Intro to export

Instructor: Jim and Jennifer Krigbaum

Founders 2020 Development Company LLC

Instructor Introduction

Export 101 Building blocks for successful exports

How to enter the International market

Select a Product for Export

•Do you have sufficient supply to service export markets? •Do you have sufficient capital, personnel, and resources to handle volume? •Are you better off selling a big volume item or a small volume item with more profit?

Niche definition Niche

A position particularly well suited to the person/product who occupies it; “shea butter has a good niche in the natural cosmetic industry in California."

Applied to products Most products have several possible niches in the market – the key to maximum success is finding the niche that provides the greatest return for the supply chain – a “good” product in the wrong niche will be unsuccessful. Identifying the right niche requires a full understanding of the product including strengths and weaknesses of the product and supply chain. Consumer demand is what drives a product to succeed in a niche.

Discussion 4 what factors determine if a buyer buys?

Discussion What factors determine if a buyer purchases a product at the importer level? What about the distributor level? What determines if an end consumer purchases your product?

Prepare Company Profile Sheets

Objective of the profile is to create buyer confidence in the producer by communicating their background, ability and resources. Provide information about the company’s owners and management team

Vital Information About Your Company: Contact Information List of Products Company History and Philosophy Answer the question “why in the world would anyone buy my product over everything else that is available?”

Company Fact Sheets

Value of a company fact sheet It is important that the customer have confidence in the company producing the product the fact sheet helps them gain this confidence.

It is important to provide an outline of the

companies technical abilities and resources. It is important to provide background

information on the company owners.

Company Fact Sheet

Create your own Fact Sheet

Develop a Product Profile Sheets

What is a product profile sheet? Why prepare it? “Unseen is Unsold” What elements would it need to include?

Contact Information Common and Scientific Names Ingredients Packaging Specifications Special Certifications Shipping conditions

Product Fact Sheet

How will these documents be used and why do them?

Documenting information – ensuring that it is complete and the process has been thought through. Marketing tool for promoting the company You need something to leave with the customer – either in person or e-mail.

Packaging and Labeling

But Packaging sells it first!

The customer wants a high perceived value – this is often a factor of image of packaging and price.

Quality Sells

“Make sure your product can make the trip in the correct condition.”

Packaging Wisdom #1

Know When to Ship Your Product So That It Arrives in Good Condition!

Find out how your product usually ships

•Cultural beliefs

•Color •Size/Units per package •Transportation •Living conditions •Shopping habits

“It doesn’t matter what you like, it matters what your customer likes.”

Packaging Wisdom #2

“Follow The Market Leader”

Guerrilla Marketing: Emulate those who have market experience.

Packaging Wisdom #3

Your Customer Is The Expert!

They Can Help By: •Proofreading your labels •Reviewing your grammar •Giving feedback on your colors

•Critiquing your image

Solicit Feedback from your Customers!

• Photos can show how the product is used • They can be understood in any culture • They can remind customers why they want to buy the product

• Photos create an image of value

Use Photos On Your Labels The importance of Photos

Exercise – Evaluate your packaging

A tradeshow is an industry gathering where manufacturers and producers exhibit their products to expand their markets.

What is a Tradeshow?

* Identify new products and services * Strengthen relations with existing suppliers and customers * Identify industry players – customers, suppliers and support industry * Gather information for future purchasing decisions * Review business plans with customers and suppliers

Reasons for attending a show

* Find new customers and suppliers * Launch a new product * Strengthen brand identity * Visit existing customers

Reasons for participating in a show

How to catch a customer at a tradeshow! This image cannot currently be displayed.

You have a choice.... • Will you cast a wide net and see how much you catch? • Will you choose your bait carefully and attract one big fish?

The tradeshow doesn’t have to be big to attract the “Right” customer

Choose a targeted tradeshow

Tradeshow attendants are at the show to sell – not to buy

Therefore, it is critical that you do your homework to arrange meetings

prior to the show!

Research Visit tradeshow websites and research who is exhibiting and who is attending. Look for other companies in your niche or complimentary to your niche. Talk with people who have been to the show in the past

Questions to consider before committing to attend a show Who is the target audience and how do I reach them? Do I need to change the product, image or position of the product to reach the target audience? Can I afford the time away from my regular work to attend the show?

Questions to consider before committing to attend the show….

Cost of Samples

Follow-up

Business Cards

Brochures

Travel

Booth Rental

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Budget for all costs of attending a tradeshow

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If you were not at the trade show, what would you be doing ?

Is that more rewarding than attending the show?

Don’t underestimate the cost of your time

Maximize your tradeshow booth attendance

Make sure you and your product arrive to the trade show on time! Make sure the samples have all the necessary paperwork for customs clearance.

Take care of details!

