Selection of export products for sale has got to be the toughest decision you will face when starting out in international trade. It should be the first step you take even before getting into the details on how to start export business. If you get it right, the rest will be a walk in the park. We have compiled a checklist to help you make the best choice in this regard.
- Target Market
Your selection of export markets will dictate a host of other considerations. You need to find out what export products are in high demand in that market. Look for the country’s trade statistics going as far back as possible. Aside from that, you need to think about cultural and language differences. Each of these will present a unique challenge.
Many times we imagine that the fewer the challenges, the better for business. But at times, the most challenging markets offer the greatest potential. So find out whether you can surmount the obstacles and make a kill. A popular recourse is to find sales agents in the target market whose knowledge of local culture will make for smooth sailing.
It is also vital to consider the business environment in potential target markets. Think about how the transport infrastructure, weather and climate conditions will impact on your trade. The political situation as well as government policies in place also plays a role in this. Countries with a record of political upheavals do not make the most conducive trading partners. Economic factors should also be considered as they determine currency fluctuations and growth potential for export business opportunities. Choose a country with a promising Gross National Product and an increasing per capita income.
Conflicts will always arise in business and you want to be sure that your interests are protected. Find out if the legal framework in a target market is likely to protect your product comprehensively. This is particularly applicable if you are thinking of selling software. Your product in this case needs protection from piracy.
What kind of record does this country have in enforcing anti-copyright laws? Look beyond the laws in place and find out how related conflicts are handled. If the system seems lenient then you need to change either the product or target market. Always think about how well your company will operate under any country’s laws before venturing in.
When you have this tricky part figured out, now you can start thinking about creating an export buyers list in the markets you find viable.
- Product Familiarity
With thorough knowledge of the target market, you could begin to formulate a product list of promising items. However, just because a product has high demand in a particular market does not mean you should start trading in it. Only go for those items with which you are familiar. Starting a business with a product you know nothing about is a sure recipe for disaster.
In some cases though, a high level of interest in a particular line of products is all that you need. When you have a passion for something, learning about it is much easier. It will give you the motivation needed and ensure sustained interest. So think about your hobbies and experience and from the list of promising products, pick the ones that meet this criterion.
- Product Trends
The viability of any business idea should be evident from prevailing product trends. But you need to dig deep to ensure long term sustainability. Looking into the performance of similar products over a significant period of time will help you devise a good export business plan. You should be able to study the factors that affect product demand and pricing. Look at the variances from past performance and monitor current trends. This gives you a thorough overview of the select items and helps you make an informed decision.
In fact if you get this part right you might be on to something big. You may be able to foresee the next trend and get onboard at the very beginning of a product cycle. Many times, the earliest risers make the biggest kill on new trends. By the time the rest of the world catches up, you will have yourself a following and your brand may be the new household name.
- Associated Costs
As you study specific product trends, you want to be able to determine whether or not they will offer a good profit margin. This entails making a calculation of all costs involved. Some import export traders fail because they forget to factor in the extra expense that comes with overseas trading. Find out the delivery terms from different suppliers, insurance charges, export certificates and the shipping cost.
With these points considered you are now able to determine total cost and expected profit margin. Make sure that your export pricing procedure takes into account unexpected eventualities like inflation and allow for relevant adjustments. Remember that good sales do not guarantee good returns when overhead expenses are high. So strike a balance before settling for any product.
- Growth Potential
You need to use historical research data to determine a product’s future prospects. In addition, you need to think about the combined market size for a particular product. If for instance you want to export to Africa, how many countries on the continent offer a viable market for what you have in mind? What are the market growth rates for the product you have in mind?
A comparison of desktop and laptop growth rates will show that desktop demand is on a steep decline. E-books are performing much better in most markets than physical books. How long are these trends likely to last? Avoid fads because even though they promise exciting immediate rewards, their flames burn out all too soon.
Product types also determine growth potential. Household consumable seem to offer higher viability than electronic items. Even though their profit margins could be low, they are used every day and therefore in constant demand. But consumers take much longer to upgrade TVs and refrigerators. How often will customers buy your products?
