MOQ FOB and Packaging

Export packaging is a field of its own, and your Freight Forwarder and shipping supply company are both happy to assist your small business present a first rate package.  There are technical issues too...

Effective packaging is the key to avoiding some LCL risks. Packaging requirements exceed even those of LTL, because the cargo will not only be packed with other shippers' goods, but will be subject to the rigors of sea transport.

I use Uline at uline.com for their comprehensive catalog, multi-locations and excellent service.  I also admire them for taking space in one of their catalog editions to trash the predatory capitalism that beggared one of their customers, the grand old business called Harry & David.

But aside form admiration, when making MOQ FOB offers, as the offer itself displays a professionalism inasmuch as the offer is simple and clear, this can be extended to the export packaging itself.  And the packaging, which may end up showing at retail, can be plastered with your advertising. Remember to have your moqfob url, and U S A on the packaging.  Other buyers will find you.

While someone may have a steady business of 20' container loads of flax seed, and MOQ FOB may be for a mere 30 gallon drum, which facilitates many unimaginable uses being tested overseas.



There is a maxim in retail: "Stack 'em high, watch 'em fly."  Wine exporters may find the MOQ FOB best offered in this little number, approved as export packaging.




Shipping sugar cane, chopped fresh in the field?  It telescopes!




Your energy bars may be giveaways for banks trying to attract the Bulgarian Yuppie, and packed in this clever number goes from your warehouse to the Sophia Marathon finish line air or surface.


Wait wait... there is more... you need assurance the goods are handled well in transit?  Uline has you covered:

Worried about humidity?  Check these out...  they don't prevent humidity, but if you've been promised enviro-controls, this will prove if it's been otherwise...


Or is heat the issue?



or is it freezing?

if it is just a matter of keeping it dry, why then...



Sure these things cost, but the point of MOQ FOB is to discover markets, not turn a profit.  There are no economies of scale in this, but it is frustrating to have to try again for poor packaging or some such. Just make sure you add the cost into your MOQ FOB.  The customer pays for everything.

 Get advice on packaging as part of your MOQ FOB.

I receive no compensation in any form from uline for this endorsement.
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Exporting Food and Beverage Business Start-up

Two months ago I posted this on developing export markets for food and beverage products.  Time for an update...

LCL = Less than Container Load

FCL  Full Container Load

The MOQ FOB is valid in the food trade, as we know from feedback from presentations at industry conferences and my own courses through schools.  I personally saw confirmation at the ExpoWest Show, but to my mind, if MOQ FOB does not work in chill, then it is rather too limited.  The challenge to chill in MOQ FOB is cross contamination (onions and cherries cannot be shipped together), the variations of temperature, humidity, venting, requirements of a given product.  Whole lotta mutually exclusive going on, the gathering of unrelated sellers chill products compatibly into one container is a logistical nightmare. 

Given the challenge of coordinating conflicting logistical requirements in chill, for most players in logistics, LCL chill is a nonstarter. The prejudice among traders is chill is necessarily FCL, and usually straight loads at that.  Everyone is in FCL default mode.  MOQ FOB is a nonstarter in the minds of the players.  

Without MOQ FOB, it is exceptionally hard for chill product SMEs to break into the market.  Solve that problem, and give SME’s selling chill products a marketing edge, worldwide.  The big boys who have never considered LCL chill MOQ FOB will be blindsided by new chill products showing up in their countries. This is an opportunity to make news, enhance the image and grow the business, as Ogilvy says...

Logistics is usually about bottlenecks, but in this case it is the opposite, it is about gathering a critical mass.   If the improvements in communication and transportation which so expanded trade over the last 20 years could be applied to that neglected area of LCL chill, then I think there would be outsized results for the efforts put in. So what to do?

The Freight Forwarder is key to solving the problem, and finding one in the chill trade who also was willing to consider LCL took time, but I found one.  Next we picked Hong Kong as a path-of-least-resistance test case.  I studied the five year trend at the ten-digit level in usa-hk exports in chill, and developed a product/temp/humidity/compatibility matrix, of what markets have the largest demand/supply ratio by matrix element.  And prices paid FAS.  Some of the chill traded is actual crops, so we have that time constraint as well (harvest time).

The HKTDC introduced me to a chill food importer/distributor that has its own 3PL operations for absolue QC in the HK & China trade.  The 3PL division is public, handling other companies wares, assuring that requisite economy of scale on that side.

So now we have a five year trend of what chill products move in what quantity from USA to Hong Kong, at what time, at what price, and at what temperature, venting and humidity requirements.  So  we know what is popular, and now it is just a matter of "showing the potential exporters (sellers) the money" and the buyers the opportunity to test market exceptional USA goods.  Small companies who would like to break into hertofore closed markets.  Should a USA producer decline the opportunity, then a trading agent might step in and take the business.

As mentioned above, MOQ FOB is valid, but to be science it also has to be reliable, that is to say others do it and it works for them too. I would like to see more people pushing the same thing independently, and measure the results.

The more the merrier, and if you'd like to join an online class open to anyone in the world on breaking into the food trade worldwide, and copying this plan in the context of exporting food form anywhere in the world, then please consider the course here, and you may register here.  Chill is only one category of this tactic outlined in the class, it applies ot any food or beverage product.  But I keep working the cutting edge, and the solution to this problem will be part of the class.

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How Many Suppliers to Recruit?

