1-Choosing a Sales ChannelSales Channel
[Download Video 24 MB]
Quick Links: Next Video | Finding Foreign Buyers Video Set | How to Export Video Series
Subscribe to Our Email List
The most common methods of exporting are: indirect selling and direct selling.
In indirect selling, an export intermediary such as an export management company (EMC) or an export trading company (ETC) assumes responsibility for finding overseas buyers, shipping products, and getting paid.
In direct selling, the U.S. producer works directly with a foreign buyer. The paramount consideration in determining whether to market indirectly or directly is the level of resources your company is willing to devote to your international marketing effort. Other factors to consider when deciding whether to market indirectly or directly include the following:
• The size of your firm
• Tolerance for risk
• Resources available to develop the market
• The nature of your products or services
• Previous export experience and expertise
• Business conditions in the selected overseas markets
The way you choose to export your products can have a significant effect on your export plan and specific marketing strategies. The various approaches to exporting relate to your company’s level of involvement in the export process. There are at least four approaches that may be used alone or in combination:
1. Passively filling orders from domestic buyers, who then export the product.
These sales are indistinguishable from other domestic sales as far as the original seller is concerned. Another party has decided that the product in question meets foreign demand. That party assumes all the risks and handles all the exporting details, in some cases even without the awareness of the original seller. (Many companies take a stronger interest in exporting when they discover that their product is already being sold overseas.)
2. Seeking out domestic buyers who represent foreign end users or customers.
Many U.S. and foreign corporations, general contractors, foreign trading companies, foreign government agencies, foreign distributors, retailers, and others in the United States purchase for export. These buyers constitute a large market for a wide variety of goods and services. In this approach, your company may know that its product is being exported, but the domestic buyer still assumes the risks and handles the details of exporting.
3. Exporting indirectly through intermediaries.
With this approach, your company engages the services of an intermediary firm that is capable of finding foreign markets and buyers for your products. EMCs, ETCs, international trade consultants, and other intermediaries can give you access to well-established expertise and trade contacts, but you retain considerable control over the process and can realize some of the other benefits of exporting, such as learning more about foreign competitors, new technologies, and other market opportunities.
4. Exporting directly.
This approach is the most ambitious and challenging because your company handles every aspect of the exporting process from market research and planning to foreign distribution and payment collections. A significant commitment of management time and attention is required to achieve good results. However, this approach may also be the best way to achieve maximum profits and long-term growth. With appropriate help and guidance from the U.S. Department of Commerce, state trade offices, freight forwarders, shipping companies, international banks, and others, even small or medium-sized firms can export directly. The exporting process today is easier and has fewer steps than ever before. For those who cannot make that commitment, the services of an EMC, ETC, trade consultant, or other qualified intermediary can be of great value.
The first two approaches represent a substantial proportion of total U.S. exports. They do not, however, involve the firm in the export process. If the nature of your company’s goals and resources makes an indirect method of exporting the best choice, little further planning may be needed. In such a case, the main task is to find a suitable intermediary firm that can handle most export details. Firms that are new to exporting or are unable to commit staff and funds to more complex export activities may find indirect methods of exporting more appropriate.
However, using an EMC or other intermediary does not exclude the possibility of direct exporting for your firm. For example, your company may try exporting directly to nearby markets such as the Bahamas, Canada, or Mexico, while letting an EMC handle more challenging sales to Egypt or Japan. You may also choose to gradually increase the level of direct exporting once you have gained enough experience and sales volume to justify added investment.
Here are some points to consider when distributing your product:
• Which channels of distribution should your company use to market its products abroad?
• Where should your company produce its products, and how should it distribute them in the foreign market?
• What types of representatives, brokers, wholesalers, dealers, distributors, or end-use customers should you use?
• What are the characteristics and capabilities of the available intermediaries?
• Should you obtain the assistance of an EMC or an ETC?
Foreign Trade Techniques Market Research Distribution