Common Mistakes New Exporters Make & How to Avoid Them

In an interaction with Industry Outlook, Vedala Srinivas, Founder of Srimandiram Traders and Services, discusses the challenges new exporters face in adapting to market trends, navigating regulations, managing documentation, logistics, and financial risks. He emphasizes that proper planning, reliable partnerships, and a strong grasp of trade terms, compliance, and government support are essential for sustainable export success.

What complexities do new exporters often underestimate, and how can they prepare for market trends, regulations, and financial risks?

Here are some common complexities faced by new Exporters:

Underestimating Market Trend: New exporters might plan for shipments without understanding the targeted country's market, preference, demand and competition. There are several changes from country to country. Please do clear and multilevel research on understanding market trends.

Documentation and Licensing: New exporters might feel a single license is enough to proceed with international shipments, but in reality, they must obtain several documents from the source country as well as the destination country (for some countries).

Rules and Regulations: Each country has its own rules and regulations and requires separate documents (for example, CIFER to China for food exports). So, plan to obtain the necessary documents and ensure compliance with the targeted country's rules and regulations.

Strategic Location office and warehouse setup: Some exporters could get office space and warehouses at different locations. This could add to the mess up for internal transportation. Meanwhile, planning a warehouse which is accessible to multi-model transport is also challenging for new exporters.

Freight forwarding and Logistics: Finding a proper freight forwarder could be challenging for new exporters. Analyze the basic amenities, knowledge levels, and potential of freight forwarders based on their work history. Try to team up with a freight forwarder/ logistic partner based on route expertise. Plan your logistics after considering inputs from the freight forwarder. Analyze the climate conditions, international holidays, and work trends during market research.

Payments Risk: Non-payments from buyers and currency fluctuations cause major financial loss. Choose safe payments such as advance payments and Letters of Credit (L/C), and always be aware of currency fluctuations. Use ECGC to cover unexpected financial risks.

Unaware/ Not Understanding of Government Schemes: New exporters might not be aware or not familiar with government schemes, which could provide some refunds. Please refer to the government schemes that support exporters, and stay in touch with new updates by following industry news. Use schemes such as RoDTEP, MEIS, etc.

How can new exporters ensure compliance with legal rules in both source and destination countries to prevent shipment delays or rejections?

Here are some common challenges faced by new exporters and tips to avoid them:

Lack of planning: Many new exporters might feel that once the order is received and the shipment is packed, the process is completely responsible to the freight forwarding or logistic partner. In reality, every exporter should have their analysis, proper planning and basic awareness about the entire process of logistics transport conditions at the international level. Do research about climate conditions, Sea routes, international holidays, port workforce delays, etc., so plan the shipment after considering all the important points from your research.

Choosing wrong Shipment partner: Inexperience selecting reliable freight forwarders or transport agencies often leads to cargo damage, port delays, or miscommunication during the shipping process. So, choose an experienced logistic partner, especially for exclusive routes and products. Do not proceed with a freight forwarder who has less exposure to your shipment route.

Misunderstanding of Incoterms: New exporters may not fully understand trade terms like FOB (Free on Board), CIF (Cost, Insurance, and Freight), or DDP (Delivered Duty Paid). This creates confusion in sharing costs and responsibilities with the buyer. Learn how trade terms work so you can clearly define who pays for freight, insurance, duties, and other costs. It helps avoid disputes with buyers and saves unnecessary costs.

Missing or Incorrect Documents: Errors in documents are the most common mistake made by new exporters. Please cross-check every export document before sending the goods. Missing or incorrect documents can delay customs clearance or even lead to fines.

Strategic location for Warehouse/office: If your office, warehouse or packing unit is located in a crowded city area, it may cause delays, as many cities don’t allow heavy trucks to operate during daytime inside city limits. Choose a warehouse that is closer to the product sourcing area, less traffic region and accessible to multi-model transport to the port. It helps reduce internal transport time and fuel costs.

Underestimating importance of clear packing and labelling method: New exporter often ignores the proper packing and labelling of the shipment; this causes potential delays in movement of goods during port operations. So, adopt proper packing and labelling system marks with HSN codes and clear numberings.

Monitor the Shipment Process: Monitor the shipment process from time to time so you can immediately take backup action if any delays occur.

Maintain the Shipment schedule: New exporters could plan the shipment sometimes at the last minute and face high shipping rates and logistic costs. So, coordinate with your buyer and make an advanced plan for shipments and maintain a consistent shipment schedule.

How can new exporters protect themselves from payment risks and ensure secure financial transactions with international buyers?

Follow these basic points to avoid payment risks and ensure safe transactions in international trade:

Safe payment: Always use safe payment terms suited for new exporters, such as letters of credit or advanced payments.

Make an agreement with the Buyer: Always don’t rely on the mail or any text promise for the payment terms agreed with the buyer. It is better to create a written agreement for payment method, product delivery timing and product details. A well-written contract for export could always protect your rights in case of disputes.

Verify the buyer's financial discipline: Understand the buyer's financial discipline by conducting a background check, such as credit history and previous shipment records, and reviewing their digital media presence and reach.

Register with ECGC: Register with ECGC, which covers credit risks for international trade.

Choose the Proper Banking Partner: Every exporter must choose the right bank which is present overseas and is well experienced in international trade transactions. Having exclusive team to handles forex transactions and Letter of Credit could also be special benefit.

Stay updated about Forex and currency fluctuation: Understand currency fluctuations and foreign exchange conversion fees. Prepare the quotation based on the currency fluctuation to avoid additional financial loss.

Why is pricing strategy crucial for export success, and how can exporters leverage government support to stay competitive?

Why pricing is crucial in Exports:

• Pricing is totally different in exports compared to pricing in local market since an additional factor such as Air/ Sea freight charges, customs fees, packing and labelling, additional costs such as import tax could end up final pricing a bit higher than local market product.
• New exporters might underestimate this and commits for the lower price in the excitement of their first shipment and causes loss of profit. Similarly, if you overprice, you might lose customers.
• Consider the exporter benefits given by the government to decide your final price. Never ignore them (e.g., RoDTEP, MEIS, etc.).
• Customers in the international market always consider your product if the pricing is competitive. Under-pricing could not only result in a loss of profit but also create certain doubts about the product, even if it is of higher quality. Buyer losses impression on you for underpricing the quality product.
• Exporters should calculate the complete landing cost, keep margins, consider forex rates, and use government benefits smartly to reduce the final export price without affecting profit. This way, you stay both competitive and profitable.