How do you identify the products and market for exports and imports? How to choose products for export or import. How to come up with the right products that you can trade in your country.
For entrepreneurs who are just starting out with their brand new import-export business, the one of the biggest obstacle what stops them is – what to export?
Choosing the right products for your export-import business is very important. If you are choosing the wrong products for your business, then you may find it very hard to find overseas buyers with your prices. It’s possible that during the export, there appear problems what you didn’t expect because you didn’t know the product well. Also, you may realize, that the products you had been choosing are not actually inspiring for you.
So, choosing the right products for your export or import business means that the product(s) needs to meet the two most important criteria below.
- The product what to export needs to be profitable for you.
- The product what to export needs to be suitable for you personally.
You should ONLY establish your import-export company when you know what to export, so only after you have chosen products what you are going to export or import, not before.
We will help you with the question: what to export, to select the right products for your import-export business. We have written about the three most important things you should do. Those will help you discover the right products for your import-export business.
Analyze the trade statistics of your country
In order to figure out, what to export, you should start with analyzing your country trade statistics. Your goal is to get the idea of what kinds of products your country is exporting and importing. You should find out what are your country exporting sectors and what are importing sectors. Every country is different with imports and exports.
I would suggest reaching out to the import-export statistics, to learn what are the products exported and imported by your country. Every country has some institutions what are collecting such data and you can learn from this.
Example, if you are interested in doing import-export business with European countries, the EU has European Commission which is doing the data collection and analysis. You can easily find out what your country is exporting to Europe and importing from there. Moreover, you can even find out exactly what every specific country is importing or exporting regarding your country.
You can find all the necessary information from European Commission web page.
If you want to know trade information with some other, non-European country, then the best way is to approach to right institution in your country which is doing trade statistics. You can approach your country custom and trade-related institutions, they will show you the right place.
Sometimes you can find some general information if you just type into google, example: “Indias top 10 exports”.
It’s important to understand, that there is always a reason, why your country is exporting certain types of products and importing others.
Every country has its own advantages for different kinds of products. Maybe your country has the diverse climate, let’s say you have a tropical climate. Then probably certain types of fruits and tropical plants are growing in your country really well. This means your country is definitely exporting bananas, pineapples and other tropical fruits. Ecuador is a great example for this.
Generally speaking, export and import sectors for particular country or countries depends on:
- Country development level
- Availability and the quality of natural resources
- Political and economical trade relations with other countries and organizations.
There is a tendency, that developing countries are great exporters of certain raw materials and cheap commodities what need a lot of energy and cheap labor cost. Most developing countries are exporting to the developed countries. The reason behind this is, that developed countries don’t have cheap labor force and low-cost energy anymore to mine and produce certain raw materials.
Example, it’s not reasonable to produce garments and low-cost clothes in Europe or USA anymore, because all this can be done in developing countries much more cheaply. It is not a rational type of product what to export in developed country.
Sometimes some developed country may have the raw materials available, but it’s too expensive to process them. Often developed countries are forced to import raw materials.
Example Norway has iron-ore in its mountains, but because of the high cost of mining and processing, its economically rational to import metal products from such developing countries like India, China, instead of producing it in Norway.
On the other hand, developed countries are exporters of high-tech products. It’s because developed countries have high development level and high technology and skilled staff, which usually developing countries are lacking. The developing countries are importing high-tech products from developed countries.
So, analyze the trade statistics and make sure your country imports and exports, this is a primary step, to make sure what to export.
Choose products what you know and are familiar with
After you have learned about your country imports and exports and hopefully you have now a list of potential products in your mind already, it’s time to go further.
Now, I suggest, only go further with those products about what you are familiar with or at least feel interested.
It’s impossible to start a successful import-export business with the products about what you don’t know anything. Even if the profit margins seem to be high, you can’t do the business only because of money, you must be also somewhat interested in the products you are dealing with.
In my experience, if you just choose the products only because of money, then sooner or later you will lose the passion and interest. If you are not interested you just can’t be good negotiator and communicator and then you are also not capable of closing good business deals. Others who are much more passionate will beat you and you lose the deals.
Your interest in the product is also important, because if you are not very familiar with the particular product, then you need to learn about this. If you are not interested in something, then its also hard to find the motivation to learn about this.
