Once a business has identified the market/ markets to export
to, the next step is to establish who will sell the product/service to
potential customers and how it will be sold and distributed. How a business
organises their sales presence in export markets is one of the key decisions to
be made by an exporter. The choice of selling method will be influenced by the
nature of the product/service. It is important to assess the usual local
distribution practice with regard to similar products. There are 2 main ways of
exporting to overseas markets, these are:
- Selling Direct from the exporter’s
location - Some larger companies prefer to purchase directly from the manufacturer without the services of a middleman. This typically involves making frequent sales visits to the particular country, as well as telephone sales or accepting of overseas orders on an e-commerce website. This can be a straightforward, cost effective way of entering overseas markets; however, it can have implications. It may leave the exporter remote from customers, and unable to share the exporting workload with partners or intermediaries.
- Opening Operations in Overseas
Markets -This is generally the most costly and time consuming method to enter an overseas market, however, it can be the most rewarding.
- Using a Commission Agent - An overseas agent represents the exporter in the overseas
market, sells the exporter’s product or service to the overseas customer and routes
orders back to the domestic market. Once the goods are paid for by the customer, the
overseas agente receives commission from the exporter. The commission varies
from 2% to 15%, depending on the nature of the goods being handled. Commission
should be included in the price quoted to the customer. It is essential to
recruit a commission agent that has extensive experience in the particular business
context, as well as relationships with potential buyers.
an Overseas Distributor - A distributor buys the goods from the
exporter, and then takes responsibility for selling them on to a third party.
The role of a distributor is to find customers for the exporter’s goods.
Distributors bridge the gap between the exporter and the end-user customers. It
is imperative to seek legal advice before concluding a distributorship