How to Export - Part 4 Developing Sourcing Guide for Export Products

A key success factor in any export business is clear understanding and detail knowledge of products to be exported. Before starting marketing effort and contacting prospective buyers, one must be ready with a detail sourcing guide that documents all necessary information about your product basket. We shall identify key elements of a sourcing plan and how to document them in this article.

Whether you are exporting first time or been in export trade for a long time - it pays to be methodical and systematic in your approach. Its not enough to have all necessary data 'in your head' - but equally important is to put everything on paper in a structured manner. Once you have done that - it becomes easier to find the gaps in your knowledgebase and take necessary corrective actions.

Preparing Product Portfolio

Once you have zeroed in to a set of products - next step is to prepare a profile or dossier for each selected product. The dossier should contain all information about the product - its sourcing, packaging, pricing, selling etc. Together, these dossiers will comprise your product portfolio.

I have prepared a sample checklist for preparing product dossier. Please add and subtract to arrive at your own.

  • Product Name

  • Availability : Where available at competitive price

  • Description : Short and snappy

  • Image/photographs - Specially for handicraft/beauty products

  • Specifications - size, volume, weight, materials

  • Quality standards

  • Packaging - unit pack, carton pack, packaging materials

  • Market Price

  • Suppliers - names and addresses of most suppliers

  • Competitors

  • Target Countries - Some Market research required

  • Various overhead costs like packaging, labeling, transportation, logistics, port charge etc.

  • Your profit margin

  • Selling price (FOB and CIF)

  • Minimum Order quantity

  • Discount scheme for volume buyers

  • Agency/distribution commission

It is strongly advised that you complete above homework before starting your marketing effort. Even if you are an experienced hand and know all these well - there is no harm in putting this knowledge on a piece of paper. You can improve a lot by introspecting and re-writing your thoughts. Remember, God is in detail - success of your plan depends a great deal on how much care you take on small details.

Do not be a Jumping Joe

I have seen many new entrants who either completely overlooked these preparations or planned to do so after securing first order and jumped headlong into marketing only to suffer later. What they do not understand is that even for negotiation - you need detail product knowledge. If your buyer asks for a smaller volume what will be your price ? Your negotiation is bound to fail if your buyer does not get precise and fast response and gets dissatisfied with your answer.

Be Nearest to your Supplier

Success depends a great deal on what price you can offer to your buyer. As your selling price depends on sourcing price, try to avoid unnecessary middlemen who only add cost but no value. By avoiding middlemen and sourcing directly from supplier - you not only cut transaction cost but also get greater control over product quality and timely shipment.

Identify Competitive Sources

One can source almost everything from major cities like Delhi or Mumbai. However, in most cases, these products reach cities from hinterland through layers of middlemen, each of whom add a transaction cost.

To be competitive - one should identify direct sources rather than middlemen. Keep in mind geographical pockets that have excelled in producing low cost products. For example, if you are trading in glass beads you should be as close to two major bead producing pockets in India - Purdalpur, a village near Agra, Uttar Pradesh for North India and Papanaidupet, a village in Andhra Pradesh for South India.

We shall identify key sourcing pockets in next issue

Happy and Productive Surfing

Dr. Amit K Chatterjee

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Source: FAIDA - Newsletter on Business Opportunties from India and Abroad Vol: 6, Issue 4 ; July 22' 2005

Author : Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various capacities like Research and Information Analysis, Market Development, MIS, R&D Information Systems etc. before starting his e-commerce venture in 1997. The views expressed in this columns are of his own. He may be reached at )

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