The only way for high-quality sellers: How to establish an overseas warehouse in the United States

November 1, 2017 20:10 (China Time)

Host: Six-One

Topic: How to establish an overseas warehouse in the United States

Location: WeChat group of "Knowing Everything" Wendao Study Group

Mode: Voice/text live broadcast

「Activity content record」

Without further ado, overseas warehouses are essential for sea freight sellers, especially before the peak season begins. On the one hand, it is convenient to prepare goods, and on the other hand, it saves logistics costs. Especially if you have an overseas warehouse, the price of not palletizing is equivalent to the price of loading two containers, but only using one container (you can definitely come to the United States to palletize).

I am an American Amazon seller. I have lived in the United States for a long time and also provide some local services in the United States. If you are interested, you can visit my website: http://www.loopnet.com . Today I will mainly introduce some costs and techniques for building warehouses in the United States.

If you want to build a warehouse in the United States, you must not only consider where you want to build the warehouse, but also the comprehensive cost: comprehensive cost = warehouse fee + labor cost + bulk logistics cost + sea freight cost. These costs are closely related to your final cost.

1. Several ways to calculate rental costs

When renting a warehouse, the website provides several ways to calculate the cost:

The first type is the warehouse rent, which is the price per square foot + NNN (property tax/various taxes) + miscellaneous fees (parking fees, lawn mowing fees, etc.) + water and electricity costs. First-hand landlords generally have more NNN leases. The second type is FS lease: Full Service, which includes all miscellaneous fees. Second-hand landlords are more likely to have Full Service.

Don’t take the NNN price on the website too seriously. Generally speaking, warehouses that have not been rented out for a long time will be charged a Full Service price, and you can bargain at this time.

The United States does not use square meters, but SQFT (square feet), 10 SQFT = 0.92 square meters. For the same warehouse, the difference between Houston and Los Angeles is more than $20,000 a year based on their average prices. Taking into account various expenses such as labor costs, Los Angeles is more than $30,000 more expensive than Houston in a year.

The above two rents of course do not include incidental expenses and water and electricity. The water and electricity bills for a 7,000 square foot warehouse (650 square meters) are about US$500 per month, and it will be higher if air conditioning is turned on.

If you rent a 7,000 square foot warehouse (650 square meters), the rent for a warehouse in California is $88,000, and the rent for the Houston Port is $67,000 a year. The larger the warehouse, the cheaper it is. If you plan to rent a 15,000 square foot warehouse, you can negotiate the unit price with the landlord. The general lease is 3 or 5 years. If you rent for 5 years, the price can be negotiated. Warehouses in port cities will be more expensive, but the cost of inland container transportation is almost zero.

There are many floor plans when renting a warehouse. American companies like to have more offices and smaller storage areas. But for e-commerce companies, they may prefer open offices. As a boss, you can supervise employees and save office space. After you have decided on a warehouse, you can ask the landlord to remove all the walls. This is called a demo. If you rent for 5 years at a time, many landlords are willing to remove the walls, install new floors, and replace new lights for you. But if you only rent for three years, many landlords are too lazy to do it. Another point is that the more changes you ask the landlord to make, the less bargaining power you will have, and the lower the possibility of a deal. It is better to find a contractor to install the floor yourself later. Because laying the floor is not much compared to the rent.

2. How to handle shelves and forklifts

There is another point about building shelves. The shelves need to be driven into the ground. So a special contractor is needed to install them. A three-meter-long shelf costs $400, not including labor. If it is just for transshipment, shelves are not needed, because after installing the shelves, you still need to buy a forklift that can extend vertically, which is very expensive. However, forklifts can be rented. You only need to rent it for one day on the day the container arrives, and it costs about $250 a day. Buying a second-hand one is 20,000 US dollars, and a new one is 40,000 US dollars. Forklifts are divided into electricity and gas. Electricity requires 480v voltage, and not every warehouse has a plug-in adapter and this voltage. Gas is coal gas. A barrel of coal gas is quite cheap, but you need to store a lot of gas tanks.

3. How to discuss warehouse issues with the landlord

When you are looking at a warehouse, you should try to find problems with the warehouse and find faults, because the more faults you find, the more you can bargain with the landlord. For example:

1. There are too many offices and too little actual usable warehouse space.

2. Your forklift uses electricity, not gas (if it uses electricity, you say you use gas, if it uses gas, you say you use electricity).

3. The warehouse has low floors and not much vertical space can be utilized.

4. The surrounding environment is poor and unsafe.

5. There are pillars inside the warehouse.

6. The warehouse deck cannot accommodate 40-foot high-cube trucks.

Everything is negotiable.

If you really like this warehouse, you can send the RFP to the landlord's agent, and the landlord's agent will give you a reply within 3-5 days. At this time, you can send the RRFP back. Don't be too anxious, because if you are too anxious, there will be no room for bargaining. Generally, you can bargain 10%-15%.

4. Where you can save money

1. Many people will recommend you to use an agent, here called an agent/broker. He will help you find a warehouse, take you to see the warehouse, and help you bargain. I would not recommend it very much, because the agent is paid on commission. Although it is for your service, he also hopes that you can pay more money to the landlord, so that he can also get more commission. The general commission is 4.5% of your rent, and it is paid by the landlord in one lump sum. If your rent for three years is 200,000 US dollars, then after you sign the contract, the landlord will pay the agent a lump sum of 9,000 US dollars without collecting the rent. If you look at it yourself and bargain by yourself, you can save yourself 9,000 US dollars... If you don't use an agent, you can directly bargain with the landlord for this 4.5%.

