When your company ships products and goods overseas, you open yourself to a world of possibilities. But how do you ensure your strategy brings prosperity and growth to your business, avoiding the pitfalls that may lie along the way?
In our guide to getting started with overseas trade, we answer some of the key questions in this area, helping your business receive the full benefit of an international shipping approach.
Research and identify viable overseas markets
It’s not always easy to identify viable opportunities for overseas trade. However, a targeted framework can make your assessment and evaluation more straightforward.
Here are the steps involved in the process:
- Understand the total market potential – You’ll need to look at market potential in the overseas location. How many potential customers are there in your core demographic? How many people are likely to buy your product? The answers will be crucial to your growth strategy on an international scale.
- Evaluate the market access – Ease of access is essential. Do you have a shared language that will help you market to customers? This may be English or another language. Are there any trade or regulatory obstacles to overcome? Fix these, and you can move forward to the next level in your business.
- Acknowledge the economic factors – Different countries are experiencing different economic conditions. Consider the purchasing power of your target market in each potential country.
You can do these yourself or outsource your overseas market research, depending on your available resources.
Assess and mitigate risks for your company
Overseas trade brings a wealth of opportunities, but there are risks, too.
Here’s how you can assess and mitigate some of these risks:
- Use available resources to assess the risk in your chosen country – Public and government resources will give you an idea of the different risk factors involved.
- Consider different types of risk – Factor in the following risk types during your assessment, and choose the best candidate based on this.
- Economic risk – The reliability of the banking system, the rate of employment, and currency stability.
- Political risk – Governmental stability, trade restrictions, and crime levels.
- Structural risk – Availability of infrastructure, market development level, and competitors in the market.
Last but not least, work with experienced local partners. Overcoming potential problems in overseas trade may require strong partnerships in the overseas market.
Work with local sellers and experienced professionals in your chosen country.
Identify legal and regulatory requirements for overseas trade
Staying compliant is vital at every stage of the overseas trade process.
Think about the following aspects:
- Export regulations – Make sure there is no legislation in place to prevent you from exporting from your country of origin to your target country.
- Import regulations – Make sure there is no legislation stopping import to your target country from your original country.
- Domestic and other regulations – Learn more about all of the domestic and tax duty regulations for imported products in the target country, focusing specifically on the type of products you will be importing.
You may need to consult a local legal or accounting expert to help your business stay compliant.
Develop an effective export strategy
You’ll need a robust plan to achieve success in overseas trading, beginning with a reliable framework.
Here is what to consider:
- Decide what you want to achieve – Define your objectives with core metrics that are easy to measure.
- Understand what you are working with – Assess your inventory levels and other resources
- Identify your target – Decide on where you are going to sell your products.
- Appraise your products – Examine the key features and selling points of your products.
- Set cost boundaries – Decide on fair and viable pricing.
Finally, set a timeline for launching. Define a schedule for launching your product in the new market and stick to it, even if you begin with a minimum viable product at first.
Identify and select reliable suppliers or partners
How do you choose the right partners and distributors? There are a few factors you can look out for here:
- Knowledge of the market – First and foremost, your partners and suppliers must know the market you want to move into.
- A strong track record – The partners you choose must have a good track record of success in your chosen market.
- Clearly defined metrics – There needs to be an expected service level with clearly defined parameters. For example, your distributors might be able to have your product in X amount of stores within a defined time period.
- Close communication – You should be able to reach your partners whenever you need to.
Remember that the partner organization should be in a stable situation and not likely to encounter hardship that could affect your strategy.
Establish a supply chain for overseas trade
The flow of your products onto overseas markets requires a reliable supply chain.
Here are a few tips for creating and sustaining this chain:
- Be flexible and adaptable – If there is a problem, you will need a Plan B in place to keep your products flowing.
- Diversify risk mitigation – Just a Plan B might not be enough. Look for other opportunities to mitigate risk and put together several different risk mitigation strategies to maintain the supply chain.
- Remain aware of supply chain position – Examine your supply chain in both upstream and downstream directions, evaluating any potential sticking points.
It would help if you were ready to switch up your partner network in the event of a blockage in the supply chain. So, make informed decisions and always have a backup plan in place.
Ensure compliance with international standards and regulations
Regulatory compliance is not something you can set and forget – it’s a continuous process.
You’ll need to keep on making sure you’re checking all of those compliance boxes:
- Stay on top of the evolving landscape – Trade legislation changes, and international businesses are exposed to complex regulatory networks. You’ll need to remain on top of the compliance requirements in your field.
