonials are already use by businesses to help them sell their products and services. When people shop whether is online or offline, there is always a measure of uncertainty when dealing with purchasing a product or services. This uncertainty fades as the shopper go through the process of researching their purchases. Shopper looks at features, quality, and pricing. A shopper also looks at the brand in doing their purchases. A company who has the best brand tends to get away all the shoppers uncertainty in purchasing.

One of the ways to help customers get rid of this uncertainty in purchasing products is through what we call “Social Proof”.  People tend to determine what is right especially when purchasing a product is by finding what other people say that is correct. Just as the saying goes,

“Don’t believe what I say, instead believe what other people say”

Why use Testimonial?

One fact is that 76% of consumers regularly or occasionally use online reviews to determine which businesses to use. About 52% said that positive online reviews make them more likely to use a local business.

Marketers often forgot one of the most important way to attract new customers to buy their products and services is through their previous customers – happy customers. Once a customer is happy with the product or service they purchase they tend to tell other people of what they have experienced. They even take time to write online reviews and testimonials for the certain product and services. Testimonials establish you as an expert; they say you deliver what you promised and that you get great results.

Testimonials Make You Famous

Know some of the Famous Companies that are using Testimonials to attract more visitors and customers.

Comcast have categorize their testimonials from Product, Customer services, Internet, Phone, TV testimonials.

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Fleet Feet Sports has reached up to 237 reviews on Yelp in the Shopping Category. And most of the reviews are positive feedbacks. And most of the raters are from reliable customers. The business specializes in properly fitting your running and walking footwear, running accessories, and athletic apparel and sports bras.

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DAMAGED GOODS

You are going to have damage in your container. What do you do? Do you just throw it away?

 

As a matter of fact, I’ve made a lot of money on damaged goods before. Sometimes I’ve made more money on damaged goods than I’ve made on “good” goods. You’d be surprised. If people get into a bidding war in an auction situation, sometimes they will pay more for stuff you don’t want than you would have ever gotten anyway.

 

A friend of mine has a site and he imports tapestries, really nice tapestries from China. He does a lot of business. People return them, or he’ll overstock in one that he thinks is going to sell and it doesn’t sell as well as the others do.

 

Sometimes you’ll liquidate just to balance inventory. We’ve had three models of something and one model will sell out in two weeks, but the other two will take forever. You’re just willing to sell them out so you can reorder. The next time you reorder you’ll know to go heavier on the model that sold the most, but you didn’t know that the first time out so you just liquidate out these others as quickly as possible to give you the capital to reorder.

 

eBay And Craigslist

What I will do is take a look at a lot of my damaged goods or overstocked goods and I’ll determine what the best strategy is to liquidate the product. Number one, I go to eBay. You’re not going to get any more out of the product that you’re liquidating then you are going to get out of it on eBay. You’re going straight to the consumer at that point. The same is true with Craigslist.

 

The friend of mine that does tapestries is fortunate because he has 1000 tapestries. When he gets returns back that are overstocks or damaged, he has one or two of this one and one or two of that one and he can have 100 auctions going on eBay for 100 different tapestries and that works for him. If you have 100 of exactly the same thing you can’t put 100 auctions up on eBay for it because you’ll destroy the market and nobody will buy it. It’s a slow going process, but if you want the most money out of your additional freight eBay does a good job.

 

Scratch-n-Dent Sales

The second thing is scratch-n-dent sales. If you have a customer base, in most cases you’re going to have a list. We did this with equipment one time. We had a list of customers and we got in a shipment of fillers that we didn’t sell a lot of. We, or the factory, had made a mistake on the order. We meant to order five of one filler and 20 of another because we already a bunch of the one we had just ordered five of, but they inverted the order and we ended up getting almost none of the ones we needed and a whole bunch of the ones we didn’t. We just went to our best customers and said, “We’re having a scratch-n-dent sale,” everything coming in gets a scratch or a dent on it somewhere, “and we have these 20 fillers, and if you want one we’ll sell it to you for half price right now.”

 

Remember, I can dock up to half price on an expensive piece of equipment and guess what I’m still making? Money. My first cost is one third of my sale price? I’m still making a 40 margin. I was able to go out and liquidate at half price all of the additional fillers that I didn’t want in one day just by going back to my core list.

 

Here’s the thing. You can’t just go in and say I’m going to give them to you at half price. There has to be a reason why. “I’m closing my warehouse.” “I’m consolidating shelving.” “They’re scratch-n-dent.” “I’m overstocked.” You have to have a reason why or you’re just discounting the product. One thing you have to be aware of when you do that: if you’re selling to customers who consistently buy from you each month, and you give them a deal to come in and buy a bunch of your overstock or a bunch of your damaged goods or a bunch of your scratch-n-dent, you’re going to take them out of the market for a while. That sucks. That’s exactly what happened here. We had a guy in South America that was buying about four fillers from us every month. He was paying us $3500-3700 a filler. We offered him these scratch-n-dent fillers for $2000. He bought them all, but then he didn’t buy anything from me for five months. You have to be sure you want to do that when you do it.

 

Overstock Companies

Another thing is to go to retailers like Big Lots and Overstock.com. Overstock.com will give you a bid on practically anything. You can send them a photo and some specs of what you have and they’ll give you a bid on it. Many times Overstock will not even move the merchandise. They’ll just pay you to pack it and ship it for them. Big Lots, if it’s a reasonable good, a consumer good, this type of company will make a bid on it. They will make you an embarrassing bid but they’ll make you a bid. Here’s the deal with them. When you’re starting to deal with guys like them and brokers, they’re like us, they’re going to look at that and say, “He made about a dollar for that. Let’s give him $.80.” They’re going to make you bleed a little bit. But I would much rather lose $.20 on the dollar and turn over my cash than let it set there and ride that train all the way into the ground. I’d rather turn it and burn it while I can.

