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So, I am helping a client today that sources product from China. Out of curiosity I looked at his markup on the products- 500%
(I will not go into any details about the product or any other particulars )
I posted recently about an interest I have in starting up a small web store if not for anything else but to learn the business a little better so I can help my business clients with their e-commerce needs. I have a pretty good idea of what "niche" I want to pursue with it and many of the products can be sourced in China.
I am wondering if a 500% mark up is common for products sourced in China? I have looked at the Alibaba.com website numerous times but they do not quote prices so I haven't been able to get a good look at costs.
Markup depends on a lot of things, plus are you looking at the price FOB or is this the total cost, including shipping, customs fees, taxes, storage etc?
Sourcing from China can be challenging due to the culture difference and distance. Big issues are turn around time and quality control. Were you looking at selling items already being churned out or sourcing something unique of your own design?
Markup depends on a lot of things, plus are you looking at the price FOB or is this the total cost, including shipping, customs fees, taxes, storage etc?
Sourcing from China can be challenging due to the culture difference and distance. Big issues are turn around time and quality control. Were you looking at selling items already being churned out or sourcing something unique of your own design?
In the case that I mentioned this mark up included all costs involved in delivering the product to this business's warehouse.
I will personally be looking at existing products for my e-commerce site. I am working with a client right now that imports product they have manufactured on a contract basis in China. I am going to have to talk to him about the issue next time I am at his office. The client I mentioned in the original post is importing existing product and I think I will try to pick his brain a bit too.
When I posted the original message it was out of amazement. We all know China produces product cheaply but I never had any "hard data" to look at until yesterday. I realize that not "ALL" products will be this attractive BUT seeing the potential makes me want to pursue it further.
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I would say that 500% is the low end of average. Go on Ebay and you will find things like cables for electronics for $2 with free shipping, and they come directly from China. I ordered one item and got a message that it was delayed 2 days because of Chinese new year. Items you buy at Wal-Mart and other stores, especially craft items at places like Michaels, are 1/3 less than they would be priced if made here, but the cost to produce is about 1/10.
Shipping is not as costly as you would think. For small items they can fit thousand, or hundreds of thousands in one shipping container. Then they have to pay a trucker to deliver the containers to the store's regional warehouse or by rail to another state. When you divide the shipping cost by the number of items in each container it's pennies.
Well, to be fair you can go on Newegg and find those cables for $2-3 shipped. The difference is having a brick and mortar store where you can run out and buy it because you need it tonight and not next week. You're not going to be able to charge $15 on a webstore like BestBuy does for the same cable. And the markup on bigger items isn't as big or isn't being captured by the retailer. Supposedly the iPhone is marked up by 500%, but it's Apple who is keeping that. I imagine Motorola, HTC, etc have similar markup. Maybe not as much since they have better hardware than the iPhone but still a lot. Or the LCD flat panels that are price fixed... but again, that's done not the retailer marking them up.
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