Direct export and indirect exporting: cost differences

Direct export

Direct export is the sale by an exporter directly to an importer located in another country, without using another person or organization to make arrangements for them. The exporter will be responsible for handling the sales process, logistics of shipment, foreign distribution, and for collecting payment.

Direct exporting works for many companies that either have a service that you can provide from abroad, if you have products that don’t need local installation and that have low shipping costs compared to the product value, or for products that are so expensive that you can allow somebody to deliver and install it personally.

The advantage is that you don’t have to pay any middlemen like an importer, agent or distributor for their services. The disadvantage is that you have arrange everything yourself, and with limited shipments, you may lack economies of scale. For example if your product needs servicing or has to be returned, costs will typically be much higher compared to when you have a local partner.

Indirect export

Indirect export refers to selling to an intermediary, who later sells the goods or services either directly to importing wholesalers or to customers. It could also be a sale by the exporter to the buyer via a locally located intermediary, such as an export trading company or an export management company.

Indirect exporting also involves selling to an intermediary in your own country who then arranges the export of goods. Selling through indirect exporting does mostly not involve collecting payment from the foreign customer, or for coordinating the shipping logistics. So this saves you setting up the organisation and processes do this. On the other hand, you will loose margin to an importer or distributor or you have to pay commission to an agent.

Especially for small and medium sized companies indirect export is often the best way to enter new markets, at least for markets further away where you may have different cultures, languages and time differences. Apart from more control in the delivery process, the local partner can also play a role in marketing your goods and in aftersales.

How to find the right importer, distributor or sales agent

If your market entry plan includes finding distributors or sales agents, Alliance experts can find these for you. We have people in over 30 countries, who know the market and can easily approach local partners. Based your strategy for your market entry, we draft a partnering profile, describing your company and the type of partner that you are looking for.

In parallel, we list a broad range of potential distributors or agents. We discuss this long-list with you, to see what type of companies you want to focus on. Once we have the short-list of companies, we try to arrange calls or meetings for you. We prepare these meetings with you and join you in the meetings, so that you can present yourself in the best possible way.

This entry in exports was updated on October 27, 2020 by specialist.