In today’s highly competitive market, more online businesses seek ways to reduce their products’ per-unit cost and lead times to drive sales and increase profits.
As a current or future FBA seller, one way to reduce your overhead and grow your business is to find a reliable Chinese supplier or manufacturer and import goods to the United States for sale to US customers.
International shipping requires an understanding of applicable laws and how to navigate them, and this often requires hiring a professional logistics service to oversee the operation.
FBA — Fulfillment by Amazon
There are two primary fulfillment methods employed by Amazon marketplace sellers: FBA (fulfillment by Amazon) and FBM (fulfillment by merchant). In FBA, you ship or have your supplier ship products to Amazon FBA warehouses for storage and order fulfillment. You don’t have to worry about packaging, shipping, customer service/support, or return order processing — these services are Amazon’s responsibility.
FBA allows Amazon sellers to benefit from Prime selling, provided you meet specific performance metrics. It can also help you win Buy Box placement, improving sales volumes. The Buy Box is the part of an Amazon product page that includes the “Add to Cart” and “Buy Now” buttons. When an Amazon buyer clicks one of these buttons, the sale is assigned to a particular seller, depending on their performance metrics.
When you’re selling on Amazon, sourcing a Chinese supplier with which you can have an ongoing business relationship can be a lucrative endeavor. The first step should be determining what kind of product you want to sell. Online marketplaces like Alibaba allow Amazon FBA sellers to find companies capable of high-volume production runs of generic goods.
The products you’re ordering should not be patented, or, if they are, the supplier should have written authorization from the patent holder to manufacture and sell the protected technology. Always conduct your due diligence when sourcing supplies from abroad, including verifying the manufacturer’s quality control.
Direct or Third-Party Shipping
You’ll need to decide whether you want the Chinese supplier to ship your goods directly to Amazon fulfillment centers located in the United States or to a third-party service first. Each method has its pros and cons.
If you opt for direct shipping, you’ll need to provide your Chinese supplier with detailed instructions on how to prepare your goods in accordance with FBA requirements.
Direct shipping benefits from reduced transit times; however, it limits quality assurance. A lack of inspection and proper preparation can cost you more in the long run, especially if a higher defect or cancellation rate causes your performance metrics to decline.
You also have to pay customs duties and freight charges before receipt by Amazon.
If you have a trusted supplier with whom you’ve conducted business for a prolonged period, direct shipping to an Amazon FBA warehouse can be advantageous for low cost products shipped in minimal quantities where time is sensitive.
The same is true if you use an inspection service in China. However, it’s safer and potentially less expensive to have the supplier ship products to an intermediary when you’re getting started.
If your supplier in China ships to a third-party freight forwarding service like Asiana USA, we can inspect the goods, preparing them for FBA. Alternatively, if you have premises in the U.S., you can have the supplier ship the goods to you.
You can also have the supplier ship the goods as a consolidated shipment. This shipment can then be divided into separate packages for inspection, preparation, and shipment to fulfillment centers.
The initial capital outlay for third-party consolidated shipping is higher; however, proper inspection and preparation can offset the higher upfront cost, as you ensure a good Amazon FBA relationship.
Finding the Right Supplier
If you’re willing to pay to access them, it’s possible to use public import and export records to find established Chinese suppliers — including those used by your competitors. Alternatively, you can contract a freight forwarding and logistics company to find a trustworthy Chinese supplier/manufacturer for you.
If you decide to find suppliers through open platforms, such as Alibaba, it’s critical that you verify the authenticity and reliability of the prospective supplier/manufacturer before placing an order. You should know who the manufacturing team is and how they produce the goods that you’re ordering. You should always request product prototypes and samples before finalizing an order.
Don’t Pay the Balance in Advance
Do not pay the balance before shipment when placing your first order with a Chinese manufacturer or supplier. If you can, pay a deposit until the order arrives, so you can inspect it, verifying its quality, before paying the remaining balance.
Keep Track of Lead Times and Costs
Whether it’s your design or from a company’s catalog, the production of a new product requires lead time. This depends on various factors, such as the materials required, the complexity of the product, fabrication and assembly methods, and whether research and development are needed.
Accounting for these factors, you need to ensure that your inventory will not be depleted before replenishment from your Chinese supplier, which also requires an understanding of customer demand and local market conditions.
If your product has unique manufacturing requirements, for example, or its complexity dictates several sample orders or prototypes before finalizing the order, you need to account for these factors.
Lead times include the destination country’s import duties and taxes, customs, and inspection requirements. China also has export requirements that need to be met by the supplier.
