Winter, 2006

From the Editor

Export Misconceptions

Everyone knows that getting the right customers is key to business success. First they have to be checked for credit, then they have be moral and reasonable so that they will deal cooperatively when there are claims or problems, and they need to buy a decent quantity so you can make some money. Finally, they should be growing so you can grow along with them.

Getting the right supplier is every bit as crucial, maybe more so than getting customers. Good suppliers will give you consistently appropriate product at a decent price. They will minimize difficulties in delivery and service and work to keep you in stock with what you need regardless of weather calamities, transportation issues and other obstacles. They will provide you with market intelligence and suggest products you never knew existed.

A good supplier is a partner in satisfying the customer. Yet buyers of American food and ag products often make incorrect assumptions about what makes a great supplier and so miss possible lucrative business opportunities. This is our annual Buyer’s Guide directory issue, so it is full of great suppliers. In seeking one out, avoid these five common misconceptions:

  1. I have to buy everything direct from the source.

     

    It seems logical that a direct relationship with a producer will result in lower prices and steady supply. After all, buying “direct” means there is no middleman to add costs to the system, and as a direct buyer, one assumes a favored relationship with the producer in case of supply shortfalls. But as an old American song tells us: “It ain’t necessarily so.”

    On some products, market imbalances cause prices on the market to drop lower than what one could buy FOB from the production point. Also an exporter may buy larger quantities and thus be able to secure a discount over the price of buying direct. An exporter may also buy a wider range of products and be able to negotiate more favorable terms on everything by purchasing products the producer finds hard to sell.

    And don’t think having a direct relationship guarantees access to supply. If you were buying direct from a grower who got hit by a hurricane, he may not have any crop to sell. An experienced exporter may have many relationships and the capability to cover your needs from another state or country.

  2. I only want straight loads.

     

    Yes, you can usually get a discount by buying a straight load of a product. But that is a false bargain if you are buying more of a product than you need. If it is perishable, you run the risk of selling old, poor quality product and of experiencing excessive shrink. If it is non-perishable, you have to warehouse it and run the risk of fire and theft.

    A mixed load may be the answer. You need to buy only the quantity you can sell quickly and can import a wider range of products. Today, when ships are frequent to most destinations, you are usually better off ordering lesser quantity of more items more frequently. It keeps up quality and reduces handling costs.

  3. I don’t have to know much about a vendor’s business as long as he has the product I need.

     

    A reliable supplier usually is a solid company with a decent credit rating and a track record in the business. If the company itself is new, the individuals involved should be experienced in the business. Solid companies are both more likely to be able to cover your needs when supplies are tight and more likely to honor ethical obligations when disputes arise.

  4. Export experience doesn’t matter.

     

    Many fine domestic suppliers are disasters as exporters. They may not have the experience to package product for the rigors of export; they may not know how to load vans to maintain air flow for perishables; they may not know the rules and regulations of shipping, packaging and labeling. They may not know the tricks to securing shipping containers in times of scarcity from shipping lines and air carriers, and they may not be adept at negotiating for the best rates on transportation.

    Beyond the practicalities, they simply may not be prepared to deal with the claims, the delays and the problems inherent in export. And an unhappy supplier usually doesn’t lead to a satisfied customer.

  5. I know what I want to order.

     

    You may know what you need, but you need a supplier who is always bringing you new ideas to grow your business. The best supplier isn’t just an order-taker but a dynamic marketing partner looking to work with you to build your business.

    In the Buyer’s Guide starting on page 32 of this issue, you’ll find loads of suppliers. Every one of them paid to be included, so you can count on them being dedicated to export. These are experienced, committed professionals you should reach out to when building a supplier base.

    Together they offer you America’s bounty — and do it with the ease that comes of being a true export professional. Remember to tell them that American Food And Ag Exporter sent you their way.  EXP