Ask HN: Any Internet retailers of physical goods here?

https://news.ycombinator.com/item?id=1027274

by retailnewb • 17 years ago

9 4 17 years ago

news.ycombinator.com

I have a source of stuff that I can purchase cheaply in one country. I would like to move that stuff to the US and sell it for more, through an online store. Does anyone here have experience with something like this and, if so, would you be willing to give me some suggestions on how to proceed? I'm basically looking for a "hello world" of the process (although maybe it's not so simple as to be hello-world-able).

Here are obstacles I think I will have to deal with:

-government (Taxes? Regulations? Do I need some sort of permit to do this, even if I'm not importing food? Can I just put things in boxes and mail them between countries? This is the area where I feel like I'm missing the most information)

-shipping costs

-keeping inventory in stock (when I first open, what's a reasonable amount - I don't want to make my first customers wait while I reload from a foreign country if I run out, but I also don't want to buy huge amounts of stuff it might turn out I can't sell).

Am I missing anything? Can anyone give suggestions?

brk2• 17 years ago

Yes, I've done this in the past (~10 years ago, but not much has changed).

I imported from China, Brazil, the UK and NZ. Exported/sold to almost every country.

For basic consumer goods, the majority of the time you just have to declare the export/customs paperwork properly, and make it clear that any VAT, import duties, taxes, etc. are the responsibility of the buyer. Just be sure to fill out the paperwork accurately (people will often ask you to under-value items, declare them as a samples, warranty replacements, and so on).

You'll likely want to incorporate an official business entity in your state. Specifics about taxes and regulations vary by state, but generally speaking you can run something like this out of your garage/basement until it gets large enough to warrant consideration of a more formal location.

My best advice is probably to find a decent local attorney and have him/her help you with all the initial incorporation paperwork. This shouldn't cost more than a couple of hundred dollars. You will also likely have other legal questions from time to time with this kind of operation, and it's helpful to have a relationship with someone who can give you good legal guidance and help you deal with any regulatory issues and so on.

For shipping, get a UPS account. They have a nice API and you can get real-time shipping quotes easily. Tack on $5-$10 for each order to cover packaging costs.

Stocking inventory depends on anticipated volumes. I started by placing small orders for items, and when adding new products would do some hyping and offer "pre-ordering" to get a feel for demand before stocking up. You will learn to get the feel of it, and because there are 1,000,000 different niches, I can't suggest anything more detailed. Also, if you can get products locally, even at much higher prices, it can be helpful to first source locally, even if you don't make much profit, to get a feel for demand, and then order direct.

retailnewb• 17 years ago

Thank you, this is extremely informative.

I'm a little unclear about one area: When you say to "make it clear than any VAT, import duties, taxes, etc. are the responsibility of the buyer", to what kind of buyer were you referring? If you were stocking inventory before selling to American consumers (assuming that you're an American), wouldn't you be the "intermediate" buyer responsible for import duties, etc?

It sounds like, in some instances, you were providing the goods directly to another distributor or end-consumer. If you imported from China and exported to the UK, would you actually keep inventory in the US? I'm not sure I see many advantages to that approach, except perhaps that you could get your goods to the UK slightly faster and maybe you already had inventory being distributed locally in the US (but shipping twice seems expensive).

I already have a corporation and a friendly attorney, so in terms of the regulations, it sounds as if I just need to dig in and start reading and asking my attorney questions.

Thanks for the info about UPS and pre-ordering, that's a clever trick I hadn't thought of. The idea about starting by sourcing locally to get a feel for volume is also interesting.

It sounds like you quit. May I ask why?

brk2• 17 years ago

It sounds like you quit. May I ask why?

I got to the point that I had a nice brick and mortar store, a good clip of web sales, and a couple of employees. I was working full time and doing this as a side operation. Another company kept making me job offers until the offer reached the point where it was worthwhile. However, I had to relocate and do a bit of travel, so it was going to be too difficult to maintain the other operation so I spun it down.

90% of my sales were in the US, so all the inventory was in the US (it got to the point that I had about $500,000-$900,000K in inventory on hand (home automation, home audio, home theater stuff)).

I paid taxes/duties/etc on anything I imported and on anything exported made sure that fell to the buyer.

The majority of the stuff came from US manufacturers or distributors and was re-sold in the US to dealers or end-users.

michael_c• 17 years ago

(For what it's worth, I used to interact a lot with similar businesses when I was working for eBay plus I am currently running my own similar business).

Here are some tips: 1. Keep your costs very low while you are figuring out if there is a market. If possible, use sites like shopify, eBay, Amazon, etc to find some first buyers for minimal web development and only order a relatively small amount of inventory - hopefully you won't end up with a pile of un-saleable inventory while working out if this can sell.

2. If you can source the inventory cheaper than is the current market price, that can be a good advantage - but don't think that cost will be your only advantage without worrying about marketing etc.

3. When calculating your sale price, factor in fraud, refunds, wastage, etc. Regarding fraud, it seems like a regular occurence - be hesitant shipping large orders to unknown customers with unverifiable addresses.

Hope that helps.

Ask HN: Any Internet retailers of physical goods here?

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