Complete Guide To Starting Your Handicraft Export Business In India
All About Handicraft Export Business in India
A Complete Guide on How to Start Your Own Handicraft Export Business in India?
This article contains all of the information you’ll need to begin your market research if you’re thinking about starting your own handicrafts export business in India. Read this ultimate guide to help you develop a successful handicraft business plan while flourishing with ideas. We have several ideas to help you build a plan if you are confused about starting a handicraft business from home or an online craft business in India.
In this article, we are going to discuss the major organizations in India for Handicraft, tips to start handicraft business from home, online craft business in india.
The easiest way to start a handicraft business is to first do thorough competitive analysis. Exclusive industry research and a solid business plan will take you a long way in starting a business in Indian handicrafts.
As you know the Indian handicraft sector is the second largest to provide employment on a large scale, this research itself shows how profitable an Indian handicraft business is. In recent years, there has been an increase in demand for Indian handicrafts.
The Handicraft Market of India
Scope of Indian Handicraft Business
Five Things You Need To Keep In Mind If You Want To Get Into The Export Business
First and foremost, research the handicraft export market, not only online but also offline.
- Visit the export-import office, attend export-import related exhibitions, meet business contemporaries, and meet social enterprises that sell overseas for offline research.
- Concurrently conduct research and background research on the handicraft business you want to start. Examine intervention and reinvention in the craft you are interested in.
- Register with the export-import office and obtain an Exim id/no for your export business.
- Exporting is a difficult business to start, especially in the handicrafts sector.
- Product quality is a critical aspect of export, and it is an area in which Indian artisans are struggling, so I recommend conducting extensive research, meeting (with artisans, contemporaries, officials, and buyers), and beginning with a sampling of products.
Let’s Know How You Might Fix The Export Price!
The following factors should be considered when determining export prices.
- Cost of Production – The cost of producing a product. (Raw materials required for the same).
- Packaging Cost – Packaging costs vary depending on product quantity & size. (Whether it’s a single item to be packed or more.)
- Coverage Cost – Coverage cost of Export Credit Guarantee Corporation of India Ltd [ECGC].
- Product Promotion Cost – Expenses incurred in promoting / booking an order.
- Documentation Fees – Expenses incurred in the documentation process required to export the item.
- Transportation Cost – Cost of transportation to the port, including freight handling and other costs.
- Taxes Applicable – If applicable, the cost of taxes, duties, levies, and so on.
- Profit Margin – Adding a profit percentage to the item produced.
- Export Cost – The Freight on Board [FOB] export price depends on above factors plus the distance of the port of destination from the port of export. It also includes the cost of insurance (Cost Insurance Freight [CIF] price).
Learn more in detail about how to set the export price for your handicraft item in the next section.
Export Pricing Strategy for your Handicraft Export Business in Detail
Setting your export prices right is very essential for your export business. You can’t set prices too low and reduce your margins and profits. Neither can you set too high prices which will result in you losing revenue and trust of the customers.
- Know your Incoterms
Incoterms are a set of internationally recognised rules which determines responsibilities of buyers and sellers. Incoterms specify who is responsible for paying and managing the shipment, documentation, insurance, and other logistical activities. The Incoterms you and your buyers agree on affects your export costs and your profits. Know your Incoterms before setting your export price so that you can add it your export costs.
- Calculate Export Costs
As a seller, along with the cost of the product, you will have to add up all the expenses that you bear until the product reaches your buyer. The cost of producing handicrafts can be segregated into fixed cost and variable cost.
- Fixed cost includes the cost of machinery, wages and so on.
- Variable cost includes transportation, seasonal storage costs, etc.
After figuring out the different costs and adding it, you will have a base price at which you produced your handicrafts. Now, additional cost will have to be added that you will incur during the export process.
Apart from the cost of shipping your product, export cost includes many more things which are discussed below:
- Loading charges of handicrafts
- Freight charges to the port
- Clearing and forwarding charges
- Dock charges
- Insurance charges
- Commissions and interests
- Duties and taxes
- Export documentation and certificates charges, if any incurred.
- Factor in discounts.
However, your cost may also be reduced with the help of facilities in the form of cashback, rebates, exemption of taxes and excise duties, export credit, etc. These factors impact the pricing of your product and thus, should be taken into consideration while calculating the cost.
Set the prices for handicrafts after determining the margin and markup that you will keep for your product. A margin shows the revenue you make after paying cost while markup shows how much more your selling price is than the cost of the item.
- Profit margin can be obtained by subtracting Costs of Goods Sold (COGS) from the Revenue ( REVENUE-COGS ) and then dividing it by revenue.
- Markup can be obtained by subtracting COGS from the Revenue and then dividing it by COGS.
Knowing the difference between a margin and a markup helps you set goals. If you know how much profit you want to make, you can set your prices accordingly using margins and markups.
- Common Pricing Strategies
Pricing strategies are shaped by your profit expectations and other factors that influence your product’s price. Some of the common pricing strategies are:
- Cost Plus Pricing: It is a simple technique where you add cost of production along with all your export cost and then add a profit margin.
- Market-driven Pricing: It is the most used approach where you keep your product’s price flexible keeping in mind factors like demand and supply, inflation, etc.
- Penetration Pricing: To penetrate into the market, this pricing approach is often used. This technique requires you to charge a low price for those products as compared to your competitors.
- Premium Pricing: If you are adopting this method, it means that your products are top notch. Exporters use the word premium to justify the inflated prices of the products. Exporters in the handicrafts industry often adopt this strategy.
Use these strategies and techniques to obtain an optimal price for your product and gain a hold on your desired market.
List Of Items Which Are Majorly Exported:
- Textiles – Textiles can be a very nice option to start your own handicraft export business in India. It is divided into two sections – Daily Use textiles and Decorative products. It includes batiks, tie-dye, screen-printed clothes etc. As India has various states where Silk and Cotton is grown, it is also a hub for huge demand.
- Woodwork and stonecraft Wooden articles are not only beautiful but in demand too. Furniture, toys or decorative items, all these types are unique and represent our Indian culture in foreign land. Not only wood work, but stone crafted articles have become popular too as they carry Indian heritage in the best artistic way.
It’s the most fast moving handicraft in India. It comes under the daily wear category and is made of different metals like bronze, copper etc. It also includes precious stones. It comes in various styles and patterns. Starting with handmade jewellery can be the best way to start your own business.
How Can You Be Successful While Exporting In Handicrafts?
Let’s know how you can start a handicraft business from home or online craft business in India.
- Finding various marketing strategies will help propel your handicrafts export business’s growth if you want to be successful.
- Platforms that offer business-to-customer sales, such as Craftezy, Amazon and eBay, work like magic in the modern internet era.
- If you want to export them in bulk, you can use business-to-business channels such as Craftezy.
These B2B platforms have buyers all over the world and will assist you in selling your specialty goods in bulk. You can also try offline channels such as trade shows, export carnivals, and relatives or friends who live in the target country.
Aside from selling them across these platforms, maintaining an individual website can also help. While learning how to start a handicraft business in India, you may come across several other channels.