Indirect Exporting

Last reviewed: ~5 min read Marketing › Antitrust

Indirect Exporting The article intends to highlight the pros and cons of different export intermediaries that are involved in indirect exporting. The article details the workings of these intermediaries and finally concludes on the most suitable method of exporting. 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) normally assumes responsibility for finding overseas buyers, shipping products, coordinating logistics and getting paid.

EMCs, ETCs, international trade consultants, and other intermediaries can give the exporter access to well-established expertise and trade contacts. Yet, the exporter can still 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. EMCs usually specialize either by product or by foreign market, or sometimes even both.

Because of their specialization, the best EMCs know their products and the markets they serve very well and usually have well-established networks of foreign distributors already in place. This immediate access to foreign markets is one of the principal reasons for using an EMC, since establishing a productive relationship with a foreign representative may be a costly and lengthy process. Like an EMC, an ETC can either act as the export department for producers or take title to the product and export for its own account.

Therefore, the terms ETC and EMC are often used interchangeably. Conversely, they tend to function on a more demand-driven basis, by which the demand of the market compels them to buy specific commodities. They usually have long-standing customers for whom they source products on a regular basis. Indirect exporting can also involve selling to an intermediary in the country where you wish to transact business, who in turn sells your products directly to customers or to other importing distributors (wholesalers).

Export agents, merchants, or remarketers purchase products directly from the manufacturer, packing and marking the products according to their own specifications. They then sell these products overseas through their contacts in their own names and assume all risks for accounts. In transactions with export agents, merchants, or remarketers, a firm relinquishes control over the marketing and promotion of its product.

This situation could have an adverse effect on future sales efforts abroad as the exporter rarely knows the customers and thus loses the opportunity to tailor the product offerings to their evolving needs. On the other hand, the effort required by the manufacturer to market the product overseas is very small and may lead to sales that otherwise would take a great deal of effort to obtain. Another option for indirect exporting is piggy backing the goods and services.

Piggyback marketing is an arrangement in which one manufacturer or service firm distributes a second firm's product or service. Product lines tend be complementary rather than competing and appeal to the same customers giving the exporting company immediate access to foreign markets (Indirect Exporting, n.d). In conclusion the article states that the paramount consideration in determining whether to market indirectly or directly is dependent on the level of resources a company is willing to devote to its international marketing effort.

The size of firm, the nature of products and the ultimate goal of the organization also needs to be taking into account when ultimately choosing between direct and indirect exporting. Through indirect exporting a firm is likely to lose control over sales and is removed from personal contact with the customer. Thus direct exporting may be a preferred approach to exporting. Many of the issues stated in this article relate to the conditions present in USA. Exports remain an important growth vehicle for U.S.

companies, as many domestic product and service markets are saturated and offer only limited growth prospects. Today, many smaller firms export occasionally and seek to develop permanent, recurring business in foreign countries. Other companies only export to a few countries and want to increase the number of countries in which they do business. Fifteen percent of U.S. exporters account for 84% of the value of U.S. manufactured exports. One-half of all exporters sell in only one foreign market. Fewer than 20% of exporters and fewer than 3% of U.S.

companies overall, export to more than five markets. EMC is a popular mode for indirect exporting in USA and there are about forty such associations in the United States. These associations.