About IMPORT BUSINESS REFERENCE GUIDES will get you working like the pros in no time. These short topics are packed with links to valuable online research and data used every day by those in the import trade.
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 An example big-profit category: floral stems With Free Online Tools, Find the Most Profitable Products to Import
Want to know how much profit there is on those items made overseas? With a little research using free online tools, you can review the average price per unit of goods being imported into the U.S. We’ll show you how to quickly find a product’s classification code so you can review powerful importing statistics.
We’ll use the fresh-cut floral industry for our research. Roses are popular, but how are their profits compared to other varieties of flowers, such as chrysanthemums. Let’s look at the two simple steps to quickly compare the two varieties and determine the average import value per stem for each. We can also see trends in pricing and import quantities.
Let’s Get Started
Step 1: Determine the Harmonized Tariff Schedule (HTS) Classification
First we need to determine the classification code for our products. The United States Harmonized Tariff Schedule contains all the classification codes for goods imported into the U.S. This number is also used to assess duties upon importing. (Note: While this tool is useful for research, it’s recommended you work with a customs agent to provide a final determination of your product’s HTS classification. The discipline of assessing a classification code is complex and takes years of experience to master.)
We go to the United States Harmonized Tariff Schedule website. We enter the first search term “roses” to capture the HTS number, then enter the second search term “chrysanthemums” to capture the second HTS number:
0603.11.0010 – Sweetheart roses
0603.14.0010 – Pom pom chrysanthemums
With these two cut-flower variety classifications known, we can now look at the import trade statistics.
Step 2: Find Trade Data for a Specific Product
The U.S. International Trade Commission website has a wealth of statistical data that can help you explore any product you may consider importing. Best of all, it’s free to use once you set up a user account. Then proceed to use the trade data tool.
We enter our classification numbers and request data on value and quantities, giving us the average price per unit (before duties and custom fees are applied). Here are our results:
Roses: U.S. import average price per stem
2008 – US$0.147 per stem
2007 – US$0.136 per stem
Pom pom chrysanthemums: U.S. import average price per stem
2008 – US$0.135 per stem
2007 – US$0.136 per stem
What We Conclude From These Statistics
Roses: There is substantial gross profit margin between the retail price per stem we see in the U.S. versus the average price per stem paid by flower importers. A bouquet of a dozen roses on 1-800-Flowers.com sells for $59.99 (including the glass vase), while we find the average price per rose stem of just under 15 cents, or $1.76 per dozen before duties. We also see the average per-stem price is on the rise, increasing 8.60% from 2007 to 2008.
Chrysanthemums: A check at our local grocery store floral stand shows pom pom chrysanthemum stems are selling at $2.99 per stem. To order these through a florist will be much higher. We see the average imported price running 13.5 cents per stem. Again, a nice gross profit margin. However the trend on pricing from 2007 to 2008 is on the decline, although not by much, decreasing by 0.60%.
Even with a substantially lower gross margin per stem than roses, the chrysanthemum is often used in all types of floral arrangements throughout the year. While roses see a sharp sales spike for Valentine’s Day and Mother’s Day in the U.S., the chrysanthemum sells in bouquets consistently throughout the year.
Do-it-yourself Research Along With a Professional’s Input
Conduct preliminary research online with these free resources to narrow down the product categories of interest to you. Once you know the product to import, contact a customs broker and ask that your findings be validated. The broker will become your partner in global trade, and will provide ongoing information about trends, regulation changes, and other important issues that will make a difference on your bottom line.
 An Easy Lesson for Clearing Customs: Leave It to the Pros
The steps to clearing customs can be mystifying. We suggest focusing on what you’re good at — sourcing and selling your products – and cut through the red tape by handing this step over to the pro: your customs broker.
A partnership with a customs broker is nearly a necessity in the importing business and will save you valuable time and trouble. After reviewing The Import Channel topic Customs Brokers — An Importer’s Best Friend and reading the guidelines below, you’ll find that the easiest thing to do is to leave the complexities to the professionals.