 

Liquidation Auctions

Try local brokers and local discount people. There are a lot of them around and if you want to find them here is a really great tip: make friends with some trucking company managers in town, and people who handle damaged freight for trucking companies. When the trucking company have a damaged load they pay an insurance claim to whoever the damaged claim was going to and they keep the goods. Then they try to recoup some of their money is by calling surplus brokers and saying, “Hey, this is Jimmy over at Passville Truck Lines, and I have a truck load of light switches. What will you give me for them?” The guys who run the trucking company docks know all the liquidation dealers in town.

 

Most cities, or most larger cities have liquidation auctions. They’ll usually have them once a week or at least once a month. They are often called Asset Recovery Auctions, or Asset Reduction Auctions. You can bring in your container of stuff and let somebody bid on it at an auction and sell it right there. Again, you might not get everything that you want out of it.

 

Insurance

I told you before that sometimes I would make more money. This is pretty interesting. If you get freight insurance on a product, particularly inland freight, and it gets damaged between California and wherever you are, you are going to get a claim with the inland company, the trucking company, or the rail company that brought it in. If you can show that that is the case, they’ll usually make you two offers. “We’ll give you $20,000 and we keep the freight, or we’ll give you $17,000 and you keep the freight.” I’m pretty good at liquidating so if I can do it I’ll take the lower amount from the insurance claim and then I’ll sell off the scratch-n-dent merchandise, which in a lot of cases there isn’t a whole lot wrong with it. I’ve had situations where I’ve actually made more money from a losing container than I’ve made from a winning container because I have $.90 on the dollar for the goods and got a $17,000, $18,000, or $25,000 check from the freight company. There is a possibility that can happen. Is that a business model? Hell, no. It doesn’t happen most of the time, but occasionally it will happen.

 

Recouping From The Factory

With damaged goods though, your number one avenue is to try to get the factory to make it right. Most of the time they will do their very best to make it right if there is any possible way that they can. If I get damaged goods in and I am able to overcome it, when I place my reorder I will ask the factory for a credit for whatever it was that it cost me. “I’ll tell you what. You guys really messed me up on that last order.” They’re going to start calling and emailing you, “Are you ready for another order?” “No, you really messed me up on the last order. It cost me $10,000 to get that crap fixed. If you want to give me a $10,000 credit on that last order I might try you again. I might.” Don’t ever give them a sure thing. “Oh, okay, okay.” Normally they will do it and they’ll cover whatever it was that cost you to remediate on your side of the fence. That is another way that you can make money on damaged freight.

SHIPPING AND DUTIES

When you get into shipping you’re going to have to deal with a couple of things. When you have your product ready to go you’re going to have to determine who is going to be your freight forwarder. They are the companies that handle your documents for you. They clear customs for you, they shuffle all of the product and paperwork around and all of that. You do not want to do any of that yourself: it is a paperwork nightmare. The companies that do it are really good at it, and they’re very inexpensive.

 

One trick that we learned on buying a bond. It was about $500 a year where you avoided paying a $200 per import fee. As an importer you have to have a bond. The government makes you buy a bond which is basically insurance in case they have to destroy the container or charge you more duty because you didn’t tell the truth. If you fly the coop and they can’t find you, then the insurance company that sold you the bond is on the hook. Like Richard said, we were paying several hundred dollars for bond every time we brought in a container. Once they realized we were bringing in multiple containers a year they said, “Hey, why don’t you just buy your bond one time for the year?” Five hundred dollars a year to buy our bond and if we brought in 500 containers it would cover us on all of them. You’re going to need a bond, and freight forwarders are going to help you with that. The best thing you can do is talk to a freight forwarder.

 

The one we like the most is HYC Logistics. They have offices in L. A., in Memphis, Tennessee, where all the rails meet because most freight travels by rail once it’s in the States. They also have offices in China. They have a quality control arm and also a consolidating warehouse in Shanghai and Guangzhou, which means if you’re using HYC they can pick up a pallet of something for you, put it on one of their containers, and bring it to the States. There is going to be an additional fee for that, and it’s going to be more expensive, but at least they have the capability of doing that.

 

What To Ask Your Freight Company

What port do you ship from?

You want to order from their FOB-VAT port. If you order from their factory, a lot of times the inland freight in China can be more than the sea freight to get something to you. China is a very mountainous country and you can have a remote factory that is 500 miles away from a port and it has to go by train through a mountain, around a branch, and up and down here all just to get to the port. You may pay $500-600 just to get the product moved from the factory to the port. You want to make sure you have your prices quoted FOB their nearest port. The fees to ship products in China are going to be different based on the port, so you’re going to want to look at a Chinese map and see where ports are available. Usually this is something your freight forwarder can help you with. It costs more to ship from the Guangzhou port than it does from the Shanghai port; at least it used to. You want to make sure you get the most advantageous port.

 

What are the duties on this?

Almost every product coming into the United States has some sort of a duty on it. A duty or tariff is the same thing. It’s a tax. It’s saying, if you’re bringing this product from China we charge a percentage of the total invoice amount as a duty. You’re freight forwarder is going to pay it and you’ll pay them back. That is another thing that they will handle for you. Once you go to China and you get ready to buy, you’re not going to finalize anything until you talk to your freight forwarder. If you want to get the duty charges call the freight forwarder and say, “What are the duties going to be on this?” There are some things that you can bring from China at different times that have extremely high duties. Those are things that have a high duty on them as a penalty. Meaning that there is strong lobby or labor union here in the States, and maybe in your country, that has lobbied Congress to get a huge duty put on something. The candle business is good example of that. For a while because of safety and other things, there was a 70% duty on candles. If I bought a candle from China for one dollar I had to pay seventy cents to the government for the privilege of bringing it into the country. Believe it or not, it was still cheaper than making the candle in this country, but a lot of the time it’s not.

 

Harmonize Codes

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All products that come from China (or anywhere else) have something called a harmonize code. There is an online service from customs where you can find a harmonize number for your particular goods.

