Exporting: The Basics
The two most common methods of exporting are: indirect selling and direct selling. Indirect selling is when a business contacts an export intermediary such as an export management company like XM Works, Inc. who assumes the responsibility of finding buyers, shipping the goods, and receiving payments. In the direct selling method of exporting the domestic firm deals directly with foreign buyers.
The key factor in deciding the whether to export directly or indirectly is the amount of resources a company has to spend on the process, mainly money, time, and knowledge of the foreign markets and export process. The way a company choses to export their products has a significant effect on on the export plan and marketing strategies. There are four general approaches that may also be used jointly in the process. They are:
- Selling products to domestic buyers who then export the product abroad without the explicit knowledge or consent of the seller. In this case the domestic buyer has assumed all risk and finds an oppurtunity to sell the goods abroad.
- Actively seeking domestic buyers to export the products abroad. In this case the domestic buyer still assumes all risks associated with the exportation of the products.
- Exporting indirectly via intermediaries, such as export management companies. The intermediaries utilize their knowledge of foreign markets and established foreign contacts to sell the products abroad while still leaving considerable control over the process to the exporter.
- Exporting directly. This is the most difficult and resource-consuming method of exporting. The exporter assumes all responsibility of every step of the export process including: market research, planning, discovering distribution channels, and collecting payments.
In deciding which approach to use a company must look closely at it's available resources and goals it wishes to achieve in exporting.