Pros and Cons of Direct Exporting

Direct exporting means selling goods from your country directly to export markets. This involves dealing directly with your customers from your country base. Direct supply to export markets usually occurs when companies are supplying a component or a service which is specialized or customized for a particular customer, for example the supply of complex-use products like software or other highly specialized, technically advanced products or services. Negotiation can be carried out directly with the customer, although the input of people with specialized knowledge and expertise may be required. For such products and services, customers are small in number and relatively easy to identify.

Exporters can also sell directly to retail chains. Initial contacts can be made at foreign or domestic trade shows and followed with personal visits. Achieving sales through one retail chain makes it much easier to approach others in the same market. However, there may come a point where the volume of sales necessitates an overseas presence through a company representative, in order to effectively handle the increased number of customers and their needs. Direct exporting more closely parallels your domestic distribution.

The advantages of direct exporting for your company include more control over such areas like pricing, labeling and distribution; greater profit margins; and closer ties to customers and markets. Direct sales can accelerate export sales volume in the long run, even though a well matched export management company may get faster initial results. The major resource required is time rather than capital. Exporting can start small and develop over time without undue risk.

The cons of direct exporting include significant travel and service costs due to time commitment. This may result in loss of focus in the home market. Commitment of senior staff limits the number of customers and geographical spread that can be serviced initially. The exporter has to learn how to do business in the chosen market including negotiations, pricing, terms and conditions.

Direct exporting certain costs more but there is no doubt in the fact that you can make even more through it. Again, it depends on you whether the reward is worth the risk.

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