We have all heard of importing and exporting in daily life. We all have a general understanding that this is a vital part of how the business system of the world works. Different countries will import and export many items that will benefit their country- a good example would be the first importation of tea in 1667 by the British East India Company.
This is probably one of the most well-known examples of how importing affected our world in history. However, importing and exporting trade has changed quite a bit since then, and now it is a vital part of our world.
One way to think of this is that if you were to purchase anything offline, this is considered as a form of importing. However, business imports and exports are a bit different. It is time we better understand this.
Importing Vs Exporting: What’s the Difference?
In terms of business, importing and exporting goods can help businesses to expand both in your home country and abroad. However, it is important that as you go about this, you follow all the laws and regulations of doing so. In the U.S.A. the U.S. Customs and Border Protection will have basic information on this.
Importing and exporting has a huge impact on the worldwide economy. Every country will have one thing that they trade the most through exports to another country. For example one of the biggest exports of the U.S.A. is refined petroleum, whereas one of their biggest imports is cars. In contrast, a great deal of South America including Brazil and Argentina have large exports in food and produce, whereas one of their biggest imports is fuel.
The United Kingdom imports and exports a lot of cars. Then parts of Africa such as Mauritania export in minerals, metals and organics, however they import more food and produce.
So, in simple terms, exporting is what a country sells to another country, whereas importing is what another country sells to them. It is the cornerstone of worldwide trade that gives each country access to the things that they need.
Imports- Producers are in one country, selling to a buyer in another country
Imports are basically any resources, goods, or services that producers in any one country can sell to buyers in a different country. Some goods and services may require a license or permit to import into the U.S. as a part of your business.
When thinking of imports and how importing works, just think of the customs border patrol you pass every time you visit the airport.
Importing goods and services purchased from the rest of the world by the residents of a country, instead of buying domestically produced items can be done in some instances as perhaps their own country does not produce this product, or perhaps that the product that they do produce is not financially viable for them.
Imports lead to an outflow of funds from one country to another, since importing transactions involve paying sellers residing in another country. You could in this sense see trade as a worldwide operation, balanced by continual inflow and outflow.
Exports- Goods/Services that a buyer in one country purchases from a seller
Exports on the other hand are resources, intermediate goods, or final goods and services, of which a buyer in one country will purchase from a seller in a different country. Depending on what the good or service is, you may require a license or permit to be able to export it from the United States as part of your Business.
Exports are the goods and services your country produces domestically, however, instead of being sold to the country’s residents it is then sold to international customers, from another country. Exporting goods leads to an inflow of funds to your country as the transactions from exports involve selling your goods to foreign buyers.
This is the other side of the coin that makes trading a worldwide operation.
Simply, if you buy something from another country you are importing the product, however, if you sell your goods to someone overseas, then you are exporting your product to another.
The benefits of Importing/ Exporting
Every country is uniquely endowed with their own range of resources and individual minds that can come up with revolutionary ideas on products that can make our lives easier and better. One country may lack some resources that another has in abundance.
Once countries start to export the products that they are rich in, as well as importing the goods in which they lack, economies start to develop and the countries can start to build better. It is not only vital to businesses, but to consumers as well. You can always benefit from particular products and components.
In individual businesses, you can benefit from this too, while you may not be able to get a component you need for your product in your own country, you may be able to get it overseas.
The business of importing and exporting is a financial wheel that makes the world go round and become one large economy outside each countries’ individual economy.
If you are totally new to why importing and exporting is beneficial, then let’s use a simple metaphor to help you understand why this works so well. Baseball cards.
Helps your business expand
So, let’s say you are a kid in school, and you love trading baseball cards. Importing and exporting can be a bit like baseball cards. If your country was just your year group in school, you would have very limited resources. Only trading with a few people, however, if you decided to trade cards with people in other year groups or even other schools, you could get better cards faster, and it will give you more opportunities.
