Is it time to reassess importing products from China?

Like most online retailers, My Event Décor imports goods from China.

President Donald Trump’s current swathe of tariffs on imported Chinese-manufactured goods, in addition to the continuing and increasingly violent street protests in Hong Kong over perceived Chinese interference, makes me nervous.

To my understanding, our Australian government has not introduced tariffs into the breadth of goods and to the percent currently charged by the American authorities. But, as faithful defense allies, it might occur.

For the financial year ended June 30, 2019, my earnings reversed to 55 percent buys and 45 percent rentals. It was the opposite two or three years back. But despite supplying less than half of my earnings, leasing décor generated 63 percent of my gain.

President Donald Trump’s current swathe of tariffs on imported Chinese-manufactured goods… makes me worried.

Purchasing items to rent (like a golden resort luggage trolley for product launches and tv advertisements or cordless table lamps for dinners) has proved profitable. Once a product has made back the initial cost, following rentals are pure profit.

As an unexpected bonus, rentals are also environmentally friendly because customers use only what they require. The very same items can be rented repeatedly till they break, crack, split, chip, scuff, or become unusable or unfashionable.

 

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Product strategy

I have to evaluate my merchandise strategy, however. Do I sometimes buy for my rental company, which is rewarding but time consuming, or often and in larger quantities for my burgeoning purchases range so that clients can receive goods fast?

The revenue growth from selling decorative homewares, fuelled largely by Google Shopping ads since August 2018, has motivated me to expand offerings around topics, such as classic, garden, glamour, or destination.

My Event Décor is notorious for featuring decorative highlights not commonly available in Australia and for procuring hard-to-get customized items. Most customers want decorative features to pleasure their event guests.

But unless the décor piece is a top-seller, I purchase only to order. It retains control over stock and so cash flow, although would sell more if I’d items in stock, ready to send.

Tariff impact?

Forty-four percent of my providers have been in Australia and New Zealand. To provide unusual pieces, however, I am forced to search further afield.

I supply 25 percent of my merchandise from China through Alibaba, AliExpress, and DHgate. Twenty-three percentage of the products are from providers in the U.S., and 8% are from the U.K.

The 3 Chinese procurement platforms cost in U.S. dollars, as do the American providers, obviously. The U.S. dollar has grown increasingly expensive against the Australian dollar with the tariff wars, among other elements.

Some of my favorite items have increased in price. 1 pub cart trolley has risen by US$100 in only 10 months. Do I absorb that excess cost and make less profit or charge a higher price and sell it less frequently?

I’ve had limited success in quality and reliability in sourcing goods on Alibaba from Indian providers . I’ve yet to supply items from Vietnam, Sri Lanka, Thailand, and the Philippines.

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But the U.S. tariffs might already be damaging the Chinese. China-based Alibaba providers whom I contacted up to three years back for quotations return, asking for my small business.

I have noticed some Chinese Alibaba providers are increasingly prepared to take a lower minimum order amount. Indian producers, interestingly, haven’t lowered their minimum thresholds.

I would really like to have more Australian providers to offset rising cross-border prices. However Australian employees are among the highest-paid on earth, making it harder to be aggressive.

If I reduce my reliance on Chinese and U.S. suppliers, I would have to secure exclusive sourcing with Australian providers to avoid those products from becoming readily available or easy to find on Google. Hard-to-find items, after all, are my competitive edge and exceptional selling point.

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