Wholesalers and retail chains make up the vast majority of the products imported from China. They buy large volumes, and then sell the good out of their inventory — either to several domestic customers, or in their own stores.

This is the traditional model. It excludes most would-be importers because factories don’t accept small orders (see tips to decrease a minimum order quantity). And I can see that it is eroded day after day by a new trend: small-quantity imports.

I see three alternative models that are emerging.

1. Drop-shipping direct from China

This is already a popular solution for buying products that are standard, light, and of high value. As my friend Mike wrote in a previous article:

You can dropship from China direct, 1 piece at a time, direct to customers… but these will be items produced by the factories themselves, non-branded, or branded with the factory information.

It generally means buying stock directly from a factory. A clear limit on this model is this made-to-stock requirement. It is not very popular for several reasons:

• Risk for the importer: getting defective goods that were refused by another buyer.
• Risk for manufacturer: producing before a customer orders, and then waiting while the products lose value.

Another problem is the courier fee. A DHL package from China costs easily 30-50 USD.

But the main problem, in my mind, is that the buyer relies on the Chinese supplier for everything related to safety and quality. I guess it is fine for small quantities, in product categories that are not too sensitive (forget about children toys, home appliances…).

Some platforms already fullfil this need: DHGate, JMwant (launching in English soon), etc.

2. Container self-consolidation

Every year, thousands of importers go to Yiwu city’s permanent wholesale market. They can buy small quantities of standard products from several suppliers, and get it all consolidated in one container.

How does it work?

• They can see the products before paying (which is essential in that area of China where average quality is very, very low).
• The job of checking the goods and consolidating in a container is often performed by a local agent.

(This is also possible in other places, for standard products that are made in the same area. For example: electronic products in Shenzhen.)

Granted, we are not talking about very small quantities. But it can be very small quantities of each type of product.

Unfortunately, it also requires that products are made-to-stock, with the same problems as I described above. This solution is popular with importers from Africa, the Middle East, and India, from my observations.

3. The Goupon model, adapted for international trade

I was recently in contact with two companies — one in Australia, one in Canada — that want to take the Groupon model (discount deals that are possible once there are enough buyers) and adapt it to China sourcing. I think it is smart.

Basically, they would fill a container with one type of product from one factory — but only after they had sold the whole order to domestic customers. So one container contains many separate orders from individuals (or small retailers).

Imagine buying products coming from China, with a minimum quantity of 1 piece, and at a slight markup (since the importer didn’t have to keep some inventory or pay for warehousing).

And the good thing is, the goods can be controlled prior to shipment. And the importer can get the manufacturer to sign a contract. It is possible to follow all the tried-and-true processes of traditional importers. That’s what makes me think it can really work.

What do you think?