Getting EXW pricing versus FOB? Which is “better”?

Reader question – about getting EXW pricing versus FOB.  Is one “better” than the other?

 

Hi, I’m Julie and have been following the Million Dollar Case Study. Thank you for your information. During the webinar you shared a sample RFQ. At the end of the RFQ you had some questions. Question number one was for photos, specifications, and EXW Quotation. What does “EXW” stand for?  Thanks, Julie S

 

First let’s take a step back and look at the big picture why we are requesting quotations in the first place…

 

EXW vs FOB
EXW vs FOB

The key question is whether the product will be shipped by air or by sea. If by air then most likely it will ship direct from the factory to the US. In this case you will want to request EXW means that the supplier will factor in only the cost to manufacture the product and have it ready for delivery at the factory.

EXW stands for Ex Works where the supplier is only responsible for making the products ready for delivery from their location.  Normally this is the factory.  And the buyer (you) are responsible for all transportation costs the rest of the way.  In other words to ship it from the factory to your destination.

On the other hand, if shipping by sea then we would request for FOB quotations, or free on board. This means that the supplier is responsible for manufacturing the product, moving it to the port, clearing customs, and getting it onto the boat.

In cases of FOB, the buyer is responsible for transportation costs the rest of the way from the boat to the final destination.

For example if we wanted to ship lightweight electronics from Shenzhen to our fulfillment warehouse in Los Angeles by AIR, then we would request EXW quotations.

If we wanted to ship heavy tables from Shenzhen to Los Angeles, we probably would ship them by SEA to save on freight costs and request FOB quotations.

Going back to the Jungle Scout case study I assumed that the towels will be small and lightweight enough to ship by air there I requested EXW quotations.

Here’s my answer to another reader who had a question about shipping to Germany.

https://www.dropbox.com/s/omnh2z7bxsvggja/Airshipping%20EXW%20DDP.m4a?dl=0 

I hope that helps!

Author: Gary

I work with many Amazon sellers to help them source from China. I’ve managed multimillion dollar sourcing campaigns and have been sourcing from China since 2008. I also am an Amazon Private Label seller myself so I know what you’re going through. My goal is to teach you how to source from China quickly and easily so you can own a 7-figure online business.

2 thoughts on “Getting EXW pricing versus FOB? Which is “better”?”

  1. Thanks Gary,

    As I read, I wonder if it makes a difference where in the US the warehouse sits? I imagine that most likely amazon will set the warehouse location? Or as the seller do we choose where in the US the FBA product will be stored? This may be answered later on… I am just curious. This has been excellent btw, thanks!

    Katherina

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