Announce your attendance to prospective clients

Invite clients in the area to your booth or to dinner

Follow-up with a call to personally invite them to visit your booth

Actively promote your attendance at the tradeshow

Be prepared to answer questions: • Why should the customer buy your product over any

other in the world? • What is the price? • What are your payment terms? • How quickly can you ship? • Do you have an agent? • What is your experience in the market?

At the show!

Make Brochures, Business Cards, and Corporate Literature Available Give-Away Samples or Gifts Create a U-Shaped Booth

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To draw customers into your booth:

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Keep your display simple and feature your hottest selling products

Dress to Sell

• Don’t over or under dress your customer

• Consider dressing in “theme” clothing

• Wear company tee- shirts or matching colors

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At the Show

• Walking the Show • Contact • Schmooze • Take promotional photos • Debrief with care

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No Exhibit? No Problem.

• The Power of coffee • Walk the floor • Pick up others materials • Check out the Media Room • E-mail • Send a thank-you note • Google your competition

Follow-up after the show!

Things to consider when contacting the potential customer

• You have a two week window to keep the relationship alive • The first week the customer is swamped getting back to their

normal flow of business. • When contacting the customer always send something in

writing first • Avoid sending attachments in e-mails • Give them time to read the document and then follow-up

with a phone call • Always follow-through on what you say you are going to do. • Be persistent but not a pest – walk the thin line. • Look for other opportunities and ask if they can recommend

someone else to talk with or another company to work with.

Relationship management Key points

• Listen – it is your most valuable communications tool. Learn what the buyer wants.

• Look – when meeting with them look for signs as to who they are. Get to know them.

The meeting

• Work with your target customer to arrange a meeting. If they are not going to be at the show ask who else you can meet with.

• Always have something to leave them. Have a sample to show if possible and paper to leave. Send the sample later as most people don’t want to carry it home from the show and it will get lost.

• Know your product, its potential and your target customers needs.

Monitoring the relationship

• Stay in touch. Don’t just call the people when you need something, but don’t waist their time.

• Develop a friendship with both supplier and customer that goes beyond the product

• Follow-up with details requested at the show. Contact 100% of the people who gave you a business card.

• Send out samples promptly

Back Home • Make press book • Send thank-you notes • Debrief your colleagues • Update database • Follow-up with stragglers • Update website • Send samples!

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Incoterms 2010 g

Exercise – “Benefits of Speaking the Same Language”

Documentation flow export shipment offer

• Formal offer submitted to interested customer

Proforma Invoice • Proforma Invoice sent to customer

Purcer hase Or

• Customer opens Purchase Order – places order

LC • Customer opens LC

Advsesd

• LC is advised by bank to Exporter

offer • LC reviewed by exporter

Proforma Invoice • Containers or shipment space booked

Purcer hase Or

• Pre-shipment documents filed 10+2 USA

LC • Shipment loads on vessel – bill of lading issued

Advsesd

• Documents prepared and submitted to the bank

for negotiations

offer • Bank reviews documents

Proforma Invoice

• Bank submits documents to issuing bank for payment

Purcer hase Or

• If no discrepancies payment made

LC

• If discrepancies either an amendment is requested or an acceptance is requested

Advsesd

• Funds deposited into exporters account

Costing and Pricing COSTING • Calculating what a product costs to produce. • As you calculate, you need to consider everything it costs to produce THIS product.

PRICING • What you're willing to part with a product for and what your market is willing to pay for it.

• Cost-based pricing sets the floor; demand-based pricing sets the ceiling

Export Quotation Worksheet

►Document and record how you arrived at your offer price.

► Use the form in your notebook or develop something computerized with a similar function.

Cost of Goods for Export $3.50 Quantity 1904 Total Cost of Goods $6,664.00 Add Profit Margin 3.50

x .15 = .525 $0.53 $1009.12

Inland Freight to Port or Airport $0.21 $400.00 Consular Legalization Fees $0.01 $25.00 Inspection Fees/Charges $0.02 $35.00 Freight Forwarding Fee $0.03 $50.00 Bank Charges $0.02 $35.00 Document courier charges $0.01 $25.00 Total Exporting Costs $0.30 $565.00 FOB Loading Port / FAS Airport

Total Price $4.33 $8238.12

Ocean Freight /Air Freight $0.63 $1200.00 CFR Unloading Port / CPT Airport

Total Price $4.96 $9438.12

Insurance Premium $0.11 $ 200.00 CIF Unload Port / CIP Airport

Total Price $5.07 $9638.12

Offer Valid Until: 11/31/02 Prepared by: Authorized by:

#2: The Bank guarantees the importer that the exporter has met the terms of the LC before issuing payment.

# 1: The bank replaces the exporters credit with theirs thus eliminating risk to the exporter that the importer will be insolvent at time of shipment.