 

When I started bringing wax from China to make my candles with, I brought in a couple of containers of wax and the duty was zero. So I’m bringing in one container of candles and I’m paying 70% duty, and I’m bringing in another container of wax and I’m paying zero duty. I ain’t the smartest guy in the world, but believe it or not I did that for a year. One day I’m waking up in the morning and this ding went off in my head and I said, “What is a candle?” I called up customs and I said, “Can you tell me, when you’re looking at the classification of the harmonize code for a candle, what constitutes a candle?” “The definition of a candle is wax with a wick in it.” I said, “So you’re telling me that if I brought in candles that had no wick then those would be wax, right?” “Absolutely.”

 

This is a big deal. You have to ask them for a binding letter when they give you a ruling like that. They may tell you anything on the phone and if you go do it you can get really screwed. You want a binding letter from customs that that is indeed the case, so you write a confirming letter saying, “This is a confirming letter that the conversation I had this morning with Agent ____ that I understand it this way. Will you please confirm this and send me a binding ruling.” They sent me back a binding ruling so from then on I would have them drill a hole in every candle I got and on the end of the container, guess what I had? Boxes of wicks. I would bring the candles into my factory here in the States, we would unload the container, open the boxes, and my staff would drop a wick in every one of the holes and seal the box back up. My duty was zero dollars. That saved me $14,000 per container of candles. I had an absolutely unbeatable advantage in the candle business. In the import candle business I killed them. I killed them for two or three years. It was forever before people figured out what I was doing.

 

What you have to understand is that harmonization codes are somewhat open to interpretation. That doesn’t mean your interpretation. It means that items can be classified most of the time under different codes.

 

We were importing DVD media storage cases, which were classed as “blank DVD cases”. It was an inexpensive item and on a $.20 item it was four cents duty, almost a quarter of the value. This is another commodity type item so already you’re dealing with a lower profit margin, so every penny counts. We used a third party auditing service that was recommended to us by our freight forwarder, HYC Logistics, to come in and go over everything we were importing, look at the harmonization codes we were using, and suggest any changes. They told us we could classify them as empty storage containers, which took us from a 23-24% duty all the way down to three or four percent. It was a huge difference. We didn’t have to get any binding ruling. We brought in so many of these: there were 160,000 DVD cases on a container and we brought in multiple, multiple, multiple containers of them. We saved a nickel apiece. That’s a whole bunch of nickels.

 

Freight Forwarding

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So, the freight comes in and you get a call from your freight forwarding company. They will say, “Hey, you’re container is in port. Have you made your last payment yet?” You’ll make your payment and the documents will release to the freight forwarder. The freight forwarder is going to move your container over to customs and ask them, “Do you want to take a look at this?” Customs only looks at about 1:200 containers. It’s pretty random. If they say no, usually the container will clear customs in two to three days.

 

Then the freight forwarder is going to arrange your inland transportation. How do you want to get the container from where it is to where you need it to be? We’re in Texas and they would arrange freight for that container to go from Los Angeles to Texas. Nine times out of ten they aren’t going to truck that container and if they do, you’re going to pay through the nose for it. Instead, they’re going to put it on the rail and send it to you via railroad.

 

In the port of L.A. they have these giant cranes. If you get into the importing business going to the port of L.A. is a lot of fun. They literally are pulling off thousands and thousands of these containers off ships each day like they’re tinker toys. They’re moving them from the ship to the train. They’re able to move that container all that way from California to Texas for $500-600 by rail. If I had that done by truck it would cost me at least $2000. They’ll put it on the rail, bring it to me here, and then they’ll back it up to the dock.

 

There is going to be a “diberge time.” Usually it’s two hours per 40 foot. You have a bus to move. You have to have people ready. They’re going to drop that container off, and when they drop it off you have a couple of hours to get that container unloaded. You can pay for a couple of extra hours but it’s pretty expensive. If you have a truck stop near you, go to the truck stop and ask if there are any “lumpers” that want to do any work. They usually have some guys hanging around truck stops that do nothing but load and unload trucks. You can get some lumpers to help you come and unload your container into your warehouse.

 

If you choose coastal distribution, you may have warehouses all over the country. It really sucks to move all your freight from California to North Carolina and then have somebody place an order in L.A. They aren’t going to ship the freight back to L.A., right? What a lot of people will do is have stocking warehouses, which are public warehouses that will rent you space and they will do fulfillment for you. It’s call Pick, Pack, and Ship. One of the biggest in the industry is Federal Express. You can contact Federal Express. They have warehouses in Los Angeles where they will break a container up by individual boxes and ship one to everyone in North America if you want them to. And if you’re willing to pay for it! I believe HYC Logistics also has fulfillment services in L.A. If they don’t they can put you in contact with people in L.A. that can do fulfillment services and public warehousing for you.

 

Trade-Free Zones

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The port of L.A. has a lot of warehouses that have something called a “trade-free” zone. When you bring a container of merchandise into the US that is an asset at that point. You own that and you could owe taxes on that depending on where you are. In a trade-free zone, the government allows you to leave that merchandise in the trade-free zone without any taxes until you ship it out of the trade-free zone. In other words, you don’t have to pay tax on inventory that is just sitting there. A lot of times it’s the duties as well. So instead of paying on an entire container, you only pay on the part that moves out.

 

Partial Containers

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If you go with someone like HYC, they will have a consolidation service for you on the China side where you can have freight brought in by the pallet load. When it gets into the States you can have it shipped back out by the pallet load. You can stack pallets very high on a shipping container although you want to make sure that you don’t stack the pallets so high that they won’t fit on a truck when they come to the States. Ask me how I know!

