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.

13 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

  2. Hi Gary,

    I am from and based in the UK and will be sourcing products from China and shipping them to the Amazon US. My product is small and lightweight and i’ll be looking for a test order of 500 units and so I would be using air express. I will be taking your advice and will be using Asia Inspection for quality control. This is my first time doing FBA and so had a few questions.

    1) If EXW is just the price for the product (and no shipping), what do I ask the factory if i want the products sent door-to door (straight from the factory to amazon fulfillment centre)?

    2) Do the shipping fees that factories quote for door-to-door include customs duties as Amazon require DDP terms and I am not a US resident?

    3) Do factories with courier accounts (UPS, DHL, Fedex etc) have better pricing terms than if I set up my own courier account to ship to amazon?

    4) How would I know if the shipping fee and custom duties they have quoted have not been inflated so that they make a cut of it?

    Thank you for your time.

    Mo

  3. Hi Gary… Amazing post, especially for a someone new to importing & exporting. I do have a question, I’m currently enrolled in ASM7 and they teach us to use a freight forwarder for our first order. We’re finding that a freight forwarder is actually more costly than our actual inventory. My question, is it normal to use a forwarder and for them to charge $850-$1300 (example: Shanghai- Tampa) 30 sets, 13kg. We’re using by sea so we’re going with EXW for our shipping method.

  4. Is there some kind of FOB but for Airports? Like FOPlane. Or is it better to do EXW? If you elaborate it will be great. Thank you!

  5. Gary, im in the middle of my first order and need help. The supplier is asking for an offline contract. Is this normal?

    1. Hi Judy,

      If I understand you correctly, you mean that you are initially contacting them on Laibaba and then they are asking to contact you off of Alibaba correct? If so then yes this is quite normal. I normally use email, telephone, and Wechat to contact them. It’s a good idea to have a record of your communications for future reference.

      I hope that helps.
      Gary

  6. Hi Gary.

    Excellent website, i’m learning a lot and loving it. I had a quick question regarding lead times. When requesting and receiving a manufacturing lead time from a supplier on alibaba as part of the RFQ e.g 30 days, generally speaking would it normally be only working days or would it include the weekends? And when does the lead time (e.g the 30 days) start ticking? Is it straight away i.e the day you complete the first part payment? Is it when the factory receives the materials for the order?

    1. Hi Mo,

      Great question. Before placing an order it’s always a good idea to ask the factory what the delivery lead time is. Normally this begins after you confirm the order and submit the deposit or first part of the payment. However, it makes sense to keep track of their production as delays can occur due to many reasons. Normally these are work days excluding weekends (i.e. Sunday) and holidays. I hope that helps.

      Gary

  7. Hi Mr Gary,

    Thanks for the amazing article and your time responding to each of us.

    Am a new entrepreneur from Dubai/middle east, as new in this field, it will be great help to support me to clear my following doubts?
    1- How should I trust to pay online wither to Alibaba or any other known website (which might not be known for us in Middle East)? And what if they delayed in delivery after the payment or what if it a fraud factory? I mean what we should keep in our mind before placing the order and pay.

    3-I will be attending my first visit to china for the canton fair 2017 and I will buy really small amount of varies goods, as am just staring not yet aware our market requirement, so how should I trust the export agencies who will ship my goods to Dubai (factory will not deliver I think, coz i think they don’t deal much with small quantities order)?

    So what if they (Agencies) have fake license and they disappear with goods and money? And I will be in Dubai then how to follow up : $ .so what do you advice on this?

    I know business is always risky but I believe with some expert advice we can reduce that.

    Thanks and appreciate your time reading this.
    Latifa /Dubai

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  9. Hi Gary, need your advice, we are planning to import Energy drink n Beverages from Poland. 20 footers n maybe 40 footer. Should we bring under Ex Works or should we do Fob.
    Rgds
    Praveen
    New Delhi.

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