On May 29, 2015, at 9:52 AM, LA wrote:

John,

Thank you for being so patient with my questions last class.

Here is yet another one:  Is this hypothesis a good one to test?

I have found 130 specialty suppliers of higher end (product), any of whom could be argued to be best in the world.  

From those 130 I have discovered 5 make their (product) in a special way.  It's with an open type of (ingredient) that was used prior to 1970.

These 5 are the only makers who still make their (product) this way and it is loved by some enthusiasts.  

I was going to contact all 130 (using your methods) but especially focus on the 5 traditional makers and get a MOQ from one of those 5.  Then see if in Japan

and Korea (Top 2 export markets now) there is interest in this special type of (product).

Is this correct?

Thank you for such a great class.  It really has been wonderful.

--LA

Hey LA,

Contacting 130 is waaaay too much work...

But you do have a hypothesis to test....

"the special process product will find market overseas..."

Contact the five serially, not all at once... (ignore the other 125, small business is specialty, the five are specialty, the 125 are price competitors).

Work through the five and discover which one (if any) will support your export program by committing to shipping any lcl moq fob test sale you contract AND not go around you...    (NEVER gain an exclusive....  work with those truly uninterested in exports)

Now..say one and two will not agree...  three is just too loopy to work with... and 4 agrees...  very good...

For now, ignore five...  work with four...

What do you know?  1 and 2 may compete with you... three cannot... four will work with you.. 5 is unknown...  That is good enough to proceed with a test of the hypothesis.  Big lesson to learn: although we start with hard-core solid research for rationale and direction, we switch to customer contact soonest.  We don't worry about competitors or the unknown, we start developing our own "known" with whatever path opens.  Perfect is the enemy of the good, having a supplier is good enough to start without worrying about anything else.

Create your offer: the lcl moq fob for your product, and in fact, your "product" is your lcl moq fob.

Now, the #1 reason for failure is always when the start-up says "yes" to a customer...  (I see your LCL MOQ FOB, will you make a change?  "Yes!  Failure is then guaranteed.)

You only make a change to your lcl moq fob after about 75 customers make the exact same complaint (and only if that complaint is valid)  (of course EVERY buyer will say your prices are too high, but that complaint is never valid in business.)

So your offer is special (product)...  you tool is the lcl moq fob colby...  you test the hypothesis by means I outline... you watch the other five as you find customers....  they will be contacted BECAUSE you interest people overseas....

At which point you then "prove your company" in the sales process...  by showing why everyone should buy from you...  this is a separate issue for you to be working on as you develop your lcl mog fob...

so far so good?

John

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Selling the MOQ FOB to Suppliers

Specialty buyers are beset with the constant need for new product to keep their customers delighted on each visit.  no buy has any idea what will sell.  All buyers want tests. That MOQ FOB is the answer to the buyers first question "What is new?" goes back into ancient history.  ion one way we are not even selling any given product, at first we are selling the test, the MOQ FOB.

 If you plan to act as an agent then you'll need to "sell" the MOQ FOB to the supplier you plan to represent.  Now comes Steve on this point...

On Aug 25, 2014, at 5:31 PM, Steve wrote:

Dear John,

Hey I just thought I would forward a quick note to you that I had sent a supplier letter about 10-12 days ago regarding the (product) and spoke with the owner. I kept the phone call brief and established that they do not have any current export inquiries and no plans/interest in exporting. They had not even thought that direction. I asked (if I could) email him so that I could get the necessary ingredient information and pricing so that I could form the MOQ FOB offer and then market it within my targeted countries. He gave me his email and told me that his son would most likely assist in the gathering of the information. All in all it was a good move forward toward my first MOQ rational sale. I appreciate your assistance in this small step forward. I look forward to many more productive conversations with suppliers and buyers all according to your system. Now, I am working on that MOQ FOB and looking forward to starting both passive and active marketing. Thanks, I appreciate you and your contributions.

Steve 

Indeed, almost no small business is thinking exports, but they can be just as profitable and every bit as easy as a domestic sale.  Note the process, the approach letter in the mail, a phone call.  Always go straight at your target.  Once you get there, every connection is unique.

Anytime you come across a food business and if you like their product, just ask "Do you have an export programs?"  Usually they just laugh.  That's good.  It gives you something to work with.

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MOQ FOB Tactic

MOQ FOB stands for "Minimum Order Quantity, Free on Board (named port presumed).  In international trade FOB is an incoterm, with precise legal meaning.  In essence, it means the price of the goods with all freight and costs paid to the export port (that named port.)  FOB will always have the name of a port associated with the term, eg, FOB Elizabeth.

The "Free" in Free on Board, means free of any encumbrances such as sheriff's liens, bill notations for short or wet boxes, etc, and of course all freight and fees paid to get the goods loaded on the vessel.

MOQ FOB is a tactic in international trade used to at once...

1. Make export sales no more difficult than domestic sales.

2. Make export sales even less risky than domestic sales.

3. By implication outsource export market development.

4. Direct export marketing efforts at the best customers worldwide.

5. By virtue of the fundamental research in the process, front run competitors world wide.

6. Maintain engagement with the customer on the basis of "if not, why not?"

The tactic is ancient, and new research has confirmed the tactic is widespread and effective.

