You should buy Walter’s book “Import Direct from China”

I’ve had the pleasure of corresponding with Walter, over the years, as members of an internet marketing forum. He’s retired from active trading and now serves as a passionate advocate for businesses who want to learn how to import without purchasing obscene quantities of merchandise. First, let me say that I’m an experienced importer. Not as experienced as Walter, but I sell more imported merchandise than I sell domestic merchandise. I went to a trade show in 2007 and decided that I wanted to build a business around importing.

But it was not without pitfall. Oh I’ve had highs and lows, successes and complete wastes of money. So when I came across his book, I was curious. Buying an ebook is a difficult thing because you don’t want to buy a book from a money hungry tool who just figured they knew one thing that others didn’t and decided to write a book full of basic information anyone should know. I hate that. I really, really hate that. So you spend your time trying to figure out if the person knows more than you already know, so that you will learn something from the book.

Walter knows a lot. Even if you have experience importing, it’s worth the price just to learn different techniques and tips because even if you only learn one thing, it will probably make or save you far more money than you paid for the book. You’re at a perfect time to begin to learn about importing because the barriers to trade are rapidly being crushed and it’s far easier for a small business to get in the game, with minimal investment, than it was even just a few years ago.

This is not a book about importing designer or branded clothes and accessories. If you read my guide, you know why it’s not about that and anyone selling you something about that is probably completely full of it. This is a book about importing and using that business opportunity to build a sustainable business for yourself, that you can scale. Tons of sellers are making six and seven (even eight) figures importing merchandise, branding it, and selling it on amazon.

The best thing about purchasing Walter’s book is he’s around to answer any questions. If you’re serious about importing from China and building a business, this is the book to buy.

import-china-buy-book

Why no one is helping you with your apparel business

I get a lot of emails, most of which I ignore. There’s one particular type of email that I get (nearly daily) that irritates me so much that I figure I’d write about it.

This is why no one is helping you:

I am starting an _____ store in ______. I wanted to know what type of brands you could supply me and how can you help?

I’m not helping you and I’m not even replying to help you. When I sold on ebay, there were sellers who would say something like this in thier ads:

If you don’t read what I write in my description, it’s not likely that you’ll read what I write when I answer the question you send me because you don’t respect my time.

When people send me an email, and they clearly don’t get that I don’t actually sell clothing, I don’t respond.

And I’m sure others don’t either. In fact, many of my industry colleagues echo this sentiment. The ones who don’t get what they do tend to be the biggest time wasters.

Now, here’s the other part where you’re wrong: Nobody credible is going to chase you for your business, even if you are well funded (or claim to be). The fact that you’re not reading and you don’t understand how to contact manufacturers is an indicator that you’re unlikely to succeed. Why bother? There’s not enough quality discount designer merchandise on the market. Good jobbers barely have enough merchandise to go around, they don’t really need to hand hold newbies. A scammer will chase you for your business relentlessly because it’s a one shot deal, they need a steady flow of newbies.

Lessons Learned in 2003, part 2

I learned that some people are way too sensitive and just aren’t cut out for this business

Off Price isn’t easy. Even some of the best jobbers can be curt when you try and deal with them. But people expect to get Nordstrom treatment in this industry. Really. And they get all tizzy when you don’t bow down and kiss their feet. Really. Some people need to just get a thicker skin. Mostly it’s women that get all offended and sensitive. People read my site and email me asking how I can be so rude. No dear, I’m to the point. And I’m about as open as you are going to get, you know.

I remember years ago when I was first speaking with an old timer in the business. He was short and to the point. You know, sometimes you want people to nod in agreement and pat you on the back, tell you all your ideas are fabulous and you’re going to be a big success. Well, that’s what family is for. But when you ask real people real questions, expect to get real feedback.

Anyway back to this guy, he told me like it was. And it took me a day or two to recover, to get over what he had said. And I just had to suck it up because the guy had been in business for decades, and if my ideas were whack, he was going to tell me. If I was looking for agreement, I had other places to go to get that, but I was looking for honesty.

I’ll give you honesty, if you ask, if you can’t handle the truth, don’t ask.

I’m learning more and more that deals are everywhere.

People constantly amaze me with where they get merchandise. I don’t tell everything I know because some people relay a source in confidence. As a result, there are companies I know about that are not in the guide. Every company in there is there by a vote of confidence from a buyer or some buyers. So sometimes, when there is a company and I get feedback that they are cool, I put them in. But if someone comes and tells me about some obscure source that is now their best kept secret, well I won’t go and tell that secret, you know. I respect what people have to do to stay in business.

People don’t understand that deals are all around you. But you have to get involved in the business, you have to make connections, and you have to get off the internet sometimes (most of the time).

I learned that you have to respect the limitations of the marketplace
There is a finite amount of merchandise to go around. When you are a normal regular retail buyer, and you need 200 pieces of something, you pretty much get it. They take orders, the make a little more than what was ordered and they deliver.

