(PART 1)
Highlights:-
HS Code Classification
Looking for the target markets
Analyzing the demand and price
Check for Competitors
Once you are confident that 'yes, my product has the export potential', thereafter begins the in-depth research and planning. In the first step, you have to identify and classify your product under the right Harmonized System Code (also known as HSN or HS Code). HS Code is a unique and standard code given to each category of products to resolve the conflict of different names of a product in different countries. The code is generally six to eight digits long and is developed by the World Customs Organization (WCO). Hence, once you classify your product under the right HS Code, then you will not face the problem of different names of one product and it will be helpful in doing the market analysis of demand, prices, competition, etc. which we are going to discuss now.
Demand for a product drives its sales, and more than 80% of the world consumers are outside the borders of India. Although all consumers have different tastes and preferences, there are high chances that the demand for your product will be higher outside the country. Therefore, a thorough demand analysis of your product is crucial for export planning. Let’s take an example of Shoes (HS Code- 640419), India has a demand of nearly 100million shoes per year while the worldwide demand for shoes is approx. 2000 million. This means that 95% of the demand for shoes is outside the borders of India. Now, the next question is - where is that 95 % of consumers? After all, there are 190+ countries in the world. Hence, a country-wise demand report is important for choosing the right target markets. Ximpex helps you analyze the market trends, and once you know the demand for your product in different countries, it is easier to move towards the next step of analyzing the prices.
You would be likely to sell your product in a country where the prices are high as it helps in getting higher margins. Hence, while looking for target markets, it is crucial to have a balanced list on the basis of demand and prices. Small countries like Belgium and the Netherlands are attractive to the exporters because of the value of their currency and higher ROI. Let’s continue with the example of Shoes, In India, the price of shoes ranges from Rs 500 to 10,000 and more, while the price range of shoes in the USA is from $50 to $1000 and more. Given the current exchange rate of 1$=Rs 71, the price in the USA is about 7 times that in India. Hence, you will be more likely to sell your product in the USA at higher prices than that of India. A country-wise price analysis helps you in selecting the most profitable markets for your products. But, beware of the growing competition, which is stronger in attractive markets and it may affect your planning.
As competition in attractive markets like the USA and Europe is stronger, you might feel hesitant in choosing those markets. Ximpex will help you in tackling those hesitations and conduct a competitive analysis of your product. This will help you in knowing your competitors’ prices, unique attributes, and key selling points. On the basis of this analysis, you can make your own strategy in terms of pricing or designs to gain customers in those countries. If we again take the example of shoes, you can offer your unique designs that were, earlier, not available to the customers in those markets or you can lower your prices than that of your competitors to win the deal. Ximpex will help you in taking the right decision and promoting your product accordingly.
As a whole, it is important to prepare a balanced target market list considering all these factors like demand, price, and competition. Ximpex helps you with an in-depth analysis of your product in the international market to ensure successful export planning. You can also add other factors like your production capacity or stocks to make a better decision in terms of export planning. The next steps, like in-depth target country analysis, risk assessment and trade barriers with different countries, will be discussed in our next article. In the meantime, keep your motivations high!
Author: Sachin Yadav Co-Author: Lisa Goel
Data Source: statistica.com
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