 

There are several kinds of containers. When you’re shipping something into the US from China, 99.9% of the time you’re going to have three different kinds of containers to ship on. You’re going to have a 20-foot standard container, which holds small lots of stuff like the guy that brings in key fobs. He may not want to bring in a whole 40-foot container. Usually what you use short containers for are things that are very, very heavy. The reason you do that is because no matter how big the container is it can’t weigh over 56,000 pounds. If you have a 40-foot container and you’re bringing in car batteries, a huge percentage of the container is going to be wasted because you’re going to have more car batteries in weight than you fill in space. There is a way around that where you can make that work for you if you’re pretty savvy, but for the most part what people will do if they’re bringing in something really heavy is they’ll bring them in on 20-foot containers. The 20-foot container is about 2/3 of the cost of a 40-foot container. It’s not an even half. You’re going to pay more for the 20-footer, but it’s still cheaper.

 

Top Loading

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Alternatively, you can put your goods on a long 40-foot container and do something called “top loading.” Let’s say that you have 40, 000 pounds of stuff that you could put on a 20 foot container, but instead you put it on a 40-foot container because you have 8,000 pounds more you can put on. You might fill that with feather pillows, or something that is lightweight. We used to bring in stanchions that always weighted out. We could have brought them in on a 20-foot container, but we also brought in these key control boxes that are big hollow metal boxes for holding keys. They don’t weigh anything. We would top load the container with the empty, hollow boxes, and the bottom would be loaded with the heavy metal bases and the container would come in chock full.

 

The bottom line is you have a certain amount of cubic feet and you’re going to have a certain amount of that on a container and you’re going to try to fill every inch of that cubic feet that you can, for two reasons. One is efficiency. You want to get the most for your money. You’re paying for it you might as well use it. Two (and this one is almost as important if not more so) you want that container packed, jammed up, and jelly tight. You don’t want any room for movement inside the container as that is where damage happens. Look at the way movers pack houses. When you get professional movers to move you from one city to another they won’t use the whole truck. They’ll push everything to the front of the truck and they’ll have everything so squished in there you think it’s going to turn into one big blob of something. The reason they do that is because they know that if they have stuff packed in tight that it can’t move around and can’t shift a lot.

 

Partial containers can go in, in China, and we can consolidate them anywhere and come out in the US the same way. There are a couple of good freight lines that carry less than truckloads that can ship these pallets. They typically don’t go by rail. They typically go by truck. We’re in Texas and we paid about $350 per pallet from California using ABF Truck Lines, or Yellow Freight.

 

If you’re dealing with trucking companies, don’t ever call them up and ask for a quote. Call and ask what your freight discount is because freight is typically automatically discounted 60% from trucking companies. If they give you a book rate just say, “What’s my discount rate?” and by saying that they will typically take 60% off the original quote. Don’t ever pay normal quote fees. Your freight forwarder can act like a broker on that as well. That’s what they are there for.

 

Air Freight

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There is a lot of freight now that is being done by air. Sometimes it’s better to airfreight stuff than it is for ground transportation to bring it. It depends on what you’re bringing in. The guy that does the key fobs is an example. If he’s buying key fobs for three dollars and selling them for $20, rather than be out and not be able to sell any I would start air freighting boxes in rather than waiting on a container. You just have to do the math in your head. You’re going to pay somewhere around four dollars per kilogram to airfreight products in.

 

There are two ways to get airfreight done: first, through your freight forwarder. Sometimes they can get you a discount on airfreight. Federal Express is probably going to be your most expensive solution, but it’s going to get there. If you have to use FedEx you’re going to pay four to five dollars per kilo depending on where you are coming from to most of the destinations in the States You have to have something that is pretty valuable and pretty light. If you’re importing feather quills this will probably work out.

 

If you go to a normal airline, and the Chinese airlines are particularly good about this – China Southern, Air China, China Eastern – they all have cargo freight departments and you can call them up and get a quote on a per kilo basis. They’ll give you a decent quote, but they’ll give you better and better quotes depending on how much of a contract you want to give them, how long you plan to use their services, and how long you guarantee you’ll use their services. You can get airfreight down to around two dollars and change per kilo if you’re willing to sign a contract with one of the major airlines saying “I’ll guarantee to bring in so many pounds of air cargo per month.”

 

I’ve seen a lot of businesses that have made that work. The company I mentioned before that does the dental work, they get all the molds taken for dentures or crowns, and literally box those up in a FedEx box and FedEx them to China. China makes the dental work in a matter of 10 days or so, and then ships it back in a FedEx box. Can you imagine how many thousands of dollars worth of dentures and crown molds you can get in a 10-kilo box? A lot. It costs them a couple hundred dollars to send a box and they have $10,000 worth of dental work in the box. Air freight is worth it then.

 

There are some things you just don’t want to bring in and ship if you can help it. Big pieces of framed art are a pain in the neck. Dry erase and chalkboards are a pain in the neck. I’ve sold all of these things and imported them from China. The damage is almost more than the actual worth of the goods. It seems like the bigger the product, the more broad and narrow that the product is, the more difficult it is to bring in

 

If you’re bringing in a piece of equipment that is more than $400-500 I would definitely demand that it be put in a crate. When you get it here have someone else un-crate it. We found bugs and all kinds of crap in those crates, and throw that wood away because sometimes it just plain stinks. The wood crates have to go through fumigation which kills the bugs that are in there but it doesn’t vacuum them out, it just kills them. Just be sure to be careful. If you’re going to have something brought in that’s worth at least $400-500 then have it crated.

 

I’m not going to go into the duties on this and the duties on that and get into real detail. To be honest, the freight forwarder handles all of that. I never had to learn it. I’ve brought more products into the States than most people have and if I’ve never had to learn about duties and all that, you shouldn’t have to either. It’s not really a big deal.

 

MONEY

I’ll tell you, importing from China is not a business for the faint of heart. You have to have a little gut on you. There are basically two ways that money is sent to China: letters of credit and

 

Letters Of Credit

This is a simple document where you go to your bank or a bank that does letters of credit. It has to be a credible bank that is known in China. If you’re at the Bank of Schlockdaw, Mississippi, they might not be willing to take a letter of credit from you, but any national bank: Chase Bank, Citicorp, Wells Fargo, any of those guys.