Ironically, this tactic is the most effective and least costly way of export market development, largely employed at the small business level, although large businesses may employ it to discover new markets.  By offering the simplest possible deal, on the prospective sellers side is a clear understanding of the offer, which makes any requested changes by the buyer very clear inasmuch as they deviate from the clear MOQ FOB.  Studying and pricing changes is easy.

With a firm grasp of buyer requirements, keeping the buyer engaged as long as it appears profitable is doable.  The tactic is common in most business, but appears to be unknown in food and agricultural trade, for reason having to do with the relentlessly bad advice that industry gets regarding market development.

Search this blog for MOQ FOB for more on this topic...

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Logistics - Working with Freight Forwarders

A fellow from last session is fixing some errors on his MOQ FOB, and he made some tactical errors vis a vis his freight forwarder we are sorting out...  pay careful attention to what I say about freight forwarders, their help is critical, but be zen like, use as little as possible...  think through and minimize...

Begin forwarded message:

From: John Spiers

Date: August 6, 2014 6:02:23 AM PDT

To: J

Subject: Re: Freight Forwarder Help

Hey J,

In my lesson on freight forwarders I stress that they are not inclined to help small exporters because usually they are a lot of work and usually no pay-off.  This is one reason of many why I stress the MOQ FOB as a tactic, "one size fits all."

She says directly there is no "one size fits all."

But there is...  and you only get ONE chance to create it.  You do not get two chances to create the MOQ FOB with a freight forwarder.

Now when you freight forwarder says:

From Winnipeg to China, for instance, cargo will come to Vancouver or Montreal whereas if the freight is going to Europe, Montreal or Halifax are more likely.

This is quite true.  For Canada, Vancouver, Montreal and Halifax are the big export ports.  So during your research, say your #1 target country was Malaysia, then you would make it FOB Vancouver.  If your target market was Bulgaria, the Halifax or Montreal.  I believe you said USA was, so them Montreal.

Your goal is all "in-country" costs known and listed up to the point from which any buyer in the world can take it from there, eg, FOB Vancouver.

Now, hear yourself:

I told her to give me estimates for Winnipeg to Montreal and Winnipeg to Vancouver to cover most of the possibilities. In the MOQ FOB Offer, I plan only to show Winnipeg to Montreal because it is the closest port.

Why are you having her do work when you will not use the fruit of her efforts? If you are not going to use Winnipeg to Vancouver then don't ask for it.  It will not do to say "I may need it" because you may also need Winnipeg to halifax and endless other combinations.  Any time spent on creating things you cannot use immediately is wasted time.   I am not picking on you, I am just showing why Freight Forwarders lose interest fast because what they offer is "free" and so people want huge helpings of "free."  

So you get only Winnipeg to Montreal, and show that.  IF it should come to pass in a year a Romanian buyer wants FOB halifax you can go back to the freight forwarder and say "Kazar of Romania is inquiring about an FOB halifax quote."  this new request is based on a solid customer inquiry, not wild "maybe this, maybe that..."

Now, you can go back to your FF and explain your "customers are in USA and you want to make it as easy as possible, so you want the FOB Montreal quote", and if she provides, then good.  You  might ask if you can link from the quote page to her email so if an american buyer wants your FF to "handle the shipment" the buyer can easily contact the FF.

Here is what is tedious for the freight forwarder:  their field is far more complicated than people imagine, and anyone who has academic information about the field, what they learned in school, has no idea about the fact the landscape changes constantly during the hours of any given day, so any thought as to how things should be done is almost always wrong.  There is nothing like selling a perishable space and time moving from place to place, faster than the market can make a price.  There is nothing like it.  And unless you do it for a living, you cannot know what it is like. Long fruitless, frustrating discussions occur.

So, when you first visit a freight forwarder, you show your research and say "I will be offering this HTS at this weight and dimension at this price, etc, from this port."  Please give me a quote.  DONE!  The FF sees you have a purpose and that your requirement is specific and limited.

So in this instance, where it seems we've crossed the "too much work" line with Cole, you can ask for that one clean Winnipeg to Montreal quote, and if your FF will not help, then find another FF, maybe one in Montreal... and start over.

Does this make sense?

John

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Calling All Freight Forwarders

A critical fundamental in trade is infrastructure to support trade.  No one can beat the infrastructure we enjoy in USA.  But we can do more and thus expand trade.  The opportunity is the growing demand for fresh agriculture in Asian markets.  The potential is within the new and better high quality specialty crops being produced in USA.  The common tactic is to “search and learn” markets by offering LCL export quotes.  The problem is a lack of coordination of present resources to support this market.  The solution is a LCL Chill Seasonal Weekly Sailing from a West Coast USA port.  The “seasonal” stipulation reflects the fact that for probably 3 months a year,  there is neither enough supply nor demand to warrant the service, at least initially.

OOCL currently offers such a service on their webpage, but sadly informs us a lack of equipment stymies their effort.  I suspect it is a lack of sales that is the real problem.  Nonetheless, OOCL does have a chill consolidator under contract in Seattle, ready to perform.

While the tactic of MOQ FOB is well-received in processed ag exports, in fresh produce it is a non-starter for lack of reliable LCL chill service.  Lack of demand inhibits service.  So who moves first?

For my part, I am acquainting specialty fresh growers with the MOQ FOB sales tactic, with a view to inviting demand when logistics warrant.  Specifically, I am asking them to reply to the unsolicited export requests they are recieving, and spelling out the plans for LCL chill that are afoot.

