The Real Cost Of Shipping From China
Shipping… what an absolute minefield. There are so many different TLA’s (that’s Three Letter Achronymys for the ironic out there). One of the hard parts of dealing with China is finding out the real cost of shipping from China.
After all, we need to ensure you as a customer can get stock to your country of sale cheaper when all costs have been accounted for.
What would be the point?
What would be the point if you have a product in mind, but after you considered everything, cost of the product, shipping to the port in China, Shipping from China to your country of destination, import duty, VAT and then shipping to your warehouse? If it came to a larger expense than you could source the product for in your own country.
Thankfully, that’s usually not the case.
But you have to ensure that you have done your homework beforehand.
We here at Merchsprout are no strangers to asking the question “What is your target piece price?” to receive the answer “As cheap as possible…” of course it is.
But is it the right answer, in our opinion no, it’s not. Let’s explain why.
Concentrate on Quality, not Price when Initially Sourcing
We talk about the cost of poor quality in operational excellence. And it holds here. If you chase the lowest piece price when sourcing, you are more than likely to get the poorest quality. They go hand in hand.
Which is why one of the reasons when sourcing we construct a good idea of suppliers and apply a weighted sourcing value to the supplier. It weeds out the poor suppliers right from the very start.
Buy Cheap, Buy Twice
Or even worse, your customers will return products to you. That’s when you learn about the cost of poor quality and the meaning of it.
Once we have sourced for you, we ensure that the supplier is robust, active, legal and sustainable. We then enact an onsite audit with our China team and if applicable test the samples.
That’s when we know that we have a good supplier or a lemon.
Once samples have been tested, the supplier audited and the 30% deposit for the product paid. The production starts.
Production is usually not monitored by our team through this stage. We have a good understanding of capability from our audit and sample tests.
However, the real tests come when we robustly analyse the samples.
Statistical Analysis
We use some industry-standard automotive-based Six Sigma analysis techniques for our quality control testing. We have confidence levels built into the testing and you can read how we do this here.
We have been testing in China now for over 13 years and not much slips through the net.
Once the batch is signed off and accepted the rest of the 70% of balance is then released to the supplier.
This is where the shipping confusion may arise:
The three main shipping strategies that we use at Merchsprout are:
- Ex. Works; this is where the factory puts their stock out of the front door, and that’s it. We usually arrange the shipping to the port or the supplier can arrange:
- FOB; Free on board, this is where the piece price of the component has a cost absorbed in it where the cost includes delivery to the boat that will ship your container or package to your port where you will distribute the product.
- DDP; We can arrange this in the UK; we would import stock, arrange shipping, duty, VAT and carriage to your warehouse or final destination. Meaning the only thing you should worry about is how to sell your product.
In Conclusion
We can arrange an entire turnkey solution for your product from source to your doom (UK only the majority of other markets can arrange CPT, please get in touch). Or add us on LinkedIn here.
We are able to calculate an accurate cost from the initial sourcing that has quality baked in. Get in touch for a free quotation.