 

If you are an incredibly creditworthy individual with tons of assets and the banker is in love with you, then perhaps they will give you a letter of credit to let you go buy goods in China without putting up money. I have never had that particular experience.

 

Typically what you do is you go in and say, “I want to buy a container of products that is $30,000 and I need a letter of credit for $30,000.” Your banker will say, “That’s fantastic. I’m happy to do it. All I need is $30,000.” They’ll put the $30,000 into an account that you don’t have control of anymore, although the money is still there in your local bank. They’ll issue the letter of credit to the factory and the factory will take it to a Chinese bank and that bank will give them a loan on your letter of credit so they get the money to buy the raw materials to build your order. They will build your order and it will ship to the United States.

 

When the order gets to the States you can’t open the container until the documents have been released to you to open the container and take ownership of it. The letter of credit has to transfer at that time. The container lands in the States, the letter of credit transfers and is converted to cash, and the factory in China gets their money and you have your merchandise. It’s sort of like an escrow service, for lack of a better term. You still haven’t opened that container yet. It could be filled with marshmallows, but for the most part it’s not. They would be committing a pretty big fraud against their bank at home in China and all of that. It’s not going to happen.

 

Time Of Transfer Payments

In truth, the first way is for chickens! For what it’s worth, the second way is the way I do all my business in China. As a matter of fact, almost everybody I know that does business in China does business this way now. It’s called TT Payments: Time of Transfer Payments. That means that I’m going to wire some money to a cat in China and hope that he sends me something.

 

If you’re wondering why you would want to do that, there is an inherent reason: they make it advantageous for you to do that. Why wouldn’t they? What they do is allow you to have terms at that point. Let’s say you’re buying that same $30,000 container of equipment. You would TT or wire transfer the money, the factory or the broker – and I don’t like dealing with brokers because I trust the factories more than I trust the brokers – $10,000. They’re going to take that $10,000 and go buy the raw materials to make your stuff. That’s why I know how much money they have in it. They’ll take the $10,000 and start building your product.

 

When it’s built, they load it on the container in China, put the lock on and seal it, and the document is created that it is coming to the States, and at that point you’re required to send them another third, another $10,000. You’re sending them $10,000 today, and if they perform in the proper time another $10,000 in 20 days. I like this form a lot better because they don’t get all the money up front. They’re not as slow. They want the next $10,000 so they’ll hurry up and get the order made. Then the order is on the ocean on its way to the US or Canada or Australia or Europe or wherever you are. It’s on the ship coming to you. While it’s on the ship coming to you the vessel company has your documents. When the container arrives at your port it’s frozen until you have the documents to go take possession of the container: the original bill of lading.

 

In order to get your documents released you’re going to have to pay the final payment of $10,000. At that point the shipping company will release your documents and the container is yours. You still have to deal with customs. I’ve had one container of goods inspected by customs. It’s not really a big deal. That’s the way that most people buy. After you’ve established some purchases with Chinese factories, a lot of times you can start negotiating those credit terms.

 

I have good friends that have 30-day net terms from time of landing in the United States. It depends on how big a percentage that Chinese factory’s business you become. They will do anything they can to keep you as a customer. They won’t do so much to get you as a customer. They’re more interested in keeping their customers, keeping their customer base, and keeping their turnover up.

 

Chinese factories don’t make any money through the year. Most of them don’t work on much of a profit. What they do is at the end of the year for every dollar of merchandise that they sell, the owner of the factory gets a rebate from the government. It’s anywhere from eight to 15% of his total gross sales. They don’t really care a whole lot about how much money they made selling to you. They care a whole lot more about how much volume they do. That’s the reason that their export business is so robust. They reward their factories and their companies for exporting. They know import dollars coming in is what will make their economy grow like a weed. That is the reason for the mentality they have. They’re really interested in volume and if you’re producing volume with them it is really easy to go back and negotiate further terms.

 

One more codicil for you if you get really big in the importing business: if you have a licensed Chinese company like a Hong Kong trading company, or a Shanghai trading company, you can get a rebate from the government for your own exporting. In other words, you would buy your products domestically by having your Chinese company buy the products domestically in China and you pay the price the factory wants. When you export the goods out of China to the States you can apply for those government rebates at the end of the year. If you’re doing millions of dollars in exporting a year and importing a year, it’s really worth doing though there is quite a bit of paperwork involved. It’s for an advanced importer.

 

If you’re savvy enough sometimes you can find trade partners. If you can find a broker or agents almost all of them are set up with these rebates and it is another way they are making money on you. Tell the agent, “Tell you what. I would like to use you but let’s split the rebates.” At first they’re going to say, “I don’t know what you’re talking about. What do you mean rebates?”

 

The way it works in China is when you go to manufacture something, every time you buy a part or raw material the factory pays sales tax on it. We don’t do that in the States. Over there they all pay sales tax on that stuff when they build the product. When they go to sell it, basically the money they are getting back from the government is money they paid in. If they export those good out of China they get a refund for 100% of all of that tax. If they sell it domestically they don’t get that refund, but the trading company does. The trading company can export and then get the refund for eight to 15% of the full-face amount. That’s a big deal.

 

If you’re dealing with an agent say, “Hey, look. Why don’t you split the VATs with me? Let’s split the VATs. If you want my business you’ll split VATs with me.” A lot of times they will. I didn’t get that little piece of data right there until I had been to China at least six or seven times. This could save you tens of thousands of dollars, or even millions of dollars over time if you’re a big importer.

ORDERING POLICY

When you write your specs, here’s something you really need to remember. If you have a contractor friend, you might have them come over and help you write your first order. The bottom line is this. I believe if you ordered a car from China and you didn’t tell them in the spec that it needed a steering wheel, I don’t think it would have one when it got here. They literally are going to go by the order to the letter of the order.

