Phase 1 muse: how to ship products manufactured on another continent?

[bruno-31]

Hi everyone,

I am new on the forum and would like to introduce myself quickly. My name's bruno, 32, I am French and live in France. I discovered Tim's book about 9 months ago. What a discovery, indeed... It was all there, all I had dreamt for years: a free life in which YOU decide all the Ws: what, where, when, why!

Currently, probably like most readers of the book, this is not the case: I have a well paid but time consuming, geographically focused, 9-7, Mon-Fri job, plus (as if it wasn't enough) debts from a failed business I tried to set up a few years ago in a first attempt to escape this. And this latter part renders me dependent on the former, until I can set up profitable muses, which I am now firmly decided to do.

One of my ideas is a new dietary supplement. Original isn't it? :D Well, now that you have laughed, just let me precise that I have had a big interest in vitamin/mineral supplementation, orthomolecular medicine and nutrition for more than 8 years. I have come across hundreds of medical journal articles in this area, helped several friends with diverse conditions, etc. I am myself a regular consumer of dietary supplements. Just to say that it is a coincidence that Tim has developed his business precisely in an area in which I have so much interest and knowledge! Ok, hope I have the legitimacy now :D

I am currently completing the steps described by Tim before launching the business. My main problem comes from the fact that the US is THE place when it comes to dietary supplements. Thanks to the freedom given by the DSHEA (the US act regulating DS), the US market is by far the most advanced. However, I live in Europe, where stupid regulations have not allowed for such a development. Clearly, given the formulation and the spirit of my product, the place to manufacture and sell is in the US.

Problem: to complete musing phase 1 (you can see I am trying to closely follow Tim's advice ;)), I need to ship myself the low volumes I'll have in the beginning. However, this would be crazy as I would have to get the shipment from the US manufacturer to France, with customs, taxes, and maybe regulation problems, just to send it back to US customers!

Possible solutions:
1- find a US manufacturer who can drop ship. There are several. However, there is usually a minimum of $2,000-$3,000 a month, corresponding to more than 1,000 orders a month... Hardly a solution for phase 1. However, maybe it would be possible to negotiate very low quantities, by paying a high fee on each shipment? Are there people here familiar with drop shipping who could advise me?

2- find a logistics company that would accept very low quantities at an acceptable price. Any advice?

3- have a partner living in the US. This could also ease legal/administrative issues... Main problems: confidence and profit sharing... :D

All suggestions and ideas are welcome...
Anyway, thanks all for sharing your experience about musing... I hope to be able to do so in the future!

Bruno

[Sven]

I think check out the real cost of shipping it back and forth before starting up the much more difficult solutions you mention. It could be that it is not as expensive as it may seem just glancing at it.

As long as you buy in as a business and export as a business, it could stay reasonable.

[kamakiri]

Sven is right on there with his advice, but I think you are going in the wrong direction. If you can't sell your product in France, you aren't going to sell it in the USA.

Many many people have come here and, like you, on their first post asked the same questions. You are only going to set yourself up for frustration by going that route. With the mistaken assumption that Americans will buy more supplements than the French (or Europeans in general), you will have some almost insurmountable obstacles.

The reason manufacturers have a high minimum order (barrier to entry) is because they don't need the business from tire kickers. Find a local manufacturer, start selling locally, then expand to other markets. Anything else is jsut putting the horse ahead of the carriage.

[bruno-31]

Kamakiri, I understand your position. The problem is that the formulation of my supplement would probably not be allowed by current European regulations, which are, as I said, quite restrictive. It is true however that I should check this assumption!

Well... I think I am going to take these steps:
1) check if my product could be sold in Europe under current regulations
2) if ok, do the muse testing on a bilingual website (French + English), concentrating on the European market (French market alone would be really small)
3) if ok, import a first batch (20,000 tablets is the minimum I have found, which is manageable)
4) launch phase 1

On the other hand, if European regulations do not allow for the product... do you really think I should forget the idea?

[Omega]

Dear Bruno,

I too live in Europe, Portugal, and from my experience I can tell you that...

The shipping US-France-US will be huge, to the point of doubling your cost per unit....

If you ship more than 5 units of the same item you will have to pay import tax and VAT (value added tax). This part is very uniform across the Eurozone.
Considering you are shipping 20.000 tabblets I don't see how you can get around this.

In Portugal I pay about 30% of the declared price, in taxes. I can't tell you how much you will pay, because the taxes in France are different, plus the nature of the product also affects the taxes you will pay.
From what I know, taxes there are higher, so be prepared.