My ambition is to gather a critical mass of marketers that warrants OOCL to make regular the LCL Chill shipment.  If I diagram the goal, then the means may become clear:

The key to making this work is the Freight Forwarders (FF).  If they promote the tactic to their clients the chance of a critical mass to interest OOCL is gained faster.  Any Freight Forwarder that would like me to present to their clients can count on me.  Just let me know.

In the last year I have talked over the problems with growers in various states.  Growers in Wyoming worry about the costs of LCL interstate to port, to which the reply is, those costs are included in the quote, and if you get a prepaid order, the buyer obviously thinks it is worthwhile.

Freight forwarders are concerned about being worked to death with daily quotes requests, but the exporter’s MOQ FOB offer is one size fits all.  One quote is made, and then whether the marketing is active or passive on the part of the exporter, a sale is the same thing in every instance.  Not only is the first quote the same a year later to any and all inquiries, any sale is referenced to that FF to book and earn.

FF are also worried about incoterms, but to start there is only one to know, and that is FOB.  And since it is FOB, the quote is evergreen, with export forwarding quoted when requested.

While LCL Dry and LCL Frozen is simple enough, LCL Chill has many complications, such as “no mixing garlic and apples.”  Then there is the different temps ideal of diff products, and then proper venting of each.  Given the complexity of the loading matrix, the FF’s want to be absolved of any claims at delivery.

Bankers worry about payment expertise regarding letters of credit, etc, but the MOQ FOB is strictly prepaid.  TT is enough expertise.

The exporter is expert strictly in the MOQ FOB.

These and other problems can be worked out in practice.  Perhaps to start the most likely mixed load candidates can be targeted, and perhaps include not necesarily chill items that can stand a chill shipment, such as (hops?).

What’s in it for me?  I’ve already been paid by the Ag Associations, whether this works or not.  What is left is work to reverse the “get big or get out” policies that have hampered small ag exports from the usa for the last 40 years.  That is my ambition.

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Export Food - Repping Supplier Approach - LCL MOQ FOB Part 2

This is part two, part one yesterday...

On Nov 27, 2016, at 11:18 AM, J L wrote:

Hi John,

Appreciate you taking out the time to provide such a detailed feedback. The "Answer matrix" is amazing and very helpful.  

• I actually liked the idea of having the LCL MOQ FOB listed on his website. It puts the supplier at ease in terms of transparency ( which you have been advocating all along ), they are still in charge of their product and will probably make them comfortable doing business with me. It's a win win situation for both parties

• I've cleaned up the concluding statements in the draft and also made the other changes you suggested. Please let me know how it looks?.

• I like "Brothers L". My brother's name is K’yo and I was also thinking of names like Kyoto or Tokyp by combining both. Though they sound more Japanese than Ghanian :). What do you think?

• By all means strip and edit this as an example if it helps.

Thanks,

J

On Nov 27, 2016, at 12:00 PM, J L wrote:

I've included "export" in the letter for specificity. Thanks!

• You're right. I checked the HTS for units and it is Kg. So then is the analysis correct?. The Specialty Snack chips, 1 packet is 5 OZ and cost ~ $5 (retail). For Mexico the average price is $4.55 per Kg!

***Right, mostly chips...  at costco chips are about that...  he might say, that's too cheap, you reply..

a. that includes the cheapest mass produced chips too, it's the average, so skews very low give the mass amount of bad chops going in...  

b.  the bigger the mass market, the bigger the specialty market too...  

It's the trends that tell... ***

From point "b", should I initially be targeting Canada then in lieu of Mexico even though the average prices are lower?

JL

On Nov 27, 2016, at 12:09 PM, John Spiers wrote:

Hmmm... do either on either justification... just pick one narrative to start...

John

On Dec 2, 2016, at 1:03 AM, J L wrote:

Hi John,

Thanks for another fantastic session this Tuesday. I have mailed out the initial letter and wanted to be prepared just in case he calls me before our scheduled time this Tuesday. I have started a different email thread since we are on the next phase and also makes it easier.  

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming he's interested, he'll either start getting into specificity then and there OR will want to think about it and get back to me OR will ask me on how I want to proceed [ I'm assuming you'll say "Right Now over the phone" ?? ].  Was hoping me you can give me some guidelines on the following details which I think will be fundamental to our discussions and If there's something else you think might come up in the discussion and is important, please let me know

MOQ

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

Manufacturer Price ( ExW) / My Commission

On his website, he has prices quoted for 1 & 2 packets. Price for 8 packets have a reduction of approximately 12.2%. Going by that assumption, I came up with price for 1024 packets [ Hypothetical MOQ ]. The store I bought them from sold it for $5.50/packet 

• Now I know the reduction will stop at some point but am not sure what I can expect a reasonable price to be. As I'm writing this, I'm guessing you'll say that I should just take his price quote and get back with reliable and validated test data. 

• Should I go with 10% commission as suggested in the class?.

packets

Pricereductionmatrix.xls

JL

On Dec 2, 2016, at 6:31 AM, John Spiers wrote:

On Dec 2, 2016, at 1:03 AM, J L wrote:

Hi John,

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming he's interested, he'll either start getting into specificity then and there

***Yes, and you're best answer is "I don't know... and it will be fun to find out..."  (Will I have to change the packaging? Who in Mexico do you have in mind?)

A N D

No, I don't want or need an exclusive

Yes, you can say forget it... (except for the one, first LCL MOQ FOB)

Yes, you can fire me...  because I am not your employee and don't have anything at riak but some time spent doing something interesting, trying out my learning...

