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Fulfillment Costs - Does it even work for $20 items.

by wargamez
7 replies
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I'm trying to figure this fulfillment game out. I have an item that I can buy from China for $4 (plus there's shipping costs to get it here). I can sell it for $20. I can also buy this same item on ebay for $9-$10 with free shipping.

Can someone explain how fulfillment can even work?

Here's the shipwire calculator for shipping. I think there's a ~$2.50 charge on top of that for handling+storage.



$5.55 + $2.50 = $8.05...nearly the cost of buying directly from ebay. About $5 for my item costs on top of that. It doesn't make sense.

Here's the USPS calculator for the same package...



$3.32.

If fulfillment handling is $2.50 and shipping was $3.32 then I could at least match the ebay price and be in business.

My question is, is there any point if an ecommerce site with 3rd party fulfillment sells anything at all under $10?

How can I get it to work for me?
#$20 #costs #fulfillment #items #work
  • Profile picture of the author kjamesnv
    Lower priced items like this are tricky to make the numbers work. Once you factor the inbound freight and duties from China there isn't much profit margin. Look for products selling above $25.
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  • Profile picture of the author suredone
    The lower the margin, the higher the quantity you need to sell in order for it to make sense and also the higher the risk factor of profit loss by returns, lost packages, managing questions/returns/orders etc. If you can get your costs even lower by buying in larger bulk, that would be the key.
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    • Profile picture of the author Importexport
      Originally Posted by suredone View Post

      The lower the margin, the higher the quantity you need to sell in order for it to make sense and also the higher the risk factor of profit loss by returns, lost packages, managing questions/returns/orders etc. If you can get your costs even lower by buying in larger bulk, that would be the key.
      Buying in larger bulk is not the key. The idea of huge discounts for larger quantities is a myth. Please see my post today in the thread: Average china markup

      The key is to buy right and that means to buy from the real manufacturer. If something is selling at $9 -10 on eBay, my guess is that you have been dealing with a trader or wholesaler and you probably found them on Alibaba.

      They most likely claim to be the manufacturer, but on Alibaba and most of the popular B2B sites you can take those claims with a grain of salt.

      A product selling at $9 - 10 on eBay probably sells ex-factory for about $2. I am not talking big quantities. For buying in the thousands you might get the price down to $1.96.

      I have taught hundreds of newbie importers how to order small quantities direct from genuine manufacturers regardless of the huge MOQs they quote, and how to be sure they are getting the best price.

      It depends on how you approach them, but first of all you have to find the manufacturer. There are a small number of sites where you can be sure that their claims are true.

      I don't disclose these sites online because you need to know how to source safely before you start trying to find manufacturers. You can find a lot of helpful information on my thread: If your secret B2B portals are so safe why don't you share?
      Signature
      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author SmallBusinessFulfillment
        Yes, you can make a $20.00 item assuming the product weighs less than 1lb work. A large volume fulfillment center typically has negotiated rates and may use a hybrid delivery model including tracking, insurance, and an expedited service. For example, your product weighs 4 OZ and shipping to across the country, you are probably looking at less than $1.95, for shipping and another $0.75 for pick, and pack. We have several profitable customers that selling items in the $15-20.00 range.
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  • Profile picture of the author wargamez
    Hey ImportExport,

    I actually bought your ebook because I'm in that hungry state. Your fulfillment section was super light though. It was the first chapter I jumped to but nothing there.

    I got some tips from it but not sure it helped me find a manufacturer.
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    • Profile picture of the author wargamez
      I just had a call with shipwire who said their shipping calculator doesn't always work properly.

      They said shipping would be $3.66 for USPS if the item went in an envelope with no insurance. The extra cost from the USPS website quote is an expanded carrier fee plus a small margin they have. They don't get a discounted rate from government post services.

      Their handling fee is about $2.50....depends on volume/storage space etc.

      So it's $5-6 to send a small package with shipwire.

      Things would work if I could find the $2 supplier! or the $1.95 + $0.75 fulfillment service.

      Both of these together could put me on the way to a successful business. Why are they hiding though! I'm feeling like it could be a mirage...
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      • Profile picture of the author Importexport
        Originally Posted by wargamez View Post

        I just had a call with shipwire who said their shipping calculator doesn't always work properly.

        They said shipping would be $3.66 for USPS if the item went in an envelope with no insurance. The extra cost from the USPS website quote is an expanded carrier fee plus a small margin they have. They don't get a discounted rate from government post services.

        Their handling fee is about $2.50....depends on volume/storage space etc.

        So it's $5-6 to send a small package with shipwire.

        Things would work if I could find the $2 supplier! or the $1.95 + $0.75 fulfillment service.

        Both of these together could put me on the way to a successful business. Why are they hiding though! I'm feeling like it could be a mirage...
        Fulfillment does not get a lot of attention in my book because that is a marketing issue. I don't pretend to be a marketing expert, but I do know how to safely source and import.

        If you have been unable to find a low cost supplier who is a genuine manufacturer, you need to have a good read of Chapters 8 to 10. They cover 13 pages and should help you find what you are looking for.

        If you have no luck, PM me. Those low prices are possible and I want you to find them.

        If you need help with fulfillment, contact my support team at the address you were given when you bought the book.
        Signature
        Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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