Is Export Business beneficial?

Being several years in the field of export and import, I face this question several times with new exporters and importers. They really want to know that how much profit they can earn by doing export and import business. Whether entering in export and import business is beneficial. My answer is yes. Doing import and export business is beneficial and profit margin is on higher side as compared to domestic trade.

But, we need to understand several aspect of export and import business to maximize our profit margin. Firstly, we need to identify buyers who can pay us good price for our products. We are aware of the cost of our product which we manufacture or trade so we need to minimize our cost of product but do not compromise on the quality as there is stiff competition in international trade. If there is issues with quality of product you may lose your client. So it is very important to export quality products.

Secondly, cost of movement of goods, which includes inland movement, ocean movement etc depending upon the incoterms you agree with your buyer. In this case, you need to compare ocean freight from different shipping lines (if shipment is containerized) and the nearby Seaport or Inland Container Depot (ICD) where you can send your goods for export. These costs are variable in nature, so it is very important to have proper understanding of this cost any negligence will increase your costing which will ultimately impact your profit margin.

Thirdly, there are cost associated with insurance or third party inspection charges to insure quality of goods / products which will depend upon you agreement with the foreign buyer to whom you are going to export.

There are other several small costs are associated with the export which you need to understand and calculate very minutely to safeguard and increase your profit margin. If you want to get insurance for your buyer default cover, you many go for ECGC insurance as per their available policies. Further, if you are taking finance from your bank or you are putting your own money, you need to consider interest factor also.

This is the outline of your export costing which depends on several factors including delivery terms, payment terms and other associated costs.

So, it is advisable to have proper understanding of your costing so that you could offer your customer a good competitive price and to also secure a good profit margin.