 

If you have a contractor buddy, they’re used to that. They’re using to dealing with subcontractors. Subcontractors are the same way. They’ll brick your house without mortar if you don’t ask for it. They’ll just stack the bricks up along the wall. Those contractors know they have to write very, very, very, very specific instructions with that letter. When you’re writing that order, you need to be ultra-specific. You need to talk about what’s included. You need to talk about the gauge of the metal that’s used. The quality of everything needs to be totally gone through.

 

Another thing: you need to absolutely get hard completion dates, along with penalties. Typically speaking the standard manufacturing time in China for most everything is 20 days. You need to have is an automatic cancel, or financial penalty, or something built into that order to make sure. That is what the big guys do. The big guys say,

 

“Look, you want $10,000 for this order, okay. I’ll give you $10,000 and it has to be delivered on the 20th. For every day that you’re late there is a $100 penalty that we will take off of the rest of the invoice.”

 

What happens is if your order is sitting there and a big guys order is sitting there and they have a penalty for his order and they don’t have a penalty for your order, guess which one they’re going to do first?

 

The thing is, you’re going to pay some money down when you place your order and you have a cost of money that starts ticking that day. When you pay your money your biggest objective is getting it made and getting it across the water. Pre-selling it across the water. You definitely want hard completion dates if everybody agrees to it and signs off on it.

 

Finally, you want an established written damage policy with the factory and you also want that with your freight company, or you may want to choose freight insurance. The truth, between you, me, and the fence post, if they tell you to go p— off there is not a whole lot you can do about it, but for the most part if they agree to something in writing most of the time they will follow through with it. If they don’t agree to something in writing and you get damages, well, there you go. “Sorry about that. You never said anything about that. You mean you want it to work? You never mentioned that part.”

 

You definitely want to have a damage policy that says “In case the freight comes in damaged or not as described the factory agrees to remediate, send new merchandise, pay for return shipping, or replacement,” whatever the case may be.

 

When I’ve had problems with factories in the past, for the most part they try to make it right. It’s not like Wal-Mart. You’re never going to be able to walk into the store and return it with no questions asked without the packaging or the original receipt. You’re going to end up communicating in the middle of the night when you’re not very excited about communicating because the time is so different. It’s much, much easier to deal with the situation if you deal with it right up front in the beginning. Clearly spell out what happens if this product is poor quality, or is not as described, or doesn’t work, or is damaged. The reason you want to have a contract with them is you can’t go to the freight carrier and get satisfaction. They have to get satisfaction from the freight carrier and they reimburse you.

 

The factory is packing your container, too, that is something to keep in mind. We’ve argued with people before, “Oh, you can fit more in that container.” Sometimes you can, and sometimes you can’t. I tell people that if they don’t have quality control on the China side, don’t go into the import business period.

 

One of the ways that you’re going to avoid a lot of problems with that is, if you don’t know somebody in China that you’re already dealing with, you need to hire a third party company. A good one is SGS Testing Laboratories. They are in all the major ports in China. You can have your sample sent to them so they can go to the factory, make sure that it works, they’ll bring a 110V generator to plug in electrical things to make sure they work, they’ll go to the factory as the product is being built, they’ll mike the metal, they’ll check the paint, they’ll send you photos and videos. They’ll actually go there while the container is being loaded to make sure that it is being loaded safely and tightly so that there won’t be any damage in the sea vessel. They’ll watch the container being sealed off with the proper count of product on it, All that is going to cost you maybe 20% of your shipping costs. It is the best money that you will ever spend. And when you tell your people in your order that quality control will be handled by SGS Testing Laboratories, guess what? They know you’re no joke. They’re not going to mess with you at that point. You’ve done everything throughout the entire process to show that you’re a professional, all the way down to having a reputable company coming out to do quality control.

CUSTOMIZATION AND EXTRAS

Here’s what you can do now. Once they’ve agreed to the price, then we want to go back and work on the specs. These are some of the coolest things that you would probably never think to do in a million years when it comes to importing. Number one is to ask for special packaging. You can usually get them to print you a box, full color, with your images, your pictures, or whatever on the outside of the box for your product to go in. It will usually cost you nothing or very near nothing to have that done. You’ve been in Wal-Mart before and picked up a ceiling fan. You see the whole side of the box is full-color graphics. That stuff in China costs almost nothing. It costs a couple pennies more than a regular box. They’ll just give it to you. It’s almost no sweat off their back at all, but it can make a huge difference for you when you go to sell. Remember this: if they agree to that, you’re going to have to get artwork over there in enough time for them to get your box printed.

 

I also always request double boxing. I want my product boxed, then I want it put inside another box. That will eliminate as much as 90% of your damage in freight. Typically speaking, again, they’ll do that for free or very close to free. If you’re talking about a dollar item, they may not do it for free. If you’re talking about a $20 or $30 item, they’ll almost always do it for free because it costs practically nothing.

 

Then ask for free add-ons that you can then sell. We’ve had experience with heat sealers with that. When we were importing these heat sealers, they had a heating element. Over time, the heating element would go out. It’s normal. It wasn’t anything that was specific to our brand or the company that we imported from. That’s just what happens to these particular items. They were a cheap item, from a manufacturing standpoint. It was almost considered a throwaway cost item.

 

It was about $4-20, our cost and we sold them for $20 to $70. From a manufacturing standpoint, it didn’t cost a whole lot of money. Typically, people would throw them away and buy another one. However, we started getting a ton of calls asking for replacement elements in these particular items. What we were able to do here was to go back to the factory and negotiate individual kits of three or four additional elements in the package. We just complained to the factory that the elements were burning out. They said, “Okay. Next time, we’ll just put four extra elements in.” I said, “How much is that going to be?” They said, “No charge.” They cost two or three cents apiece.