One of the most crucial criteria for selection of products for exports is availability. The product selection process should in effect go hand in hand with supplier search. The information gathered up to this point might give you a rough idea of quantities needed for your target market. Armed with this data, you can talk to suppliers and find out their production capacity. Establish whether there are any challenges in the processes involved that would complicate dealing in the shortlisted products.
Adequate supply ensures pricing stability and makes it easy to build lasting trade relations. You can be sure to deliver required quantities to your customers as need arises and within stipulated time frames.
- Trade Regulations and Restrictions
Every single market has a unique set of regulations. Export documentation procedures vary from place to place as do compliance requirements. The same applies to products. Some are restricted in some markets and allowed into others. Some require special certification or have to meet some pre-specified conditions to be accepted. This could swing either way and either make your idea a success or a complete failure.
Many traders look for the least complicated products that can be sold immediately without a long list of procedures. This leaves a gap for restricted products. Focusing on few target markets could allow you to take advantage of this. If you choose to deal in the restricted product line, all you need is information and you are good to go. Talk to all the relevant authorities to make sure you get the details right.
- Adaptability to Different Markets
Many import export traders deal with several markets at a time so as to spread out risk and maximize on gains. But great product performance in one market does not guarantee similar results elsewhere. So the best products for a startup would do well to be adaptable to several markets. This will simplify the sourcing process and help you not to spread out your resources too thin.
The most successful export products are those that can easily be adjusted to suit different target markets. Simple adaptations in taste, color, packaging or design are all that is needed to make the item to the different markets.
Knowing your competition in any given industry is important as it helps you project product performance. Highly competitive industries have very high entry barriers and require extensive marketing campaigns. The most strategic competitive point is offering lower prices than your competitors. But this might throw you off balance, even resulting in loss if you’re not careful.
At the same time, venturing into an industry with low competition comes with its unique challenges. Market awareness and consumer knowledge in such product lines is limited. This means that you and your few competitors hold all the cards. Find a way to differentiate yourself and you will easily dominate the said industry.
The key here is to study competitor dynamics and determine a foolproof way to make the most of the situation. Find a unique angle that allows you to set yourself apart from the rest. This way, your product will be certain to enjoy success. If you cannot find any such angle, move on to the next item on the list.
- Product Analysis
In order to commit to the success of any product in the market, you need to give it adequate attention. Think about it from all possible angles before launching it to the market. Start with a thorough self-analysis to establish an emotional connection. Pick out every item on the list and think about whether it excites you, whether you would buy it. Do you trust it enough to sell it to friends and family? Would you enjoy dealing in that product line for the next decade?
After this soul search, think about the item from the consumer’s perspective. Does it offer to improve their life in any way? What pain point does it address? What kind of clients would be interested in the product? What are your feelings toward such people? Is the item in any way superior to what is already in the market?
Think through its production, promotion and sales processes. Think about warranty, guarantee and replacement issues. Think about whether the profits you hope generate justify the expenses you will incur in these processes. If the answers to all of the above questions make business sense then you have yourself a product for export.
Taking Your Selected Product to the Next Level with Waystocap
The product identification process is a delicate procedure that requires keen attention. Every opportunity comes with its amount of risk. Even after considering all angles, at times things do not work out as planned and you may find yourself in a ditch. Associated risks typically increase as you move further away from your local markets and product. So how can you take advantage of the numerous opportunities that international trade provides while minimizing risks?
The importance of working with an experienced partner can therefore not be understated. Waystocap offers you a helping hand for conducting business with the African market. We are the first African B2B marketplace offering time-tested solutions for startups and more established businesses as well. We will help you to understand the continent’s market dynamics and tailor your product choice accordingly.
We offer a comprehensive database to help you conduct effective research on this market. All the information you need will be available at your fingertips. From the different governmental regulations and custom clearance requirements, we have got you covered. We will keep you updated on changes as they take place in your target market to ensure you always operate within the legal frameworks in place.
We also offer the opportunity to network with other entrepreneurs who share your goals and values. This could be through trade fairs organized on the continent and beyond. It could also be on our secure platform where like-minded traders abound. We offer a secure trading environment to ensure your interests are protected at all times. We also offer you statistical and practical information on the products that perform well in different markets in Africa. Sign up to Waystocap today and get the right start on this rewarding business path.