OR will want to think about it and get back to me

***  All I need is weights and measures of say a pallet load, what price YOU want, where I can pick it up from you, and  what would be the lead time, a month?  Then you can think about my export offer, after you see it,  is it something you want out there?  Start your thinking then, when you have something solid to look at.  If you say no, I'll be trying Bison Jerky next, but I like your product more. "***

MOQ

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

***Yes, must...  they have one already for domestic sales, but yours may be bigger, but usually no more than a pallet load.  You see on the template we need the weights and measures (H,L. W each and total) of the cartons, add the pallet height, and the price he wants to earn on the sale (ExW), and his delivery lead time, plus where he wants the goods picked up.  You might just have a rough draft template of the LCL MOQ FOB form with those blanks highlighted to email him, so if he asks how you want to proceed, you can just email him that .pdf.

Smallest rational really gets to logistics cost; if you get 100% more product for 5% more logistics cost (FF will point this out), then yes, jack up the qty to make the offer more attractive, but no, never a full container load...  two pallets is max for a test, and we are testing at this point in the export game.  There is back and forth on the LCL MOQ FOB development.  Measure twice, cut once....  remember, you are stuck with your lcl moq fob through 100 inquiries...***

Manufacturer Price ( ExW) / My Commission

On his website, he has prices quoted for 1 & 2 packets. Price for 8 packets have a reduction of approximately 12.2%. Going by that assumption, I came up with price for 1024 packets [ Hypothetical MOQ ]. The store I bought them from sold it for $5.50/packet 

• Now I know the reduction will stop at some point but am not sure what I can expect a reasonable price to be. As I'm writing this, I'm guessing you'll say that I should just take his price quote and get back with reliable and validated test data. 

****Precisement!  You are testing prices too.  The higher the better.  You get data back from your effort, for future reference, iterations.***

• Should I go with 10% commission as suggested in the class?.

Yes.

His discount is probably an example of the folly of price cutting, he has no economies of scale to offer...  it probably costs him close to your 64 box discount....

Just take his price and work with it...

And make sure you keep records of all of this activity with the potential supplier.  You add this to your rolodex of your contacts in the international trade of specialty chips.

As usualy feel free to email...

This is fun...

John

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Export Websites Done Right

If you hope to export one element that must be on your website is the FOB MOQ page.  This page needs to have a means to make a payment immediately, usually by TT.  Here a pearl exporter has a good example.

Paypal or "escrow" services are not considered professional means of payment, so I would avoid those.  A major credit card is becoming more and more an option (and certainly a debit card would work) but paypal just rides on the major credit card system, it is not the same thing.  The difference matters to most professional buyers.  And finally paypal has a $1500 limit, making it unusable.

These pages are meant to be a means to develop FCL shipments.  they should never suggest they are a means to facilitate a retail sale.  Never should the page have "beginners instructions" because the page it directed to pros, not beginners.  With no beginners instructions, here again the design of the page scares flakes away, so you only hear from pros, serious B2B buyers.

And recall the FOB MOQ page quotes an FOB price.  So the buyer at that point is wondering what is the cost of getting the product from the sellers port to my port?  At this point of the FOB MOQ webpage you should is to have the means for the buyer to get a freight quote immediately.  So you link to the major carriers, if possible to their rate desks.  More on this as we proceed...

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Export Sales: No Good Deed Goes Unpunished

One mistake people who are looking at exporting make is to fail to have a clear, rational offer, that is solid.  The problem is two-fold: on one hand the sellers are trying to be helpful, and on the other, they are trying to learn what will work.  They are open to everything when we already know exactly what the buyer wants. The salespeople keep running to the owner - can we do this, can we do that?  In every instance, no good deed goes unpunished.

Any buyer worth his salt will try to get as much as possible from a supplier.  All buyers hate to leave anything on the table, to not get what anyone else is getting from a seller.  They will push, whine, probe.  There is no such thing as an outrageous buyer demand.  There are only outrageous seller concessions.  

The MOQ FOB (search the term on this blog) offer is your best defense, because you can keep returning to all the details in the offer, and only discuss a change one way or another of any of the detail items in the MOQ FOB.

The very fact that you have all the details published up front quiets the clamoring for gimmes.   And since it is an FOB quote, prepaid, the buyer clearly understands you will take no risks on this shipment.  Yes, the buyer understands the seller will take no risks... ultimately, buyers will buy if the product looks promising, the reason the buyer is talking to you is the product looks promising.  Exporters need to be disciplined in never giving in on any point unless all extra costs are profitably covered...

Sellers who fold and give things away worry buyers.  Such sellers are not long for the world.  What is the point of testing products from a supplier that may not be in business in six months?

Giving in may be agreeing to pay some cost on the MOQ FOB, or agreeing to cover the cost of something like new labels.  The answer is no, you will not cover the cost.  You may be willing investigate what it will cost, and add that plus a profit to the price, but you will NOT cover the cost.

If the buyer can get you to put on new labels at $1.00 each cost to you, at no charge to the buyer, then the buyer does not have to put new labels on in his country at ten cents each.  Why would he do it for a dime when he can get you to do it for $1 no charge to him? If you put on the labels and they are wrong, then it is all your fault. No good deed goes unpunished.