 

Here’s what we’d do. When we would sell one, we would ask the customer, either on the phone or on the Internet, “You’re buying the heat sealer. It’s $29.95. Is that right?” They’d say, “Yeah, that’s right.” We’d say, “Sometimes the heat elements burn out in them. You can get four extra heat elements for them so it will last a whole lot longer, and you’ll never be out of heat elements, for another $9.95.” We’d say, “Most people,” and this is big piece of verbiage you need to remember. The vast majority – almost 70% of people – would say “Yes.” You’ve got to imagine this. We took something we got for free, and sold it for $9.95, along with the $30 item. Guess how much the $30 item cost? It cost us four bucks. The up-sell alone paid for the entire purchase and, in most cases, the shipping of the doggone item. We made 100% of the purchase price. If that doesn’t turn you on, I don’t know what’ll turn you on. That’s hot stuff.

 

You can do that in a lot of cases. We did it with rubber stamps. Through a rubber stamp manufacturing company, we were making rubber stamps. We’d sell people a rubber stamp for $12.95 or $13.95 that cost us about two dollars. We got bottles of refill ink from the factory and we would offer the refill ink for the rubber stamp for $4.95. Almost everybody took the refill ink, which paid 100% for the cost of the rubber stamp and the refill ink. If you grasp that concept from consumer goods, you will go very far in importing. I don’t care if you’re a little bit slow, but if you can sell products and make 100% of the money, you’re going to do okay.

 

It’s like a house builder: they don’t want to give you the home at a drastic discount because they’ve got other people who are basing their price somewhat off what you’re paying. However, they’ll be willing to throw in upgrades.

 

 

NEGOTIATIONS

So, you’ve toured the factory, you’ve checked out the quality, and you’ve reviewed the prospectus. You’re ready now to absolutely get down to your price for your first order.

 

I always say that take-its-or-leave- its don’t work when it comes to China importing. At this point, you can start to request the real price. You’ve been to the factory, you’ve really checked the quality, you’ve really checked the prospectus, and they’ve given you a quote already. You can sit down with them now and just begin to explain that you like the product and you like the quality. You compliment them a lot. Tell them how well their product is built. Tell them how much you like their factory and the professionalism of their staff. Give them a lot of compliments. Then say, “I would love to buy from you. However, I can’t pay more than $15 a unit. The math just doesn’t work for me.” That will start the negotiation process.

 

Don’t expect to buy for $15 if you start at $15. You’re going to meet the ground somewhere in between. You already know about what their hard cost is, though. It goes from the first quote that they give you. They’re going to give you a quote at roughly three times their hard cost. If it’s $20, that means they have about six bucks in it. So, offering them $15 is not an insult.

 

As a matter of fact, in a situation like that, you can tell them easily, “I’ve gotten quotes on similar products as low as $12,” if you’ve got legitimate quotes. Sometimes they’ll ask you who the company is. If you can reach in your bag and pull out one and really show them, most of the time, they’ll meet it, almost every time. However, if you’re just B.S.ing your way through, they’re not going to buy that. They’re good negotiators, they know a lot of their competitors locally. They’re going to know when you’re full of bull and when you’re not.

 

Sometimes I will write them a buyer’s order and just state a price. I don’t like to do that in a live negotiation, but I’ll do that after I get back home. If I’m getting close to where I want to be – if they got close to my $15, $12, or $10 – I’ll literally enter a buyer’s order at $10 and fax it into the factory and ask them for wiring information of where to send the deposit. Sometimes they take it and sometimes they don’t.

 

You’ve got to remember this: these Chinese factories are all about paperwork. Words don’t mean anything. They can walk into their boss and say, “Boss, look. I got an order for 1,000 of these things, but they want them for $12.” Now, in their mind, they have a bird in the hand. Before, they were just talking numbers back and forth. It really didn’t matter: it wasn’t real math. Now they have a bird in the hand. So, when you’re just orally communicating and negotiating, you’re probably not going to get your best price there. It’s probably never going to happen.

 

Let’s assume, now, that we’re ready to make the offer. If you’re going to do it there live, I want you to say,

 

“Okay. I’m going to give you the terms you want on this first order, and I’m going to try to make money with it. If it doesn’t make money for me, then we’ll have to talk about whether we’re going to continue our relationship or not by the time we place the next order.”

 

Let them know right up front that if the price doesn’t work out, you’re going to go elsewhere. Just don’t let them think that you’re agreeing to the price they’re giving you forever.

 

FINDING AN AGENT

The second thing to do is to find an agent. Agents used to be more popular than they are now. An agent is just somebody who understands importing better than you do. They’ll typically take a fee of somewhere between eight and fifteen percent to go out and put together your deal for you: to source your product and to find your manufacturers.

 

There are a couple of problems with agents. One problem with agents is that they typically don’t want to mess with you if you’re not doing volume. They claim to only take a small percentage, so they don’t want to go through a lot of trouble. Did you hear the key word in that phrase? It was “claim.” They claim to take a small percentage. I have yet to ever meet an agent – at least one on the Asian side of the water, in Hong Kong or China – that didn’t have a back door deal with a factory.

 

So they’re going to be charging you on your side. They’ll swear to everybody on earth that they’re not making any money on the back side and that is bullshit; they’re all making money on the back side, every single one of them. That’s just something that you need to accept, deal with, and get over. As long as they are a quality agent and providing you some services, then that’s just the nature of the beast.

 

There are basically three agents. I typically avoid Hong Kong and Shanghai agents, especially Hong Kong agents. I’ve never had a Hong Kong agent quote me a reasonable price on anything – ever. If you’ve not been to Hong Kong before, it’s an incredibly international metropolitan city. It cost a fortune to live in Hong Kong. If you’re an agent living in Hong Kong, I’d say that those guys are making a minimum of anywhere from $500,000 to one million dollars a year brokering goods. Unfortunately, based on their circumstances, they have to make a lot of money on the front and backend of you to make it work.

