Dropship from China, another way of doing business with China and cutting down cost

Are you sourcing products from China?
Because of the cheap product sources, you probably have or are going to source from China to purchase different products for your customers and earn more profit margins. Usually Alibaba.com and Aliexpress.com are treated as the first two options for purchasing sites, and perhaps every businessman have heard of them.

Beside them, there is another cheaper site, Alibaba.cn, which is with even cheaper prices, can also be your product source. Alibaba.cn is also called 1688.com, and it’s in Chinese language. The product on 1688.com is actually much cheaper than Aibaba.com or Aliexpress.com. The only difficulty is that it’s in Chinese language and it’s designed for Chinese wholesaler only. So if you want to purchase from it, you need to use Google Chrome’s translate function and a purchase agent’s help to make the purchase for you.

About how to purchase from 1688.com, you can google it, and I’m not going to expand it too much here.

Are you shipping the products to your warehouse and then ship to your clients?
In most cases, you probably ship the goods to your warehouse after you purchase from the supplier/sellers before you sell to your end-clients. But have you ever considered building up a stock inventory in someone else’s warehouse in China and have them ship to your end clients when you receive an order?

This is another way of doing the business. It is called drop shipping, or shipping fulfillment by third party. In this way, you can benefit in following:

Sale Tax or VAT (Value Added Tax) Benefits: You don’t need to pay sale tax or VAT locally. In most of the countries or states, you as an e-commerce seller, must incur the payment of the sales tax or VAT for each business for sending products from your resident warehouse. Using drop shipping means you can walk around this cost.

Avoid Duties: If you have a warehouse away in a different country, import duties will be applied at the border customs when importing bulk goods into the country for most made-in-china products. Eventually, you this will be an important part of your total business cost that you nee to consider. However, if your warehouse is in China itself and you are sending small packages directly to your individual end customers from China, the import duties are very likely avoided.

Minimize Losses: If you have to write-off your inventory and dispose your outmoded or seasonal products, the freight fees and all the taxes that you have already paid will convert into irrecoverable losses. However, if you keep these products in warehouse in China, you can save the wasted freight fees and taxes. They will never come to you.

Low Labor Cost: You can benefit from the lower labor cost in China, comparing to Europe and North America.

Sell More, Faster: As all operations are done in China, the time of exporting and importing along with shipping to your own resident warehouse are saved. Totally, you can make your business running faster, especially for those seasonal hot selling which is very time sensitive.

Of course, there are some disadvantages:

1. This method is especially very useful only when your end-clients are from all over the world. If your customer is from your own country, you may probably not consider it because of the timing of shipping to your end-client.

2. You need to find a reliable partner to help you do it, preferably some companies (like FreeShoppingChina.com) who are offering stable service like this. If you find a personal service provider or some unreliable people, you will always worry about something. FreeShoppingChina.com is professional drop shipping service agent and has built up a streamlined workflow to offer this service. Also, FreeShoppingChina.com will help you handle purchasing, payment, product inspection, private labeling, packaging and consolidation and shipping. A whole purchasing-dropshipping solution is offered by FreeShoppingChina.com. For more details, you can check this page: http://freeshoppingchina.com/drop_shipping_stock_prepared.php

Tips and Best Practices
Finally, I still need to come to some points of tips and best practices.

1. Usually this method applies to sellers selling small items under 2kg, including packaging weight.

2. The value of single item shouldn’t be too high considering the shipping risk.

3. The end-clients should be from all different countries, which means you must sell globally. If you are selling locally, this method is not the best way to cut down the cost.

4. You always need to purchase some product samples first before selling widely, so that you can control the quality, and design your personalized packaging, which affects the shipping cost.

5. Always find a reliable and stable partner to make it.

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