The average North American home is filled with products made in other countries—maybe tapestries from India, shoes from Indonesia, or electronics from China. These products find their way to you through import-export businesses. They're the matchmakers of global trade who connect manufacturers with buyers in foreign countries, and vice versa.
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Now imagine a furniture maker wanting to sell products in foreign markets. An import-export business can help them find international markets and buyers for their goods.
An import-export business focuses on buying and selling goods across international borders. It requires understanding trade regulations, market demands, and effective logistics to ensure smooth operations. Successful import-export businesses leverage global networks and relationships to navigate challenges and capitalize on market opportunities.
Import-export businesses facilitate international commerce across borders. The three main types of import-export businesses differ in terms of focus, payment methods, and assumed risk:
An ETC scouts for hot market trends and focuses on foreign buyers that want to sell those exports. They then match the buyers with domestic manufacturers who want to export their goods. The export company often will take temporary ownership of the goods while in transit, and after they distribute the goods, they make a commission.
EMCs work on behalf of the seller. They tend to specialize in a product niche or industry. If a furniture maker wants to sell to other countries, they'd pay an EMC to find dealers and distributors in an overseas market. The EMC would arrange safe and secure shipping, and handle paperwork. An EMC receives a salary, commission, or retainer.
These free-agent intermediaries discover and directly purchase various kinds of goods from a domestic company or overseas manufacturer and then resell them at a markup. In this import-export business type, the merchant takes on all the risk, but the profit potential may be higher.
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Discover Shopify MarketsLaunching an import-export business can be daunting because of the complexities of global trade rules and regulations. Below are some basic guidelines, but you'll have to do the proper research and tailor the specifics to your business type:
Which industry or products inspire you the most? Start by doing the following:
To determine whether the products you're interested in are likely to sell, you can use tools like Google Trends, industry reports, GlobalEDGE's Market Potential Index, analytics from social media channels, and the International Trade Administration's data and analysis.
Model your import-export business on a type that best matches your vision—ETC, EMC, or import-export merchant.
A business plan lays out how you'll handle foreign qualification—the registration of the business with foreign countries—so you can conduct business there. It also maps out licensing, insurance, and permit requirements. Lawyers and advisers who specialize in international business can help you sort through the details, and government agencies typically provide guidance.
Startup costs will vary depending on your product type, inventory storage, location, marketing budget, and travel expenses. Also consider costs for salaries, office space, insurance, office equipment, operations, distribution, and logistics fees to pack, store, and ship goods. You'll need enough startup capital to cover these costs before profits roll in. Then you can take the following steps:
Register with your locality, home state, and federal government, if necessary. The US Small Business Administration has information on how and where to register based on the business structure and location.
Register the business with the foreign country where you want to do business. Typically you file paperwork, appoint a registered agent in that country, and pay fees.
Many products don't need a license to trade, but some—such as agricultural products—require additional authorization or permits from government agencies. For example, you may need a license to comply with health and safety standards, environmental regulations, or trade restrictions.
If you plan to import goods into the US, register with Customs and Border Protection as an importer of record (IOR) to ensure that goods are cleared through customs smoothly. As an IOR, you pay customs duties, taxes, and associated fees, and are legally responsible for the imported goods. To become an IOR in the US, complete the Importer Identity Form, also known as CBP Form .
For help with understanding and navigating tariffs and international shipping, consult resources that keep you updated on changing trade policies.
New businesses may need to obtain a customs bond that provides insurance for any duties and taxes on imported goods shipments of $2,500 or more.
Import-export businesses can acquire export credit insurance and cargo insurance in addition to standard business insurance. Export credit insurance, obtained from the Export-Import Bank of the United States (EXIM), protects against loss in case buyers in other countries don't pay. This lets you sell on credit. Cargo insurance protects against lost or damaged freight and compensates you for lost time and profits.
Market research involves investigating the end user you want to target. Because import-export businesses are always making connections with both exporters and importers, both sides of the trade can be potential clients. You can also aim to serve an international market in a niche such as health care.
To bring target customers to your doorstep, establish a strong online presence and reach out to manufacturers and distributors or retailers directly. For calls or direct mail campaigns, introduce your company, talk about the potential of international markets, and pitch your business's ability to deliver results.
This is probably the most fun part of the import-export business, where you hunt for products to trade and build strong connections with a local manufacturer or foreign manufacturer.
To find exciting, promising goods to trade, you can travel abroad, respond to inquiries from foreign manufacturers, go to trade shows, contact development offices at embassies, scour trade publications, and follow up with leads you find on the internet. You can also connect with established Shopify brands through supplier networks to access quality products with reliable fulfillment.
