Before starting an import company thorough research must be under-taken. With importing a product you will and need to find your niche market. In order to that you will have to conduct market research. There are professional companies that undertake this kind of research. However, most start-ups cannot afford to employ a market research company so they have to conduct the research themselves.
We asked a marketing expert how she would tackle the problem.
“Pound the pavements and try to make sure that you research a diverse market”, says Lee-Anne Bac, Grant Thornton Consulting.
“I would also advise when doing your own market research to approach associations, such as the Restaurant Association of South Africa and through associations of this kind, try and establish the size of the market. It’s important to decide if the product will be launched locally or nationally and only then canvas the target market,” says Bac.
Ten steps to follow in conducting market research
1. Decide what information you want to gather from the survey.
The very first step to take is that you have to identify your market, i.e. who will buy the product. To do this you must determine who the audience is from which you wish to obtain the information you need. For example, in the case of catering products, it would be head-chefs, restaurants or hotels.
This is known as “in-market research”, where you physically visit the selected market to investigate the market conditions. You can undertake “desk research” as well, where you examine all the information available from published sources.
2. Supplying the Market
Decide if your market is going to local or national. If it’s national then you’ll have to understand how you are going to collect data research and the costs that go with it.
3. Affordable Research – The Dipstick Survey
How can information be collected in an affordable manner? One of the best ways is the Dipstick method, or exploratory research, which is conducted to measure the scope or depth of a market.
First you have to decide if you would use questionnaires, interviews, or conduct focus groups to decide how the product would be received. If you go the questionnaire route, you would do this by approaching a small part of the perceived target market and ask them to complete a survey of mainly open-ended questions (meaning that the respondent should formulate his own answers) to determine:
- Interest in the product
- Price the buyer is prepared to pay
- Volume you need to import to meet supply and demand
4. How to prepare the questions
- Keep the survey as short as possible, asking only those questions that will provide the information you need.
- Use a casual, conversational style, making the questions easy for anyone to understand.
- Test the survey on 10 to 15 people before you produce it for mass distribution. Conduct an interview with each of those respondents after he or she completes the survey to determine if your questions were easily understood and easy to answer.
- Use the same rating scale throughout your survey for questions requiring the respondent to rate items. For example, if the scale is from 1 to 10, with 10 being the most positive, keep the same scale for all of the questions requiring a rating.
5. Ask the right questions
It is important to ask the right questions. There is a host of useful templates which you can access on the internet. You can edit the questions, and add new questions to your survey. By looking at different templates you’ll get lots of good ideas and useful information.
6. Modes of Data Collection
- Telephone: Telephone research is easy and encourages “sample persons” to respond, leading to higher response rates. Telephone surveys are fairly cost efficient and fast.
- Online surveys: These can be done via the web or email. The web is preferred (if you have a website of your own) over email because they are usually inexpensive to administer, provide very fast results and are easy to modify.
- Personal survey: The target market is interviewed in person, in their homes or place of work and are suitable when graphic representations, smells, or demonstrations are need.
7. Analyse and Compare
Once you have gathered information you have to organise and analyse the data. Follow these easy steps:
- Look for relevant data that focuses on your immediate needs.
- Analyse for consistency; compare the results of different methods of your data collection.
- Quantify your results – look for common opinions that may be counted together.
- Read between the lines – for example, combine and compare other statistics on similar products which you would find though associations relating to the product.
After completing the survey prepare a check list of “reasons for importing” based on the advantages of the targeted goods. Once you have checked all the surveys and have the information you have asked for, ask these important questions from the results of the survey:
- Will the product be in demand?
- Is the product cheaper or unavailable in the market?
- Is it really exclusive?
- Other than the initial product can you develop new lines?
- Is the market ready for the product?
- How does my business compare with my competitors?
Many exporters offer special trade discounts to start import business; this will help importer with start-up costs.
10. Import initiatives and joint ventures
Investigate the product supplier carefully as you may find that exporters offer market support to importers especially for certain products. Import initiatives can also lead to joint ventures and strategic alliances with companies which may be an advantage.
Is it possible for a sole proprietor to obtain an import license?
Yes, it is possible for a sole proprietor to obtain an import licence.
Before you start to import ensure you have the right strategy in place and understand all the paper work and exchange control regulations. Importing presents its own unique set of complications, such as managing long-distance relationships and organising international transport and customs clearance.
What products does South Africa need to import?
The imported product is typically something that is new, unavailable or produced in insufficient quantities to meet the present market demand.
Recent statistics list the top ten imports as:
- Gold (monetary)
- Components for motor vehicles
- Cell phones
- Refined copper
- Copper ore
- Electrical energy
- Motor vehicles
- Distillate fuel
The factors that detract from profitable imports
According to Riaan de Lange, director at Tariff & Trade Intelligence: “One of the obvious issues to consider is the landed cost of any imported product. When looking at the selling price of products in a foreign (overseas) market, you might well believe that there is a market for the product, purely based on the price advantage.
Of course, when you take into account shipping, insurance, and ordinary customs duties (also known as import duties) and possibly other forms of customs duty, then it might well no longer be cost effective.” Another obvious factor is the exchange rate which is subject to constant fluctuations, shipping costs (denominated in US dollars), inland transport in South Africa (which can be very costly), insurance, customs duties and other costs.
Register as an importer
Anyone who imports goods into South Africa must register as an importer with South African customs. You have to register as an importer if you are importing goods that exceed a value of R20 000. If you need to register download an application form (DA185.4A1) from the SARS website .
Goods imported into South Africa are accepted at certain places of entry, which include: airports; border posts; harbours; post offices. When cargo is landed in South Africa, a cargo manifest that reflects all the imported goods must be produced. A bill of entry must account for all goods to the satisfaction of Customs. If importers or owners of imported goods fail to do this, the goods may be detained and removed to the state warehouse.
Finding products to import
One of the most common reasons to start an import business is to deliver products that fill a gap in the local market. The imported product is typically something that is new, unavailable or produced in insufficient quantities to meet the present market demand.“The best way of investigating products to import is to look at an industry where you believe that a market for an imported product exists, based on the present products that are on offer. There is unfortunately no ‘scientific’ way to do this. You will need to rely on your business instinct to spot an opportunity”, says Riaan de Lange, director at Tariff & Trade Intelligence.
Where to find statistics on Import data in South Africa?
There data available on commodities being imported to the country
Bridgat.com is a website that focuses on import and export globally. It features comprehensive information regarding the South African import market. According to Bridgat, South Africa imports a great deal of products with passenger vehicles ranking as the top import (trade value). Other imports include motor vehicle parts, cell phones, medicines, computers and much more. Click here for a complete list of actual commodities that are imported to South Africa.
Bridgat.com is a one-stop site, which includes a variety of valuable information from statistics to risk assessment with regard to South African economic activity. It provides data regarding the South Africa’s strengths and weaknesses. It also includes a B2B Forum that provides assistance and advice for buyers, importers, exporters, sellers, suppliers and manufacturers concerning international trade.
SA Stats supply relevant and accurate statistics. They cover just about any thing you can think of and have a great deal of information regarding imports to South Africa. You can visit the SA Stats site for more information. SARS statistics include detailed Bilateral Trade data which is listed by country and year. Trade data also includes world trade zones and monthly import data.
The Department of Trade and Industry also has extensive statistics such as business stats, statistical reports, trade statistics, investment statistics and labour statistics.
The South African Revenue Service (SARS)
This is a very useful source of data with regard to import information. On their site there is comprehensive data from trade statistics, import data, and even the top ten trade commodities listed by value.