Whether you're a small business just getting started in the shipping industry or an experienced hand, there's always something new to learn when it comes to importing.
From the documents and rules that govern importing to the best practices for efficiently getting your goods into the country, this guide is here to give you everything you need to know about importing.
Whether you're looking for advice on navigating the complex regulations and requirements associated with importing or simply want to learn more about the practical steps involved in this process, you'll find everything you need right here.
What Is Importing?
Importing is the process of bringing goods into a country from another country or region, usually for commercial purposes.
This can involve importing goods from producers in other countries to sell on your own, or it can involve importing goods for use in your business operations, such as raw materials or parts.
Who Can Be an Importer?
Essentially anyone who obtains an import license can be an importer.
An import license is required by most countries to ensure that only those who are qualified and have met all of the requirements are able to partake in importing goods. The requirements can vary from country to country.
In addition to obtaining an import license, importers must also comply with product safety standards and other regulations that are set by the country of importation. These standards and regulations are in place to protect both consumers and businesses, and failure to adhere to them can result in severe consequences.
Finally, it's important to note that certain items may require special permits or licenses in order to be imported. These items include things like food, alcohol, weapons, and automobiles. So before you attempt to import any goods, be sure to do your research and check if you need any special permits or licenses.
Step-By-Step Import Procedure
If you want to import goods from abroad, you need to learn the basics of international trade, which means you need to learn about things like customs regulations, tariffs, and the laws governing imports into your country.
We've put together a list of five things you should do before you embark on your importing journey.
#1 Learn Basic Terms and Business Concepts
First and foremost, you need to learn the basic terms and business concepts associated with importing. This includes things like tariff classification, trade agreements, fees and duties, and more.
You should also familiarize yourself with the regulations that govern imports in your country. This will include everything from product safety standards to licensing requirements for different types of goods.
Finally, you'll need to understand how international trade works, including how shipments are processed and shipped, as well as how you will be paid for your goods.
If you're new to the world of importing, it's a good idea to do some research online. You can benefit from free-to-access resources like:
- WTO and UNCTAD — they have hundreds of articles on the web where that contain up-to-date information and primary data on imports
- Training videos on Youtube
- Up-to-date articles by experienced importers on LinkedIn
- Cargoflip's resources for importing and exporting
Still, our advice is to attend the training of experts and, if you are going to import for the first time, get support from consultant companies and sourcing agents. With these resources, you'll be well-prepared for the process of importing goods from abroad.
#2 Research Products And Suppliers
Once you have a basic understanding of the importing process, your next step should be to research potential products and suppliers. This is an important step, as it will help you to select suitable goods for your needs and find reputable suppliers who can reliably meet your demands.
Profit begins at the purchase stage. You must decide which products to import by conducting a thorough market analysis. It requires a research process and feasibility that includes criteria such as product life, price, segment, target audience, and other aspects.
You should also conduct due diligence on potential suppliers, including researching their track record and talking to existing clients. This will help you get a sense of the kind of service they provide and how well they can meet your needs.
By taking the time to research products and suppliers carefully, you'll be able to ensure that your importing efforts are successful from start to finish. Our initial recommendation to importers is to always diversify and not deal with just one country or vendor. This is risky because of political conflicts and supply chain issues. A singular provider can put you in a supply crisis if they cannot fulfill your needs.
Ask your supplier for an HS Code to ensure that the product is legally allowed to be imported into your country. You can also ask your supplier if they have any other certifications or documentation that will help with the importing process. Finally, make sure that you understand all of the costs associated with importing your goods, including customs tariffs, insurance costs, shipping fees, and more.
For example, you should not start importing a product whose import is subject to the permission of the Ministry of Health before the permit, approval, and certification process is completed. Missing or incorrect information can cause serious consequences. Even worse, the products you buy that have been shipped to your country may be rejected during customs.
#3 Product and Supplier Identification
If you're looking to expand or grow your importing business, it's essential to build strong relationships with reputable manufacturers and suppliers.
But how do you go about meeting potential manufacturers and suppliers? Below are four methods you can use to get started:
- Supplier listing websites and B2B sites — there are a number of supplier listing websites and B2B sites that can help you free up some time in your search by connecting you with potential suppliers
- Sourcing and consulting companies — by partnering with a sourcing or consulting company, you'll have access to a network of experienced professionals who can help you find the right suppliers
- Trade shows and industry events — trade shows and other industry events allow you to meet potential manufacturers and suppliers in person and build relationships that will be useful for future business dealings
- Online networking tools — social media platforms and online networking sites can be a great way to connect with potential suppliers and manufacturers, as well as other business professionals in your industry.