To find buyers for imported or exported goods, exploit all available online resources—such as B2B marketplaces, industry-specific directories, government trade resources—as well as trade shows, industry events, cold calls, trade associations, and chambers of commerce.
Figuring out what to charge and how to get products from the manufacturer to the buyer is complex. You'll have to consider the best options for shipping, packaging and storing, and first- and last-mile transport. Many import-export businesses charge by commission or retainer:
Selling price is determined by the volume of units sold and the commission earned—commonly a markup of 10% to 15%. If the product is easy to sell and broadly desirable, a commission model can be easier.
Getting a retainer means receiving a guaranteed preset payment. Pricing a retainer depends on the estimated salary per hour, wages, benefits, time for conducting market research, overhead costs involved (operating expenses), and a profit percentage on labor, materials, and overhead.
Payments are processed in a number of ways as goods work their way through the export-import trading pipeline:
The exporter takes payment before the product actually reaches the buyer, sometimes offering a discount or other break. Buyers may worry about paying for products they haven't received yet, which is why cash payment in advance is risky for importers.
These are a commitment by a bank on behalf of the buyer. The bank ensures that the exporter will receive payment, so long as they meet the terms and conditions of the sale. LCs are great for new buyers without long credit histories because the bank backstops the transaction.
Here, an exporter delegates payment collection to its bank (the remitting bank), which sends required documents to the buyer's bank (the collecting bank), and instructs it how to pay. Documentary collections tend to be more affordable than letters of credit, but they lack a verification process. In the event of non-payment, legal recourse may be limited.
This gives importers 30, 60, or 90 days to pay for goods after delivery. This benefits the importer more than the exporter, who assumes more risk, but the exporter can purchase credit insurance to cover potential non-payment.
The exporter doesn't get paid until the buyer sells the products. The exporter technically retains ownership of the goods until the sale is completed. An exporter might want this arrangement if they're looking to ramp up availability of products and reduce storage costs.
Here are the most common shipping documents you'll work with daily. Be aware that these aren't the only documents an import-export business may need. See the Department of Commerce International Trade Administration for a complete list.
It includes a description of the goods and a guarantee to provide them at a specified price and date. It's typically used as a quote to negotiate the sale. Pro forma invoices are also useful for financing, opening letters of credit, and obtaining licenses.
This expanded version of a pro forma invoice adds items like reference numbers, payment terms, and banking information. Customs officers use the value of items on the commercial invoice to calculate the customs duty.
When products are ready to ship, the packing list details the quantity of goods, packaging, weight, dimensions, and other relevant information. Customs officials use the packing list to check cargo.
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This is a contract between the product owner and the carrier shipping the goods by land (inland bill of lading) or sea (ocean bill of lading).
This is like a bill of lading, only for shipments by air carriers. It includes information on the goods for tracking during shipment.
Sometimes this is required for letters of credit or at the buyer's request. It must be signed by a government official. A generic certificate of origin is used when no trade agreements exist between the importing and exporting countries. A Free Trade Agreement certificate of origin voids or reduces tariffs, depending on the language of the trade agreement between exporting and importing nations.
Before shipping, check with the government agency that oversees the product category to see if a license is required. Check also with state and local officials to see if any other regulations apply. For example, you can check the Department of Commerce for the product's Export Control Classification Number (ECCN), which identifies so-called dual-use items for export control purposes. This includes goods connected to national security, nuclear non-proliferation, missile technology, chemical and biological weapons, criminal activity, and terrorist threats.
With some exceptions, products entering the US do not require import licenses. An import license may be required for food and dairy products, plants, animals, arms, ammunition, explosives, radioactive materials and nuclear reactors, prescription drugs, trademarked articles such as name-brand shoes, handbags, luggage, golf clubs, toys, and copyrighted material like CDs and DVDs. This government document on importing to the US provides detailed guidelines.
Understanding tariffs and customs duties is essential for import-export businesses. The Harmonized System (HS) is a standardized numerical classification system used worldwide to identify products for customs purposes. Each product is assigned an HS code that determines what tariffs and duties apply when crossing borders. Incorrect classification can lead to shipment delays, unexpected fees, or penalties. Research the applicable tariff rates for your products and consider using tools that help simplify the process of finding the correct HS codes and understanding how to navigate changing tariff policies.
When a shipment exceeds $2,500 in value or an export license is required, this filing is submitted to the Automated Export System. This is so the US Census Bureau can gather trade data on US exports and ensure customs compliance.
[vc_row][vc_column][vc_column_text]Are you planning a move into the export or import trade? Are you asking yourself, “How should I get into import export, so I can get away from working 9-to-5 day after day?”.
