Earlier this month Simply Business hosted a Google Hangout looking at importing and exporting.
We invited a panel of experts, consisting of Alibaba’s James Hardy, Wholesale Forums’ Anthony Trollope, and DHL UK’s Claire Maher, to discuss the practicalities of beginning to import or export as a small business.
You can watch the full Hangout here, and read our question-by-question précis here.
Alibaba’s James Hardy said that the internet is important for researching where your business fits in. He said that there is a choice between pioneering in a new market, and therefore enjoying first mover advantage, or joining other British businesses in an existing market.
James also said that it is important to assess demand, and that finding an online marketplace, either by vertical or by geography, is the best way to achieve this. He suggested that this may be a better first step than contracting with an agency.
Wholesale Forums’ Anthony Trollope underscored the importance of understanding the complexity of individual markets. He said the longer you can remain in a market the better, but that it is important to assess the importance of one geographical area in comparison with others.
James added that the only way to truly understand a market is to visit, to talk to people, and to attend trade shows. He said that in order to get the important granular detail about products and services it is necessary to talk to customers face to face.
DHL’s Claire Maher said that it is important to build relationships with reputable carriers in order to reduce the necessity for personal travel, and that firms should ensure that they retain ownership of carrier arrangements.
Anthony suggested that it may be preferable to first enter markets in which barriers such as language are not present. He added, though, that modern technologies and services have reduced these barriers significantly.
James added that language does not need to prohibit procurement, as these requests can be fulfilled in English using platforms like Alibaba. He also underscored the importance of using local online marketplaces, and suggested that a combination of Google Translate and paid-for translators hired through university departments can be a cost-effective solution. He added, though, that partner arrangements and wholesaling, as opposed to marketplaces, can still present a language issue, which becomes particularly apparent in marketing.
Anthony said that trade shows are a good place to start, whether or not you are exhibiting. Claire added that small exporters may wish to concentrate on markets in which high levels of English are spoken, adding that the primary export destinations for their small clients are the USA, Germany, and Australia. She also suggested that it may be wise to concentrate on EU markets in order to minimise duties.
James said that businesses can underscore their reputation by becoming an Alibaba Gold Supplier, which requires that applicants are investigated by Alibaba.
James also added that the major demand on Alibaba for UK products comes from the USA, China, India, France, Pakistan, Spain, Italy, Poland, and Germany.
James said that China is “a great market to get into” if you have the cash to invest, adding that it is the fastest growing online retail market in the world but entry can be expensive and complex. He added that in aggregate, the easiest market may be the United States, particularly as language is not a concern.
James said that logistical questions are important, including shipping, duties and taxes, and language. He added that you should consider how easy it is to penetrate the market, and whether there is an established marketplace already in existence. It is also vital, he said, to test demand.
Claire said that DHL acts locally to mitigate any logistical challenges that may appear in individual markets. She added that there are parts of certain countries are difficult to get to, but that “we find ways of overcoming it”.
Claire said that it is important to remember that seasons don’t necessarily coincide from country to country. Anthony highlighted that this may present opportunities for “savvy traders” picking up out of season items abroad and waiting to sell them on at home.
James said that agencies based in target markets will give “better answers and better strategies”. He said that it will often make sense to go for small agencies, who may be able to offer most cost-effective services.
Anthony said that UK patents will only cover the UK, and that they will need to be revisited abroad.
James said that a direct relationship with a manufacturer is important in order to secure a long-term competitive advantage and the cheapest products. He said that this may be more difficult in the short term, and that if simplicity is a necessity than a wholesaler may be a better option – particularly as they may be able to wield more clout when it comes to immediate prices.
Anthony agreed, suggesting that a wholesaler is a good option when starting up, but that a direct relationship with a manufacturer will yield long-term advantages, especially if you are dealing in large volumes.
From a logistics perspective, Claire said that arrangements can vary between manufacturer and wholesaler. It is important, she said, to have visibility of logistics arrangements and their costs from the outset.
Claire said that it is important to consider the total cost of a movement versus speed, underscoring that, for example, sea freight, while cheaper, requires far longer lead times and offers less visibility.
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