Bonded Warehousing


Starting your new entrepreneurial retail venture

With so much product coming in cheaply from abroad these days, it’s never been easier to start an ecommerce business and to start selling online. The huge variety on offer in the Far East means that satisfying an area of an unexplored market is easily achievable. The hard bit is identifying what that market is!

Identifying your product

Let’s assume that you’ve had your moment of genius and that you’ve identified a product or range of products that you’re going to sell. We’ll call your new invention The Wotsit (not the crisp!). The next tricky step is sourcing the product from a reliable manufacture in one of the low cost regions. It’s very common for product quality and consistency to vary so be sure to ask for references or current clients from any potential supplier. What you’re going to find next is that although the unit price you’re being quoted is relatively low, you’re going to need to be ordering in large quantities in order to get those low unit prices…

To the bank and beyond

Let’s assume that your meeting with the bank was a roaring success and that your friendly bank manager has agreed to loan you the funds needed to secure an order with your Chinese supplier. Your order is placed and the container full of shiny new Wotsits is winging its way towards you. The next hurdle for you to overcome is the issue of import taxation on the goods as they enter the country. It is standard for the entire consignment to be taxed in one go when the goods arrive onshore. This can be crippling on a large order as you’re suddenly forking out heavily for not just the product but the tax as well. There is a solution though.

Bonded Warehousing

A Bonded warehouse is a facility that can aid your cash flow in this situation.

The way it works is that your product gets stored in the bonded warehouse and you only pay the import duty when taking your Wotsits from the facility. So say you’ve taken delivery of 5000 Wotsits, they can sit there while you take 100 Wotsits away at a time to fulfill your orders and you only pay the import tax on the chunks you’re taking. Obviously you’re selling your products so you have a healthy cash flow meaning you can happily (well, not happily!) satisfy the tax man’s demands.

The above link is to a bonded warehousing operation who also have a fulfillment operation on their premises:

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