Imports: selecting products and supplies

One of the most important ingredients for a successful import/export business is a good product, another is the marketing of that product. Knowing how to locate and test product ideas, how to find and evaluate suppliers, and some of the terms and conditions that are often written into agreements between exporters and their agents or distributors are key issues that are discussed in this chapter.

Getting Product Ideas

People who travel to foreign countries often see products they think will sell easily back home. They return with a few samples, show them to potential buyers, and perhaps move on to develop profitable businesses.

Another excellent way to find products to import is to subscribe to trade publications. One of the best: is Trade Channel. This monthly newspaper is published in two editions, one for developed and one for developing countries. It is dedicated almost entirely to advertisements, from all over the world, of products that are available to import.

People who are especially interested, in importing from Europe can subscribe to one or more of the Made in Europe series. These excellent magazines are devoted to single product categories and published at varying intervals:

• General Merchandise, monthly;

• Technical Equipment and Furniture and Interiors, semi-monthly;

• Food and Drink and Construction Equipment and Machinery, quarterly;

• Medical Equipment, annually.

There is a similar set of publications for Asian products. These are called Asian Sources.

Sometimes people decide on a country first and look for products from it.

A potential importer can also contact the relevant countries' trade promotion offices in his/her country for information about products to import. Most countries have trade offices.

Foreign countries' export promotion offices can often guide a potential importer to helpful publications from their countries.

Still another source of import product ideas is trade exhibits. Nearly every kind of product is categorized in some industry, and every industry has exhibits.

Major shows are listed in book called Exhibits Guide, which you'll find in major libraries, and shows for each industry are written up in trade publications. You can identify (and subscribe to) the publications in any trade by visiting their stands at the shows, by asking people in the trade what they read, or from a book found in most libraries called the Encyclopaedia of Business Information Sources.

Getting Sample Products for Testing

When you've chosen several potential products that you might want to import, you'll want to obtain samples and test them in the market. Write or telex some of the firms that supply those products in the foreign country and get catalogs and prices from them.

With that information in hand,* you can choose three or four different products (unless you're looking at very large and/or expensive items) and send for samples of these. Write to the supplier saying you are considering importing his product and would like a sample, enclose the money order, and send the letter by registered air mail.* (You often can get free samples of inexpensive items, but by sending payment, you save time.) Occasionally the exporter won't reply, and your money will be lost but that must be considered part of the cost of starting an import business.

Testing Product Ideas

When the samples arrive you will need to evaluate them yourself and get the opinions of people in the retail area. This is a crucial process for several reasons. The buyers simply might not be interested in your product. The price may be too high. The product will probably need changes to meet consumer preferences* in your country or legal requirements. (Most foreign products have to be modified to make them "right" for the U.S. market.)

First try to determine the uses of your product and who will be the consumers (actual users) and the customers (buyers). Often the two are different people. Try to determine which kinds of business firms the potential customers would buy from. Identify several and show the product to them (in most cases you will have to make appointments). Ask them what they think of it, whether they would recommend any changes, whether they would be likely to buy it from an importer (or from a foreign exporter through you as agent), and if so how often they would order and in which season, how much they would order at a time, and of course how much they would pay. This question of price is critical, and you may have trouble getting an honest reply. If results are not satisfactory when you ask, "How much would you pay for this?" try asking the estimated selling price and percent mark-up, how much they are now paying for similar products, or what price you would have to meet in order for them to buy from you.

You will soon find that each person with whom you speak gives you opinions and ideas, but the opinions are conflicting. This is because each buyer has his individual preferences as well as his unique group of customers. You will have to analyze the various replies to draw conclusions about the viability of your product idea*, modifications required, the target market, the channel of distribution, and the pricing structure.

Finding Foreign Suppliers

Although in the process of selecting products to import you will probably find a number of foreign suppliers, you want to do more research to find the foreign companies that can best serve you.

Look in Directories. In addition to finding suppliers in trade exhibits and through magazine advertisements, there are a number of United States and foreign business directories you can consult. Directories are available in the trade promotion offices and consulates of many countries and in major public and private libraries. A superb series of directories, Kompass, which you will find in major libraries, includes virtually all ranking firms in a number of important countries, and there are other directories that cover firms in certain regions.

Advertising. You can place your own advertisements in publications such as Trade Channel to locate foreign suppliers. If you want to target your messages better*, you can advertise directly in foreign trade journals. Good libraries have directories that can give you information about major trade publications in all countries.

Contact Service Firms and Trade Promotion Offices. Other sources of potential foreign suppliers are international banks and transportation companies and various countries' export promotion organizations. Banks and airlines have always helped their clients make trade contacts, and some banks have set up formal procedures for doing this.

Travelling. Perhaps the most enjoyable way to find foreign suppliers is to travel. If language is not a barrier, you can actually speak with officials of the trade promotion organization in their own country, and with the ministry of commerce, local chambers of commerce, the American chamber of commerce, and other organizations. Often you can make appointments with potential suppliers and visit them immediately.

Selecting Foreign Suppliers

Once you have made contact with one or several suppliers, you will have to choose the ones with whom you wish to do business. There are a number of ways to evaluate suppliers. The first is simply to analyze the firm's correspondence. Do they answer your inquiries promptly and accurately? Does their letterhead show a telex address? Is the stationery of good quality? You must try not to judge a foreign firm by the quality of the English used in its correspondence. A foreign executive may be top-notch*, except for his English, but may write to you in English to save you the trouble of finding a translator.

A second guideline involves assessing the way your foreign suppliers respond to your requests, especially for product modifications.

A third useful technique is to obtain credit information on potential foreign suppliers.

Finally, a visit to your potential supplier is not a bad idea. It is probably better to make appointments in advance, although that will give your potential suppliers time to clean their factories and perhaps hire extra temporary personnel. One West African firm rented an entire suite of offices, complete with equipment and personnel, in preparation for the visit of a new European customer.

When you get to the exporter's place of business, speak with some of the key personnel, ask if you can see some recent financial reports and look at the production equipment. Make sure your supplier has the capability of fulfilling his obligations to you.

In most cases, you will want to import from manufacturers rather than from export trading companies. This is both to save money and to have direct contact with the producers of your goods. You can usually tell the difference by the company name and the catalogs it sends you. If the catalog pages have stickers with your exporter's name* and address placed over some other name and address, your exporter is not the manufacturer.

You may want to make an exception to this rule if your orders will be too small for a manufacturer to handle, if you plan to order small quantities of several different items, if you are buying from a country such as Japan, in which exporting is normally done by trading companies, or if you will be dealing in handmade products. Since most producers of handcrafts are too small and unsophisticated to do their own exporting, you will need an intermediary to help you.