This is a lot like world trade. If you only trade within your country, your audience can be very limited, demand may not be high enough in your country for you to adequately grow, as there will likely be many other companies in your country doing the same. However, if you branch out to start exporting your goods to other countries you open yourself up to billions more people, and therefore you can expand and grow much faster with more customers. While you may also have more competition, you will also have more consumers. This brings us to our next point.
Increases competitiveness in the market
Back to the baseball card metaphor. If you are only trading cards with a few people, chances are the competition is small, and you will stick to usual techniques and the game can get a little boring after a while.
In business, things are rather similar. As you start exporting your goods overseas, you will find that you have more competitors, although you also have a much larger market. With more competitors there is a large healthy competition, and you will have more competitors to investigate. You can look into what other companies are doing to increase their sales, and reach more people, take on what they are doing, adapt it, and learn.
Competitiveness can be seen as a bad thing, however, it can also help you learn how to better things for yourself, and gives you an opportunity to adapt and grow in the market that you are in.
A market that is not competitive will end up at a standstill, doing nearly nothing and never growing beyond its peak. However, when there is competition, products and services need to improve to become the best. Consider Apple and Samsung, these two mobile phone producers are in constant competition and have been for a long time, and both of them thrive off of this competition, releasing new products, phones, and branching out into other areas of technology to compete with one another. This has been especially beneficial to the market and to consumers everywhere. Without their competition, who’s to say that mobile technology would be where it is today.
How to Import & Export
If you are considering starting your way into the import and export business, there are a few things you need to consider. While it may look like an easy feat and something that you can use to grow, there can be some complexities to import and export trade. It is not as easy and simple as it may be seen from the outside.
It is also not just for the lone footloose adventure types of whom survive by wits, it is big business, with a good $1.2 trillion in goods. In a year alone, you could expect $772 billion in merchandise to be exported to more than 150 foreign countries. These companies can trade anything from tasty beverages, to a commode, and more things you may think would never be up for global merchandise. Many, many products are bought, sold, represented, and distributed somewhere in the world on a daily basis.
Let’s take a look at the three things you need to consider the most about how to import and export your own goods.
Apply for a license/ permit
Your first step is to apply for a license or permit. While it is not always necessary, it is worth checking. A majority of the time you will not need a license to import goods into the United States, however some goods being imported may require a license, permit, or other types of certification.
In terms of importing, consider a few things first.
- Check requirements of federal agencies. Guidelines from the U.S. Customs and Border Protection will describe the types of items which do require a license or permit.
- Contact the local port of entry that you will use to import your goods for import requirements and other information about the import process of your goods.
- Even if you do not require an import license, you still need to fill out Customs and Border Protection entry forms within 15 calendar days of the date that your shipment arrives. Provide your importer number (IRS business registration number) on all these forms. If you do not own a business, then this would be your Social Security Number.
Things are similar for exporting goods as well, a majority of items that you are exporting to a foreign buyer do not need an export license, however, all items are subjected to export control laws and regulations.
The best way to find out whether you will need an export license for your product is to find a list of federal departments and agencies and check there. You can also save time by simply following the U.S. Customs and Border Protection’s exporting requirements, or you can simply contact the local port of entry that will be used to export your goods and find out from them.
Marketing research and creating a marketing plan is essential
In business, marketing is very important, no matter what the market is. Any form of product or service requires a marketing plan. However, as you and your product head out into the big wide world, it is best to rethink your marketing, as not only are you dealing with people in your home country, but now you are dealing with people worldwide as well. You will want to write up a marketing strategy, research foreign markets, and find methods and sources of information to help you on this journey.
Remember that this will be the foundation for your international success, so do not rush this part of your journey, planning is just as important as action, if not more.
You may want to think about your product and the type of person it is most suitable for, and get an idea of your consumers across the world and what they want. This can mean tinkering with your product slightly and making a few changes to make it more viable, or not. Some companies will prefer to simply find their audience in the world and target them before they go any further as a form of research, whereas others may prefer to do this kind of research before they target their audience.
Always consider that many foreign markets will differ significantly from those in the United States, they may have different climatic and environmental conditions, lower wage costs, social and cultural differences, local availability of raw materials or product alternatives, availability of foreign exchange, government import controls, and varying amounts of purchasing power. If you consider these things and still deem your product to be ideal, then the next step for you is to populate your plan with insights and relevant data from available sources.
