I usually recommend exporters identify a domestic supplier before starting the hunt for foreign importers to buy the products. But there’s another way….
For many years I’ve shown newcomers to global trade how to profit as an international trader. My trade information products outline very specific steps a new trader must take to be successful as a trade intermediary.
This doesn’t mean, however, that there’s only one way to be an exporter, particularly if you want to be an exporter without actually taking title to the goods you’re exporting. As they say, whatever works, works! And if you’ve ever thought about dipping your toe into the waters of global trade, take a look at this simple step-by-step plan that has worked for some newcomers.
Step 1 – Find an importer from another country who is looking for a particular product. You can find these leads on Internet buy-and-sell sites or through various trade newspapers. Be cautioned, however, that many of the “buyers” and “sellers” listed at Internet buy-and-sell sites have neither the resources to buy nor the means to sell a product. Through communication with the presumed buyer, you should gain a pretty good idea if he can deliver.
If you work with a bank that has an international department, they may be able to do background checks on the other party. You can also use commercial background checks, if you like.
Finally, there are some buy-and-sell sites on the Internet these days that actually pre-qualify their contacts.
Step 2 – Identify a supply source (U.S. or non-U.S.) for the product the importer is seeking. You might find suppliers in directories available at your library or on the Internet at Thomas Register ( http://www.thomasnet.com// ). Another way to identify potential suppliers is to simply go to a search engine such as Google and type in the name of the product you’re seeking. Any supply source will do but as a newcomer, you might do better to target small and mid-sized suppliers who are probably too small to conduct their own export marketing. They’ll be looking for someone like you to sell their product.
Step 3 – Now it’s time to go back to the seller you identified earlier and request a firm price quote for the precise product he’s seeking.
Step 4 – Using your company letterhead, prepare a price quotation to send to this potential buyer. Add a commission of 5 to 15 per cent to quoted prices. Inform the buyer to issue a confirmed, irrevocable letter of credit if he accepts your price quote.
Step 5 – When you receive the letter of credit, take it to your international banker and ask him to issue a back-to-back letter of credit to cover the purchase of the items you plan to buy on behalf of your buyer. You may also decide to use an assignable or transferable letter of credit. Ask your banker – and preferably in advance of receiving the letter of credit from the buyer. This brings up an important point: it’s always a good idea to identify a banker and freight forwarder before you’re involved in a trade transaction. You don’t want to be under extra pressure when money is involved and time is an issue.
Step 6 – You may also use a freight forwarder to handle the details of packaging and insurance (ask him in advance) as well as other details associated with shipping. A freight forwarder can be your best friend and the modest fees he charges can be added to the cost of the sale. Again, this is something you should determine before you’re in the middle of a trade transaction.
Step 7 – Present your letter of credit to the seller. Once they have met the specifications in the letter, they will be paid for the goods and the freight forwarder will ship them. Congratulations! You’re an exporter.