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Passive Income

Chinese New Year Shuts Down Manufacturing

2014 Year Of The Horse

I guess it’s the year of the horse?

The product samples were awesome, I really like the quality of the ones that arrived.   So late last night I jump on Skype and start talking to the guy and he mentions that there’s a Chinese New Year celebration at the end of January and everything shuts down for 2 weeks!   That means they wouldnt be able to be produced & shipped until Mid-February.   Tack onto that a 30 day delivery for sea delivery and I’m looking at a hell of a wait to get these things here.

So 15 mins of going back and forth trying to figure it out, he ends up calling his shipping guy who says if I get payment in first thing tomorrow that they are able to do it.   To be honest I think there’s still a 50/50 shot of these things getting done & shipped before the new year.   There’s a large chance he just wanted to lock in my order so I didn’t go somewhere else; but whatever, even if they don’t get them done there’s still plenty of stuff to do in the meantime before they arrive.

He wanted a minimum order quanity (MOQ) of 500 @ $8.00/each, and alot of them will want to lock you in for that.   But all these guys are willing to bargain with you, don’t let their initial offer scare you off.  He ended up going all way down to 100 @ $10, but for what I’m planning to do down the road I wanted a few more extra just in case we ran low & needed more.  We ended up settling on 300 @ $8.50.    It’s a little bit more than I was hoping for but it’s not too bad.  That also includes full customization with the custom  logo we had made, printed on the packaging & product itself.   Shipping ended up being only $120 which seems like a hell of a deal.

The total with everything for the 300 pieces is $2,670.  If that’s too much for you to do as a test run definitely negotiate your way down.  Start with as low as 20-50 pieces until you have a proof of concept.   There’s going to be a little risk involved so make sure you only put down what your comfortable with.   I just didn’t want to end up in a situation where I started selling and had to wait 30 days to get more pieces shipped here.

To get an idea of profit margin, I’m HOPING to sell them for around $24.95, and as low as $19.95 if need be.   So if it goes as planned there’s a rough approximate profit margin of  $16.45 per item; or $4,935 profit on that inital $2,670 worth of product.  Keep in mind thats a gross profit and not including other expenses you’ll see coming up down the road.

I’ve never ordered via cargo ship before so this is going to be an experience.  I’m planning on driving to the port to pick them up myself to see exactly how it all works.  Honestly I’m really stoked and looking forward to seeing them arrive.

So here’s where we stand money wise now:

Samples From Alibaba:  -$130.00
Domain Name:  -$320.00 (Bought Domain – Usually will be only $10)
Initial Product Production (300 pcs):  $2,670.00
Total Income:  -$3,120.00

 

 

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