Exporting goods or products to other countries is an exciting feat for most businesses that may have been servicing a local market because it provides an opportunity to enter new markets and gain more customers. However, to successfully export goods to other countries there are factors to consider.
A few years ago, due to the advent of the Covid-19 pandemic, it was very difficult for people to export goods from one country to another. For exporters in Africa, it was even more difficult and almost impossible.
With restrictions easing across borders, the export industry is gradually coming to full bloom.
The misconception that the export business is for multinational or intercontinental businesses has denied a lot of business owners access to larger markets and new customers.
If you run a small business, you may be surprised to find out how many small businesses, probably of a smaller size than yours, ship their products internationally.
To successfully export, there are certain factors to consider when exporting. These factors are key to entering the export market successfully and thriving. They are:
Identifying your export strategy
This might sound weird to you, but the first step for export, just like other businesses, is creating a good strategy. In creating your export strategy, here are some factors to consider:
What product to sell
Irrespective of the nature of the product, you need to outline in specific terms, what product you want to sell. In choosing a product, put into consideration what people are ready and willing to buy.
The market you want to sell to
Where do you want to sell your product? You have to decide the country, city, continent, or town you want your products to be sold. Also, look out for applicable duty rates, tariffs or other taxes in the market that may affect you as a business should you decide to sell there.
Ensure that you are aware of the export licences and/or legalities associated with the goods that you intend to export to that market.
Your selling strategy
You can either sell products directly to end-users, partners or distributors. Before you get to an international market decide who you’ll be selling to so that you will save yourself the distress of confusion and loss of money.
When you decide to sell to end-users, your company would be responsible for certain aspects of the transaction ranging from shipping, payment, and product servicing among other factors. If you don’t include these costs upfront, chances are that your company may lose money.
Selling to distributors may be less stressful because they take care of all the other added expenses since they are the ones to sell to the end users.
You can also sell to partners. They are a great step up from a distributor. This could be an existing company in your market that is in your field and understands the market more than you.
How you would support your Product
After identifying what products to sell and how you plan to sell them, you have to create a support plan for your product. When you make a sale, for instance, you may need to provide technical support for products that require such or draft a process to accommodate refund of substandard products.
How you would price your product
Pricing can be a challenge if you are new in the business. Most exporters who have been in the business for years are still finding their way around pricing but to get this right, there are a few questions you need to get answers to.
- What type of market positioning would you like your company to take?
- Would the price of your product reflect its quality?
- What type of discount allowances does your company intend to offer foreign companies?
- Should your price differ by market segment?
- What options are available if your firm’s cost increases or decreases?
Understanding Export and Import Regulations
The next thing you need to learn about before you start exporting products is if there are any restrictions or regulations on the product you intend to export in the country you have chosen to serve.
To be on the safe side, here are a few things to find out about:
Export licence requirements
Most of the goods that you want to export will require that you obtain a licence. These licence requirements differ from country to country and it’s your company’s responsibility to research the country you have decided to service and find out what applies there.
Look out for embargoed countries
Embargoed countries are countries in which you, your company and people from your country are not allowed to do business, for one reason or another. Identify these countries and avoid them.
There are individuals, businesses and organizations which may have been restricted from business dealings mostly because of their involvement in illegal activities like human trafficking, drugs, selling of arms and terrorism. You shouldn’t be doing business with these kinds of organisations.
To avoid being penalised, investigate businesses you intend to partner with for such restrictions before going into any partnership.
Preparing your goods for shipping
Whether you are looking for a new partner or reviewing your relationship with your current freight forwarder, in preparing your goods for shipping, here are a few questions that you need to ask.
- Do I have a specialised product line or import?
- How many parts will I be using for imports?
- Is automation easy with this partner?
- What is the broker or freight forwarder’s general reputation?
- Do I need a dedicated account representative?
- Do we have a written working agreement?
- Are there warning signs?
The answers to the above questions will help you assess your freight forwarder and decide if he is the best fit for you.
In addition to getting answers to the above questions, there are other things you need to learn about.
Understand product labelling requirements in your destination country.
Here are a few questions that will help you find labelling requirements
- Does the country legally require using specific language?
- Does the product content and country of origin need to be included?
- Are weights and measures stated in the local units?
- Do items need to be labelled individually?
Find out the most suitable packing for your goods.
Most companies and exporters lose billions of dollars due to improperly packed containers and goods yearly. Don’t be one of such, pay attention to getting the packing of your product for shipping right.
Understand International Commercial Terms (Incoterms).
This cannot be overemphasised. If you must effectively export your goods safely across countries and continents, you must understand incoterms.
Choose a carrier method.
Don’t be in a hurry to make this decision. Ensure that you have done your research on the best method to take your goods from where it is to where it is going.
Understand insurance requirements
Make the necessary inquiries to discover if there are insurance policies for your goods and products.
Completing your export paperwork
This is as important as every other detail that we have discussed. Don’t just ship out your goods, ensure that you have filled out all the necessary information and provided all the documentation required.
Ensure you take care of every requirement to avoid extra costs and penalties due to documentation inefficiencies.
Getting paid for your goods
Getting paid for your products is the most important part of your export business. You have to decide on a payment method that is secure and can be easily implemented, to receive payments for your products. To ensure that this happens effectively, here are a few things you need to put in place.
Get an international banking partner
Don’t just go with any bank overseas, interview several and make sure that they can help you in your quest to get paid. Don’t just start working with any bank you see. Your chosen bank should be knowledgeable about handling financial matters related to the export business.
Understand your payment options.
Aside from choosing a banking partner you can trust and rely on, it’s essential to find out about the available payment options.
In international trade, the payment options available are consignment, open account, documentary collection, letters of credit and cash-in-advance.
If you are new to exporting, these details can seem overwhelming. Fortunately, exporting goods is achievable with time, patience, and a little knowledge which we have exposed you to in this article.
A good freight forwarder can provide the right guidance and assistance needed to successfully manage an export business. At kadan kadan, we pride ourselves in our vast knowledge of the export and import industry, having gained years of experience servicing clients and partners.
kadan kadan takes care of all that is involved with exporting and importing goods so that you can focus on other parts of your business.
Want to learn more about how kadan kadan can help you with your shipment or find out how we work? Contact us by calling +234(0)9023138228, or send us a chat at +234(0)9198050059 to talk to us about your next shipment.
You can also visit www.kadankadan.com for more details.