In addition to the lead times that typically accompany the production of a new product, you also have to consider local cultural factors. If you’re a westerner, there are several public Chinese holidays you should be aware of, as these can affect lead times and shipping costs.
New Year’s Day
According to the Gregorian calendar, the Chinese celebrate New Year’s Day on the same day as those in the West — January 1. It’s not uncommon for Chinese workers to take three days off for this holiday.
Chinese New Year (Spring Festival or Lunar New Year)
The Chinese New Year is one of China’s most important public holidays. The holiday lasts between ten days and one month and occurs sometime between January and February. During the Chinese New Year, many workers will return to their hometowns to celebrate with their families.
Qingming Festival (Tomb-Sweeping Day)
Also known as Tomb-Sweeping Day, this holiday is observed by Han Chinese families, who visit the tombs of their ancestors to clean their graves and commemorate their lives. This holiday usually falls on the 15th day of the Spring Equinox — between April 4 and 6, depending on the year.
Unlike in the United States, Labor Day is celebrated on May 1 in China — the same as many other countries. This is also known as May Day. However, whereas Labor Day usually only lasts for one day in the West, the Chinese may celebrate it for up to a week.
Dragon Boat Festival
A 3-day holiday in China, the Dragon Boat Festival is a famous cultural festival that falls on the fifth day of the fifth month of the Chinese calendar and usually takes place in June. You’ll need to check to see which particular day, as this varies from year to year.
The Mid-Autumn Festival, also known as the Moon Festival or Mooncake Festival, falls on the 15th day of the 8th month on the Chinese calendar and typically lasts for at least three days. This usually takes place in September. Depending on the year, the Mid-Autumn Festival may take place on the same day as the National Day (Golden Week).
National Day, also known as the Golden Week, starts on October 1 and lasts one week. This holiday commemorates the establishment of the People’s Republic of China as a nation on October 1, 1949.
Shipping from China to the U.S.
Once you’ve found a suitable supplier or manufacturer, settled on a product to order, verified production lead times and quality, and negotiated costs and payment, it’s time to organize shipping and logistics. The most cost-effective option for the Amazon FBA seller is to use a reliable freight forwarding service to manage the complexities of shipping internationally, from customs clearance documentation to paying taxes and duties.
United States Customs and Border Protection (CBP) conducts random searches of cargo imported into the U.S. to determine legal compliance. The extent of a CBP examination is unpredictable, ranging from the use of X-rays to a physical exam by the Contraband Enforcement Team.
Ideally, your freight forwarding company is also a logistics service that can help you navigate the formalities associated with importing foreign goods, including preparing the necessary documentation.
If your goods are shipped by air, an air waybill, also known as an air consignment note, is a document showing proof of receipt of goods by the air carrier and serves as a way of tracking the shipment. Once signed by all parties, an air waybill is an enforceable contract. It’s the airborne equivalent of a bill of lading.
Multiple copies of the air waybill should be printed for your protection. In contrast to bills of lading, air waybills are non-negotiable.
The information contained in an air waybill should include the name and address of the shipper, the name and address of the consignee, the three-letter origin airport code, three-letter destination airport code, a declared value for customs clearance, the number of items, the gross weight, and a description of the goods.
Bill of Lading
If your goods are shipped by sea, a bill of lading shows proof of receipt of goods by the sea carrier. Like an air waybill, the bill of lading is a legal document and, once signed by all parties, is an enforceable contract between the carrier and the shipper.
It’s also proof of title. The air waybill and bill of lading serve the same purpose. The primary difference is the transportation method. The bill of lading contains the same information as the air waybill and must accompany the goods at all times.
The commercial invoice is an essential legal document in the customs process between you, the buyer, and your supplier/manufacturer. The invoice includes important information regarding the products you’ve ordered, their value, payment details, etc. The CBP will use the invoice to determine, in part, the duty that should be imposed on your goods.
The packing list shows the shipment’s contents, including weight, dimensions, and quantity.
Duties and Taxes
When you’re accounting for the cost of shipping goods from China to the U.S., one of the most important expenses is import duties and taxes. Unless you have a binding ruling from a U.S. customs broker, you can only estimate the duties that you owe for an import, as the CBP decides which category your products will fall into.
U.S. Customs Brokers
The United States Customs and Border Protection is tasked with preventing the importation of prohibited goods. If the goods you’re attempting to import don’t meet the CBP’s requirements, they may be refused entry or seized.
Consulting a licensed customs broker regarding importation can ensure that your goods meet the CBP’s stringent regulations. At Asiana USA, our customs brokers can provide the guidance necessary to ensure your goods enter the United States without issue.