So, you should choose the products what you like and what you understand well or at least feel interested. To choose the right products for you, think about your profession, experiences, hobbies. If you are an engineer and you like technology, then maybe you like technical products, maybe some kind of machines or equipment or raw materials?
Maybe you are interested in fashion and trends? Then you should think about clothes, footwear, fashion and beauty products.
You should choose the product(s) what you know and like and this is directly connected with your educational background and previous experiences and hobbies.
Hopefully, you can now select a bunch of different products out from your country import or export sectors what are suitable for you. All this will bring you closer to the answer for what to export.
Choose profitable product
Now after you have analyzed the trade statistics, where you got the raw-list of product ideas. Secondly, you have considered possible products from your own perspective and made a sub-list of the potential products best fit for you.
Now it’s time to select the right ones out – choose products that are also financially rewarding for you. You need to know how to make sure the selling prices in your target markets and you need to know exactly what price you can buy the products in your country. Finally, you also need to take into account all the costs related to exporting, then finally you know, what will be your profit margin.
In my opinion, most newbie importers-exporters are failing, because they don’t know how to analyze the market prices for their products. They don’t know what are the right prices and how to consistently monitor the situation in the markets. Also, they fail to account all the costs included in the export-import business.
The fact is, that all products and commodities, their prices are not stable. And for each and every product out there is a wide range of factors what are all affecting that price, it’s like a long equation with lots of unknown coefficients – what are changing its value all the time.
You don’t need to know all the coefficients ( nobody knows all), but you need to know how to check and monitor the prices for your products, so you can make wise decisions about buying and selling to maximize your profits.
For choosing the most promising products, I suggest to consider following things in the order below:
NB! You should do these considerations with the products what you have been chosen previously, just choose the product what you liked most and do the following steps.
Make sure the prices for the product in your country
With the products you most like, you should now think about where you are going to get it? Maybe you know already some producer for it? You should contact the factory and make sure the prices what they can offer to you. Together with the prices, you need to make sure the important things about this product(s), like the specifications and the certifications, what they can give you. Also, make sure the delivery terms what they accept. Make sure you are asking the prices from different suppliers, so you can compare the prices.
Make sure the selling prices for this product(s)
After you have made sure the buying prices and conditions for the chosen product, then now it’s time to make sure what price you can get if you are exporting it to your target markets. The easiest way to check the approximate prices is to go to the Alibaba and type the product name and check what you can see. You can get general idea there.
Now, if you are considering to export raw materials, then there exists one great and trustworthy platform. There you can check all the most raw materials and agricultural products world market prices. This platform is Indexmundi – you can find all the most common commodities from there and much more useful.
Still the most accurate way for making sure the prices is, to talk with the buyers and ask their target prices. You should start looking the buyers and start communications with them and ask their target prices and also make sure what are their conditions and requirements. You need to make sure that the buyer is talking about the same product ( meet the same specifications) what your supplier can give you.
Definitely, you talk with different buyers and compare prices. At the end of this step, you should see approximate profit margin would be for your product. If the margin is 10% and more, then continue, if the margin is lower, take the next product from your list.
Now you should make sure all the costs related to actually exporting that specific product to your target market. Probably the buyers whom you talked told you what is their delivery terms and requirements. Now based on those you can calculate all the cost relevant
- Delivery to your country port from your supplier.
Make sure what this cost to transport goods from your supplier to the shipping port. Maybe your supplier can transport the products for you, make sure how much it adds per product unit ( kg,s pieces, m3 etc)
- Export custom and preparing for export.
Make sure how much cost, for applying certificates, filling export declaration, correct packing insurance, renting the containers if necessary.
*I would suggest asking these costs from your customs broker and freight forwarder.
- Shipping cost to the end destination.
Now you can ask shipping cost for your products. You can ask offers from a freight forwarder or you can contact directly with some shipping companies. I suggest ask prices from different companies and also ask the delivery time.
I would suggest shipping companies like Mediterranean Shipping Company, Maersk, DHL, DSV.
So, at the end of this, you should know what the actual profit margin will be for your chosen product(s). Make sure you count all the related costs, if you are using LC payments, then you need to count also the bank costs.
Now you can decide, should you continue with the selected product or you should take another one. Now you should know what to export, or at least you know, how to find that product.