The Role of the Bank Under Letter of Credit terms

Bank

Avoid Discrepancies in an LC

Your Documents Must Exactly

Reflect the LC, Even if the

Information is Incorrect.

Questions to ask about an LC

Is the LC Irrevocable?

Is the amount accurate?

Is the address correct?

Is the description correct?

Are the ports correct?

Is transshipment allowed?

Can I meet the schedule?

Can I produce the documents?

Is insurance required?

Is the correct transportation

document required?

Is it what I expected?

Documentation Terminology Proforma Invoice - An invoice sent in advance of shipment, to enable the buyer to obtain an import permit or exchange permit or both. The proforma invoice gives a close approximation of the weights, values and timing of the intended shipment.

Commercial Invoice - A written and signed list of merchandise and/or services with associated quantities, prices and expenses. It contains the terms of the sale and is prepared by the seller to show the total amount owed by the buyer.

Notify - This phrase requires the carrier to notify a designed party upon arrival of the merchandise, but does not transfer title of the merchandise to that party.

Consignee - a person who receives goods from someone for their own use or to sell for the sender. The consignee is the person to whom the shipment is to be delivered whether by land, sea or air.

Types of payments Documentary Credit - A letter of credit issued to support the movement of merchandise supported by shipping documents presented by the beneficiary to the Issuing Bank for payment or acceptance. Documents Against Acceptance (D/A) - Instructions given by a shipper to his or her acceptance bank that the documents attached to a time draft for collection are deliverable to the drawee/payer against his or her acceptance of the draft.

Direct Collection - Method of payment for goods in which the seller sends a draft drawn on the buyer, the shipping documents, invoices, insurance certificates, other appropriate documents directly to the buyer’s bank for collection. Only an information copy of the advice is sent to the exporter’s bank to establish and monitor the collection transaction for the seller.

Negotiating Bank - The bank that reviews the documents required in the letter of credit for compliance with its terms and remits payment to the beneficiary.

Discrepancy - Any deviation from the terms and conditions of a letter of credit or from the documents presented under the letter of credit.

Clean Bill of Lading - One in which the goods are described as having been received by the carrier in apparent good order and condition” and without qualification.

Bill of Lading (Air, Ocean, Railroad, Truck) - A document of title issued by the carrier (transport company) or its agent. Bill of lading is a receipt for the merchandise in transit, as well as a contract for delivery to a specified party at a specified destination.

Freight Forwarder - An independent business that arranges for the shipment of export cargo and completes the necessary export documentation on behalf of the exporter. Issuing Bank - Bank that draws up and issues the letter of credit and that makes payment according to the conditions

Negotiate - Take action to verify that the documents presented under an L/C conform to the requirements in order to release funds to the seller.

Beneficiary - The party who receives payment as stipulated in a letter of credit. This party is usually the seller/exporter.

Expiry or Expiration Date - The date on which the draft and documents drawn under a letter of credit must be presented to the negotiating, accepting, paying, or issuing bank in order to effect payment. If the letter of credit is a “negotiable credit,” the issuing bank must honor the credit, provided the complying documents were submitted prior to the expiry (or expiration) date.

Draft - A draft is a formal demand for payment. It is an unconditional order in writing, addressed by one party (drawer) to another party (drawee), requiring the drawee to pay, at a designated or determinable future date, a specified sum in lawful currency. In international trade, drafts are also known as “Bills of Exchange.”

Types of Letters of Credit

Letter of Credit - An instrument issued by a bank, at the request of the applicant, promising to pay the beneficiary upon his presentation of stipulated documents in accordance with the terms and conditions of the credit. Irrevocable Letter of Credit (L/C) - Letter of credit that cannot be changed or cancelled without the consent of all parties involved. Almost all L/Cs are irrevocable unless otherwise stated on L/C. See also “letter of credit”. Confirmed - A letter of credit issued by one bank to which another bank added its irrevocable confirmation to pay, thereby obligating itself in the same manner as the opening bank.

Revocable Letter of Credit (L/C) - A letter of credit that can be modified or canceled by the issuing bank without the beneficiary’s consent unless the negotiation of complying documents has already taken place. The issuing bank must honor the draft(s) negotiated before the notice of revocation has been made.

Red Clause - Clause in a letter of credit that authorizes the advising/negotiating bank to make an advance payment to the beneficiary before presentation of shipping documents, usually against a simple receipt.

Standby - A letter of credit that generally guarantees payment due for an unfulfilled obligation on the part of the applicant or another party. It is payable upon presentation of a draft, as well as a signed statement or certification by the beneficiary that the applicant has failed in his obligation.

Transferable Letter of Credit (L/C) - Letter of credit that permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary.