INDIRECT EXPORTING
BEGA DOINA
OSADCII MARIONELA
FORTUNA MADALINA
KEY IDEAS
• INDIRECT EXPORTING MEANS SELLING TO AN INTERMEDIARY, WHO IN TURN SELLS YOUR
PRODUCTS EITHER DIRECTLY TO CUSTOMERS OR TO IMPORTING WHOLESALERS.
• THE EASIEST METHOD OF INDIRECT EXPORTING IS TO SELL TO AN INTERMEDIARY IN YOUR
OWN COUNTRY.
• WHEN SELLING BY THIS METHOD, YOU NORMALLY ARE NOT RESPONSIBLE FOR COLLECTING
PAYMENT FROM THE OVERSEAS CUSTOMER, NOR FOR COORDINATING THE SHIPPING
LOGISTICS.
MANAGEMENT COMPANIES
• AN EXPORT MANAGEMENT COMPANY (EMC) IS ONE SUCH INTERMEDIARY.
• A GOOD ONE WILL ACT IN ALL RESPECTS AS A GLOBAL EXTENSION OF YOUR SALES-AND-
SERVICE PRESENCE—MORE OR LESS WHAT YOU ARE ATTEMPTING TO DO ON BEHALF OF A
MANUFACTURER.
• EMCS OFFER A WIDE RANGE OF SERVICES, BUT MOST SPECIALIZE IN EXPORTING A SPECIFIC
RANGE OF PRODUCTS TO A WELL-DEFINED CUSTOMER BASE IN A PARTICULAR COUNTRY OR
REGION.
• AN EMC IS HIGHLY MARKET-DRIVEN, REPRESENTING YOUR PRODUCT ALONG WITH OTHER
COMPANIES' NON-COMPETING PRODUCTS AS PART OF THEIR OWN IMPORT "PRODUCT LINE"
AIMED AT THE CUSTOMER BASE THEY HAVE CREATED.
• GENERALLY, THE EMC BUYS THE PRODUCT FROM A MANUFACTURER AND MARKS UP THE PRICE
TO COVER THEIR PROFIT. IT IS CALLED A BUY-RESELL ARRANGEMENT.
OTHER COMMON COMPENSATION STRUCTURES USED BY EMCS INCLUDE BOTH COMMISSION
AND BUY-AND-RESELL, START-UP OR PROJECT FEE ONLY, FEE PLUS COMMISSION, OR FEE PLUS
COMMISSION AND BUY-AND-RESELL. AN EMC WILL CARRY OUT ALL ASPECTS OF THE EXPORT
TRANSACTION:
1. IDENTIFYING INTERNATIONAL MARKETS FOR YOUR PRODUCT OR SERVICE
2. LOCATING CUSTOMERS OVERSEAS
3. ARRANGING AGENT/DISTRIBUTORSHIP RELATIONSHIPS
4. PREPARING, NEGOTIATING, AND HANDLING ALL COMMUNICATION, DOCUMENTATION, AND
SHIPPING LOGISTICS
5. EXHIBITING AT INTERNATIONAL TRADE SHOWS
6. TRAVELING OVERSEAS TO MEET WITH POTENTIAL CUSTOMERS
7. SETTING UP APPROPRIATE DISTRIBUTION CHANNELS
INTERMEDIARIES
• 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 OTHER IMPORTING DISTRIBUTORS (WHOLESALERS). UNDER THESE
CIRCUMSTANCES, YOU WILL NOT KNOW WHO YOUR ULTIMATE CONSUMERS ARE. WHEN SELLING
BY THIS METHOD, YOU ARE NORMALLY RESPONSIBLE FOR COLLECTING PAYMENT FROM THE
OVERSEAS CUSTOMER AND FOR COORDINATING THE SHIPPING LOGISTICS.
• IN SOME INSTANCES, THE OVERSEAS AGENT MIGHT REQUEST THAT THEY ARE ALLOWED TO
HANDLE THE SHIPPING, USUALLY BECAUSE THEY RECEIVE SPECIAL TRANSPORTATION RATES FROM
CARRIERS WITH WHOM THEY'VE DONE VOLUME BUSINESS FOR YEARS. IN THIS CASE, YOU WILL
NEED TO ARRANGE FOR THE CARGO TO BE READY BY THE SHIPMENT DATE. YOU MUST STILL
COLLECT PAYMENT FROM THE CUSTOMER, BUT YOUR ACTUAL INVOLVEMENT IN THE TRANSACTION
IS MINIMAL. IT IS NEARLY AS EASY AS A DOMESTIC SALE.
ADVANTAGES
• IT'S AN ALMOST RISK-FREE WAY TO BEGIN.
• IT DEMANDS MINIMAL INVOLVEMENT IN THE EXPORT PROCESS.
• IT ALLOWS YOU TO CONTINUE TO CONCENTRATE ON YOUR DOMESTIC BUSINESS.