Anything you give for free is in effect a discount on the price.  Once you discount the price, the buyer starts looking for more.  It never ends.  And there is a pattern in unhappy export results: the more talking the more likely some sort of failure in getting paid.  The more talking, the more expectations, the more expectations, the more expectations to fail to get met.  And scam artists, people looking to flat out rip you off, keep talking as you invest more and more time in the deal, and then they slowly get you to drop all defenses.  Scammers get paid for their patience.  Be impatient to move on to the next potential customer.

You will not be scammed with MOQ FOB because you say no, and you are prepaid.

In my book page 221 I have a section on the deleterious effect of discounts. Any freebie is in effect a price discount.  They are far more damaging than you may think.

This back and forth is the process of getting to know you, know each other.  Show yourself to be steady, calm rational.  That makes you a more attractive long term partner.

If the seller ever gives in to a buyers demand, and gives a freebie, then the  seller lost the opportunity to find out what objections there might be to the standard offer.  Giving in now means you no longer know what you are doing.  Don’t go there.  When the seller gives in, he lost his margin while missing extremely valuable feedback.

I was a buyer for years, working with larger companies.  Now that I am a one man operation, I still am.  When working with buyers, keep in mind, spare the rod, spoil the buyer.  They are like children, you have to beat them so they learn no means no.  Like beating a child, done right, it only has to be done once.  It's the kind of thing you do not want to have to do a second time.

The MOQ FOB should be is not all 300 items in your product line, but your best seller, one, maybe three items.  You offer your best item to new customers, and new products to old customers.

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LCL MOQ FOB Partial Colloquy

On Dec 2, 2016, at 1:03 AM, LL wrote:

Hi John,

Thanks for another fantastic session this Tuesday. I have mailed out the initial letter and wanted to be prepared just incase she calls me before our scheduled time this Tuesday. I have started a different email thread since we are on the next phase and also makes it easier.  

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming she's interested, she'll either start getting into specificity then and there

***Yes, and you're best answer is "I don't know... and it will be find to find out..."  (Will I have to change the packaging?Who in Mexico do you have in mond?)

A N D

No, I don't want or need and exclusive

Yes, you can say forget it... (except for the one, first LCL MOQ FOB)

Yes, you can fire me...  because I am not your employee and don't have anything but some time spent doing something interesting, trying out my learning, at risk...

OR will want to think about it and get back to me

***  All I need is weights and measures of say a pallet load, what price YOU want, where I can pick it up from you, and  what would be the lead time, a month?  Then you can think about my export offer, after you see it,  is it something you want out there?  Start your thinking then, when you have something solid to look at.  If you say no, I'll be trying Bison Jerky next, but I like your product more. "***

OR will ask me on how I want to proceed [ I'm assuming you'll say "Right Now over the phone" 🙂 ].  Was hoping me you can give me some guidelines on the following details which I think will be fundamental to our discussions and If there's something else you think might come up in the discussion and is important, please let me know

MOQ

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

***Yes, must...  they have one already for domestic sales, but yours may be bigger, but usually no more than a pallet load.  You see on the template we need the weights and measures (H,L. W each and total) of the cartons, add the pallet height, and the price she wants to ear on the sale (ExW), and her delivery lead time, plus where she wants the goods picked up.  You might just have a rough draft template of the LCL MOQ FOB form with those blanks highlighted to email her, so if she asks how you want to proceed, you can just email her that .pdf.

Smallest rational really gets to logistics cost; if you get 100% more product for 5% more logistics cost (FF will point this out), then yes, jack up the qty to make the offer more attractive, but no, never a full container load...  two pallets is max for a test, and we are testing at this point in the export game.  There is back and forth on the LCL MOQ FOB development.  Measure twice, cut once....  remember it, you are stuck with it through 100 inquiries...***

More to follow...

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Exporting is Scary

An email arrives:

John, it is no wonder why exporting is not a more common activity in the US. The exporting jargon is so complex that the whole process is scary. I know just enough to be dangerous. 

I am grateful that you are telling me exactly what to say.   Don't think for a minute that I could do any of this without you.

Thank you for being my mentor.

I'll keep you posted as to his reply and hopefully we can celebrate with a cyberspace "high five" when this venture is successfully over.

I reply:

Thanks for the kind words.  Let me tell you, I get scared just advising...  just the word FOB causes a lot of confusion.  FOB in int'l trade always means on the vessel in the port between the seller and the buyer, whereas domestically it can mean the warehouse of the buyer.  And as I said, with legal implications!

Another reason to have the MOQ FOB is you have a basic offer down, one you and your FF and banker are all expertly apprised.  For every inquiry from everywhere in the world, that is your offer.  Since you are expert in that very simple, clear offer, any variance requested shines for clear and simple response.

So I encourage you to get the MOQ FOB done, so you can make this exporting no more difficult than a domestic sale.   This two pallet quantity sounds like a good sized MOQ FOB quote.  Why not work it up with an FOB Elizabeth NJ and a FOB Long Beach version, so you can sell the world as easily as you sell San Francisco?

John

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Sales Approach as Export Agent & Freight Forwarder Fees

On Aug 15, 2014, at 7:11 AM, Steve wrote:

Hey John, Thanks for the responses. I appreciate it. I have sent out a supplier letter to discover interest in finding foreign markets and have set a time to connect via phone with them in over a week. I am in process of looking at other supply options and other avenues related to the pastries. However, as I prepare, I am thinking forward to my conversations with prospective suppliers. I could use some clarification/confirmation on my focus in these conversations. Please let me know if I am missing anything.

