Market research before entering a new export market

Exporters often choose a new market because an enquiry arrived from it, or because a competitor is already there. Sometimes that works. More often the first shipment reveals what a few weeks of research would have shown: a labelling rule, a duty that removes the margin, or a buyer who expected a different pack size.

This guide sets out the questions to answer before you commit money and stock to a new export market.

Step 1: Shortlist markets with data

Start wide, then narrow. For each candidate country, look at:

• Imports of your product. Trade statistics show how much a country imports, from where, and whether the trend is rising or falling. Public tools such as the ITC Trade Map and UN Comtrade publish this data by product code.
• Who supplies it now. A market dominated by one nearby origin is harder to enter than one that buys from many.
• Average import values, as a rough indicator of price level. Treat them with caution, since they mix qualities and pack types.

Trade data is organised by HS code, the international product classification. Identify the correct code for your product first. The first six digits are harmonised internationally; further digits differ by country.

Step 2: Check market access

A market with strong demand is of no use if your product cannot enter it at a workable cost. Find out:

• Import duties and taxes for your HS code and origin, and whether a trade agreement gives your origin a preference.
• Product regulations: safety and quality standards, permitted ingredients or materials, and required tests.
• Registration or conformity procedures that must be completed before shipment.
• Labelling rules: language, mandatory information, origin marking.
• Certificates required at import, such as health, phytosanitary, halal or conformity certificates.
• Restrictions: quotas, licences or bans.

Use official sources: the customs authority and relevant ministries of the destination country, and your own trade promotion body. Rules change, so confirm them again before you ship, ideally with a customs broker in that market. This article is general information, not legal or customs advice.

Step 3: Understand demand and the customer

Numbers show that a product is imported. They do not show why people buy it. Find out:

• who the end users are and how they use the product,
• preferred sizes, grades, flavours, colours or formats,
• seasonality, including holidays and climate,
• quality expectations and what buyers complain about today,
• whether demand is price-driven or brand-driven.

Sources include importer and distributor conversations, store and online shelf checks, trade fair visits and trade publications. A handful of honest conversations with importers often tells you more than a long report.

Step 4: Study the competition

List the main competing products and note, for each:

• origin and brand,
• pack size and packaging quality,
• retail and, where you can find it, wholesale price,
• claims and certifications,
• where it is sold.

Then ask what your product offers that these do not: price, quality, consistency, pack format, certification, delivery time or service. If the answer is nothing, the market will be hard.

Step 5: Map the route to market

Work out how products like yours reach the end customer:

• Importers and distributors, who buy, stock and resell.
• Agents, who find customers for a commission without taking stock.
• Direct sales to retailers, manufacturers or project buyers.
• Online channels and marketplaces.

Each layer adds a margin and removes a burden. Find out typical payment terms, how much stock distributors expect to hold, and whether exclusivity is customary. Laws on agency and distribution differ between countries, so take local advice before signing.

Step 6: Calculate the landed cost

Build the price up from your factory to the buyer's warehouse, then to the shelf:

1. Ex-works price
2. Export packing, inland transport and export clearance
3. International freight and insurance
4. Import duties, taxes and clearance charges
5. Inland delivery at destination
6. Importer and distributor margins
7. Retail margin and sales taxes, for consumer goods

Compare the result with the prices you found in step 4. If your product lands above the market with no clear advantage, change the pack, the route or the target market before you spend more.

The Incoterm you offer determines which of these costs you carry. See our Incoterms 2020 guide.

Step 7: Assess the risks

• Payment risk. How will you be paid, and how secure is it? Consider the buyer's credit standing and the payment method.
• Currency risk. Which currency will you quote in, and who bears exchange movements?
• Regulatory and political risk. How stable are the import rules, and are there currency controls or sanctions to consider?
• Logistics. Are shipping routes regular and transit times acceptable for your product's shelf life?
• Intellectual property. Register your trade mark in the market before you promote the brand there.

Speak to your bank, insurer and legal adviser about how to manage these. This is not financial advice.

Step 8: Test before you commit

Research reduces uncertainty; it does not remove it. Before a full launch:

• send samples to several potential buyers and collect structured feedback,
• exhibit at or visit a trade fair in the market,
• ship a trial order with one importer,
• review the results and adjust product, pack and price.

A one-page summary

Finish with a short document that answers:

• Is there demand, and is it growing?
• Can the product enter legally, and at what cost?
• Who are the competitors, and where do we fit?
• Which channel will we use?
• What is the landed cost and the margin?
• What are the main risks, and how will we limit them?
• What is the next step and its budget?

Next steps

Once a market looks viable, the next task is finding buyers in it. Read how to find international buyers for your products, or see our market research service.

To discuss a target market, request a quote and tell us your product, origin and the countries you are considering.