• YOU HAVE LIMITED LIABILITY FOR PRODUCT MARKETING PROBLEMS—THERE'S ALWAYS SOMEONE ELSE TO
POINT THE FINGER AT!
• YOU LEARN AS YOU GO ABOUT INTERNATIONAL MARKETING.
• DEPENDING ON THE TYPE OF INTERMEDIARY WITH WHICH YOU ARE DEALING, YOU DON'T HAVE TO CONCERN
YOURSELF WITH SHIPMENT AND OTHER LOGISTICS.
• YOU CAN FIELD-TEST YOUR PRODUCTS FOR EXPORT POTENTIAL.
• IN SOME INSTANCES, YOUR LOCAL AGENT CAN FIELD TECHNICAL QUESTIONS AND PROVIDE NECESSARY
PRODUCT SUPPORT.
DISADVANTAGES
• YOUR PROFITS ARE LOWER.
• YOU LOSE CONTROL OVER YOUR FOREIGN SALES.
• YOU VERY RARELY KNOW WHO YOUR CUSTOMERS ARE, AND THUS LOSE THE OPPORTUNITY TO TAILOR YOUR
OFFERINGS TO THEIR EVOLVING NEEDS.
• WHEN YOU VISIT, YOU ARE A STEP REMOVED FROM THE ACTUAL TRANSACTION. YOU FEEL OUT OF THE LOOP.
• THE INTERMEDIARY MIGHT ALSO BE OFFERING PRODUCTS SIMILAR TO YOURS, INCLUDING DIRECTLY
COMPETITIVE PRODUCTS, TO THE SAME CUSTOMERS INSTEAD OF PROVIDING EXCLUSIVE REPRESENTATION.
• YOUR LONG-TERM OUTLOOK AND GOALS FOR YOUR EXPORT PROGRAM CAN CHANGE RAPIDLY, AND IF
YOU'VE PUT YOUR PRODUCT IN SOMEONE ELSE'S HANDS, IT'S HARD TO REDIRECT YOUR EFFORTS
ACCORDINGLY.
EXAMPLES
A SPECIFIC EXAMPLE OF PIGGYBACK EXPORTING COULD BE THE FOLLOWING:
• LET'S SAY THAT JOHN C. HAS A COMPANY THAT MANUFACTURER HAIR BRUSHES. JOHN C.
DOES NOT DO ANY EXPORT. HE IS INTERESTED IN SELLING HIS PRODUCTS TO ITALY, BUT DOES
NOT WANT TO ASSUME ANY RISKS, OR HEADACHES INVOLVED IN THE PAPERWORK. ACROSS
THE ROAD FROM HIS FACTORY IS A COMPANY CALLED CHRISTOPHER'S SHAMPOOS.
CHRISTOPHER'S SHAMPOO IS A WELL ESTABLISHED MANUFACTURER/EXPORTER OF A LINE OF
SHAMPOO PRODUCTS. CHRISTOPHER'S IS CURRENTLY SELLING AGGRESSIVELY HIS ENTIRE
PRODUCT LINE TO THE ITALIAN MARKETPLACE. SO IN PIGGYBACK EXPORTING JOHN C WILL
APPROACH CHRISTOPHER'S SHAMPOO, AND OFFER TO ALLOW HIM TO REPRESENT AND SELL
HIS PRODUCTS IN ITALY (OR FOR THAT FACT - ANY EXPORT MARKET)
FINAL THOUGHTS
• ONLY YOU CAN DETERMINE WHICH EXPORT STRATEGY SUITS YOUR NEEDS. YOUR CHOICE WILL
DEPEND ON YOUR GOALS, YOUR AVAILABLE RESOURCES, AND THE TYPE OF BUSINESS YOU RUN. IT
IS RECOMMENDED THAT YOU CHOOSE THE METHOD THAT MAKES YOU MOST COMFORTABLE AND
LETS YOU FOCUS ON YOUR BUSINESS PRIORITIES SO THAT YOU WON'T BE WASTING YOUR
ENERGY WORRYING THAT SOMETHING ISN'T WORKING. AT THE SAME TIME, THOUGH, MANY
BELIEVE THAT DIRECT EXPORTING IS THE ONLY WAY TO MAXIMIZE CONTROL, PROFITS, AND MARKET
PRESENCE.
• IF YOU ARE TWO OR THREE TIMES REMOVED FROM A DIRECT RELATIONSHIP WITH YOUR
CUSTOMERS, THINK TWICE ABOUT HOW YOU MIGHT GET TO THEM DIRECTLY. AFTER ALL, THE NAME
OF THE GLOBAL GAME IS GENERATING YOUR NETWORK OF CUSTOMER RELATIONSHIPS. THE
SOONER YOU BEGIN BUILDING THIS FOUNDATION, THE SOONER YOU WILL HAVE A FLOURISHING
IMPORT/EXPORT BUSINESS.
THANK YOU FOR ATTENTION!
