| Exporting
to Overseas Retailers - Are You Ready ?
Exporting directly to
small overseas retailers is a comparatively new phenomenon,
brought about by Internet. Selling directly to small
US or European retail outlets even 10 years back was
an uphill task because of many hurdles like lack of
information on buyers, expensive communication media,
scant information on overseas consumer interest, difficulty
in accepting small payments etc. Trade Fairs and Buying
Agents were two major avenues for small and medium exporters.
Internet, acting like a disruptive force,
brought about major changes in traditional supply chain
of
Exporter > Buying Agent > Importer > Distributor
> Stockiest > Retailer
Seamless, easy and inexpensive communication through
continents brought exporter and retailer closer, removing
many myths and wrong notions. The retailer suddenly
discovered how much he/she stand to gain by importing
directly because of huge price difference between merchandise
of local stockiest and that of exporter's. The exporter
found the middlemen disappearing and was too glad to
deal directly with buyer.
The phenomenon has been aptly described
by many such as Sigurd Helland in Import Your Own Products
And Make Your Profit Margin Miles Wider, Online Or Off
and Robert Nelson in Importing Made Easy
Today, traditional supply chain is still in use for
major chunk of exportable merchandise - but direct transaction
between exporters and overseas retailers is growing
very fast. Smart exporters have already organized themselves
for serving overseas retailers - but Are you ready ?
We discuss here what it takes to be successful in this
new area of opportunity.
Retailer Buys in Small Quantity
If you plan to address small retailers - forget container
load quantities. The business of retail is such that
- large purchase can block money and even jeopardize
business. The retailer may variously coin order quantity
as 'first order' or 'sample order' - but it is very
unlikely that he/she will ever order large quantity
of one model/product. So, if your business model does
not permit small order - retailer is not really your
forte. Others may find Minimum Order Quantity a valuable
clause in their product catalog.
Orders are More Frequent
Retailer will come back with repeat orders more often
than a large importer as he/she can neither afford to
maintain large inventory nor can keep rack space empty.
Export orders will come as often as consumers demand,
such as during Christmas season.
Margins are Higher
Silver line for exporters - you may compensate smaller
quantity with higher price. Compared to the price charged
by local stockiest - the retailer is unlikely to feel
sizeable pinch and may not object to slightly higher
price provided you communicate smoothly.
Be Sensitive to Issue of Trust
Importing from overseas country may bring excellent
profit, but it is certainly more risky than buying from
local distributor or stockiest. The issue of trust will
always play on the mind of retailer, specially during
first transaction, and he/she is likely to keep the
first order as low as possible. The exporter should
be sensitive to this concern and negotiate accordingly.
Prefer Air Freight
Most small retailers are not equipped to handle logistics
operators and are uncomfortable with long delivery period
in sea freight. Air freight, though more expensive,
suits retailer's requirements better. However, the retailer
may not be aware with these issues, specially the first
timers. As exporter, you should quote air freight as
much as possible and educate the retailer if necessary.
How to Get Information on Retailers
There are many retailers' associations in USA and Europe.
You may contact them for their list of members. Easier
option is to contact The Great Indian Bazaar who has
compiled a directory of over 2000 overseas retailers
(small retail outlets, convenience stores, drop shippers,
large retail chains etc).
Conclusion
Exporting to small overseas retailers does not require
significant investment and shipment can easily be handled
through couriers. As a result, small Indian exporters
and those new to export field will find this opportunity
very lucrative. Margin from single shipment may not
be much - but a handful of active retailers can keep
a small to medium exporter busy throughout the year.
Happy and Productive Surfing
Dr. Amit K Chatterjee
Related Links:
Author
: Dr.
Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15
years in various capacities like Research and Information
Analysis, Market Development, MIS, R&D Information
Systems etc. before starting his e-commerce venture
in 1997. The views expressed in this columns are
of his own. |
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