#54 Q & A Tuesday No. 6 Show Notes

Q1 : Gareth [INCOTERMS]

We are in the process of sourcing our first product and we are struggling with what we need to ask for in terms of delivery. Does the term FOB only refer to shipping (boat)? What is it we need to ask for to get air freight delivered to the door to FBAI (or equivalent) in the US? As we seem to be getting different responses from different suppliers?

Incoterms (“International commercial terms” in full) refer to the Freight deal you have with a supplier [aka Vendor=Seller].

There are 9 3-Letter codes denoting the 9 possible agreement types:

http://www.skywaysms.com/inco-terms-2016/

More precisely, it shows how much of the supply chain your supplier [the Seller] takes responsibility for, and at what precise point you as the Buyer take on responsibility for your consignment and any costs of transporting it/dealing with import/export etc.

The early in the Chain the Vendor passes responsibility on to the Buyer, the cheaper it is but the more work you as Buyer need to sort out yourself. Or of course hire someone to sort out.

FOB =Free On Board- strictly only for sea  shipping but Chinese suppliers use this for everything!

This is okay to use to compare quotes if most suppliers give you the price in that way.

However, that is all.

I prefer to get quotes EXW=Ex Works i.e. literally just manufacture with no Freight. However I would never place an order EXW unless using a Freight Forwarder. 

If your supplier will give you DDP=Delivered Duty Paid, this is the most expensive but simplest option. I would always start with this as a new seller unless you have expertise or experience or contacts in the freight/import area.

If you not you could go for the next best thing, Sometimes known as “DDU=Delivered Duty Unpaid”, [which really should be known as DAP=Delivered At Place in proper incoterms, but is known as DDU among some suppliers]

Note the difference between Air Freight and Air Courier. The latter is basically a well known courier like DHL, UPS, Fedex. They have their own channels for clearing customs in USA and are simplest for beginners or if you dislike freight issues!

You can always get a customs broker if shipping into USA - I’ve used Western Corporation Overseas for extra security around USA customs clearance. It will add to your costs but can provide peace of mind on first shipment.

Bear in mind that Chinese suppliers will know more than you (probably) when you’re first starting out but they are not experts in freight. Particularly bear in mind: They are speaking a foreign language! The nuances between “Freight” and “courier”, for example, may not be clear to your supplier - but they are nevertheless real when it comes to Freight. But they will be very used to using Air Express services like DHL.

If in doubt: 1. use your supplier’s courier account; stick to Air Courier; get DDP if possible or the closest you can.

OR use a Freight Forwarder if you want to do Sea Freight (a bit more involved for a first batch of first product in some ways but may be necessary for heavy items) or even Air Freight.

Q2. Chat [Inventory] Forecasting methods/techniques.

How do people project and plan for how much inventory they will need? What is important to consider when planning ahead for growth?

“Feels like you kind of have to guess a lot more in the beginning! Started off at 500 units and down to around 460. Most of those are giveaways though. only 3-4 are organic.”

3-4 units is almost no sales history so don't try to make any predictions yet.

Get your reviews, start PPC and then after say 100 sales or two weeks or so you'll have enough data to predict. Get some consistency if possible. If you’re buried on page 5, 10 etc,