My understanding presently is that when I connect with the decision maker regarding the supply for my export possibility my main discovery should be whether or not they are interested in export or if they currently export. My desire revolves around their disinterest in export.

***Yes, in the context of being an export ageny, the irony is your best bet is someone who has conscisouly decided to NOT export.  Any buyer worth his salt will try to go around you directly to the source.  When your source is proven unavailable otherwise, then you are the defacto source.  In this way you need no de jure “exclusive” because what you have is necessary and sifficient.  It also serves your low impact approach to the supplier.  It costs nothing (no legal considerations) to begin to work with you.***

If I find that they are not interested, I am to find out what they might do with their current export inquiries so as to obtain them as great sales leads. 

***Well, come in with your own target market customers.  Get the agreement, THEN go after that low hanging fruit.  Prime the pump with your own contacts first.  I am sitting on buyers in Hong Kong for USA beef, and in spite of the Russian ban on USA beef, the drought in USA has caused such a shortage here that customers go begging, and beefsters don’t care.  Next year, el nino, no drought, the world changes again.***

Next, my consideration should be to find out the MOQ they would need to profit. 

*** You make an export sale no more difficult and every bit as  profitable to the producer.  So, what is your client’s present USA Min order requirement?  Then that is yours, or some rationale multiple thereof for export moq fob.***

My goal in the whole process of the call is to make the supplier feel at ease so that it really is no more difficult than a domestic sale. 

***Perzactly!***

Is there any subject a newbie like me may need to stay away from? 

*** No...  the subject is your offer to test their product in what your research shows to be a promising market.  YOu both get the same thing, solid market info upon which to decide what to do next.  Age quod agis:  You are selling the next immediate step: is there market overseas for their product.  The only definitive test is mow fob.***

Also, how do I end the call? can you help me understand my process 

***Yes,   end the call quickly.  As to the process, yes, let me send you a separate email tomorrow detailing this...***

if they are not only disinterested in export but are absolutely opposed (worst case)? 

***Excellent information.  Do an false door marketing campaign.  See if you find market.  If so, get a contract baker to produce under your brand.  You’ll know for sure #1 is absolutely opposed to competing with you.***

As I understand things, if I simply wanted to look for buyers in Mexico then purchase the pastries myself, then they are my property so I can export them if I desire, right? Is there something I miss in that scenario?

***No.  Customers trump all.***

I do have some uncertainty in constructing the MOQ FOB offer. This comes from reading the customs rulings in the research. They are so detailed as to percentages and such in the ingredients. I am not the expert in this area (yet) or in the product. But in order to construct that MOQ FOB offer, I would need that info (am I right?) 

***Yes.***

So is that info that I would need from my initial conversation? 

***No...***

Or is that obtained by me. 

***After they agree, the owner tells the baker to give you the breakdown.  The baker has it.***

Also, regarding labeling - Do I request that they not label the products for export as the importer would handle that according to their regs? 

***Low impact, you sell as it is labelled for the USA market, the buyer overseas worries about this problem, if it is a problem.***

In the passive marketing of the MOQ FOB, does that really produce a significant amount of business to justify it. I do see benefit because it is simple enough and why not do it since their is ease - I get that, but I just am curious to the return generated.

***Exactly... great place to file it, it may rise on rankings, and when people check you out they see it.  But I call it passive because websites are no place to base a business.  Amazon cannot make money at it.  Expect sales from the web marketing to be negligible, like ievery other website (or cost more that it is worth.)

Other curiosity - I took an import/export class about a year ago and the main teaching was for the teacher to explain what a freight forwarder does and to show you how the forms work and what is required. It was mostly informational rather than instructional. Additionally, he did not take the student in the direction of starting and building a business which is what you do (and it is awesome). But in the process, he mentioned that when dealing with the freight forwarder, there were certain 'fees' that were bogus and that you should dispute those specific fees and not agree to them (akin to a car dealer's vague fees). Is this the case? and from your experience are there any fees with a custom's broker / FF that should be disputed so as to better represent our buyer/seller?

***Ungh...  freight forwarder fees are low in comparison to the services rendered...  the problem is not bogus fees, the problem is unsaid fees... since people comparison shop, some FF leave out significant fees in the pro-forma phase of costing.  The trick is not to find bogus fees but to find ALL the fees...  who cares what the fees are?  Ultimately all brokers tend to charge you the same,  and the customer has to pay all fees anyway.

GEt the leader FF in your field, keep bugging them with “is this all the fees?” and add them to your price.  show them you don’t care what they are, that you only want to know WHAT they are...”***

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Promoting Export to USA

In comes a inquiry, from a NGO asking assistance, my comments between the asterisks....

We have just recently launched our Export Incubator program which is designed to help exporters here in (Overseas Country) tap into the US marketplace. 

***Very good...***

 Our program involves training and mentoring on things like how to communicate with importers, properly pack and ship goods, register with the FDA, and all that other technical stuff. 

***Often this is counterproductive...***

 Another component of the project is simply finding data on importers in the U.S. -  I have identified sites like Piers and Import genius, ect. 

***Not a useful vein to mine....cannabilizing current trade is not net development, there are better means for better results..***

 I just wanted to ask if you had any other advice given our particular situation.  We are trying to line up exporters here (exporters with innovative goods that we think will be competitive) with importers in the U.S.  

