FOB CIF EXW T/T L/C What do they mean to an Amazon Private Label Seller?

alphabet-soupT/T, FOB, WU, EXW, CIF, and a whole lot more of alphabet soup…You went to Alibaba and saw all of these of other acronyms.

You were told Alibaba was in English, right?  All of these business terms might as well have been in Chinese.

What do they mean?  How do they affect you as an Amazon Private Label Seller?

When I first saw all of these terms on Alibaba, I didn’t think much about it.  However, I’ve been a merchant for over 25 years now and have worked with each quite a bit.

But I do get a lot of what does they mean questions so let me go to the “Mark Thesaurus” and translate a few of them for you.

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Banking/Money Terms

T/T…Telegraphic Transfer.  In modern terms this really means a bank wire transfer.  Most banks will charge about 50 US dollars to send or “wire” money to a foreign bank.

L/C…Line of Credit.  Typically you will establish a line of credit at a third party, usually a bank and when payment is required the bank will wire the money to the supplier.  This is usually used in larger transactions from larger companies

W/U…Western Union.  Yes the telegram company.  They have modernized and you can use this to transfer money not only to friends and family but also business suppliers.

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Shipping Terms

FOB…Free on Board or Freight on Board.  This means the suppliers will prepare your shipment and deliver it to the shipping company, however their quote does not the cost of shipping.  

However, a lot can get lost in translation when dealing with someone in another language.  Double and triple check what their quote includes.

CIF…Cost, Insurance, Freight.   This means the supplier will include the cost of freight in their quote.  Sometimes it means shipping to your nearest port and sometimes it means to your door.

Again, double and triple check with your supplier

EXW…Ex Works.  Really means you plan on picking up the order at the sellers warehouse.  Typically used with big companies that have their own shipping systems, like 18 wheeler trucks.

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As the typical Amazon seller you won’t be importing large containers of goods, so many of the the terms you see won’t apply. However, you’re now a little more knowledgeable and hopefully a little more confident.

Now go out there and get started!

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Already an Amazon Seller?  Interested in a little help, maybe validation of your product and market or need some marketing direction?  Then take a look at my 1 on 1 coaching.  I accept a limited number of people into my coaching program.  Click here to learn more

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Mark Scott Adams is a serial entrepreneur who has started, built and sold six businesses.  He has sold millions of dollars of physical products on and offline over the last two decades.  He is currently a speaker, author and successful Amazon Seller.  To take his free amazon sellers training click here.   To Get his free product checklist list click here

3 Comments

  • Carlos

    February 1, 2016

    Mark,

    One thing I wanted to add, from my search I found that with DDP the seller is responsible for all customs and duty fees and any other fees all the way to my delivery address?

    Is this correct and is this the best option, which I would assume would be the most expansive for Air Courier.

    • Mark Adams

      February 2, 2016

      There are many factor that determine the best option. But air freight is much faster than sea and will allow you to keep less inventory in stock since you can replace it faster. I have always felt air is much better at the beginning. After you have a track record of sales, then you could consider other options that take longer but are less expensive.

  • Carlos

    February 1, 2016

    Hi Mark,

    If you have a chance, what would work best.

    Each unit will be 4 OZ and no more than 6 inches on either side of the package.

    Air Freight vs Air Courier like Fedex, UPS or DHL, both are air but I believe Courier is more expansive.

    Would using a Courier be considered Door to Door where If I use their courrier shipping account would it cover all customs and duty fees?

    Or should I use a third party air courier company.

    What is your opinion.

    Regards,

    Carlos