You’ll need to determine the most appropriate shipping method for transporting your goods from China to the U.S. Depending on the method you choose; shipping can take a couple of days to more than a month. The ideal method depends on a few factors, such as the weight, dimensions, and quantity of your products, transit times, whether they’re perishable, and whether they contain dangerous or hazardous materials.
There are three primary shipping methods available: express, air freight, and sea freight.
Air freight arrives faster than sea freight. If your cargo’s gross weight is less than 200 kg (approx. 440 lbs.) and two cubic meters (CM), air freight is one of the most cost-effective shipping options available. By contracting a freight forwarding company to organize air freight, you can benefit from high-volume rates, lowering your shipping costs.
Air freight is a more complicated shipping process than air express; it will typically take between five and 10 days to transport goods from China to the U.S. following departure using this method. Air freight may be less expensive than air-express shipping on a per-kilogram basis.
While faster than sea freight, air freight is also subject to more restrictions.
If you’re shipping cargo weighing 400 kg or more (approx. 880 lbs.) and with a volume of two cubic meters or more, sea freight is the best option. However, sea freight is also comparatively slow.
Depending on the goods you need to transport, sea freight can take up to a month to arrive at a U.S. port.
The primary advantage of sea freight compared to express shipping and air freight is that it allows you to ship heavy, bulky goods cheaply and is subject to fewer restrictions.
There are two common shipping options available: less than container load (LCL) and full container load (FCL). The bulk, or volume, of the inventory you’ll be shipping, will determine the appropriate option.
If you don’t have enough inventory to fill a full container (FCL), LCL is generally more suitable. However, FCL allows for easier tracking and is less susceptible to damage or tampering.
Express is the fastest shipping option available when using shipping companies such as FedEx, UPS, and DHL. Express shipping can be highly cost-effective if you’re shipping cargo with a gross weight of less than 200 kg and a volume of one cubic meter or less. The courier service will usually charge you according to the weight or volume, whichever is higher.
Depending on the value of the goods you intend to import, U.S. customs may still apply; however, the process is less complicated than it is with air freight. You can also avoid requesting quotations. Express shipping is also useful for low-quantity shipments that you may order to determine the viability of a product or its demand before placing a bulk order with your supplier.
While inappropriate for bulk shipments or heavy cargo, regular mail can send lightweight, compact packages. If you need to request product samples, for example, regular mail is a relatively inexpensive option.
For valuable prototypes, you may consider opting for express shipping, properly insured. When you’re starting out, regular mail can be a practical method of delivering goods directly to the end user.
Before you establish a shipping method and order the shipment of your goods, whether to a location under your control, an intermediary, or an Amazon fulfillment center, you’ll need to create a shipping plan.
The shipping plan lays out every service you want Amazon to perform once it takes receipt of your goods, from labeling and packaging to inventory management.
Whether you ship to an Amazon FC yourself or have the supplier/manufacturer ship, you’ll need to ensure the goods are properly packaged. Although Amazon will package and ship products to customers in an FBA relationship, the goods still need to arrive at an Amazon FC in good condition.
Improper packaging can cause products to become damaged or defective en route, compromising the integrity of your inventory. If this causes your defect or cancellation rate to increase, this can jeopardize vital performance metrics and your reputation as an Amazon seller.
Air freight or sea freight, if you organize international shipments, you need to insure your inventory. An insurance policy should protect you against loss due to damage, theft, or seizure. Freight insurance should apply the moment your goods leave your supplier and until Amazon takes receipt at the American fulfillment center.
If you’re using an air express shipping method, such as DHL, you should be able to track the location of your goods using the tracking number that the carrier provides.
If you’re organizing the shipment of heavy, bulky products from China by air or sea to a receiving point in the United States, it may be necessary to palletize the cartons for ease of transport and storage. This may also apply to large quantities of products.
A pallet is a square platform on which products are packaged, usually bound by cable ties, shrink wrap, or another fastener. Pallets allow material handling equipment, such as forklift trucks and pallet jacks, to lift and transport products in quantity.
If palletizing your goods is necessary before receipt by Amazon, it’s advisable to palletize your inventory at a separate receiving point in the U.S. rather than in China. Palletization can be expensive, as it directly contributes to the weight and bulk of the shipment.
Choose Asiana USA for Your Importation Needs
At Asiana USA, we have years of experience in the freight forwarding and logistics industry, helping American businesses import Chinese goods into the United States for sale to U.S. customers.
We understand the pitfalls and hurdles associated with international shipping, from estimating and paying taxes and duties to preparing the correct legal documentation. For more information on how we can help, call us at (855) 500-1808.