The Largest Error for Importers
Importing a product for the first time in today’s business world is not an easy process. As each professional businessman and entrepreneur knows, many of the potential problems and planning that need to be taken into account in the import process are critical factors that need to be done at the beginning of the import process. The most important question that today’s importers have to answer in this process is: “How do I sell the imported product in a profitable way?”
Let’s examine this situation more clearly with a scenario: Let’s say you have found a great supplier who can easily stream the product in any corner of the world. As a result of prolonged telephone conversations and many reciprocal correspondence. You have signed a profitable contract for both parties.
There’s no trouble so far. Everything goes as you wish. In the workflow, you have come to create an import operation plan. You have determined the best period of the year to avoid port jams, boycotts and strikes.
You have chosen the most suitable delivery method for you. You find a good forwarder agent or shipowner and calculate all the loading costs one by one. You have even put in unexpected costs, such as peak period and fuel adjustment factor, in your cost accounts. You need to run away the largest error for importers with these methods.
Always do your best. What you plant now, you will harvest tomorrow.
1 – Contracted Sales
Let’s say you are importing and wholesale of screws and similar products for sale in construction markets. The last thing you want is to start talking about the product that is waiting for you to sell 1 container in your warehouse and the sale of the products with the purchasing unit of the market.
In such a case; Aside from the storage costs you will have to endure, there are even sales that go down to the cost of melting the stocks of the products that you cannot sell. The most important factor you should pay attention to in this type of trade, before giving the order of the product you are importing, it is best to talk to your customer’s relevant purchasing unit in advance and specify all conditions in the form of a written contract.
One of the most important issues of importers in sales made in national chain stores is the price policy for the product to be sold. The back and front margins determined by the customer agreed in such trades should be calculated very well and the sales price should be calculated accordingly. In other words, the sales prices calculated on the import cost may result in a fiasco in this type of trade
2 – Pre-paid Sale
This method, which we refer to as Pre-paid sales, is different from previously written commitments or contracts. With this method, the importer firm assures itself a little more. The customer who buys the goods will pay a certain percentage of the total cost of goods and guarantee that the imported product will be purchased.
In this way, the importer company finances a certain percentage of the import costs it makes and makes itself more comfortable in the trade it will do. The best example of this type of trade is the high tonnage and the yearly purchases.
Let’s say that you are importing a special raw material used in feed production to fish feed producers for aquaculture. Your customer has requested 250 tons of raw material for the production of 800 tons per year. With this method, you will guarantee the sale of this special product and you will finance the costs of the import beforehand.
3 – Pre-Ordering and E-Commerce
In today’s business world, although many companies have their own e-commerce and social media accounts, they do not use these channels effectively. Instead of using this method, they prefer to collect information and orders from customers that they have already sold.
However, many e-commerce platforms on the internet, the sector related forums, and even your own social media accounts, even if you plan to make an effective research for a particular product can make and you can easily determine the number of pre-orders. These types of channels are the platforms where you can learn the opinions of the end customer or your target customers on the product and reach more than one person at the same time.
With such channels, you can learn consumer behavior and trends about the product you are importing and you can determine your product’s short and long term marketing strategies.
So, why is pre-ordering an importer so important? First of all, it provides a great convenience for you to create an effective inventory management and the best profit rate; a previously purchased order quantity allows you to keep a minimum amount of product in your warehouse, allowing you to create minimum storage costs. It also makes it easier for you to create a more effective sales price than the one you plan to organize with a previously taken order quantity and at a minimum cost.
As a result, no matter how important all three methods are, TRUST is the most critical factor in creating a commercial relationship. If your supplier or customer doesn’t trust you, nothing will happen the way you want and it will slow you down in business life. We can assits you with our International Sourcing Management service.