For an international trader, the most frequently referenced system is the Harmonized Commodity Description and Coding System (HS) of tariff nomenclature. HS is an internationally standardized system of names and numbers for classifying traded products developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization with over 170 member countries based in Brussels, Belgium. HS has everything to do with customs tariffs, rules of origin and import monitor and control.
Certain goods and technologies are highly regulated and their import or export requires approval from various federal government agencies and their foreign counterparts: the U.S. Food and Drug Administration (FDA), the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), the US Bureau of Industry and Security (BIS), the US Census Bureau (CB), the U.S. Department of Agriculture (USDA), the National Highway Traffic Safety Administration (NHTSA), the Environmental Protection Agency (EPA), the Drug Enforcement Administration (DEA), the Consumer Product Safety Commission (CPSC), the US Fish and Wildlife Service (F&W), and the Tax and Trade Bureau (TTB) of the U.S. Bureau of Alcohol Tobacco and Firearms (BATF). The U.S. Bureau of Customs and Border Protection (Customs) is an agency of the Department of Homeland Security. Non-compliance with the customs may carry severe penalties, which can be confiscating of goods, big monetary fines, huge customs warehouse storage fees, and possibly, loss of import and export privileges.
If you are not working for a big corporation, you are working in a niche. Most small businesses including sole proprietorships are in this category. There is nothing mystery about a niche market. It usualy is a market that is not big enough to attract more resourceful big businesses and it is generally underserved. Niche market can exists in an industry setting, or it could be a consumer type market. Big businesses have their core competence, and they tend to outsource their non critical components, or parts to other businesses. Automotive industry leaders like Ford and GM work with thousands of small businesses to supply their automotive parts. If you are not intimately familiar with big industries, there are however still ample opportunities to be found in the consumer space.
There are generally three categories of things that fit into a niche market: "not-yet-invented", "hard-to-find", and "too-expensive".
For "not-yet-invented" widget, you normally discover it when you are searching for a solution for an "itch". You have what that widget is for in your mind, but you simply can not find it. That is the time you put your inventor's cap on. There are bound to have many people facing the similar problem. There is a niche market for it! Computer modeling and modern manufacturing has made it possible to custom fabricate a widget cheaply before committing large resource for mass marketing and production. It may be worthwhile to make a few to test the market.
For "hard-to-find" items, the suppliers are there. But because they are not promoting their products, consumers have a hard time finding them. Most of the time, consumers are not as persistent as you. They give up after a short search. And they never find the product and go for an inferior substitutes instead. That creates an opportunity for you to buy the prodcuts wholesale from that supplier, and market them at a higher price. This type of niche market is more a marketing play.
For "too-expensive" items, those are typically first on the market or brand name products. The products themselves are not necessarily advanced or sophisticated. But because they have been around for a while, or they are new on the market, or they have spent so much marketing resources on those products, people buy them for reasons other than the products themselves. They buy them for the cool factor. That means you can bring generic products to the market at much lower price. Apple iPad and iPhone are brand name products. However there are many smart phones and tablet computers running Android commanding a bigger market share. Brand name apparels are another example where you can find a niche. This type of niche market requires a bit of sourcing effort to find quality alternatives. You have go distance to find them. Some may have to be direct imported from overseas to have a true cost advantage.
Now you have found your niche market you want to focus your energy on, the next important step is to find a way to market your products. For online commerce, we have the usual venues like eBay, Craigslist, Backpages, and many other free and paid classifieds websites. You may want to have your own website with all the features like shopping cart and blog. But promoting a website to drive traffic and buyers to your website can be costly. To advertise through pay-per-click keywords on search engines like Google and Yahoo you could be paying 50 cents a click easily. There are other online affiliate networks like Commission Junctions and ShareASale where you can promote your products. You only have to pay a percentage when your affiliates make a sale of your product.
If you have brick-n-mortar offline store presence with decent foot traffic, then you can try to stock them with those merchandises that are not normally distributed through online channels. Those merchandises can be bulky items like furnitures, or things that buyers generally like to personally inspect before making a purchase. With competitions from big retail chain stores, and 99 cents dollar stores, offline store can be very tough to make it work. Niche market business generally plays out better in the online world.
Now, lets talk about sourcing. If you are in the retail business, be it online or brick-n-mortar, essentially, you are playing a sourcing game with your competitors. Those who can find/build the most innovative, and cost effective products win. Most of the profits are made in the early stage when a need is identified in the marketplace before other players saturate the supplier side and bring down the margin. You have to sense the opportunity and act on it fast. The product may have to be custom fabricated in small quantity. That means you have to source from unproven sources, and work with new suppliers. You have to be on constant guard the suppliers you work with will not turn against you and other copy cats will not emulate your design and start manufacturing similar products. Entrepreneurs under market pressure and chronic sourcing fatigue especially need a competent partner to manage various risks.
While sourcing products overseas faces enormous risks and uncertainty, the reward of direct import can be tremendous. You could be the first to bring the products to your domestic market, and you will be ahead of your competitors to sell to your local customers. If you choose to manage the project alone, make sure you do your due diligence. Check out your exporters, inspect and test samples from manufacturers. Make sure they have the capability to deliver the goods that meet your specifications on time. Finally, do whatever you can to make sure your trading partners can be trusted. If you can not trust their words, all bets are off.
When ancient Roman corbita merchant ships set sail on the high sea, managing risks becomes a matter of survival. We here at Corbita Integrated Risk Management (CIRM) would like to make sure that loss never happens to our clients.
Each sourcing, import/export project is unique to us. We manage all risks, big or small, systematically. We work very hard to make sure all risks are discovered, calculated, monitored, controlled, and managed. We take and assume risks. We may advise our clients to avoid certain risks and offer alternatives if doing so would make more economic sense to our clients, and we transfer certain risks to third parties, like insurance companies, who are better at managing those types of risks, so our clients can benefit from such transfer.
We take a holistic and integrated view of the entire trading route. Almost any activity along the trading route has risks. Any link of the activity chain could break and ruin the entire trade. We want to make sure all risks are accounted for, from the beginning to the end. By having presence on both ends of the trade, we actually lower the overall cost of each trade. As an importer or exporter, you will gain competitive advantage, trading efficiency, and a level playing field that only the biggest multinational corporations can enjoy.
By using our service, you will no longer have to deal with inter-jurisdiction trading risks. And you don't have to send money overseas. That lowers the cost of doing business for both importer and exporter. The most frequently asked question by importer or exporter is, "If something goes wrong, how do I sue my trading partner who is in another country?" You will deal directly with us and enjoy the protection of our fair and just American court system. If your deal has to be financed, your banker will look at your loan application more favorably because now the overall risk is lower.
Other typical risks encountered in the course of international trade are: manufacturer or distributor credit, capability, and product quality risk, communication, language and cultural barrier risk, local rules, regulations and export control risk, transportation and packaging risk, import control and custom risk, target market rules and regulations risk, payment and financial risk. The list of risks are not exhaustive. Your trade may have other unique risks that we will manage individually.
Corbita Integrated Risk Management (CIRM)
© 2002-12 CIRM™ is a trademark of Digi-Go Publishing