One of the hardest things for entrepreneurs looking to start their import business is choosing the right product to import. My focus on this site is on products that can be purchased off-the-shelf from China (i.e. wholesaled), not invented, so this article will help you to choose one of these products.
China is the factory of the world and every product you can imagine can be sourced in China. The key is to find the right product that can be profitable for you.
Secret #1, #2, #3: Know Your Niche!
The first step in picking the right product to import from China is critically important. You must know your niche! (we’ll discuss niches shortly)
The biggest mistake I see new importers making is to pick a product that they think will sell well, normally because they’ve seen someone else selling such a product with success. An Australian who has never seen an ice rink in their life sees someone selling thousands of hockey skates on eBay and wants in. Or a vegetarian sees a duck call consistently being one of the top selling Sports Goods on Amazon and decides to get into importing hunting supplies.
If you don’t know the niche you’re looking to get into front and back you will not be able to create effective marketing, you won’t know how to price your product, you won’t know how to do quality inspections, and so on and so on. Even if you somehow manage to achieve short term profits, you will eventually be eaten alive by someone who knows the niche they’re operating in.
Most everyone has a hobby or an area of interest they’re interested in. These are normally the best starting points to identify a great product to import from China. If you don’t have any suitable hobbies or interests then try and identify an area you don’t mind learning about. If you’re really having a hard time, in my Importing Course I go into a lot of detail about how to find a niche and also offer a free Niche Brainstorming Guide with hundreds of potential niches to help you pick the best niche.
There’s a saying that if you read 10 books on something you’ll be smarter than 90% of the population on that subject and in reality I think the number of required readings is really more like 2 books! So if you don’t have a hobby or interest that’s a good candidate to source products from, find a hobby or interest!
Secret #4: Choose a Niche that Doesn’t Compete with Amazon or Walmart
If you’re a small entrepreneur looking to succeed in importing, you must pick a relatively small niche. Recognize that all of the major retailers like Walmart and Home Depot, import directly themselves from China. If you don’t believe the scale of which they are importing from China, take a look at the Customs records I retrieved from Import Genius after doing a search for “Walmart”. You can see that Walmart recently has imported over 24,000 different shipments from abroad, with China being the largest source country. Don’t let this burst your bubble though. These retailers only import the most popular products, things like furniture and gardening gloves.
The best niches to be in are areas that the major retailers don’t sell products in. An example I routinely bring up is Horse Riding equipment. Walmart does not sell any Horse Riding equipment nor does Home Depot the last time I checked. I don’t know about you, but I would love to be in a niche where I’m not competing against companies like Walmart!
My test for identifying a good niche is simple: I go to a magazine stand at my local grocery store and I see if that niche has a magazine devoted entirely to that subject matter. Things like model railroading are great potential niches. If the niche has an entire magazine devoted to it then it means a) there’s obviously a fanatical audience for that niche, b) magazines normally have to sell advertising so that niche likely has a wide product assortment that can be advertised.
I’ve seen very few entrepreneurs start importing businesses where they are sourcing products that compete directly with some of the largest companies in the world. I’ve known many entrepreneurs to have successful companies sourcing products that might seem relatively small and mundane but making considerable incomes from it.
Secret #4a: Using the Amazon Category Tree to Find a Niche
Another great way to brain storm for a niche is to use the Amazon Categories Tree. Almost all major retailers have some sort of category tree, but Amazon conveniently publishes theirs to be used by Third Party Sellers, listing over 13000 potential categories to import from.
Amazon’s categories follow a certain hierarchy. For example, here’s the hierarchy for Rice and Potato Servers:
Kitchen & Dining / Tableware / Flatware / Serving Utensils / Serving Spoons / Rice & Potato Servers
I’ve seen some sites recommending new importers to look at Amazon’s first level categories (i.e. Kitchen and Dining) and looking for a product to import from this category. This is far too broad. You should narrow your niche down to a fifth level category or lower, i.e. Serving Spoons. This helps you to focus your area of expertise, and more importantly, most mass-market retailers will only stock 1 or 2 items in a fifth level category (if any) and therefore there’s a great opportunity to add variety to that category.
You can download an Excel Document with a list of all fifth level categories or lower from here: Listing of All Fifth Level Categories
Not all of these categories are necessarily great potential categories to import products from, however, many of them are. Here are some categories that immediately spring to my mind that could be good opportunities and warrant further research:
- Electronics / Camera & Photo / Accessories / Photo Studio / Storage & Presentation Materials / Slide, Negative & Print Pages
- Electronics / Camera & Photo / Accessories / Photo Studio / Storage & Presentation Materials / Storage Binders
- Home, Garden & Pets / Pet Supplies / Houses & Habitats / Accessories / Aquarium Décor / Plastic Plants
- Home, Garden & Pets / Patio, Lawn & Garden / Gardening / Watering Equipment Automatic Watering Equipment / Drip Irrigation Kits
- Home, Garden & Pets / Furniture & Décor / Furniture / Other Furniture / Chairs Directors Chairs
Secret #5: Pick a Product that Retails for More than $50
This applies especially if you’re just starting out. I’ve seen many first-time importers ecstatically import 100 $2 widgets that retail for $4 in stores, only to be burned when those $100 widgets ended up costing them $800 in freight. Higher ticket items give you more margin for error. As you get more experienced and have a better idea of your true costs you can explore lower ticket items, but in the beginning your best advice is to steer clear of them.
More so, even if you sell a product for $5 that normally sells for $10, most people will not go significantly out of their way to save $5. They will not wait for it to be shipped and they will not hunt around Craigslist. They will simply buy it at Walmart or another big box retailer. However, many people will exert considerable effort to save $25 or more.
Secret #6: Pick a Product that is Low Risk
The scariest thing for someone importing from China is importing a product that ends up hurting someone. Not only will you have the moral burden of harming someone you’ll also likely be sued for every penny you have. If you want to see an example of how product liability can ruin your business and potentially your life, see this article on Bucky Balls here. Many new importers start off their companies as sole proprietorships or similar entities, meaning you ultimately bear unlimited liability.
Most products you can source are low risk. Dining room furniture, for example, has very little risk. A baby crib, on the other hand, has very high risk simply for the fact babies are involved. Soccer balls aren’t inherently dangerous but skateboards are.
We live in an extremely litigious world so avoiding any possible product liability lawsuits is in your best interests.
Secret #7: Pick a Product That is Labor Intensive
China’s competitive advantage in manufacturing is their near unlimited supply of cheap labor. So the more time a person needs to spend in manufacturing a product and the less likely it is that it can be automated by a machine, the more likely it is going to be far cheaper to be sourced in China than it can be in a Western country.
A lot of new importers want to import electronics from China (which is generally a horrible idea in my experience if for no other reason than the amount of competition one faces). However, electronics are normally designed by very highly skilled computer scientists and engineers and the amount of assembly line labor involved is a low cost relative to the cost of research and development. Therefore, electronics are often not a good item to import. In fact, if you go shopping in China, you might be surprised to find that while clothing (a very labor intensive item) can be as much as 90% cheaper than in the West electronics are relatively comparable in price.
Do a survey of a few products in your house and look at where they were made. You’ll find the very high tech products are made in countries like the USA, Japan, etc. and the simplest products are made in countries like China.
Secret #8: Pick a Product That Isn’t Counterfeit/Trademarked/Patented
Hopefully this point makes sense without explanation but for some it may not. More over, it’s easy for even the most intellectual property conscious individual to run into problems when importing from China.
Do not import counterfeit products. This goes without saying. If there is a brand name attached to a product that you recognize in the west, i.e. Apple, Samsung, Gucci, Rolex, etc. then this product is almost certainly counterfeit. If you see a little ® or ™ sign beside a product, then it is trademarked and therefore a counterfeit product. Most individuals do not accidentally import branded products (but quite a few try to deliberately import such products) so hopefully this will not be an issue for you.
However, it is sometimes easy to accidentally import patented products, which are in essence counterfeit products. China takes intellectual property laws like patents quite a bit more liberally than we do in the West, which is probably no surprise to many. That aside, a patent valid in the USA or other country is not necessarily applicable in China, which muddies the water even further. A Supplier will not hesitate to sell you a product that is patented in your home country and more importantly, they won’t research whether a product is patented in your country. That’s your job.
Determining whether a product is patented is simple. Most patented products clearly say on the product packaging that they are patented. If you’ve seen many different brands of a particular product being sold in stores, then it probably is not patented. If a product has been around for a very long time (generally 20 years or more) then it probably isn’t patented.
Interested in creating your own million dollar brand importing products from China? Mike and Dave will show you exactly how you can do it to with their Importing Kick @#$ Products from China Course. Read more about the course.