Also be aware that you will pay all of these taxes just as soon as the merchandise get into French territory.


As for the shippment itself, depending on your needs you can have it airborne or seaborne. The advantages of each, I think, are obvious.
For air, I have worked with
DHL, Fedex and UPS
(If you open an account with them you can get up to a 80% discount)
For sea, i have worked with
SDV

The air route is the safest, fastest and most expensive.
If you choose to do it by sea, be aware that you will likely have to share a container with other products.


I also strongly recommend that you talk to a lawyer and find out if:
You can ship that amount of product on your name, or if you have to open a company to get it done.
If you can get in the EU, IF the product cannot be sold here.
The state aid for exports that you can get.
And, how can you sell it in the EU.

If there is anything that I may be able to help you with, feel free to ask.

[bruno-31]

Thanks very much Omega.

On my side, I have checked the European supplement directive, and actually... it may very well be that my product could be allowed! I am currently checking further... That would be great, as it would make everything a lot easier, for sure...

Regarding taxes, 30% seems a lot, what is your merchandise? Normally you pay the VAT (19.6% here!), plus custom tariffs if there are some, but it depends on the product...

For the shipment, I'll see in due time, thanks for the info. But I guess that if you want to work on a "close-to-zero-stock" basis, quick shipment is preferable...

[Omega]

Regarding taxes, that's about it, I pay, rounded down, 20% in VAT plus 11% for import, about 31%
In all likeness you will pay something in those lines.
I belive that if you re-ship them back to the USA you should get your VAT and import tariff back. Usually at the end of the fiscall year.


I can't stress this enough, if you don't known anyone you can trust in the business and have no experience GET A LAWYER.

Before you go to this lawyer, get a list with all your questions, so you don't forget anything and have to pay twice for a second visit.... (true story, BTW)

Also, everything he says, get it in writing. Ask politely "wouldn't you mind giving me that in writing so i won't forget", or something in those lines.

[kamakiri]

From the way this is going, I would say stop right now, drop what you are doing and put a plan together.

With:


No Product
No formulation
No customers
No web site
No marketing plan

You really have no business putting the carriage so far ahead of your horse, and wasting your time by talking about tings like VAT tax and shipping non-existent products. Sure you might run into it in a few month's time, but here again, time is the fire in which we burn Bruno!

Think about compound time. What you do today will pay off far more down the road when you work on productive pursuits.

Why are you even here? Not that it isn't a good place, but you should be out in your own back yard hitting the turf, and talking to supplement manufacturers. Get an education, it is free to call them. They will most likely talk you through the entire process and help you formulate the final details. They will also tell you that international shipping of supplements is not viable unless you can supply a ream of paperwork, which is fine if you have a spare $10,000 to spend on it and a plan for recouping that investment, but not if you are you.

[Sven]

Hey guys, let's get something clear here:
A business does not pay VAT, it is used by governments to collect it from consumers.

If you import from the US, the vat is added to the price of the shipment, along with customs charge. But a business gets the vat back. Only the import duties remain and need to be incorporated in to the retail price of the product.

And if you ship products back to the US, you do not add vat to the price since you're exporting outside the EU.

[bruno-31]

Kamakiri,

Thanks for trying to get me back on the right track, however, I think you too are plagued with unverified assumptions:

- I have a product
- I have a formulation (tens of hours of bibliography research for it)
- I have a marketing plan and a "niche"
- I have contacted manufacturers (how do you think I got the minimal figures for drop shipping?)

I am working following exactly the methodology stated in Tim's book. When all the lights are green, I will:
- develop the website
- test the muse and try to attract the first customers
- if ok (which means: if potential revenues sufficiently exceed advertising+other costs), then have a first batch manufactured and imported

Sven:
you are perfectly right, however I plan to start the business under a special micro-entrepreneur status we have in France, in which you don't have to charge a VAT to the customer as long as your sales do not exceed 80,000 € a year. Of course you cannot get back the VAT on your purchases under such a status.

[kamakiri]

... plagued with unverified assumptions:

No, you aren't getting my point. Ignore that stuff, and focus on what is important. It is blatantly clear that you have not done any sort of due diligence.

Ignore my previous post because products, manufacturers, and formulations don't matter.

If you have one ounce of confidence in your marketing plan, post it here. My guess is that you have a marketing idea, because if you had researched your plan, you would have found that your competition in the US is pretty insurmountable.

Why do I say this? You are the 500th person to come here and say the same thing. Did you really think your questions were original?

Give this a read:
....Take the business ETR is in: information publishing. Not a week goes by when we don’t hear a proposition from someone who has a “brilliant” idea for a publication. It might be a new investment newsletter or a magazine about retirement or a website on health and fitness. “I can’t tell you what the idea is,” they usually say, “but when you hear it you will realize how special it is and you’ll be happy to fund it.”
Sometimes people want us to sign non-disclosure agreements. Apparently they fear that we will “steal their idea” and not pay them for it.
In my 25+ years of listening to publishing ideas, I have signed only two or three such agreements. And they were done years ago, before I really understood what I was doing. Nowadays, I don’t sign them. Not because I want to steal the idea, but because I know there is a 99.9 percent chance that (a) I won’t like it or (b) I will already be working on something similar.
That second situation is quite common. When one person comes up with a clever idea, it’s very likely that other people - often people employed by companies I consult with - have come up with it too.
The reason for these “coincidences” is easy to understand if you’ve read Malcolm Gladwell’s The Tipping Point (http://www.amazon.com/exec/obidos/ASIN/0316346624/earlytorise-20). Brand-new ideas seldom come to the market sprung from the thigh of Zeus. Usually, they have been percolating around the market’s periphery for years. Gradually, they reform themselves until one particular application of the idea catches fire.
Since the economy began to collapse in the middle of 2008, for example, every smart person in the investment advisory business has been busy thinking about new ways to make money in 2009. These individual thinkers have been talking to one another and making comments in e-letters and blogs. One specific idea spurs another. And, eventually, there’s an outpouring of similar ideas. So far, I’ve seen a half-dozen new products related to income-oriented investment advisories. And another half-dozen for products that focus on short selling.
The people coming up with these ideas are not stealing from one another. They are individually mulling over the same problems. It’s a sort of collective consciousness that results in so many similar ideas, only a handful of which will go on to make money.
And that gets us to the main reason why I don’t sign non-disclosure agreements. Because I know that ideas themselves are not so important. What matters is the way they are articulated.
In How to Get Rich (http://www.amazon.com/exec/obidos/ASIN/1591842050/earlytorise-20), Felix Dennis puts it like this:
“It really does not matter who gives birth to any particular idea. This is borne out by the law relating to patents and inventions. You cannot patent an idea. You can only patent your own method for implementing an idea. …Ray Kroc did not invent the idea of fast food. …There were thousands of ‘fast food’ outlets in the USA at the time. …His genius was merely to recognize this fact and implement a simple five-point plan: Standardize the food and prices, franchise the outlets, produce the food swiftly in clean surroundings, offer value for money, and market the whole shebang relentlessly.”
Yes, you need more than an idea to attract money. You need some unique selling proposition and, if possible, proof that the idea will work. You can have both things if - before looking for money - you build yourself a working model.
Let’s look at a few examples that define the difference between an idea and a working model.
Idea: a newsletter on short selling
Working Model: an e-letter that has been published for six months and has 100 paid subscribers
Idea: a retail jewelry store
Working Model: an operating business that has sold jewelry at flea markets profitably for a year
Idea: a musical comedy about Enron
Working Model: a script that has been performed to rave reviews at local theaters
The difference between an idea and a working model is significant - especially to a potential investor. The difference is two-fold:


Ideas tend to be generalized, whereas working models are specific.
Ideas are unproven, but working models show the potential for profits.

So that is the first and most important thing to do once you’ve come up with a “great” business idea. Turn it into a working model.
You don’t need to spend much money doing that if you are clever. By taking advantage of the Internet and using direct-marketing techniques, almost any business can be tested without a huge investment.
Almost any. Not every. You can’t create an inexpensive working model of a three-wheeled car, for example. Nor can you test out a new kind of luxury hotel idea on the cheap. But capital-intensive business ideas like those are best left to the larger businesses that occupy already dominant industries. For ordinary entrepreneurs, the good ideas are those that can be modeled cheaply.
Once you have a working model, you have a much better chance of getting the money you want. But where do you look? Check back in this space next Monday for the answer.

[bruno-31]

Kamakiri:
Ok, but you should recognize this is quite confusing, as you are the one who brings up the product issue just to say in the next post that it does not matter...

Regarding marketing, you're right, I have just a marketing idea. But how can you be sure that "competition in the US is pretty insurmountable" without having the slightest idea of the product and the niche? Supplements can have a lot of applications... If we believe this, BrainQuicken would have never been launched following your criteria...

I of course did some research on competition... Maybe not enough, as I mainly found one big concurrent, but with a completely different formulation (homeopathic). What should I do to complete the job? What would you advise to create a good marketing plan and working model? Remember I mainly have Tim's book as a reference... I think I have understood the main points of the book, but please elaborate if you think I need more...

And please... if answering to basic beginners questions bothers you, then...do not answer.
"The wise man does not try to impress others with his superiority"

[Sven]

I'm having a bit of trouble with the forum, maybe the same goes for Kam. The last few months there seems to have been a big influx in members, a lot of them putting up questions that show they have researched the topic they ask questions on.

For me this leads to staying away from topics.
But quite often I read replies written by people that are missinformed themselves and steer more users away from "THE RIGHT DIRECTION" than just the OP.

This of course means that I have all the answers due to infinite wisdom. Yeah, sure. Well I hope you know what I mean :)

Anyway, the "struggle" for me is to try and keep the forum focust (as if that were within my posibilities), or let it slide and find myself in a more interesting and nurturing forum at some point.

I like the way of working in the 4hww too much just to let it slide... But this may result in harsh critisisme every now and then. Lucky me, Kam usually steps up to this challenge. And he is very often right in doing so, even if his writing may have a sharp edge to it.

Leaving on the sharp edges makes for quicker writing, it's a 4hww thing.

[kamakiri]

Yes I might be confusing there, I was trying to stress that you picked the easy parts out of my post while ignoring the painfully difficult ones. I do try and cause a bit of cognitive dissonance in my posts. Mainly because as Sven mentioned, soo many people come here with an idea that is soo great they will make their 20,000 TMI and never work again. Those same people ask 3 questions, then never do the footwork and just give up.

I do not wish that on anyone. As Michael Masterson wrote, there sin't anything new. It has pretty much all been done. The people who are making money are the ones who are marketing well, selling well, and creating efficiencies where there were none.

The same goes for people who have an idea but are keeping it secret so it doesn't get stolen. Come on here. If your idea is good enough to be stolen in the first place, then get it out there, and hope it is. Let some other guy make those teething mistakes you were going to make and learn from them. Copy their ad words, copy their campaigns. It is like a gift, they do the hard work, and you reap the benefits. The fact is that there aren't that many good ideas.

Do you see the central point I am trying to make? Products, manufacturing, formulations, shipping, while being important, all pale in comparison to how your product is sold.

Also, I hate to be the one to tell you, but Tim doesn't even run Brain Quicken, and it never paid for any of his jet setting. You are correct, and yes Brain Quicken would never have been launched unltss it had a best selling book behind it. Just like winning a K1 fight with a technicality, and calling his small footnote in dancing a Tango World Champinship. He tells a great story, but the hard facts are just not there. Go back and read page 5-6, what Tim didn't mention is that his 'title' is a Guinness Book entry for the most consecutive spins. I am tempted to ask Sven to dance with me and beat it.

Back to the point, don't take things literally, focus on the process, not the outcome. Realize that any muse you make will have a lifespan of 2-3 years, so you will need to develope many down the line if that is a lifestyle you choose. Having a great process set up will make muse creation much easier. The products are the easiest thing to find.

[kamakiri]

I couldn't add links when I tried to edit my last post, but wanted to add some background.

Just an FYI, here is the cognitive dissonance wiki entry (http://en.wikipedia.org/wiki/Cognitive_dissonance).

And an illustration of Tim's 4 hour working week (read #4 if you read any (http://blog.penelopetrunk.com/2009/01/08/5-time-management-tricks-i-learned-from-years-of-hating-tim-ferriss/))

[bruno-31]

Kamariki:
Thanks for this post, I find it much more positive, even if the background is the same (I never challenged your core claims anyway).

I completely believe in the fact that marketing and the way the product will be sold is the central point. You need however to know in the first place if there won't be practical obstacles for selling the product. It would make no sense to design a brilliant marketing plan just to find out afterwards that you cannot sell the product because of cost/regulatory/technical issues. That was my concern when I first posted here.

