ABCs of Successful Importing, Part I
Jim Ryan, International Trade Specialist
Generally, here at the Illinois SBDC International Trade Center at Bradley, we deal more with export issues than we do with issues related to importing goods or services into the United States. This is not surprising - our resources are heavily skewed towards assisting Central Illinois businesses export U.S. goods.
Reasons to Import
Nonetheless, trade flows both ways and imports are an important element in a competitive international business strategy. When we do get inquiries on importing, the issues vary widely based on why goods or services are purchased overseas. In order to be competitive, a company may be seeking a low-cost supplier of products or materials.
Conversely, when cost is not an issue, a company may be looking for quality or expertise that is not readily available locally. Another common source of import inquiries is companies looking to expand into an additional revenue stream, or an individual looking to explore opportunities in importing goods for third parties.
These approaches raise significantly different challenges. For example, when a company or individual is looking into breaking into importing, it is crucial that the product and target customer are carefully identified. In my experience, new importers have a much better chance at success if they rely on existing expertise, relationships and networks, such as when an individual transitions out of a position in an industry sector in order to use his or her first-hand experience to service that sector with imports.
I have also seen business people with deep roots in a foreign country successfully utilize business and family contacts to launch an import venture. An example of this would be if someone of German descent or a recent German immigrant uses his or her contacts in Germany to supply imports of food products for the local grocery or restaurant markets. This works particularly well when an importer can use these connections to secure favorable terms, such as importing on open account.
Challenges to Importing
Perhaps, the most challenging approach is to look at the world and say: I should be able to come up with products that someone in the US needs. In effect, acting as a global matchmaker between sellers and buyers, or as it is known in the industry, an import agent.
I had personal experience with these challenges when I moved from importing and exporting office furniture for commercial developments to importing furniture for the retail market in order to gain the to the higher margins for residential furniture. However, I discovered that the assumptions that I had made about retail buyers were not always correct. Also, retailers were hesitant to place orders with an unknown supplier, even when upfront payments were not required. They wanted to develop a supplier relationship over time.
This is not to say that an importer cannot make this strategy work. It does, however, mean that an importer must be prepared to spend time and resources developing relationships and a track record, even when the importer has the best product at the best price.
In our next installment, we will discuss issues that all importers will have to contend with, such as pricing and legal and regulatory requirements. If you have any questions on importing, please contact us at email@example.com or call (309) 677-3075.