Clearing Customs
All goods entering the United States pass through an entry process governed by U.S. Customs and Border Protection (CBP). There are two key steps to entering merchandise:
1. Filing documents so that CBP can determine if goods may be released into the U.S.
2. Filing documents to permit assessment of duties and gathering statistical data.
There are two types of entries: formal and informal. Whether your shipment can be processed as a formal or an informal entry depends on the value of the invoice and the type of product you’re bringing in. The key difference is the type of documentation and amount of paperwork required to clear the shipment with customs.
Informal Entries
In general, an informal entry is a shipment that does not exceed US$2,000 in offshore invoice value. However, all textile products, including made-to-measure suits from Hong Kong, will be entered formally regardless of invoice amount. Also any item in a classification that’s subject to quotas will also be handled as a formal entry.
You can complete an informal entry yourself without the need for a customs broker. Here’s how it works: The carrier bringing your shipment to the U.S. will notify you that the goods have arrived. You go to the port of entry, let the staff know you are picking up an informal entry, and pay the required duties. That’s it!
If you are unable to do this step personally, a customs broker can act on your behalf to clear the goods. The carrier might also provide this service to you. A quick conversation with either will let you know if they’ll handle it.
Formal Entries
Formal entries are more involved, but working through a customs broker will make this an easy process. Here’s how it works: Approximately three weeks before the expected arrival of your shipment, contact your customs broker. The broker will ask about details of the shipment, such as country of origin, product description (including materials used in its manufacture), quantity, and invoice amount. Based on these details, the broker will complete the required documents. Fifteen days before the arrival date, your broker must contact the entry port and provide these details, which are then entered into a tracking system used by the CBP.
When your broker files the entry paperwork, a surety bond must be posted with CBP to cover any duties, taxes, and charges that will be assessed. A customs broker will often have a large surety bond already in place for his clientele to use. For a small fee, the broker will offer to enter your shipment under this bond as an added service and convenience.
Sample Goods and Avoiding Duties
If you are importing sample goods to use to pre-approve a design or to use to solicit orders, you may be able to enter the shipment without paying duty. Be aware that goods are not automatically exempt from duty because they have, for customs purposes, commercial value. For example, in order for samples of textiles to enter duty-free, they cannot be valued at over $1.00 each or must be marked “SAMPLE NOT FOR RESALE,” cut or torn, etc. Rules that determine when samples can enter duty-free are complex. Working with a broker to correctly classify samples can save you time and money when appropriate.
Keep It Simple
If the invoice amount is over $2,000 or the shipment contains any textiles (or other products covered by a quota), leave the formal entry details in the hands of a qualified customs broker. If the invoice is under $2,000 and you are a do-it-yourselfer, you can take care of this step fairly easily. For additional information, you can find an excellent FAQ tool on the U.S. Customs and Border Protection website.
 Starting an Import Business Takes Less Money Than You Think
The biggest misconception about importing is you need lots of money for a large minimum purchase order, or you need to buy enough to fill a 40-foot container. In fact, that initial purchase order you place with a new supplier may take less money than you think.
Minimum Purchase Order Requirements
Every day, businesses large and small are looking for new suppliers with fresh ideas and products. In the early days of the relationship, suppliers and buyers will treat each other with caution. The importer will want to ensure that he can trust the new supplier and the new item will sell quickly. A supplier will want to be sure the importer can come through on a purchase order with a valid letter of credit (L/C) and can move his product in the market as promised. Because of this, nearly all initial transactions are done on a small trial basis, even by big corporations with big budgets.
The small order from your company may actually be the same amount as the initial order from a major department store or mail-order catalog. What will be of more interest to the supplier is your business model: who are your customers and how are you reaching them? If you are selling to the end consumer, are you doing this from a brick-and-mortar storefront with a geographic region that is limited? Or do you have a website with impressive traffic? Are you an eBay Power Seller? Are you well connected with a community of buyers? Do you have established relationships with retailers and a team of sales reps that assist you in moving product on a wholesale basis?
The answer for those questions are more important than the size of your initial purchase order. Offshore suppliers are looking to grow long-term relationships and are willing to work with you to establish trust. Minimum orders are often a guide to what they would like to see on a re-order basis. Remember: everything is negotiable.
From a cash-outlay point of view, the dollars needed depend on the product you will import and the shipping method you use. If you are buying children’s apparel and want an initial selection of products that have an average offshore cost of US$1.00 per unit, a $500 initial purchase order will give you a nice selection of styles, colors, and sizes. If you plan to import teak furniture and need to ship by sea freight, the shipping costs may make sense only if you fill half of a 40-foot container. And if the teak furniture ships as knock-down furniture, it may require $10,000 to buy enough units to fill half of a container.
Shipping Small Sample Orders
The logistics of getting a small order imported may pose a greater challenge than meeting a minimum purchase requirement. Imported goods travel by either sea freight or air cargo. The product you carry will place you into one of these categories. For example, it doesn’t make sense to ship jewelry parts by freight, and furniture is too heavy for air cargo to be practical. But what about a sample order of apparel? Or pet supplies? Automotive parts or toys? These small sample orders can either be shipped via air cargo (at a higher cost, but with maximum speed) or consolidated on a ship with other items from the same country.
Shipping via air cargo is relatively simple for a supplier who may book directly with the air carrier. The order arrives quickly and clears customs quickly, and you are ready to test the market within a matter of days.
If you are shipping less than a container load by sea, you will wait longer to receive your initial order. Your goods will be held in the country of origin until a consolidator can bundle your goods with other products to fill the container.
Your shipping costs on a small initial order may eat up a good deal of your gross profit margin. But the initial order is a trial run at your dream. After you test the supplier, determine the marketability of the goods, and review potential profits, you can reorder on a larger scale. This will result in lower shipping costs per unit.
Other Business Expenses
Along with your initial purchase order, there are other ordinary business startup costs, such as licensing, accounting software, business logo design, marketing collateral, and more. These startup costs are outside the scope of this article and they vary, but are usually relatively small.
Given that a successful importing company can be managed by one person and given the ease with which an online store can be set up with moderate costs, it’s conceivable that an importing company can be started with US$1,000 to US$10,000 or less, depending on the cost of the product to be imported. There are hundreds of success stories of small business owners who buy directly from suppliers overseas and sell the products on eBay as a most basic example. Your business model may be quite different, but recognize that importing does not have a high cash requirement to break in to.
Most importing companies are small operations, especially in the early days. Because so much of the ongoing value in an importing business is the ability to develop relationships, the product or commodity you trade in may differ from one season to the next. You may move product merely for its profitability. Or you may stick with one product industry and become specialized in that item.
Many entrepreneurs find ways to cut corners in the early days to be able to launch their business. Sharpen your pencil and calculate typical startup costs for your business, including cost of space (if leasing), employee salaries, etc. Then add an estimated minimal sample purchase-order budget required of your product. Get clarity around your marketing strategy, and ready yourself for selling your importing business to suppliers overseas.
Locate several suppliers with a solid reputation, introduce your company, and ask for preliminary prices. Explain that you’re in the early days of your business and focus on the energy you will give to moving the supplier’s goods to market. Keep the upper hand by stating what your minimum purchase order amount will be to test the waters, not what the supplier wants of you.
As you can see, how much money it takes to start an importing business depends largely on the product and the required shipping method, not the minimum purchase-order size. Whether you have $500 or $5,000, you can start an importing business.
 Is It Possible To Start an Importing Business Without Quitting the Day Job?
With the internet giving us instant access to anyone on the other side of the globe via email, chat, and Skype, starting a global trading business has never been quicker and easier.
Any new business takes a commitment of time and start-up money. But an importer’s hours can certainly be spent after a day’s wage has been earned with an existing job. You don’t have to quit your day job to lay the groundwork for a small importing business. Many global suppliers are located on the other side of the world, and their work day is beginning after your commute home from your job. The day-to-day timing element couldn’t be a better fit.
Whether you are at a crossroads in your career, have concerns about the stability of your job with your employer, or are finishing school, owning your own business in global trade is very realistic with a minimal investment. This is a relationships business. People connecting with people, understanding what the market needs, and knowing where to source products overseas are keys to success as an importer.
