I think what should come first is “What do I import?”. What to import from China determines how much capital it would take.
There are quite some good considerations as to how much money one needs to start a mini importation business.
- What product to buy
- The quantity of what to import
- The size of what to import
When we talk about the quantity of what to import relative to the size, we now focus not only on the price of the product but the additional cost of shipping your items from China to your country.
Let’s take for instance;
Shipping fee – $6.5 per kg
Clearing fee – 500 per kg
Dollar rate: 490
Yuan – 75.
Illustration A: You want to import Yoni Pearls which a sachet costs ¥1.4. ¥1.4 to Nigerian Naira is equivalent to ₦105. Let’s assume that a sacket of 1 Yoni Pearls weighs 5grams.
If you decide to buy 20 sachets of this product will cost ₦105x 20pieces = ₦2,100. This means that you are buying 20 sachets or packs of Yoni Pearls for ₦2,100
In order to calculate the weights of 20 packs of Yoni Pearls, 5grams x 20pieces = 100grams. 100grams is equivalent to 0.1KG i.e it is less than 1KG.
Your supplier may decide to deliver your order to your shipping agent’s Chinese address for free. Even if you were charged for delivery, it could be ₦500.
The total procurement cost of the product, Yoni Pearls, within China is ₦2,100 + ₦500 = ₦2,600. Normal shipping from China to Nigeria, for instance, costs about $6.5 per KG and ₦500 clearing charge per KG.
If your shipping company or agent can ship less than 1KG item or probably approximated to 1KG, then the shipping costs will be $6.5 x ₦490 (Conversion rate for $1 as of April 2021) = ₦3,185
Now, the total cost of shopping a 1KG of Yoni Pearls from China then shipping to Nigeria = total procurement costs (₦2,600) + shipping costs to Nigeria (₦3,185).
If we did our maths well, it will give us ₦5785. That is, ₦5785 can buy 20 pieces of Yoni Pearls from China to Nigeria. That sounds cool.
Illustration B: Let’s say I want to import average luxury women’s handbag. I have a little budget anyway. From the image above, you could see that the average price is ¥17.5. So let’s say I have settled for a ¥17.5 handbag.
With my little budget, I decided to go for 10pieces, it would cost me ¥40 x 10pieces = ¥400. ¥400 is equivalent to ₦30,000.
If I decided to buy the same 20pieces as shown in illustration A, 20pieces of this handbag will cost ₦60,000. This is way too much as seen with Yoni Pearls.
This now shows the differences in what to buy.
Assuming that each handbag weighs 280grams, 10 pieces is equivalent to 2800grams which is 2.8KG. This cost more as compared to 20 sachets of yoni pearls.
But if I changed my mind for 20pieces of this handbag, both the price change from ₦30,000 to ₦60,000 and the weight changes from 2.8KG to 5.6KG.
The quantity and the size of this female handbag have influenced how much money to invest in its purchase.
So, the answer to the question “How much money does one need to start mini importation business” is solely dependent on factors as I have explained so far.
Finalizing my expenses now become = total procurement costs (₦30,000 for 10 bags) + shipping costs to Nigeria (2.8KG = ₦10,318).
If we did our maths well, it will give us ₦38,918. That is, ₦38,918 can buy 10 pieces of this particular handbag from China to Nigeria.
Whatever I included in these illustrations, A and B, still apply in any product be it sneakers, clothing, even a sewing machine. The heavier an item, the costlier the shipping charges and clearing.
In conclusion, one can start a mini importation business with any amount as long as these factors; What product to buy, the quantity of what to import and the size of what to import are considered.
But that is not enough.
Getting your orders from China down to your country is not enough to conclude the art of the importation business. One has to also consider things like
- How to sell those mini importation products
- Where to sell your products
- How to deliver purchased products to customers
In our first illustration, Illustration A, we bought 20pieces of Yoni pearls at ₦5785. It is not enough to conclude that one can actually start mini importation business with ₦6000.
Here is the narration;
A pack of yoni pearls retails for ₦1500. But in our own case, a pack of yoni pearls costs ₦578 including shipping from China to Nigeria. For someone that already has ready to buy family and friends, ₦1500 is a good profit.
This is how we calculate our profit = Selling price – cost price which is 1500 – 578 = ₦1230. This means that you made a profit of ₦1230 per pack of yoni pearls. That is a good deal.
In a situation where one has no existing or ready to buy customers, then finding new customers might be a challenge. This could be through either paid or classified media.
Paid marketing could involve digital advertising or influence marketing using Facebook, Instagram, Google Adwords, PPC etc. If non-paid marketing is to be considered, it would involve platforms like Jumia, Konga, Jiji or Olist.
Assuming that you’re to pay a professional digital marketer to advertise your products, you now begin to consider how much profit you will be making. In this very case of yoni pearls, you are going to be at a loss.
If we now begin to consider shipping to our new customer’s address, the shipping fee would be another challenge as well. If a customer insists to pay on delivery, we now need extra money to be used for shipping.
In conclusion, you need sustainable capital for your mini importation business. Whatever you decide to sell is directly dependent on how much you will need.
This capital will also have room for advertising, delivery and some cases, extra money for return items.