All grown up: Cognikids ramps up export sales

Dublin company Cognikids is ramping up export sales this year with a range of innovative products designed to help young children with early-stage development.

A finalist in the High Potential Exporter Category of the recent Export Industry Awards, the firm delivered its first order to the US retailer Buy Buy Baby last year, having exhibited at gift and lifestyle trade show NY Now.

“We have a pretty big footprint now. We started exporting to Japan in the first week of January,” said Cognikids owner Ollwyn Moran.

“We also have distributors in the UAE, Spain, Portugal, the Netherlands, Slovenia, Slovakia, Croatia, Hungary, Belgium, Luxembourg and France. We’re really starting to get to grips with the exporting now.”

Moran established Cognikids in 2010. A secondary school teacher, she came up with the idea for the company after taking a course in neurological development therapy.

Originally called Creeper Crawlers, Cognikids’ first product – a babygro with grips on the knees and the feet designed to create traction to help babies crawl safely and improve coordination – launched three years ago.

Moran has since introduced a bottle-holder for babies and a sensory teething bib. In Ireland, Cognikids is stocked by Lloyds Pharmacy, Mothercare and Tesco.

Three-year rule

“With new companies and products, when you’re trying to find a distributor overseas, they tend to have the same ‘three-year rule’ you find with buyers for the retailers,” said Moran. “Once you’ve been in business for three years, they will start talking to you properly, because they reckon that you’ll survive if your product is good enough that you’ve survived that long.”

Moran advised a proactive approach to making contacts in new markets and said persistence was key to making headway. “I was coming from a classroom and I didn’t know what I was doing, so I ended up putting the cart before the horse a lot of times at the beginning,” she said.

“I went to tradeshows I didn’t need to go to, but I’ll still go now even if I’m not exhibiting, to see what’s on the ground, catch up with other exhibitors and build business relationships that way. Coming from my background, I had zero business contacts or connections in Ireland, so I had to build a business network here, in the UK and the US, which is our ultimate target, and trade shows are a brilliant way to do that.

“I’ve walked dozens of shows in the US where I haven’t even been exhibiting and set up meetings with people just to build up those contacts.”

Learning logistics

Drumming up interest in other markets and securing distributors outside Ireland is one thing, but getting to grips with the logistics of exporting is quite another.

“You can see why the logistics side of things is a full-time job for one person within companies. It’s so time-consuming,” said Moran.

“You have to learn it, but you’ll learn it much faster if you’re working with someone who’s an expert in the field rather than trying to go through the whole thing yourself. You also need to build the costs and the resources involved into your pricing.”

Moran advised first-time exporters to seek recommendations before choosing a transport provider.

“Some logistics companies are really good. We’ve worked with a few. What I did, and it’s really down to my belief in the power of business relationships, is ask people who they would recommend. You can’t put money on that. It’s so valuable,” she said.

“A lot of the time, you may have a bad experience with a logistics company, but part of that might be down to your own experience, because you haven’t given them the information needed and guided them correctly.

“You might find then that your deliveries get stuck in customs, or you find out that you’ve only paid for the delivery to get as far as the port, not realising that there was an extra step in the process you forgot about. You can get terms mixed up. It’s a whole new lexicon when you’re talking about ‘FOB’ and ‘Ex Works’.”

Brexit customs regime

When completed, Britain’s withdrawal from the European Union will see Irish exporters selling to England, Scotland and Wales face a customs regime akin to that already in operation in the US.

For companies whose only export experience to date has been within the Free Trade Areas, the learning curve resulting from Brexit could be steep, according to Carol Lynch, customs partner, BDO.

“Until now, companies exporting outside the EU had no need to think about things like ‘Incoterms’ and ‘Ex Works’, but these will almost certainly now also apply to the UK from 2019,” said Lynch.

Incoterms are the terms of trade, which identify, for buyers and sellers, who is responsible for the shipping of goods, the export clearance, the import clearance and where risk transfers.

“It’s really about determining how you plan to sell your goods,” said Lynch. “The easiest option for a seller or exporter is to supply ex works. This means their buyer will pick up goods from your factory door and is responsible for the supply chain from there on in.”

Delivery Duty Paid

The more complex delivery option is Delivery Duty Paid (DDP). This means the seller is responsible for getting the goods to the customer’s premises and for clearing customs on export from Ireland and on import into your customer’s country.

“It can be a complex matter for most exporters and there are a number of terms of trade sitting in between ex-works and DDP,” said Lynch.

“You need to find one that fits your circumstances best. For example, Free on Board (FoB) means you clear the goods for export in Ireland and deliver them onto the ship, but the buyer takes responsibility from there.”

It’s important, when delivering goods to a customer, to check freight rates and the time to get goods to market.

“Factor in whether shipping or airfreight works best for you,” said Lynch.

“Airfreight is generally more expensive and you may need to look at whether your goods can be delivered directly from Ireland or whether they will need to transit through another EU port such as Southampton or Rotterdam.”

Export clearance

Before choosing a transport company, ask if they will complete the paperwork for export, and if necessary import, clearance for your delivery.

“This is really important because if they don’t do it, you will need to employ a specialist clearance agent and that’s another hoop to jump through.”

All goods departing the EU must declared to customs on an Export Single Administrative Document (Export SAD).

Goods entering a non-EU country must be declared to the appropriate customs authority on an Import Clearance Document.

“These documents require a significant amount of information,” said Lynch.

“The tariff code, for example, is a customs classification, which determines the sensitivity of the goods with regard to export and the duty rate that applies on import to the non-EU country.”

Trade agreements

Where your goods originate from is another factor to consider.

“If the EU has a preferential trade agreement with a country to which you are exporting and your products qualify as originating, they may obtain duty-free access to that country. This can happen with exports to Israel and Mexico, for example,” said Lynch.

Other documentation is also required with the export and import declarations. These include invoices, packing lists and other relevant shipping documents which identify the goods themselves, the exporter and importer.

“You also need to be aware of export licensing requirements,” said Lynch. “They are required for certain sensitive goods, which can be diverted to a military use and should never be exported without a licence.

All importers and exporters require an EORI number for EU Customs Registration. In Ireland, this is aligned with your Vat number and can be obtained from Revenue.

“When you’re accessing a new market, you should learn about the additional customs costs you may incur if you are responsible for clearing customs in your customer’s country,” said Lynch.

“These costs can significantly add to the cost of the goods being sold and, if not taken into account properly, can seriously erode your profits or, worse, result in those goods not being allowed to clear through customs.”

Costs and charges to be aware of in this scenario include duty rates, import licence requirements, standards certification and the local equivalent to the Vat system.

If you are not registered, you could face an irrecoverable import Vat charge.