It's also vital to do some research on your potential suppliers and manufacturers before committing to a relationship. This will help you identify any red flags, as well as ensure that they have the expertise and resources needed to meet your needs. Some key factors to consider include:
- Manufacturing capabilities and quality standards — this includes looking at things like their production capacity, whether they use state-of-the-art manufacturing technologies and their quality control procedures
- Business reputation and financial stability — you'll want to take a close look at your potential suppliers' track record of delivering high-quality goods on time, as well as their financial health, to ensure that they are a reliable partner for your importing business
- Accessibility and communication — you'll also want to consider things like how easy it is to communicate with your potential suppliers, as well as whether they offer timely and responsive customer support
If you take the time to carefully evaluate potential manufacturers and suppliers, you can build solid and long-lasting relationships that will help your importing business thrive.
#4 Request a Sample Product and Inspection Service
Once you've selected a few potential suppliers and manufacturers for your importing business, it's crucial to request a sample of their products.
A few free trials or a small-scale order allows you to test the quality of the product, assess its suitability for your business, and confirm that it meets all relevant safety standards. It's also an excellent opportunity to test how easy it is to work with your chosen supplier, and it gives you the chance to see how they measure up against competitors in terms of price and value. On top of that, you can show the goods to your potential clients and distributors to get their feedback.
Of course, when ordering samples, you should always ask for documentation such as an analysis report. And it's also a good idea to look into the supplier's quality control procedures. This way, you can be sure that you're getting what you expect.
Finally, when making your purchase order, be sure to find out about any taxes or duties that may apply to the imported goods. This will help you budget for your shipping costs and avoid any customs clearance surprises down the road.
However, quality assurance shouldn't stop at the initial stages of working with a manufacturer or supplier. Even if you've already viewed samples, we recommend requesting inspections before each or every couple of purchases and then periodically throughout the product's life.
If your business has a quality manager, they can send it to the factory for evaluation before shipping. On the other hand, if this facility is unavailable or too expensive, you can obtain this service from an independent testing laboratory in the manufacturing country. Knowing that an examination will be performed encourages manufacturers to consider quality and delivery dates.
Overall, working with a reputable and reliable supplier is essential for ensuring the success of your importing business. By requesting samples, assessing quality control procedures, and arranging inspections when necessary, you can minimize any risks and ensure that your products meet the standards you expect.
#5 Calculate Landed Cost
When it comes to sourcing products for your business, it's essential to compare the quality and price of the products you're interested in with the alternatives available on the market. This allows you to make sure you're getting the best possible value for your money.
Sometimes manufacturers will offer different models or options of the same product, which can vary in terms of quality and price. When you're looking to purchase something, it's vital that you first look at the product specifications and compare prices before deciding on anything.
Beyond just the pricing, there are also other costs that you'll need to consider when importing goods. These include taxes, duty fees, transportation and shipping charges, and the cost of value-added services like quality control inspections or reliability testing — the so-called landed costs. To make sure that your total landed costs are as low as possible, it's important to carefully calculate all of these factors before making a decision.
The landed cost will ultimately also depend on the delivery terms you choose. We recommend to always get different incoterm prices such as EXW, FOB, and CIF from your suppliers. This way, you'll be able to compare costs in a more detailed and granular fashion.
Overall, understanding your total landed cost is an integral part of ensuring that you're getting the best possible value when importing products for your business.
The Basic Import Trade Terms and Concepts
Importers need to know the jargon of international trade and the basic concepts to consider when negotiating with exporters. Here are the main points that importers should consider in the trade process:
#1 Minimum Order Quantity (MOQ)
The minimum order quantity is the smallest possible amount that an importer can order from an exporter. It's vital for importers to carefully consider this quantity, as it may be cost-prohibitive or unrealistic due to the size of their company.
For your first order from a new manufacturer, ask for a sample or some products to test the quality. Once you've checked the product, you can request a trial order with limited capacity. Many manufacturers set minimum order quantities (MOQs) to reduce production costs and not break their production schedules into small orders. Try to order the product you're interested in testing in small quantities at first. This way, if there are any problems with the quality of the product, you haven't invested too much money into it.
#2 Order Quantity and Price Balance
When sourcing new products for your business, it's important to find a good balance between the quantity of products you order and the price you pay. Ideally, you should look for suppliers that offer high-quality goods at reasonable prices.