When you are off price, you are basically trying to get a piece of a finite amount of merchandise. No one manufactures an unlimited quantity of merchandise for the of price market.

The reason this comes into play is that someone will email me or a vendor saying, “I want 200 pieces of Betsey Johnson.” And it’s like, okay because, you know, I just happen to have 200 pieces sitting here that just got overlooked by all my other customers. One jobber said to me, “I’m lucky to come up with 20.” Limited quantities. Limited quantities and it also sells so fast that you’d have to have that relationship with that jobber, make your needs known BEFORE the merchandise arrived.

Some jobbers sell out of something so fast it’s amazing. Hey, if they still have it after a few months it probably wasn’t that good to begin with (or is overpriced).

Lessons Learned in 2003, Part 1

At the end of each year I usually reflect on stuff. Maybe you don’t want to read my lengthy expositions, but I think about what I have learned. What has changed, what has remained the same. Blah blah stuff like that. Sometimes it inspires me to make huge revisions to the guide, sometimes not. Over the next few days I am going to write about the things I learned in 2003. Starting now, I suppose.

I learned a newfound fondness for eBay
Sometimes when I speak of eBay, people get the impression that I hate it. Well it’s not eBay per se, it’s what I call the “eBay mentality” which is basically thinking inside of the eBay box. I have gotten to speak with a person here and there from eBay and have developed a level of respect for what eBay is trying to do. However because of the way eBay is set up, sometimes their interests clash with yours. For example, eBay heavily solicits wholesalers, manufactures, distributors and jobbers to sell at auction. The thinking is that they can sell wholesale to some of you. And I suppose that’s one way to look at it, but the way I look at it is that most of you would roll over and die if your supplier started selling on eBay, whether they were selling wholesale or retail, it would just kill a lot of you.

But I think eBay is cool, for some people, that’s the best place for them to sell. Others are capable of moving outside that box, but for whatever reason, won’t.

I learned that some people don’t want to be helped and there isn’t anything I can say
The people who are always looking for the pie in the skill deals just kill me. And they never stop coming. There will never be a shortage. They always want something for nothing. It’s funny how they say a fool and his money shall be parted. It’s true. Some people email me and say they wish they had seen my site a year or two ago or before they bought this or that deal. But sometimes I wonder if I would have even gotten through to them then. A mind won’t accept a certain message until it is ready to accept that message. I always joke with some of my associates that the best customer is the one that has been ripped off because they are a lot more realistic than the idealistic new buyer. A LOT more realistic.

I learned that some people never learn
They don’t. They just don’t. Some people like being in their “rut” and don’t really want to be helped out of it no matter how much they ask for help, suggestions or feedback. Truth is they like being where they are but want to give the image that they are trying to do something.

I learned to appreciate the difference between milking a cash cow and hopelessly following trends
Lots of people want to know where to buy the hot this and the hot that. For the most part, I don’t even try. There is a difference between spotting a cash cow and wanting to milk it while you can and just following what’s hot. Some people have a niche, that niche serves them well, they know what they are doing, know what they are selling. And then there are those that don’t have a clue that just want to sell whatever they think is hot for the moment. Don’t know the difference between Seven or Paper Denim or Blue Cult, but want to sell it just the same. Can’t tell the knock off hoodie from a real Juicy but want to sell it just the same.

Things you should never do- Lesson 3- Refuse to learn the lingo of the retail trade

One of the things I find fascinating is that off price retailers have a greater tendency to dismiss traditional retail concepts. If you have a retail operation, there is a term called “open to buy”. You can google this term to find out more than you ever want to know, but in general, open to buy is your purchasing budget for a particular time frame. Calculating this is based on many factors, such as your cash flow, your projected sales, how much inventory you already have on hand, how much you have on order, and so on. Most off price sellers that I have come across completely ignore this concept in favor of hoarding (as I like to call it).

Let me give you an example: a jobber has a deal on high end merchandise that they get once every 4-6 months. Your typical off price seller looks at that and figures that they need to buy enough inventory to last them until the next deal comes in. So they buy 4-6 months of inventory at a time. Usually, people like this never turn the inventory over fast enough to make a good profit and by the time that next deal comes in, they are not sitting on as much cash as they had hoped.

Part of the problem is that many off price apparel sellers behave with a starvation mentality, they hoard as much inventory as they can because they don’t know when the next deal is coming. It’s a bad way to eat, and it’s a bad way to run a business. It almost never works.

Let me say that again, it almost never works.

Purchasing must be based on your projected sales and inventory turn (you can google that too). It is unwise to buy more than you can sell within a reasonable amount of time, because you are tying up your cash and retail (I don’t care what you sell) is a cash flow sensitive business.

If you’re serious about off price selling, you really should pick up a good book on retail management, read a few websites, or take a class. I know far too many sellers struggling because they refuse to implement standard retail management concepts, that are time tested and exist for very good reasons.