Import/export is a very lucrative business, but also one fraught with risks. One good new though: When armed with deep and relevant knowledge, practically everyone can embark on this journey.
->> 3 reasons why everyone can participate in the import-export playground
Following is a brief list of 5 important things to show you just how enticing the prospect can be, and also to give you pointers on what you should be aware of.
No matter which country you are trading in, complying with its relevant standards and regulations is out of the question.
You will have to possess a thorough and comprehensive understanding of the rules of every country you intend to deal with, or you are likely to find your goods getting confiscated at customs, which will eventually result in loss of stock and money, and place your nascent enterprise in a dangerous position.
But don’t worry as you will easily find most of the information online nowadays, so get ready to do some research!
(Source: CloudRaxak)
Each country has standards defined for products and commodities – those that once deviated from can result in your shipment getting rejected. This is especially applied for agricultural products and commodities and food and beverage products – staples of the Southeast Asia.
Proper labeling, pesticide use, additives used, etc.. are required to be documented properly and comprehensively. Country-specific certification may be required as well. An example for Asia standards and regulations for agricultural products can be found here.
In today’s information technology driven business environment, there’s no way your business idea and model can come to fruition without the support from appropriate business softwares
Many excellent e-commerce software programs can assist you in getting your exporting and importing business up and running. You will need to look for software that allows you to generate invoices, convert currencies in quotations, allow you to manage inventory, etc.. Quickbooks and Zoho are two examples of such software companies that you may consider.
Keep in mind, however, that you may need to tailor the software to suit your business operations.
(Source: PCMagAsia)
Another type of technology resource that may prove invaluable in your international trading business is online Business Directories or B2B portals. These websites allow you to create presence in highly targeted and niche marketplaces where wholesale buyers and suppliers meet. They will generate valuable leads for your business and also help you build your network internationally.
There is a heap of financial information that you will have to know regarding importing and exporting stock. Many online guides will inform you about financial issues such as trade finance, for example.
It is crucial to understand everything you need to know, and proper planning must be carried out to ensure you have a viable and profitable business idea. Otherwise, many unforeseen costs and expenses may come to bite you in the rear later on.
(Source: GlobalTradeMagazine)
Not only will you have to build relationships with a local bank that provides working capital loans, you will also need to arrange for letter of credit (LC), bank guarantees (BG) and a host of other financial instruments commonly used in cross-border trade.
Additionally, when pricing your products, don’t forget to factor in overheads like transportation, financing costs, etc..
Good contacts are a must if you want to be successful in any business. By developing a comprehensive list of reliable contacts, you can find new business opportunities and gain valuable knowledge and insights into your industry as a newbie.
If networking is not your strong suit, you will have to start learning if you intend to make progress. This aspect is important, and you should not overlook it. Try to acquire contacts with professionals in the industry – buyers, suppliers, manufacturers, traders, wholesalers, drop shippers, distributors, shipping agents, customs clearing agents, quality analysts, etc.. just to name a few.
(Source: Irisphere)
The various features that online sites like Boxme provide such as the ability to send inquiries as well as receive real time advices from established legal presence at Malaysia, Thailand, Vietnam, Philippines and Indonesia will also prove to be immensely helpful in building up your contact list, especially in the Southeast Asia region.
->> Tramping down import/export barriers for a smooth business expansion.
Your unique selling point – which gives you an edge over competitors – is something you should figure out pretty soon before thinking of doing anything else.
(Source: KSMBOA)
Ask yourself: What unique aspects will drive the profitability of your business? How will you find consumers who want your products? You will have to find a niche in the already crowded market that your competitors are yet to exploit. If you can do that, you are likely to emerge as the ultimate winner.
For example, if you want to import and sell or supply apparel, you will need to find something unique that’s not already selling in your local market – style, material, anything that stands out.
In case you have not got the message already: Starting an export/import business is tough work. It takes considerable effort to initiate one. Extensive preparation and knowledge of the craft are vital for success.
[vc_separator color=”orange” align=”align_left” style=”dashed”][vc_column_text]BoxMe is the premier cross-border e-Commerce fulfillment network in South East Asia, enabling world-wide merchants to sell online into this region without needing to establish local presence. We are able to deliver our services by aggregating and operating an one-stop value chain of logistic professions including: International shipping, customs clearance, warehousing, connection to local marketplaces, pick and pack, last mile delivery, local payment collection and oversea remittance.
If you have any question about Boxme Asia or how we can support your business, please contact us directly by referring to our hotline. We are glad to be of service![/vc_column_text]
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