Why Product & Market Selection is Crucial

Many SMEs jump into export or import without properly assessing their capabilities. The result? Wasted time, blocked capital, and failed shipments.

Choosing the right products and target markets is the foundation of a successful IMPEX business. This post will help you:

1. Identify products you can realistically trade

2. Analyze market demand and profitability

3. Avoid common mistakes that SMEs make

By the end, you’ll have a shortlist of products and markets that fit your business and resources.

Table of Contents

1. Assess Your Business Capabilities

2. Identify Product Opportunities

3. Targeted Market Research

4. PMF Exercise

5. Pricing & Profitability

6. Validate with Pilot Orders

7. Checklist

Assess Your Business Capabilities

Before choosing products, evaluate your readiness:

• Product control: Can you influence quality, production timelines, and packaging?

• Cost & pricing: Do you know the full landed cost, including logistics, duties, and insurance?

• Supply chain reliability: Can suppliers meet volume and quality requirements consistently?

• Regulatory compliance: Are you aware of licenses, certifications, or documentation required for your product?

• Capital buffer: Can your business handle payment delays, export credit requirements, and inventory costs?

Action: Score each area on a scale of 1–5. Products should ideally match areas where your business scores 4–5.

Identify Product Opportunities

1. Start With What You Know:

   • Products you already produce or sell domestically are easier to scale internationally.

   • Examples: Spices, textiles, handicrafts, packaged foods, machinery components.

2. Consider Marketable & Scalable Products:

   • High demand in foreign markets

   • Compliant with international standards

   • Non-perishable or easy to ship (depending on export capability)

3. Check Product Feasibility:

   • Minimum order quantities

   • Production capacity

   • Export/import restrictions

Tip: Avoid products you cannot control fully, e.g., a retailer trying to export goods sourced from multiple unverified suppliers.

Targeted Market Research

1. Use Trade Data:

   • DGFT Export-Import Data Bank (MEIDB)

   • ITC Trade Map

   • UN Comtrade

   Steps:

   • Filter by product (HS code) → identify top importing countries → check trends over 3–5 years.

2. Understand Market Demand & Growth:

   • Look for products with consistent or growing demand.

   • Avoid saturated markets unless you have a unique differentiator.

3. Analyze Competition:

   • Study price points, shipping methods, and product variations from competitors.

   • Identify gaps your SME can fill (better quality, lower price, unique packaging).

4. Regulatory & Compliance Check:

   • Confirm if the product requires certifications (ISO, organic, CE, etc.) in the target market.

   • Check tariffs, import restrictions, and labeling requirements.

Product-Market Fit Exercise

Example Workflow for an SME:

1. Product: Organic spices

2. Market shortlist: US, UK, UAE

3. Data: US imports of organic spices growing 15% YoY, UAE imports steady

4. Compliance: USDA Organic certification required for US, ISO certification for UAE

5. Feasibility: Production volume sufficient, packaging meets shipping requirements

6. Result: Prioritize US & UAE for first shipments

Actionable Tip: Create a matrix: Product vs. Market vs. Demand vs. Compliance vs. Profitability. Score each market 1–5 and prioritize.

Pricing & Profitability

1. Calculate Total Landed Cost:

   • Production + Packaging + Freight + Insurance + Customs Duties + Bank Charges

2. Set Target Selling Price:

   • Compare with competitors and market expectations

   • Ensure margin covers contingencies (payment delays, currency fluctuation)

3. Check Profitability Threshold:

   • If margin < 15–20%, reconsider product or market

   • Action: Use simple Excel or Google Sheet to model scenarios

Tip: Start small with one product and one market. Scale once you confirm repeatable profitability.

Validate with Pilot Orders

• Approach 3–5 buyers in the shortlisted market

• Send samples or small orders

• Confirm payment, shipping, and customs process

• Collect feedback to refine product quality, packaging, and logistics

Example: A Kerala SME exporting handmade jewelry sent a 100-piece sample batch to the UK. Feedback highlighted packaging flaws, which they corrected before the first full order.

Actionable Checklist

1. Assess business capabilities (product, cost, supply chain, compliance, capital)

2. List potential products

3. Shortlist target markets using trade data

4. Analyze competition & demand

5. Check regulatory requirements

6. Calculate landed cost and margin

7. Validate via pilot orders

Tip: Maintain an SME-friendly dashboard for ongoing market/product evaluation.

Once you have your product-market shortlist, the next critical step is classifying your product correctly for customs.

Read: Understanding HS Codes & Product Classification