- Put a reliable team in place – People you can trust are vital. Your team will need to assess and implement compliance strategies on an ongoing basis, making sure your business stays on the right side of regulation.
- Use smart tools – Your enterprise resource management solutions, accountancy platforms, and other pieces of software can use smart features designed to flag any potential areas of non-compliance. This means you can correct any infringements before they become serious.
If you’re into ecommerce, a good SaaS ecommerce platform will offer built-in compliance tools for your tax management and accounting.
Manage foreign currency exchange and financial risks
Currency exchange rates are constantly fluctuating. While this can be a headache for holidaymakers and travelers, for international businesses, it can be disastrous.
Here is what to consider here:
- Utilize a policy of cash in advance – Avoid agreeing to a set price before the transaction is due. Instead, get advance payments for goods supply where possible, to avoid a foreign exchange slump.
- Operate different currency profiles – It may be worth utilizing a range of different currencies, so that you and your partners can trade in a mutually acceptable currency with a more stable exchange rate if required.
- Use forward exchange contracts – Being successful in the foreign exchange market requires skill and experience, but a careful approach to forward forex contracts can help to mitigate the risk of fluctuating exchange rates.
Using intelligent currency conversion tools for your web shop will always be a plus, especially when automated.
Manage logistics and transportation for overseas trade
Logistics can be confusing, and international logistics may be particularly troublesome for smaller businesses.
Here are the steps you’ll need to follow:
- Weigh up costs and delivery requirements – Swift delivery will be expensive, but this may help you secure a greater market share. Weigh up the benefits of your delivery approaches.
- Work with local partners – A common theme here is local knowledge, and it certainly pays to work with local logistics partners in your chosen location.
- Consider end-to-end solutions – There may be logistics partners who can handle the entire journey, from your starting country to the destination, with a seamless solution that is more secure and more reliable.
Finally, think about consolidation. Consolidating your shipping with other consignments can reduce the cost for smaller loads, so you’ll have better profits and lower expenses.
Build strong relationships with overseas customers and partners
You can’t do it alone in the world of international trade. Partnerships and relationships are going to be key to success.
Before you expand your business internationally, consider the following:
- Partner relationships – A strong partner network is crucial to almost every aspect of overseas trading, so work to establish these strong connections.
- Customer relationships – Overseas customers may have different needs and expectations from those in your own domestic market.
- Official relationships – Maintaining open communication with officials at the import location is important, as is bearing local customs and laws in mind.
Of course, it’d be best to have a strong marketing, PR, and outreach team in place to achieve all of the above with minimum effort and maximum efficiency.
Adapt your marketing and sales strategies for overseas markets
You may have a strong marketing and sales strategy back home in the USA or in another country of origin, but you’ll need to modify this for international audiences.
Here’s what to do:
- Gather as much data as possible – Learn about customer behavioral patterns and expectations.
- Stay on top of marketing regulations – Make sure your marketing and sales strategies comply with local regulations.
- Invest in partnerships – Local consultants and marketing professionals will require investment, but the insight and capability they offer will prove extremely valuable.
If a local partner is not an option, make sure you work with a company with proven experience in overseas marketing strategies.
Keep in mind international regulations and legal considerations
Legal considerations are relatively straightforward in domestic markets but become a little more complex when trading overseas.
Consider the following points:
- Controlled goods – Some types of goods may be restricted or controlled in overseas markets.
- Special taxation and regulation – Overseas traders may be bound by specific rules and regulations that do not apply to domestic traders.
- Intermediary locations – If you are routing goods through an intermediary country, there may be additional rules and regulations that apply.
- A changing set of codes – Bear in mind that all rules and regulations can change at any time, and it’s up to you to stay on top of this.
Last but not least – update your research and data regularly, as legal requirements might be very dynamic in some overseas countries.
Grow your business’ potential with overseas trade
Whether you are a retail organization with a growing volume of products or your business manufactures specialized components, you may benefit from overseas trade.
By working carefully and methodically, assessing market sizes, and partnering with local importers and sellers, you can achieve real growth for your company.
Overseas trade: FAQs
How to build an overseas trade and imports business?
You need to start small and do significant research, identifying and understanding the purchase potential in your target markets.
How to find overseas trade partners?
The answer to this question once again lies in research – look for partners with a strong history of success in your industry and weigh up potential candidates.
How to manage currency and foreign exchange for international trade?
The success of your trades may be dependent on foreign exchange rates. Ask for cash in advance where possible, and mitigate risk with forex future contracts.