Manufacturers usually set prices according to specific quantity ranges. For example, they offer different prices for 1,000, 5,000, or 10,000 pieces. Research the manufacturer's limits for product type, quantity, weight, and price. Based on this information, negotiate to get the best possible deal for your current order size.
#3 Production Time
Different manufacturers have different lead times for production, and this can vary significantly based on the type of product you're looking to source. For example, some products may be made in large batches over a period of months, while others may be produced more quickly.
When sourcing new products for your business, it's important to carefully consider the deadline for delivery. This will help you manage the timing of your orders and ensure that you're not waiting too long to receive your goods. When negotiating with potential suppliers, ask about their production time and make sure that it meets your needs. If necessary, work with them to find a solution that works for both parties.
Our advice to importers is to add the deadline to the contract terms and follow the process well so that there is no delay in the shipment dates. If importers are responsible for overseas shipments, it is advantageous for them to make annual agreements with shipping companies regarding both container supply and predictable freight costs.
#4 Payment methods and terms
When importing goods, you need to carefully consider the payment terms and methods. The primary hope of exporters, e.g., manufacturers, is to receive cash payment in advance. Nevertheless, advance payments tend to pose various risks for the importer.
To begin with, you may not receive the ordered products at all. In instances such as quality errors, insufficient production or delays in deadlines, where you've already paid ahead, you have no authority to take action. For that reason , we recommend importers choose 30-60-90 days deferred or letter of credit methods instead. This will allow you to verify the quality of the products before making payment and ensure that any delays in production or shipping are not your responsibility.
#5 Incoterms (Delivery terms)
The selection of Incoterms shows who bears the costs and risks in processes such as transportation, insurance, and customs. When importing goods, it's essential to carefully consider the delivery terms, as these will impact how your goods are shipped and who is responsible for any issues that may arise.
Documents Used in Import Customs Transactions
When shipping goods internationally, several shipping documents are required to clear customs. These documents ensure that your shipment complies with all applicable laws and regulations.
While the specific documents required will vary depending on the type of goods being shipped, the country of origin, and the destination country, there are some documents that are required for almost all international shipments.
Here are the primary documents that you will need for your import customs transactions:
- Commercial invoice (CI) — provides information about the goods being shipped, including their type, quantity, and value. It is required in most cases to demonstrate compliance with regulations and to calculate duties and taxes.
- Proforma invoice — a document prepared for formalizing the trade between the importer and the exporter and shows the reconciliation of all sales-related conditions. It contains all the details about the product; price, quantity, weight, product type, how to make parcel and packaging, payment method, delivery terms, etc. An invoice is like a checklist showing what the importer purchased and under what conditions before the official documents were prepared.
- Bill of Lading (BOL) — a document issued by a shipping company that outlines the shipment details for goods being transported. This includes information about items, weight, volume, origin, destination, and other relevant details. The bill of lading is required by customs officials to verify that the shipment complies with all applicable regulations.
- Certificate of Origin (CoO) — a document that indicates the origin of goods and is often used by customs authorities to determine whether or not certain duties or taxes should be applied.
- Packing list (weight list) — it's required if the invoice doesn't contain information such as the weight and number of containers.
- Movement Certificates (A.TR, EUR.1, and EUR-MED) — documents that show the compliance for all EU member states. Any country outside of the EU must register in one of these documents to qualify as a non-EU country.
- Import License (for some countries) — a document that confirms the importer has permission to import certain types of goods into a specific country. In some cases, an import license may also be required to secure certain types of financing.
- Arrival Notice (For US customs) — a document that notifies customs officials upon the arrival of your shipment.
- Various certificates for different product groups — certain products may require additional documentation to verify the compliance of their contents. This could include certificates for organic products, textiles, pharmaceuticals, food, beverages, or chemicals.
Overall, it is crucial to understand the documents required for your import customs transactions to ensure that your shipment meets all applicable regulations. With the correct information and planning, you can ensure that your goods are cleared quickly and without any issues.
Start Importing With Ease
Importing can be a complex process, but it doesn't have to be overwhelming. With the right information, resources, and tools at your disposal, you can successfully navigate the entire importing process from start to finish.
Whether you're a new entrepreneur just getting started with importing goods or an experienced importer looking to refresh your knowledge and skills, we hope this comprehensive guide has offered everything you need.
However, if you want more personalized help and advice, please don't hesitate to contact us. Our team of experts would be happy to book a demo with you and answer any questions you may have about how Cargoflip can make the importing process smooth sailing.
Get started today, and let us help you make importing simple, seamless, and stress-free.