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Given that the success or failure of a business is often determined by whether the business understands its own market, starting an export business can pose unique challenges. It is dangerous to assume that an international market will respond to a product in the same way that the domestic market would. Of course, there is also the potential that the international market will respond better to the product than the domestic market, leading to an unexpectedly high return on investment.
Start an Import Export Business
Here are the basics for starting an import export business.
Importing and Exporting Products
Import and export businesses are essentially product/consumer matchmakers who try to guess which products will impress which consumers. However, import and export businesses take this process even further by handling the shipping, customs and distribution of products. They must not only find a manufacturer willing to sell products overseas, but also locate overseas businesses willing to sell these foreign products.
Importing also can be challenging, especially when domestic markets are often more interested in buying local and familiar brands. Still, the entrepreneur should be on the lookout for brands that have potential.
Market Research Must Be Even More Thorough
As soon as a business becomes interested in exporting to a particular part of the world, the business should get a crash course in the history of that area’s culture. It is also important to read newspapers and magazines that the target market would be reading to get a sense of the current concerns, sentiments and controversies of the particular region.
Exporters should keep in mind that they are often venturing into a cultural field of landmines where cultural misunderstandings can lead to angry customers and a PR nightmare.
When getting started as an import or export company, one approach is to start off by focusing on markets that are similar to the domestic market, such as exporting from the USA to Canada. In general, selling products to countries that are frequent trading partners, such as Japan and France, will be much easier than selling to other countries. However, there is still a huge market potential for less frequent trading partners. Regardless, entrepreneurs should invest time in understanding the target market over the long term.
Price Considerations with Imported Products
The American demand for imported products can fluctuate depending on the value of the dollar in relation to other currencies. Businesses must ask themselves to what extent the value of the imported product will outweigh the higher expenses. Of course, there are always markets that are willing to pay a premium for certain imported goods. Certain products seem classier when they are imported from certain areas of the world. However, certain products are also less expensive when imported from other areas of the world.
When first starting an import/export business, it is crucial to determine which type of business to specialize in. The types of import and export businesses include:
• Export management companies
• Import/export merchants
• Export trading companies
The export management company works with businesses that want to sell products overseas, but do not want to learn how to perform this process. Export trading companies, however, determine what customers want to purchase in a domestic market and locates these products overseas. Then, the import/export merchants purchase domestic products and resells them overseas.
Once a market has been identified and the business has agreed upon a target market, it is crucial that the business learn about the paperwork and red tape that goes along with exporting. For example, it is important to learn the import and export laws for a particular country. Once the red tape is out of the way, the business can get its feet wet in the international marketplace.
Rick Sarouk has been in the field of international Import/Export business for the past 10 years and also has a background in marketing and advertising. He is the distributing manager for one of the largest RTA Cabinet Distributors within the USA.