Otherwise, do you mean that Tim has lied in his book regarding BQ? How did he paid his "jetsetting" then? (drop me a PM if you prefer)

Regarding the tango stuff, I actually don't care much about this, except if this is to imply that Tim is fundamentally a dishonest person. But that would surprise me, I would rather say he is a very good marketing person :D

One last comment on the blog link: I feel this lady has not really caught the idea of the book... Tim precisely defines what is "work": it is what you depend on to make the money you need/want. Everything that you're not forced to do for material reasons is not work. Period. It does not mean that it is easy or not time consuming. It just mean that you would do it anyway, independently of the money. In my opinion, this single, basic idea is one of the most important in the book.

[kamakiri]

I did not say he lied at all, nor does it say anywhere in the book that he made his living from Brain Quicken. I surely don't make enough to support me form my own supplement company Game Brain (http://gamebrain.us). Tim needed an example of a muse, he made one up.

He needed an outsourcing company, so he got one off a google search done by an outsourced Indian. He blogs about this stuff (http://www.fourhourworkweek.com/blog/2008/10/28/how-not-to-use-a-lawyer-a-personal-case-study-plus-protocol-marketing-correction/). Doesn't it give you a clue that he probably doesn't 'practice what he preaches'?

Tim's muse is a book, and he did a damn good job of selling it to bloggers. It was not available in book stores for weeks, while it stayed in the Amazon top 10. Bloggers made a ton of money off recommending his book, so they talked it up more.

Tim outsourced blog comments, Tim outsourced research for his book.

-Winning a K1 fight is a victory. Winning it on a technicality is hollow
-Winning a tang championships is a victory. Getting a previously un-measured line in the Guinness book? Nothing special.
-Making up the story about a 'muse' to blow smoke in reader's eyes? That is WSJ top 10 material.

You are right. Tim is a very good marketer. Is he entirely honest? I will make no judgement, you need to do that for yourself, if you consider a lie by omission a lie, well then you have a problem.

[bruno-31]

Well, I'm a bit confused again... You master cognitive dissonance too well ;)

Tim clearly claims in the book he made $40k a month with BQ, and even up to $70k... If this is not enough to make a living, I missed something... So, did he lie on this precise point?

What is exactly BQ actually? Even if he cloned your (or another's) business just for the purpose of the book, it is still a superb achievement to generate such an income with so few time (at least after changing his way of working)... So... what is the end of the story?

I think what we are interested in is to achieve our goals, not to know if Tim actually won the world championship of pasta eating... Of course his way of presenting his achievements is heavily biased, but I don't care as long as the core ideas and methods of the book are valid (this recalls me the "Glycemic index researcher" stuff, what a joke)

[badhank]

Why cant you just have it made locally and say its for dogs or plants something that isn't covered by restriction at the time of production, then label it otherwise when u ship it 1x over to the states for distribution?

[bruno-31]

To the best of my knowledge, there is no manufacturer in Europe that could do my product... Usually, all supplements sold here are made in the US.
But this is no longer a problem, as I should be able to sell my formulation here.

[JKohlbach]

We all need to go back and look at the chapter on "reputation building"... precisely what Tim himself has mastered. It sounds freakin' cool if you've got world records to your name. It's a boasting point that adds credibility to what he's selling. Why can't you guys see that?

Kam i have to disagree when you say he doesn't mention he made a living from brainquicken. He clearly states it's a supplement company he formed after his work in Silicon Valley, built it up as a business, then streamlined using the principles in the book in order to free himself of it. (yes, i'm omitting alot of time related details here)....

Technicalities aside, is this not what we are all trying to do?


----

Back to the original post, have you investigated asia for manufacturing your pills? I imagine it would be cheaper than the US.

[kamakiri]

I am not going to split any more hairs here. Take what you will from your interpretation.

Just go back and read the book. Tim never tells a direct lie, but he is very oblique about the whole situation. Even a remote cursory study of brainquicken.com will show you that he has barely any sales. (And in no way was I hinting he stole my idea. Quite the opposite actually.)

Every single income figure in the book is listed alone. I went through them for Tim's 4HWW version 2 wiki, to stress the point that they jump all over the place with no reference to a factual date or source.

The one time they are mentioned together (p. 16), Tim references a figure of 40k, but doesn't say it is his income. It seems that it means that at first glance, but really, that figure could be company wide sales.

All I am saying is that Tim is a master of semantics. He puts the spin on EVERYTHING he writes. Be that blogs, books, or twitter.

[bruno-31]

JKohlbach:
Yes, I'm going to try that also. It would be great if I could save on product price, because my formulation is a bit expensive.
However, I am a bit reluctant with, for instance, Chinese manufacturers... There have been some bad stories about the quality/purity of their products... But I'm going to have a look.