A beginner’s guide to starting an import/export electronics business.
Electronics import/export guide for the US

Electronics import/export guide for the US

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If the thought of launching an electronics import/export business sparks your interest, here’s how to get started.

In 2015, the world’s electronics exports were valued at $2.353 trillion. You can be in on that profit by starting your own trading company. From medical devices to miniature drones, electronic products often exceed our expectations to delight and amaze us. You can build a thriving electronics business that facilitates trade around the world.

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Types of import/export businesses

There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that most interests you.

Export management company

An export management company (EMC) helps a company in the US export its electronics. It manages the details of hiring distributors, developing marketing materials and preparing shipping logistics.

Export trading company

An export trading company (ETC) researches the needs of foreign buyers and finds domestic companies to meet those needs.

Import/export merchant (or free agent)

Import/export merchants buy merchandise from a manufacturer — foreign or domestic — then resells that merchandise around the world. Although there’s heavier risk involved in being a free agent, you can potentially earn higher profits when you cut out the middlemen.

Startup costs for an electronics import/export business

You can start your own import/export business with little upfront cost. At a minimum, you’ll need a phone and reliable Internet connection. You may also want to invest in business cards, a website and a fax machine. It’s helpful to hire somebody to take care of branding, including creating a unique business logo.

Narrowing your market focus and target customer

Once you’ve decided the type of import/export electronics business you want to run and figure out the startup costs, it’s time to narrow your market focus. By niching down, you can concentrate on a market you can serve best.

As you spend time researching profitable niches, think about:

  • The customers you want to serve.
  • Areas of the world you’ll target.
  • Types of electronic goods you’ll offer.

Your target customer will be someone who wants to trade globally by either selling or buying electronics overseas or from international sources.

Types of electronic goods

To meet the needs of your target customer, you need to choose the type of electronics you’ll offer. Choose something that you have the most experience with. For instance, have you worked with computers, TVs or video game consoles? Do you have experience with medical devices? Do you know about transportation, security or aerospace?

Existing experience with your target area is a plus, but having passion for it widens your advantage. You’ll understand the jargon of your niche and you may even already have contacts.

The electronics market

  • Consumer electronics. Smart TVs, computers and tablets, smartphones, air-conditioners, hearing aids and other wearable devices.
  • Medical. Hearing aids, artificial joints and medical imaging and monitors.
  • Automotive. Controllers such as cruise control, in-car computers and sensors.
  • Military and aerospace. Includes surveillance, navigation and guidance systems, missile systems and robotics.
  • Digital electronics. Computer circuit boards, resistors, transistors, capacitors and more.

Narrowing down target countries

Identify the countries you want to do business with by thinking about your competitive advantages:

  • Do you speak a foreign language?
  • Do you have connections abroad?
  • Have you lived overseas before?
  • Have you traveled extensively to a particular country?
  • Do you love the culture of a certain country and know a lot about it?

Once you’ve narrowed your list of target countries, investigate each country’s requirements for conducting business — such as tariffs, registration and other documents.

Educating yourself before making a final decision can affect your competitive edge. Ask questions of your target country’s foreign embassy or consulate, and visit the US Department of Commerce to learn more.

Top electronic importers and exporters in 2015

Top electronics importers

1. China
2. United States
3. Hong Kong
4. Germany
5. Japan
6. Mexico
7. Singapore
8. South Korea
9. The Netherlands
10. United Kingdom

Top electronics exporters

1. China
2. Hong Kong
3. United States
4. South Korea
5. Germany
6. Singapore
7. Taiwan
8. Japan
9. Mexico
10. The Netherlands

Information courtesy International Trade Centre.

How do I register my import/export business?

To register your import/export business, you’ll need to complete the US Department of State’s SNAP-R company registration.

After you submit your registration, the Department of State email instructions about obtaining a Company Identification Number (CIN). A CIN is used for tax purposes and registration with the US Department of Commerce.

Import and export licenses

Typically, the US Customs and Border Protection (CBP) doesn’t require a license to import or export goods from the US. However, other government agencies or departments or local governments may require them. If you’re exporting goods, ask your local port of entry l about any required licenses.

Incorporating and forming an LLC

You don’t have to incorporate in order to start an import/export business.

But incorporating or creating an LLC can provide key benefits that include:

BenefitExplanation
Separation of personal and business assets.Creating a corporation or a limited liability company (LLC) can help protect your personal assets. For example, you’ll have less personal liability for business debts.
Expense deduction.Through a corporation or LLC, you can deduct business expenses before income is forwarded to you.
Enhanced credibility.Clients often prefer working with incorporated businesses, seeing them as more legitimate.

Is specific paperwork required for the electronics import/export market?

Depending on the specific makeup of the electronic goods you’re interested in importing or exporting, you could be required to submit forms to the US Food and Drug Administration, the Federal Communications Commission or other agencies. You may also be required to submit forms in the country you’re importing from or exporting to.

For more information about specific lines of business within this industry, visit the US Small Business Administration’s Business Guides by Industry.

Because regulations and requirements change, also consider seeking the help of an import/export specialist to determine the exact certificates, licenses and other clearance documents for your electronic goods.

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Charging for your services

Import/export businesses typically charge based on commission or retainer.

Commission structure

With a commission structure, you’re paid a percentage of any trade deal you close — usually around 10%. For example, if you sell a manufacturer’s smartphone for $300, you’ll make a $30 commission. On top of your commission, you’ll also want to charge for expenses like packaging and shipping.

Retainer model

On a retainer model, your clients pay you a monthly fee to be on call when they need your services. To find the right amount for your retainer, consider your costs. These may include labor, supplies and overhead.

An alternative model

Beyond a commission or retainer structure, you can simply buy electronics goods and sell them. In this case, your revenue will come from the profit you make from selling merchandise.

Which business model should you choose?

A rule of thumb is to pick a commission model if you think a product will be easy to sell. However, if you think a product will be difficult to sell, price your business based on a retainer.

The thinking is if you’ll sell a lot of product, you want to be paid based on performance. On the other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime.

Finally, if you’re confident in your ability to sell products, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a way to profit from the merchandise.

International billing and payments

Your new business will require you to make and receive international payments, which means you’ll make transactions between currencies and across borders.

You can safely and affordably manage your business payments — with lower fees and stronger exchange rates — by comparing the services of a money transfer specialist.
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Shipping the goods

You’ll be sending and receiving goods from other countries, so you’ll need to arrange shipping details.

First, contact a freight forwarder, a company that helps you transport electronics and other goods safely and efficiently. They will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo insurance.

Find a freight forwarder by looking in state-specific business directories.

After you’ve hired one, read our shipping guides to learn how to ship the merchandise.
Laws and legal documents when transferring large sums of money into the US

Risks and how to avoid them

Unpredictable shipping logistics

Needless to say, your success hinges on whether you can ship goods safely and efficiently. If you’re exporting electronics, for example, you’re responsible for ensuring they leave your local port and arrive at the correct destination on time.

You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying organized and partnering with a reputable freight forwarder will help you ship goods without a hitch.

Not knowing enough about the electronics market

It’s a good idea to thoroughly research the electronics market before entering this business, though even that may not be enough.

Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.

Running into problems at the border

Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting electronic goods. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.

Bottom line

The electronics import/export business is for people who love building relationships in other countries, and success requires an organized mind that can handle logistics. When dealing with electronic goods, a willingness to thoroughly comply to relevant regulations is a must.

If you have these qualities, take the plunge into creating a thriving electronics import/export business.

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