What You Don’t Need to Start an Importing Business
- You don’t need to quit your day job. You are communicating at any hour of the day and moving goods with the help of key partners, such as customs brokers and warehouse personnel. All this can be done online or via phone without your personal presence.
- You don’t need a lot of start-up capital. Successful importing companies have long enjoyed sizeable profits operating as small businesses with small staff.
- You don’t need office space. A desktop and computer connection is where you’ll spend most of your time. This could be in your home, a small executive suite, or a coffee house providing wireless internet connectivity.
- You don’t need to sign a long-term lease for a storefront. You can market your goods and reach your customers with a modest website built on Yahoo for a minimum cost.
- You don’t need to commit to large warehouse space, or even give up space in the guest bedroom to store your inventory. You can have a third party logistics vendor handle all your warehousing and fulfillment from another state. You never need to see your product if you wish!
What You Do Need to Start an Importing Business
- A drive to own and grow your own small business.
- An internet connection and computer for communication and marketing your company.
- A desire to play a key role in helping your global partners succeed in their business.
- A curiosity to know what’s new in the marketplace, and excitement in discovering new trends and products before the rest of the world.
- A relationship with a customer base that is looking for new, innovative products.
- Enough capital to meet the minimums of the initial purchase order your supplier requires. This may be a smaller investment than you’d expect.
You can get a solid foundation built for your importing business without quitting your day job and finding large investors. You’ll be in complete control.
 Gain Control of When and Where You Work, and How Much Money You Make
Buy at the lowest offshore price. Sell direct to the consumer at full retail. Or discover a niche somewhere in between. When operating an importing business, you are in complete control of when you work, where you connect, and how much money you make.
Importers are in an excellent position in the supply chain. Manufacturers depend on the importer to develop markets for their items, and retailers look to importers for the latest and greatest gadget and trends coming from overseas. The importer can buy at the lowest cost, and sell at the highest price.
Every season retailers asks “What’s new?” They need to keep inventory fresh and exciting for their customers. An importer has first access to items coming into the market. This knowledge makes him a valuable partner in the retailer’s success.
The offshore manufacturer needs to receive purchase orders from new customers to grow his business. He depends on the importer’s knowledge of sales trends and distribution channels in worldwide economies other than his own, and to help sell his goods into these markets.
Importers have mastered the art of sourcing, shipping, and distributing products across borders. They enjoy a lifestyle that includes travel to exotic destinations (while writing off travel costs), finding the latest products from eager manufacturers, and many ways to make money. A small minimum order of US$2,000 could conceivably gross nearly US$9,000 in sales revenue if sold direct to consumers on a website. How is this possible? It’s the magic of straddling several distribution points in the supply chain.
Importing is a relationship business on a global scale. Some start an importing business because of a desire to travel, or love of a product. Others start because family or friends living abroad can be trusted to help with initial sourcing of goods. And others shift from employee status to business owner, building their dream from the ground up.
The profitability in importing is limitless, and the opportunities are as vast as the world itself. Realize the highest profit margins selling imported items direct to consumers on the internet. Or act as an importing agent bringing buyers and sellers together, where commissions are paid on the deal without ever taking title to the goods.
Realize how easy it is to build a global business with today’s internet, voice, and Skype technologies. Weigh the investment of time and cost with the reward of more control, more money, and business ownership satisfaction. Then answer for yourself, “Is Importing for Me?”
>> Get started now! Select the reference guides from the list located under REFERENCE GUIDES in the right column.
We’re giving you the key to uncovering trade secrets in the importing industry. The Import Channel IMPORT BUSINESS REFERENCE GUIDES are written for quick reading, so you can get back to doing business. The short topics are loaded with links to dozens of crucial sites that professional U.S. importers and customs brokers depend on every day to be successful. These FREE guides will have you working like the pros in no time.
Whether you are an established business owner looking to source products from overseas, or exploring the importing trade as a new business, the reference guides provide the basic answers used daily by everyone in this global industry.
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