Wednesday, December 10, 2008

Identifying Products For Export

What to export ? What sells well in international market ? How to select products for export ? These are questions uppermost in the mind of every budding exporter. Let us examine various options and a practical way of selecting a product basket.

There are products that sell more than others in international market and it's not very difficult to find them from various market research tools. However, such products will invariably have more sellers and consequently more competition and less margin. On the other hand - a niche product may have less competition and higher margin - but there will be far less buyers.

A Practical Approach in Product Selection

Fact of the matter is - all products sell, though in varying degrees and there are positive as well as flip sides in whatever decision you take - popular or niche product.

So, instead of approaching the product selection process from demand side - it is far more practical to look at supply side. Ask yourself - what can you supply. What are your strengths ? How close are you to supply sources. Once you take a stock of your capabilities - evaluate and prioritize available options.

Key Factors in Product Selection
  • The product should be manufactured or sourced with consistent standard quality, comparable to your competitors. ISO or equivalent certification helps.

  • It should be available in sufficient quantity. If possible, avoid products which are monopoly of one or few suppliers. If you are the manufacturer - make sure sufficient capacity is available in-house or you have the wherewithal to outsource it at short notice. Timely supply is a key success factor in export business.

  • It is competitively priced. The price should not fluctuate often - threatening profitability of your export venture.

  • Regulatory aspect of export. Check Govt policy - if there is any restriction in its export. Here's a good source for export import policy and hand book of procedure for indian exporters.

  • Status of various Govt incentives - such as duty drawback, tax incentives,DEPB etc.

  • Import regulation in overseas markets, specially tariff and non-tariff barriers. Though some major non-tariff barriers such as textile quota has been abolished-quite a few tariff and non-tariff barriers exist in European Union and other regions. If your product attracts higher duty in target country - demand obviously falls.

  • Registration/Special provision for your products in importing country.This is specially applicable for processed food and beverages, drugs and chemicals. For example - one needs FDA approval for exporting drugs and pharmaceuticals to North American market.

  • Seasonal vagaries of selected products. Some products sell in Summer,others in Winter. Some products may sell only during Christmas. Keep in mind seasonal aspect of your product, if there is any, and lead time required to reach target market.

  • After Sales Service. If exported product needs after-sales service, you should open service centre beforehand or arrange distributor/agent who can provide servicing facility. It is not advisable to export a product that requires after sales service, in case you lack the technical and financial ability to provide it.

  • Packaging and labeling requirements. Keep in mind special requirements of perishable products like processed food.

  • Mode of transport, logistics requirements. Special care is required for certain products which may be bulky or fragile or hazardous or perishable or of some such feature.


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