Always consider the differences between countries before you decide to export your product. Sometimes your product may not be viable for one particular country, however, it may be perfect for another country. Your product might fill a gap in one country’s economy, and it is when you discover this that you start coming up with ways to target your international audience.
Choose a product to import/ export
Now, if you have not already, you need to pick a product, if you already have one, great! However, if you do not, yet you must obviously consider what your product will be. You need to find a product and industry you are passionate about, find your niche. Yet, it is not just about what fits you, it is also about what will fit outside you, think about it and consider if it could sell in international markets.
Not every product will be a good fit for every country, so sometimes it is best to find a product that fits you and your passions and then find your target market. Another way you can approach this is to make a list of products and check out their international market statistics and data, then pick the one that best fits you and best fits the international market.
Do not be afraid to test your ideas, it is not safe to assume that an item will sell just because you love it. Being a successful international importer/ exporter is about the whole market, it is about packaging, timing, who you know, and more.
Drop-shipping: How to Import & Export
Drop-shipping is another option for importing and exporting. This is a fulfillment method used in retail today more than you might think.
Imports and sales are not only reserved for large wholesalers, it is not uncommon nowadays for small companies, independent sellers, or even unemployed people with no equity to start drop-shipping. In drop-shipping, most can make money through this, and it can be very lucrative in the economy and brilliant for people to start up their lives in the business world. In many ways, drop-shipping can actually open doors in international sales and business that other methods of sales cannot.
If you have been thinking about making money on imports, drop-shipping makes it easier than ever, however, it is important to understand exactly what drop-shipping is and how it can benefit you.
What is drop-shipping?
Drop-shipping is a fulfillment method, in which a store does not keep the products it sells in stock. Instead of doing this, the store purchases the item from a third-party supplier and then has it shipped directly to the customer. As a result, the seller does not actually have to handle the product directly.
A great example of this is the well-known online seller Wish.com. Most people who buy things from this website are probably aware that Wish themselves do not actually handle any of the products sold, instead they are basically a platform that sells multiple very different products to buyers, which are actually the product from other sellers.
The biggest difference between drop-shipping and standard retail is that the selling merchant does not actually stock or own any inventory. Instead, the seller purchases inventory as needed from a third party, of whom is usually a wholesaler or manufacturer, in order to fulfil orders from consumers. Thinking about Wish.com, if you were to purchase something from them, then they would purchase that inventory from a third-party seller who creates and stocks the product in order to fulfil your purchase for you. Wish.com does not actually stock the item, and they have no real contact with the item that you have purchased either.
This works in four steps, either as a drop-shipping supplier or as a consumer. First the customer places an order from the online store, then the store automatically sends the order to the drop-shipping supplier, the supplier will then prepare the customer’s order, and the drop-supping supplier will then ship the order directly to the customer.
This also works on sites such as Shopify, WooCommerce, ShopBase, and Cloudways as well.
Finding a lucrative drop-shipping niche
Drop-shipping is probably one of the easiest ways to go about the import/ export process and make money from it. If you are not part of a company, starting up a drop-shipping business can be very lucrative.
One of the best parts of this is that you can import items from anywhere and sell them anywhere, aside from a few bureaucratic regimes. Now it has come, there are some services online in the market that make importing even easier. There are many good business opportunities in drop-shipping and there is no real reason for us to say that you shouldn’t give it a go.
There are many different things that you can do with your drop-shipping. You could look into fashion- which is a very successful niche on its own, tools, homeware, beauty, construction, technology and so on. Get creative, there are many opportunities, and so many niches. Find the one that sparks a fire in your heart and see what the market is like for it, take a look at potential competitors, if there are any drop-shipping companies that specialize in this yet, see what they are doing, see how successful they are, and run with it.
Understanding the supply chain
Starting up with drop-shipping, obviously you need to have a niche market, you need suppliers, and you need customers. However, even more so, you need to understand how the supply chain works and what your role in all of this is.
