I’ve found some cheap stock overseas, but how can I tell if it’s decent quality? SmartSolo
I’ve found some cheap stock overseas, but how can I tell if it’s decent quality?
By Franz Madlener
This week’s Secret Soloist is answered by Villa and Hut founder Franz Madlener.
Great question and great idea – but this is one of the biggest pitfalls for so many start-ups.
Importing stock “cheaply” from overseas for a novice business is akin to thinking that all we need to make butter at home is a cow, a bucket and a whisk: Great in theory, but much more difficult in practice.
As a starting point, more important than worrying about the quality of the stock or the integrity of the supplier, is understanding the quagmire of import regulations, duties, permits, licences, AQIS (Australian Quarantine and Inspection Services) requirements, and Australian Customs requirements.
Getting something into a container in a foreign country is often the easy part. Getting the container into Australia without the right information, documentation, permits and guidance is often the hardest part.
As an example, if you are importing goods in preparation for Christmas, it is important that you are aware of Australia’s strict import conditions.
There is a wide range of high-risk quarantine items capable of carrying foreign pests and diseases. Because Australia is a great big isolated island, there are many threats to Australia’s unique environment which may have serious consequences for our country’s import and export industries.
If your products do not comply with quarantine requirements they will be treated, exported, destroyed or withdrawn from sale at your expense – which can be far more costly than the goods themselves. Even if you finally do clear them, it can also mean a delay in delivery of your goods – which can be fatal if your container is perishable, seasonal, or pre-sold; but conditional on delivery dates.
Make sure you are familiar with what products and materials can be imported into Australia and what items may require an import permit before shipping or will need to be declared to AQIS for inspection or treatment on arrival. I would suggest you meet with a really good Australian importation broker before placing an order, and do your homework.
The total cost of importation, duties, taxes, charges, freight and fees is often more than the cost of the items themselves, so what may appear cheap in the factory overseas, suddenly becomes far less attractive once all the costs are tallied up.
Equally, I often get calls from start-ups asking for help on importation permits and fumigation issues, and the difficulties in importation compliance.
Finally, most suppliers require a deposit on placing the order (say 70%), and the balance upon releasing the original importation documents to you (say 30%).
It is not uncommon to have your money tied up for 120-150 days before the cashflow starts coming in; assuming your customers pay you on time. Other suppliers will require an LOC (letter of credit) from your bank, and others may give some credit pending security. Regardless, you will be handing over money a long time before you see it coming back.
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