Seeing low product prices on overseas platforms often sparks dreams of starting a profitable import business. However, in reality, many MSMEs actually suffer losses due to unexpected costs, disappointing product quality, and disorganized management.
The key to success in the import business isn’t just finding cheap goods, but understanding and mastering the entire process. Here are three common fatal mistakes and how to avoid them to ensure your import business is profitable.
1. Mistakes in Sourcing & Purchasing Strategy
The most fundamental and damaging mistake occurs at the very beginning: acquiring the goods. Many people fall into a scenario like this:
- Just looking at the price: Being tempted by the low price on the screen without thoroughly verifying the supplier’s reputation.
- Good sample, mass production is ruined: The product samples sent are perfect, but when the large order arrives, the quality is far below standard.
- Supplier disappears after DP: Make a down payment, then the supplier becomes difficult to contact or even disappears.
- Not knowing how to negotiate: Accepting the price, MOQ (Minimum Order Quantity), and terms without trying to negotiate.
All of this results in you receiving poor quality goods or paying more than you should, which immediately eats into your potential profits before the goods are even shipped.
The Solution: Build a Foundation with Professional Sourcing. The foundation of profitability is obtaining the true cost of products through a safe and intelligent sourcing and purchasing process. This isn’t just about bidding; it’s also about research, verification, and relationship building. This process is crucial and detailed.
To learn the complete strategy from A to Z—from how to distinguish between genuine and fake suppliers, negotiation techniques, to secure payment processes—you can read the complete guide. Learn how to shop on Alibaba from the experts at AsiaCommerce. They can help you source professionally. Click the banner below for an import consultation!
2. Total Failure to Calculate Landed Cost
This is the most common “profit killer” that goes unnoticed. Many business owners simply calculate the product price + shipping costs, then immediately determine the selling price. They forget that there are many other cost components that must be calculated to arrive at the total cost of goods (Landed Cost).
Imagine you buy a product for Rp 50,000 per item. You might think selling it for Rp 100,000 would be a significant profit. But have you calculated these costs?
- Import Duties and Taxes (VAT & Income Tax): Can reach a significant percentage of the value of the goods.
- International Shipping Costs: Air or sea cargo costs.
- Shipping Insurance: Mandatory to protect your goods from damage or loss.
- Port/Airport Handling Fees: Loading and unloading fees and other administrative costs.
- Local Shipping Cost: From forwarder’s port/warehouse to your address.
If all of this is not taken into account, you will only get a “pseudo profit” which is actually a loss.
3. Messy Financial and Stock Management
You’ve successfully sourced goods at a great price and calculated all the costs. However, if you’re still keeping track of your expenses manually using complicated books or spreadsheets, you’ll face a new problem:
- Not sure how much COGS (Cost of Goods Sold) per unit.
- It’s difficult to track which products are selling best and which ones are out of stock.
- Cannot see net profit in real-time.
- Spending a lot of time on manual recapitulation at the end of the month.
The Solution: Use Technology for Precision Management. Once you’ve successfully calculated all your expenses, you need the right tools to easily track them. This is where a cashier app like Labamu can be a lifesaver for your business.
- Calculate Accurate COGS: Enter your total landed cost into Labamu’s inventory feature. The app will automatically calculate accurate COGS per unit, serving as the basis for all your profit calculations.
- Determine a Guaranteed Profitable Selling Price: Based on your recorded COGS, you can confidently determine a selling price with a healthy profit margin. No more guesswork.
- Monitor Real-Time Profit and Loss: Every sale recorded in Labamu automatically appears in your profit and loss report. Open the app anytime, and you can instantly see your net profit, not just your perceived profit.
Also Read:
Turn the Complexity of Import Business into Hassle-Free Profits
Essentially, to build a profitable import business, you need solutions to each of the problems discussed. The key lies in two things: sourcing the right goods and managing them properly.
- To overcome Mistake 1 (sourcing and purchasing risks), you can rely on the expertise of AsiaCommerce. They help you find trusted suppliers and handle transactions, preventing losses early on.
- To address mistakes 2 and 3 (difficulty calculating costs and messy management), Labamu is the solution. With this app, you can record all import costs to obtain accurate COGS, then automatically track sales and profits.
By combining AsiaCommerce’s secure sourcing strategies with Labamu’s precise financial management, you have a solid foundation for running a truly profitable import business.
