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Apr 25, 2023 3:17:43 PM | Start a Business What is Exporting? The Importance of International Trade To Your Business

If you want to find out what is exporting, in this article, we present the benefits of becoming a worldwide merchant and a few steps to succeed in it!

Our blog cover, with the title "What Is Exporting" in the left side, Shoplazza's logo at the bottom, over a top view of a cargo ship filled with colored containers.

If you want to reach new markets and foreign buyers, start exporting goods and services to expand your business, sell your finished goods to different audiences, and increase your profits while reaching a new milestone in global trade.

Expanding activities to other countries is a dream for many entrepreneurs. Still, they don’t tell you that the export process is much more than selling your products in a different region.

Selling goods to a new market requires money and new knowledge of doing business with different cultures and people with different ways of thinking, living, languages and habits. You’re definitely not in your own country anymore.

Knowing the trade barriers and the challenges involved, we prepared this small guide to present what exporting means and some tips to help you become one of the top exporters to other countries. Are you ready?

What is exporting?

A cargo ship navigation filled with colored containers navigating to a port, in the blue sea, with blue sky and clouds, representing what exporting means.

Exporting is nothing more than selling goods or services produced in one country to another. Exporting products is a component of international trade, enabling countries to access new markets and expand their businesses beyond domestic borders.

By working with exporting, companies can bring numerous benefits to businesses and the countries that are receiving the products. Some of the benefits that exports can bring to countries are:

1. Increased revenue: While exporting to new markets, companies opt to increase sales generating additional business revenue and contributing to economic growth and development.

2. Diversification of markets: Exporting allows companies to diversify their customer base and reduce reliance on the domestic market. The exporting country can easily exchange resources with different markets and increase the quality of negotiations.

3. Access to new resources: Exported goods can provide companies access to new resources, such as raw materials or skilled labor that may not be available domestically, avoiding trade deficit.

4. Increased competitiveness: Exporting can stimulate foreign competition and innovation, increasing competitiveness and efficiency.

5. Job creation: Exports play a huge part in the economic development of a country. An exporting company can create jobs in related industries, such as transportation, logistics and companies that expand due to increased revenue.

6. Strengthening international relations: Exporting can strengthen international relations and promote peace and stability through increased economic ties and extinguish trade barriers, promoting a good environment for the international market.

These are the reasons why companies tend to go worldwide. The benefits are excellent, especially for established businesses. However, not only big companies can work with international trade. Working with exports is possible for those with a small e-business or who don’t even know how to start a business.

Steps to consider while exporting to a foreign market

The picture of a notebook on a blue table, open in a page where is written "Checklist" and some checkboxes, representing the steps that you must follow before starting direct exporting to a foreign country.

Now that you know the exporting definition, we have a few pieces of advice to tell you.

The domestic market is already insane, so you must be well-prepared to fight against huge worldwide competitors. That’s why we don’t recommend you start exporting to different countries without proper strategic planning.

No worries needed. Knowing that you need extra help to achieve this milestone, we're giving you a list of steps to survive in the target markets. So here are seven topics that you must consider before going global: 

1. Conduct market research

Market research will help you understand the target market's local culture, customs, language and business practices before you start direct exporting to a country. Research is essential to establish a product launch strategy, who’s your target audience and whether you have to sell plants or jewelry.   

Before entering a foreign country, you must determine whether there is a demand for your products or services, analyze your competitors, their product’s features and how you can differentiate yourself.

Remember that you’re not in your home country and the market has different political and cultural backgrounds, sometimes demanding additional efforts you’re not used to. Even their language can be a considerable barrier while doing business.

2. Foreign country legal requirements

Familiarizing yourself with the target market's legal and regulatory requirements will help you avoid headaches. Operating in a foreign country can be complex, from taxes and permits to certifications and export license.

For example, suppose you’re looking to expand your business to the Latin American market. In that case, you must analyze all the countries separately to understand their export regulations for specific products. 

Ensure that your products or services comply with foreign policy and analyze if all the adaptations you must do are profitable. Operating in a different country is only sometimes profitable, so we must consider all these steps to prevent investment losses.

3. Financial feasibility and foreign currency

As we said, expanding activities to a foreign market is not always profitable

To protect the ROI and not use all your hidden cards in foul play, you must prepare a complete break-even analysis, assessing the financial feasibility of expanding to the target market, including the cost of entry, potential revenue, profitability, risks and challenges.

Consider the impact of foreign currency fluctuations, inflation, and other economic and operational costs like logistics. All these elements can affect your profit margin while investing in exporting!

4. Distribution and logistics

It doesn’t matter if you’re running a regular shop or an ecommerce business; you need to determine how you will distribute your products or services in foreign countries, including the transportation or logistics challenges.

Consider the costs, the feasibility of shipping, customs and local distribution networks and third parties. Running a dropshipping business is something you must consider if you want to avoid these types of costs and don’t be preoccupied with them.

5. Branding and marketing

Developing branding and marketing strategies will help you resonate with your brand in the new marketing you’re trying to export to.

Including messaging, positioning and advertising channels, you have to consider local cultural differences and tailor your approach accordingly. Does your new foreign market follow social commerce trends? What are the best channels to advertise your goods and services? Do they look for products on Amazon?

6. Risk management and exit strategy

Develop a risk management strategy to address potential risks and challenges, including political instability, economic downturns, natural disasters and other unforeseen events.

Sometimes even prepared for risks, the market will not perform as expected, and to guarantee that your investment is safe, you’ll need to build an exit strategy. Unexpected challenges are always hidden when doing business with foreign markets and withdrawing from a country can be a great choice.

7. Partnerships and Networks

Being alone out there is dangerous! While companies are establishing their business, they need a reliable network of suppliers, partners and distributors who can help them spread their products worldwide.

For example, suppose you want to start an online store. In that case, you need to find an ecommerce platform like Shoplazza, which can provide shipping solutions and worldwide payment methods to ensure you can deliver your products to a greater audience without any issues.

In conclusion, what is exporting?

A cargo blue airplane in the airport, with trucks and machines around, representing an exporting country exporting products to a foreign market.

In summary, exporting is selling products or services produced in one country to another. Expanding to foreign markets requires careful consideration of numerous factors, from market research to risk management. However, not only experienced merchants can join the adventure of selling products worldwide!

With a great network of suppliers and using the time to understand the market you want to enter, you will likely succeed in spreading your brand and products to new customers, even though you're new to this industry!

If you research and trace strategic planning considering the country's political, economic and cultural aspects, we’re sure you’ll have great results conquering the heart of this new market.

Shoplazza Content Team

About the author: Shoplazza Content Team

The Shoplazza Content Team writes about all things ecommerce, whether it's building an online store, planning the perfect marketing strategy or turning to amazing businesses for inspiration.