Things you should never do- Lesson 2: Don’t buy an entire lot if you’re small

I know I’ve discussed this before because this consistently comes up. Should I buy an entire lot or a trailer at a lower price or go through a jobber?

A couple years ago a friend and I analyzed this issue. We had a very complex Excel spreadsheet that analyzed very different scenarios. For the data, we had a few spreadsheets of Macy’s and Bloomingdale’s manifested trailers. At this time my friend was considering opening an off-price store and selling some items on eBay and we needed to figure out if it was worth her while. At that time, you could buy an entire trailer from Federated at 10% of original retail and the jobbers were selling it at 14% (a 40% markup — a lot of people say 4%, no it’s 4 percentage points, but 40 percent).

Anyhow, we looked at every scenario and what would be a safe retail price for each item. We even figured in items that would have to sell at or below cost and items that would have to be liquidated.

When it came down to it, it was only slightly more profitable than buying from a jobber. Because when you buy from a jobber, the jobber absorbs the financial hit for the items that are slow or non selling. Now when I say it was slightly more profitable, that is right, but the question was– is it worth the risk?

Yes you can make out like a bandit sometimes, but that involves a lot of risk. If you are small, you can’t afford bad buys and if your first load is so-so, well, you’ve just put yourself in a really bad financial situation.

I have seen people also do this with smaller store loads, buy the entire thing when they could have just been selective at a higher price. Another thing that creeps up is incredibly expensive items that you can’t sell above your cost. Getting a pair of True Religion jeans at 12% of retail is a steal. Getting a hideous $5,000 Dolce & Gabbana dress at 12% of retail makes you want to cry. Get enough of those pieces in your load and you’ve offset a lot of your profit with the loss.

When you’re big and huge and can afford risk, go right ahead, but when you’re small, it’s the kiss of death.

Things you should never do- Lesson 1

In all my years of being in the clothing industry, in one facet or another, I have come across many companies (and people) that have made many mistakes. Seeing as how I see the same pattern of the same mistakes made repeatedly, I thought maybe I should start talking about it so that some of you can learn from it.

The ironic part (which I already know) is that many of you will read this and will still make the same mistakes because you will think there is something inherently different about your situation.

So with that, here it goes:

Lesson 1- Don’t hoard merchandise
I see so many people do this because of the inherent difficult of being in the off-price business- what you see today may not be available tomorrow. Inevitably some people get freaked out and think they have to buy everything they can because there will be a scarcity of merchandise. The reality is there is usually always another deal somewhere. While one particular deal may sell out, there is never really a lack of something to buy.

What usually happens is that people finance their hoarding in one of two ways:

Terms from their supplier (where they give you 30 days to pay) or
Credit cards

Yes, I know it’s often a good deal to buy merchandise on credit cards and rack up airline miles or other perks because you pay it off every month, but the people who pay their purchases off every month are hardly ever hoarders because hoarders buy more than they can handle.

What usually happens is people say “I’ll buy it today, and I have a month before I have to pay my vendor or credit card bill and I will pay off enough of it with what I have sold.

But what actually happens is much of the time, they didn’t sell enough to pay back everything they purchased and thus starts this cycle of accruing debt. Many people in this industry lack the discipline to keep their purchases limited to what they actually sell and base their purchases on what (optimistically) they think they can sell.

In business school (yes I have a degree in business) you learn about a concept called inventory turnover (or inventory turn). Please read this. Even though you don’t need to be a financial wizard, understanding inventory turnover is crucial to understanding how much merchandise you should buy and avoiding overbuying.

Here’s a quote from that site:

Every time we sell an amount of a product, product line, or other group of items equal to the average amount of money we have invested in those items, we have “turned” our inventory…

As you determine your inventory turnover goals, consider the average gross margin you receive on the sale of products. Most distributors who have 20% – 30% gross margins should strive to achieve an overall turnover rate of five to six turns per year. Distributors with lower margins require higher stock turnover. If your company enjoys high gross margins, you can afford to turn your inventory less often.

A turnover rate of six turns per year doesn’t mean that the stock of every item will turn six times. The stock of popular, fast moving items should turn more often (up to 12 times per year). Slow moving items may turn only once, or not at all.

Now the reason hoarding doesn’t work is very rarely does a person buy enough fast-turning merchandise in a load to sell it to pay off the entire purchase. Even if you sell on eBay (and I don’t care how much you beg to differ), it is still a challenge to turn enough of your inventory, at a high enough profit, to pay off the entire purchase you made.

Hoarding is usually the first step down a slippery slope leading right into debt. I know some hoarders who make impressive purchases of thousands or tens of thousands of dollars, but are no more profitable than those who purchase smaller amounts more frequently. Please read this page for an explanation of how that happens. Especially, once you consider large amounts of unsold inventory often makes sellers nervous which leads to discounting just to increase the cash flow. And once you’ve added discounting on top of hoarding, you’ve really reduced your profits.