When does it make sense to explore sourcing products outside of China? This question becomes particularly pertinent for U.S. sellers looking to optimize their business operations. In this article, we’ll share a compelling example that illustrates why considering alternative sourcing destinations can be a strategic move for businesses in the U.S.
Reducing Import Tariffs: A U.S. Seller’s Dilemma:
Picture this: A U.S. seller is grappling with a substantial 27% import tax levied on products sourced from China. Naturally, they seek a way to legally circumvent this tax burden. Their solution? Find the same product in another country with a 0% import tax rate. The journey to fulfill this request unfolded in an unexpected and highly promising manner.
Discovery in Vietnam:
Within just three hours, the search for a new supplier outside of China led to an incredibly fortunate discovery. A supplier in Vietnam was not only able to produce the desired product but also at a price that was $1 cheaper per unit. The real success story lies in the volume of the order; the U.S. seller planned to purchase 500,000 pieces of this product annually.
By simply identifying a new supplier in another country, the U.S. seller saved half a million dollars each year on product costs. The most fortunate aspect of this scenario is that the product quality was either identical or even better, a fact confirmed through quality control measures.
Astonishing Cost Savings:
This success story isn’t limited to product costs alone. The 27% import tax that would have amounted to a staggering $810,000 on the $3 million worth of products was entirely avoided. In just three hours, this U.S. seller managed to save a remarkable $1.31 million annually.
To put this into perspective, consider a scenario where a product is just $1 cheaper and you’re selling 10,000 pieces per year. That amounts to $10,000 in savings. If the savings are $6 per unit and the volume is similar to the earlier example, the impact becomes a significant $60,000 saved annually. These savings only escalate when the import tariff rates come into play.
Optimizing Product Costs and Avoiding Import Tariffs:
For U.S. sellers, there are two compelling reasons to explore sourcing outside of China. Firstly, there’s the opportunity to optimize product costs while maintaining or even improving quality. Secondly, a different country of origin can help businesses sidestep the import tariffs levied on Chinese goods when they enter the U.S.
By strategically seeking alternative sourcing destinations, U.S. sellers can unlock substantial cost savings. These savings extend beyond product costs and encompass import tariffs and shipping expenses, making it a win-win for businesses looking to maximize their profitability.
This real-life examples demonstrates the remarkable financial benefits that can be achieved by considering alternative sourcing destinations. U.S. sellers, in particular, stand to gain significantly from optimizing their product costs and avoiding import tariffs. The key to success lies in conducting thorough research, exploring various sourcing options, and, when possible, identifying suppliers in countries with favorable trade conditions.
Our dedicated team at Zignify goes beyond the conventional sourcing process. We meticulously handpick suppliers based on stringent criteria, ensuring that every product you source meets the highest quality standards. With an extensive network of reputable suppliers, we eliminate the uncertainties that often accompany sourcing from abroad.