***My advice would be to assume you have no idea what would sell in USA, and design a program based on that...***

A lot of these exporters will be looking for very niche markets while others may be medium to large enterprises. Any help would be appreciated.

***Test for companies competing on price vs competing on design...  then I’d not bother with any company competing on price.  This would limit your efforts to necessarily the small and medium firms.  Competing on design and competing on price are mutually exclusive tactics and processes.

Working with a freight forwarder, have the prospective exporter design a minimum order quantity, FOB shipment quote, (MOQ FOB) with all particulars provided on a single sheet.  If a website is possible, publish that sheet.  Two parts: the exporter is going for the smallest rational export order, not the largest possible, all risk is on the USA buyer, not the Moroccan seller.  The process is test order, not “new customers.”

Do not try to make anyone an expert in int'l trade, forget teaching incoterms, etc...  make them expert, via the freight forwarder, on the one sheet of paper that is the MOQ FOB sales offer  (if and when a market is found through selling MOQ FOB, then they may learn a little more about the biz...)

Next search google for the names of trades shows in the usa that carry the products being sold (fancy food shows for figs, home furnishings for carpets, home improvement for tiles, etc)  Find the name of American exhibitors at these shows, drill down in their product mix and find say 1/2 dozen potential USA buyers of the product, and then by snail mail, never email, send the MOQ FOB quote soliticing business.   A piece of paper in an envelop through the postal system.  It is the only way the offer will get read.

Anyone you are assisting should be communicating with decision makers, people ready willing and able to buy, within several weeks.  They should be shipping goods to USA within that time, or if not, know why not, from the only people whose opinion matters, USA buyers.  With rock solid feedback, they can decide if they want to make what changes are necessary, or not.  The Moroccan will know what he is talking about.

There is a pre-step I’ve left out since your brief is only USA trade.  Personally I would teach how to use raw world trade data to search and learn new customers worldwide.  World trade practice is also about defending home markets, and being apprised of world trade patterns gives even a small trader wonderful unseen opportunities from time to time.

John

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More on Interaction as an Agent

Hey John,

I am writing up a mock discussion that I would have with the supplier of the pastries to flesh out any flaws in my thinking and to refine my approach so that I may not be surprised in my first conversation.

So here are a few thoughts/questions that came up in that process.

The goal of the conversation is to determine the supplier's intention and orientation toward exporting their products and then sell the supplier on testing an overseas market making it no more difficult than a domestic sale. So, at the point the supplier may identify that he/she has no intention or desire to get into exporting and I have sold them on testing the market, I now want to go for the MOQ. 

***Good set up...***

So, my difficulty now is how to find the facts needed to construct the MOQ FOB within my conversation with the supplier.

1. Do I thank him for his time and ask for email address to follow up with him to obtain the needed facts to construct the MOQ FOB? or do I simply get the info on the line at that moment (my preference)? 

***He probably does not have that at hand, plus you need not the smallest order possible, but the smallest order rational (given logistics, etc).  YOu start is whatever their minimum order requirement is normally, and then make that at least a 1.2 pallet, and go fr, there.. that is back and forth discussion, with a sales manager or someone else, normally..***

2. When asking for MOQ, my thought would be to ask for a pricing schedule as I already know that he ships out domestically just one package of the pastry or a case (at 20% off). 

***Sure, but no need to be so price conscisious yet...  people are testing at thsi stage, buyer and sellers, not makign money...***

3. As I see it, here is the following facts necessary: pricing schedule for various quantities, 

***No... just one QTY***

size of package/case/pallet, 

***No, just one...***

lead time for each aspect of pricing schedule, ingredients list (do I need percentages?), 

***Yes...***

shelf life (best by/good until dates), weights - anything else necessary?

***Your broker may tell you more...  but keep in mind..

1.  A clerk gives you this info...

2.  It is all based on one inalterable offer (tos tart)

3. The freight forwarder will in serial say “o yea, this too...”

so it is a process that takes a week or two...***

4. Since I want to make this easy, how much of this should I discover on my own? 

***  Sure, prime the pump, fill in qhat you can, and let them correct...***

How far do I go with those sorts of questions?

***Whatever is necesary and sufficient to create a MOQ FOB  

http://josephawodutire.ca/yomm-beverages/

***

5. When looking at the ingredients list (as I am certain that this impacts the defining of the HTS number) is that a freight forwarder's work based on a food label? 

***You can do that step..***

6. I know this prospective supplier would sell a case of 6 pkgs and ship it out. That seems rather small to be a true, reasonable test. So if he were to respond to my MOQ request with, I would go 'minimum of a case' what would be my approach....is that tooooooo small? me thinks so, but am interested in your response. 

***What is the price of a half-pallet (prolly still too small) vs full pallet...  about 3.5 feet high vs 7 feet high...?***

7.  I also am concerned that in discussion with the prospective supplier about ingredients that he may become skeptical as to me trying to steal a recipe. How might I overcome/preclude that possibility? Or do I need to?

***Ingredients one thing, production is another...  his ingredients are permanent public record somewhere anyways...  research this question first so you know what you need to know...  if you are nervous on this point, you’ll probably fumble the ball...

buy a pack, study it, take it to a FF, and ask them what you need... start with that, later if a customer wants more,  you will then say “The customer needs....”  not “I need...”

Then you’ll know...  make sense?

John

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