2. Find a sublease. Many warehouses cannot continue to operate after 2 or 3 years of operation, or need to rent a larger warehouse, so they will sublease the original warehouse at a low price. At this time, you are the knife and the other party is the fish. If you encounter a bankrupt company, you can usually rent the warehouse at 60% of the original price. For sellers who are transitioning from overseas warehouses, finding a transition warehouse during the peak season is the most economical option. Many warehouses are generally emptied 2 months before the expiration of the lease. Half a year before the vacancy, their warehouses will be released. Then you can negotiate with them for a 2-month warehouse. You pay it in full at one time. Anyway, it is empty for them, and you only need two months of transition.

3. Pay all the rent at once. When a new tenant moves in, the landlord will check the credit history. So it will take 2 months. If you pay all the rent at once, you can also ask the landlord for a 15% discount.

4. If you are just starting a warehouse in the United States and don't have a lot of cash flow, you can also negotiate with the landlord to have a lower rent in the first year, and then increase the rent by a few percent in the second year and a few percent in the third year. Of course, the total price will remain unchanged, but the cash flow will be positive in the first year, and you won't be so stressed.

5. Going abroad in a group. I personally dislike going abroad in a group. Over the past few years, most people who went abroad in a group died together. But if you really have friends you trust, you can rent a warehouse together and share the cost. For example, if one of you only needs 5,000 square feet, and the other one also needs 5,000, then your group price is 10,000 square feet. Large warehouses are much cheaper. For example, I used to see that the unit price of a 15,000 square foot warehouse was 5 US dollars per square meter, but the unit price of a 25,000 square foot warehouse was 4 US dollars. You can rent the warehouse and sublet it. The risk is that if you sign a contract and your partner withdraws in the end, you still have to continue to pay the rent.

6. Some governments provide subsidies. I seem to have heard that some governments subsidize part of the overseas warehouse costs. You can go and ask, but there are regulations on the size of overseas warehouses, so you can form a group.

5. About labor costs

The average salary for employees in California is $15 per hour, $12 in Texas, and $10 in Baltimore in the east. Baltimore and Philadelphia are all black people, who basically don't work and can't be driven away if there's a problem. Mexicans can move things, but they also need someone to watch over them. Illegal immigrants are not very reliable either, so be careful that they may blackmail you for a work-related injury.

The Chinese uncles who come to the United States seem to have worse qualities than the square dance aunties. They are difficult to deal with, complain a lot, and don't work hard. In short, you have to send someone to watch over them. Reliable warehouse managers have an annual salary of $100,000 in California, $60,000 in the central states, and $60,000-70,000 in the east.

VI. Public Security

The cheaper the place, the worse the security. Warehouses are not in good areas, and people who earn hard-earned money are usually in poor areas. So it is recommended to have a wooden sling. Glock wooden slings usually cost $600. I suggest you always carry it with you when you go to and from get off work. Moreover, we are e-commerce people, and we work overtime throughout the peak season. It is normal to go home at night, so we should carry a wooden sling after get off work to avoid being attacked.

7. About the logistics and transportation in the interior of the United States

The main ports in the western United States are Los Angeles, the ports in the central United States are Houston, and the main ports in the east are New York, Boston, Philadelphia, etc. It usually takes only 22 days to ship from Guangdong, China to Los Angeles, 30 days to Houston, and 40 days to the east. It takes longer during the peak season.

Generally speaking, products that need to rent a warehouse in the United States will mostly go through UPS Ground. UPS charges based on distance. It will be very expensive to ship from a warehouse in California to the East. Similarly, it will be more expensive to ship from a warehouse in the East to California. This is why many companies will build 2-3 warehouses to optimize logistics costs.

If you are going to ship to Amazon, you don't need to consider where to build a warehouse. Amazon LTL services are allocated nearby. If you plan to build several warehouses at the same time, you can refer to Uline. This is the same as if you don't have a team to do product research, but you follow Anker and sell what others sell! Big companies must have done research, and we just believe in big companies.

Los Angeles, Seattle, Dallas, Atlanta, Chicago, and Philadelphia are the cities with the largest radiation according to their calculations.

If you build your first one, consider Los Angeles in the west, or Dallas in the middle.

8. Insurance

The landlord will ask you to buy insurance, usually General Liability Insurance will do, usually 800$-1500$ a year. You can get quotes from several insurance companies, each one is different. But once the goods are put into storage, this is a must.

When you apply for insurance, you will find that the quotes you receive can vary greatly. Some insurance companies will tell you that with your sales volume, you need to pay tens of thousands of dollars in insurance premiums, while some insurance companies only charge a few thousand. At this time, you can remove all unnecessary clauses. After removing unnecessary insurance clauses, you can ask the insurance company to reduce the price. At the same time, you also need to quote each other, send the low price quote of company A to company B, and so on, hoping that they match each other. This method can also be used when you choose a logistics company later. For example, if you want to use UPS services, but you don’t quote UPS directly, you can first go to Fedex to quote the price, and then go to challenge UPS to get a low price.

Insurance companies are quite disgusting and need to be challenged constantly. You need to be firm in your stance but ambiguous in your attitude so that you can get a good price.