You are basically a third-party seller. Let’s say you specialize in the fashion niche and one of your suppliers is GAP, you choose to sell GAP and put GAP’s products up on your drop-shipping site, a customer comes along and orders some GAP clothing, you then send the order to GAP letting them know that the customer wants these items. Then GAP will prepare the order for your customer, and they will ship the order directly to the customer. Then, if the customer has any concerns or needs help, they will contact you- the seller.
Drop-shipping is the art of playing the middle-man between the customer and the supplier. There are many benefits to drop-shipping including lower capital requirements, an ability to offer your customers a diverse and broad product mix on the market, being able to maintain profitability without even carrying inventory, it puts you at a lower financial risk, provides stability, and it is both convenient and practical. For the most part you will also be able to choose your own working hours as well if you decide to do drop-shipping as an independent business.
How to become an Import and Export Agent
Finally, looking at import and export agents, this is not all that different to drop-shipping, however, it is more specific as a job to international trade.
An import export agent is quite similar to a distributor in that they are a middleman in the business. However, they do not take any title to the goods, and they provide fewer services than a distributor does. Their role, instead, is to get orders and often earn a commission for their services. The buyer will put in their order through the agent, who will forward it only to the supplier, the buyer will pay the supplier and the agent will earn a commission for this.
The role of an import- export agent is to simply act as a middle person for the purchase and sale of products between both domestic and overseas companies. The responsibilities of this role, however, may vary depending on the field and type of company that the agent works for. Duties may also differ depending on where the agent is within the supply chain.
This means that an export management company agent will work with foreign distributors and overseas marketing, whereas an export trading company agent will be busier with researching the market for specific projects and delivering sales pitches.
There are a few steps that you can take to become an import export agent. Firstly you need to find a product that you wish to represent, and then build up a range of products. One of the harder parts of this is that you need to ensure that your product knowledge is 100% and no less. You should also be skilled in researching, doing competitor research is imperative. You should also ensure that you are fully aware of any safety regulations in the product’s sales. It is also imperative that you establish what territory you wish to represent, be it local, national or international. Understand the circumvention clauses and make sure that you get samples as well. Marketing is important also, so be sure that you have promotional material and of course, make sure that you know what commission rate you wish to have as you go into negotiations.
A big part of this is being prepared for the role, the market, and having the knowledge at hand in the niche to be able to really represent the product to the absolute best.
Involves being a middleman for purchases/ sales of products
It is possible that an import-export agent may choose to be hired by a company, open their own company, or even work individually. Although working individually cuts out the middleman in all this, there is a greater risk and a cacophony of more responsibility involved in doing so.
There are three main things that you need for this career. Firstly, you should typically have a bachelor’s degree earning an MBA with specialization might be a good choice for those interested in management positions. It is also important that while in education one learns trade policy, currency transactions, import-export law, and policies associated with trade deals.
You should also have a certain set of skills, including organization, as you will need to maintain correct information about products, different markets, various companies, and trading. You should be able to stay informed and in the loop. Keeping up to date with economic trends around the globe, and you must also be quick to act when there are delays, damages, and issues. The cornerstone of this career is organization and knowledge.
This is why it is important that you stay educated and aware of all aspects in this field and also, have a passion for it. Having a passion for understanding the trade will help you naturally stay in the know about it more, thus helping you do your job.
Importing and exporting is the cornerstone of global trade, and our world would not be as united in trade as it is without the frequent imports and exports many countries partake in. Every country has something to give and something they need, so importing and exporting is almost the act of every country helping one another out.
However, it is not always on such a grand scale and there is a smaller side to this which everyone can do. Any independent seller, small business owner, or even the unemployed taking a look at drop-shipping, can do it.
Be wary of permits, and get them where needed, consider your products, the market. And most of all research, research, research.
Importing and exporting is simply the sales of products and services between different countries. When you buy something online from another country, you are importing it, and when you sell something to another country, you are exporting it.
It is strange how little we realize this is a very important part of our lives that helps our societies grow and evolve.