A new product business usually starts with a supplier search and a unit price. Both matter less than the operational realities that determine whether you can actually deliver to customers at a viable cost.
Landed cost, not unit price
The quoted price is a fraction of what the goods cost you delivered and ready to sell. Landed cost includes:
- Unit price and any tooling or setup charges.
- Freight to New Zealand, and the Incoterm determining who pays what.
- Insurance in transit.
- Customs duty, based on tariff classification.
- GST on import — recoverable if registered, but a cashflow cost.
- Port and terminal charges, transitional facility fees and customs brokerage.
- Domestic freight and handling.
- Any required treatment, inspection or compliance testing.
Businesses that price from the supplier quote and discover landed cost afterwards frequently find the model does not work.
Lead time drives your working capital
The gap between paying a supplier and selling the goods is what you must fund. For imported product that gap commonly runs to months once production, shipping, clearance and shelf time are counted.
Model it explicitly: production time, shipping time, clearance, and time to sell. Then work out how many months of stock you are funding at any moment. That number, not the unit price, determines how much capital the business needs.
Lead time variability matters as much as length. A supplier who is reliably eight weeks lets you hold less safety stock than one averaging six weeks but ranging from four to twelve.
Minimum order quantities
MOQs are frequently the binding constraint for a new business. A supplier requiring 5,000 units of a product you will sell 500 of in year one is not a viable supplier, whatever the unit price.
Options: negotiate lower MOQs at a higher unit price, use a trading company or agent who aggregates orders, find a domestic or nearer-market supplier at higher cost, or start with a different product.
Paying more per unit to buy less is frequently the right answer for a new business, because it preserves cash and reduces the risk of being wrong about demand.
Compliance before you order
Several regimes can stop a shipment, and all of them are cheaper to address before ordering:
- Biosecurity. MPI Import Health Standards apply to a wide range of goods, and wood packaging must be ISPM 15 treated and marked. Untreated pallets are a leading cause of holds on consignments that were otherwise fine.
- Customs classification, which determines duty and whether a free trade agreement preference applies. Binding tariff rulings are available and under-used.
- Product safety and labelling requirements for your category, including electrical safety, and consumer information standards.
- Hazardous substances approvals if applicable.
Put compliance obligations in your purchase terms explicitly, so a non-compliant shipment is the supplier’s breach rather than your problem.
Getting the Incoterm right
State the term, the named place precisely, and the edition: FCA Shanghai, Incoterms 2020. Incoterms 2020 remains the current edition.
Avoid EXW, which makes you responsible for export clearance in the supplier’s country. FCA is usually the better term for containerised goods.
Paying an unknown supplier
The first transaction with a new overseas supplier carries real risk. Options include a deposit with balance against shipping documents, a letter of credit for larger orders, or escrow through a platform.
Verify the supplier exists as described — a video call in the factory, a third-party inspection before shipment, references from other customers. Payment fraud in international trade frequently involves altered bank details on an invoice, so confirm account details by phone using a number you already hold.
Start smaller than feels efficient
The strongest new supply chains begin with a sample order, then a small production run, then scale. Each stage tests something: quality, lead time reliability, compliance, and demand.
The cost of that caution is a slightly worse unit price. The alternative is a container of unsellable stock.
New Zealand Customs publishes tariff and import guidance, MPI publishes Import Health Standards, and NZTE publishes material on international supply arrangements. All free.