 

Shanghai is becoming the new Hong Kong. A lot of guys are now moving from Hong Kong to Shanghai, or they have an office now in Hong Kong and Shanghai. Does that mean that every Hong Kong broker and Shanghai broker is a bad guy? Absolutely not, but the ones that I’ve had experience with in the past have not been good.

 

If I were you and looking for an agent, I would look up Trade Agents in Guangzhou. Guangzhou is more “real China.” That’s what I call it anyway. When you’re in Shanghai, it’s all pretty and shiny. It’s westernized. Hong Kong is incredibly westernized, too. However, when you’re in Guangzhou in Southern China, you’re still really in China. A huge percentage of what’s manufactured in China is manufactured in the south, in Guangzhou. This is because a lot of the raw materials are down there. It’s in Southern China.

 

You can also go to a Stateside broker. If you use a Stateside company you need to make sure that they have an office in China. You need to get the address and phone number of the office in China, and be sure to call the office and make sure that they aren’t full of crap. You’re going to have to do a little due diligence here when it comes to your brokers.

SOURCING YOUR PRODUCT

There are about three ways that you can really go about sourcing products from China: online sourcing, using an agent, or actually going to China.

ONLINE SOURCING

A lot of people approach me now and talk about online sourcing, things like http://www.Alibaba.com.  This is probably the biggest website for sourcing products from China. Yahoo owns part of it and it’s sanctioned by the Chinese government, so they have a lot of support. Basically, a lot of the Chinese manufacturers have their products on Alibaba, so you can view them and send in any inquiry asking about the product, the quality, samples, etc. Another is http:// www.ttnet.net. It’s also one of the best.

 

There’s another one called Global Sources. I don’t care for it as well, but you can go to http:// www.GlobalSources.com if you choose to. I think Global Sources is more of a Hong Kong based company. I’ve never been able to get manufacturers that have good pricing from Global Sources.

 

Let’s talk about Alibaba and ttnet first. They’re going to have you sign up for an account. They’ll tell you to send your inquiries in through their system and you can do that. There’s nothing wrong with you doing that. However, here’s a biggie: when you make contact with a Chinese company, I’ll bet you can send in ten inquiries through Alibaba and probably only get back two or three replies. It’s not one of the more traditional ways of contact. Also, they get a lot of knuckleheads that just go on with, “Hey, how much for this thing?” You just can’t approach them that way.

 

Approaching A Manufacturer

We’re going to get into this in depth, but I want to start talking to you about it here. Chinese manufacturers will treat you a certain way based on how good a businessperson they think you are. If you seem like a chucklehead, they’re going to treat you like a chucklehead. If you act like just the blind idiot walking through the door, they’re going to totally ignore you, because they assume you’re just full of crap and aren’t going to buy anything.

 

You can bet that every one of these places gets dozens of inquiries every day through Alibaba. They look at a large majority of them and go, “That guy’s an idiot. He’s not serious.” They don’t even reply. For other ones, they’re going to say, “That guy’s an idiot, but he looks like he’s an idiot with some money to waste, so let’s sell him just a truckload of garbage.” They’re going to assume you’re going to be out of business in no time anyway. They’ve got nothing to lose. Why not just take some money from you if they can? They will tear you up.

 

Everybody thinks that the mentality of Chinese business is long-term relationships and that’s absolutely true, if they feel you’re worthy of a long-term relationship. If they don’t feel you’re worthy of a long-term relationship, they’re going to try to skin you for as much money as they can get out of you, as quickly as they can before somebody else does. They see you as an idiot walking around with your wallet hanging out of your back pocket and eventually, somebody’s going to take your money, so they might as well be it. They’ll just send you a container of junk and you’ll just be screwed. The beginning of this process starts with you looking like a professional, because they judge you based on that.

 

Methods Of Approach

I can remember in the 1980s there were still a lot of older companies that wouldn’t do business with you unless you would send them a letter on letterhead, asking them to do business. We still had traditional wholesale channels in the States back then. China is still, today, very much like that. If you want to get a quick response, go ahead and send in the Alibaba form or the ttnet form if you want to, but type up your request and fax it on letterhead. If you’ve got to create letterhead in Microsoft Word, that’s fine. Fax it on letterhead to the supplied fax number for that company.

 

I don’t think I’ve hardly ever sent a fax to a company that I haven’t gotten a response to overnight. If you don’t have a fax machine, you can use eFax. There’s a company called  http://www.eFax.com, you can go there for about five dollars a month – or something like that – and get a fax number where you can send and receive faxes. They’ll send your faxes to your e-mail account in a PDF form. You’re going to use faxing for all of your orders. Every order you ever place is going to be placed by fax, so you’re going to have to have faxing in order to make it work long term.

 

What To Ask

When making online requests for information, you don’t make the price the first and only criteria that you want to know. You want to ask them about quality, about their company’s turnover. Ask them a lot of questions about whether or not they’re reputable. You should ask them their factory location. Are they the prime owner of the factory or a broker? Can they send you a prospectus? What is their annual turnover? That’s a big question which we don’t use in the States at all.

 

A big pride issue in China is how much they sell. Another good question is asking what percent of their annual sales are in the country you’re in. Also, ask them if they have a stateside warehouse. If they do, you probably don’t want to do business with them because they’re probably going to become your competitor. That’s not always true, it is a lot of the time.

 

These online tools are very self- explanatory: you literally just search a name and you find it. One little tip I’ll tell you is that you’ll miss searches in Alibaba if you search in plural because most Asian manufacturers and most Asian people don’t use plurals.  If you search for “tennis shoes” you’ll get nothing, as they will advertise with: “We manufacture tennis shoe.”

 

I’d say online is my least favorite source, although I did use it a great deal in the beginning. When I’m going to import, though, I’m typically looking at importing a million dollars a year or more worth of product from somebody, so it’s worth a trip for me to go see. However, I’ve got a friend right now that I talked to the other day. He’s in an equipment business where they’re doing three million dollars a year, and he’s never been to China. He does 100% of his importing online, so it definitely can be done.