Case Study – NareshCase Study: First-Time Exporter Naresh Suman’s Successful Cotton Bedsheets Export to Spain
Introduction
Naresh Suman, a first-generation businessman and exporter from Indore, successfully executed his first international export of cotton bedsheets to Spain. This case study explores the journey of Naresh’s maiden export venture, the challenges he faced, and the strategic steps he took to ensure a smooth transaction.
Finding the Buyer
Naresh’s breakthrough came through the Indo-Spanish Chamber of Commerce, where he established contact with his buyer, Hector Maria Gonzales Lopez from Bilbao, Spain. Hector, who was in search of high-quality, handcrafted cotton bedsheets for his friend’s hotel, showed keen interest in Naresh’s offerings.
Product Presentation and Negotiation
Understanding the importance of first impressions, Naresh sent Hector miniature versions of his cotton bedsheets along with material swatches and lab test reports to authenticate the fabric’s quality. These bedsheets, made from 100% Chanderi pure cotton, featured intricate hand-embroidered Banjara needlework. Hector was highly impressed with the craftsmanship and uniqueness of the samples.
Finalizing the Order
Hector initially placed an order for 50 double-bed bedsheets, each accompanied by two large matching pillowcases, as per his specifications. The two businessmen quickly built mutual trust, leading to smooth negotiations over Incoterms, payment terms, and import requirements for Spain and the European Union.
Before proceeding, Naresh took the precaution of verifying Hector’s credentials through the Export Credit Guarantee Corporation of India Ltd. (ECGC) to mitigate any financial risks. After receiving a Proforma Invoice from Naresh, Hector confirmed the order by issuing a Purchase Order.
Payment and Procurement
Given the small order quantity, Naresh and Hector agreed on a 100% advance payment term. Hector promptly transferred the payment in Euros, ensuring financial security for Naresh before procurement began.
Naresh then sourced 50 uniquely designed embroidered cotton bedsheets from his native region of Chanderi, showcasing exclusive Banjara needlework. To enhance the value of the order, he ensured that each bed sheet set was complemented with not only the ordered customized pillowcases.
Naresh added below items as samples and gifts in his shipment:
- Bed comforters made from felt
- Water proof dry bed sheets
- Cushion covers with matching embroidery
- Bed spreads
Shipping and Delivery
Once the order was ready, Naresh opted for India Post’s international shipping services from Indore to dispatch the consignment to Bilbao, Spain. This cost-effective and reliable shipping method ensured smooth transit and successful delivery to Hector within the stipulated time.
Buyer’s Delight
- Timely receipt of the product
- Well packaged
- Quality of the material as promised
- Free Gifts
Naresh’s Gain:
- Profit of 70%
- Next order of 1000 bedsheets
- B2B order from the Hotel Association
- Government Benefits
- Fresh Order for felt comforter – 1000
- Earning in FCY
Conclusion
Naresh Suman’s first export experience was a well-executed venture marked by careful planning, meticulous product presentation, and risk mitigation. His strategic approach, including buyer verification, detailed negotiations, and securing advance payment, played a crucial role in ensuring the success of the transaction.
Today Naresh has got high volume order of 1000 bedsheets from the same buyer.
Bilbao has many hotels, motels and guest houses, the bedsheets are a regular purchase for the Hotel industry association in the Bilbao region. Naresh has got an invitation to visit Bilbao for future contracts and export orders.
Lessons Learnt:
- Gain trust through a website with:
- Product information
- Quality
- Display of certificates and registrations to create a trust worthiness
- Build a “friendly” relation with the buyer
- Discuss the benefits to the buyer from his export
- Negotiate smoothly, with full openness, the
- Incoterms
- Payment terms
- Marine Insurance
- Initially, go for small cargoes. 50 pieces of bedsheets is no quantity for exports as such. But this LCL is considered as a “sample export order” to build trust for contractual agreements and quality
- Naresh earned a whopping 70% profit even after giving the free cushion covers to the buyer. This gesture created awe in the heart of the buyer. Not all the time such “free gifts” are possible, here Naresh did it as he was not greedy of more profit. This is one way you can indirectly tell the buyer that you care; you share your profit for his benefit.
- Selection of India Post for the LCL was intelligent as the cargo reached in 10 days to the buyer in Bilbao, Spain.
Summing it Up
This case study exemplifies how first-time exporters can leverage chambers of commerce, adopt best trade practices, and build trust with international buyers to achieve export success. Naresh’s story is an inspiration for aspiring exporters looking to establish their presence in global markets.