Factoring in shipping costs

[gsudre]

Hello,

I just started working on my muse and I've been following the steps Tim describes in the book. My goal is to resell a product that is produced in Brazil, and I am trying to figure out how much to sell it for. I'd like to use the Ebay "auction" tip Tim mentions in the book, as well as putting the price in the website I'm working on to see how many people will be interested in the product. However, I have no idea on how to factor in the shipping costs to the wholesale price I already received from the producers.

The quote I obtained using UPS/USPS/Fedex seemed a bit high to ship one box of the product (i.e. more than 10 times the wholesale price), but I imagine the costs might go down once I start importing bigger numbers of boxes, and/or using different solutions to import the items. And I don't think any related costs with clearing customs are taken into consideration in the quotes from the services above.

In other words, I'd like to establish a base price to test the market and see how many people will be interested, but I don't know what the cost to import the items will be to do so, which will likely be a function of how many boxes I'm importing (which I'm trying to establish... but I think you get the point).

Please let me know any insights you might have in the situation.

Thanks in advance.

Gus

[seth121]

It really depends...are you importing it from brazil or are they drop shipping it to you and you pay the expense for it to be shipped.

If you are importing it then you may have to pay a VAT tax and a Duty tax and maybe some other fees depending on what the item is. Carriers are quite expensive thats why most items that are being imported are done by freight but in large quantities to bring down the cost. If it costs too much to use UPS/USPS/Fedex then you may either have to buy a container or rent a container. Another option is to have the exporter mix your items in with another purchaser in the same container if he offers that to bring down the cost.

But you should run some tests first before you do this.

[gsudre]

Seth,

Thanks for the reply. The testing part is exactly what I want to start. For example, in the situation described in the book the lady trying to sell French shirts adds $5 for shipping costs to the wholesale price, and from that figures out her profit margin to start testing the product and see how many people will be interested. In my case, how much should I be adding? Should I add this estimate from the carriers as if it was a worst case scenario? Wouldn't then the price turn some customers away, that potentially would buy the item if I had a better estimate of what the cost is going to be?

The producer is a very small company in Brazil and they don't export anything to the US, so I'd be the first client (and maybe only one, if things go correctly and in the future we can establish some sort of exclusivity contract). I'm fairly certain I won't need a whole container of the product (at least not in the beginning), but again I'd only know that after testing, as you suggested.

What companies should I contact that offer such services (e.g. using part of their container to import my stuff)? Should I do that now to have a better estimate of price for testing, or test first with a worst-case scenario price?

Thanks again,

G

[seth121]

I would factor the worst case scenario in pricing the item and then lower it from there. In conjunction with that I would then use PPC to test by placing the price in one of the campaigns and see what the conversion comes out to. Test the price and see what works and then see if the Brazilian exporter can match that price including your shipping and delivery cost. If not then look for another exporter who can do the same thing. So just run some test on pricing and see what feedback you get don't worry about the exact pricing yet. I would do maybe a 10%-20% additional expense on the shirt in the price just incase.

For sharing a container with another importer would have to be set up by the exporter your working with. If they are small then they may not have this option for it's customers. You may have to just have it sent by the three main carriers.

Whats the item you are selling so you I can know whether you may run into any problems when it comes through customs.

[gsudre]

Seth,

Thanks again for your insightful response. The product is a biodegradable spray made in Brazil. I was worried about problems at customs too, even though the product is harmless according to several tests, and it's been used in Brazil for years without problems. It has no CFC either. Do you foresee any problems in customs?

The producer is also the inventor, and their business is small and only makes this spray. They have a big market in Brazil and I think it will work here in the US as well (and the producer agrees).

I will follow your advice to try using the price as a variable in the campaign. However, because he is a small producer, and doesn't ship anywhere else, I'm afraid I won't have the options you mentioned to play with regarding shipping. That's why I was wondering about importing services and carriers.

Thanks again,

G