What is direct export?
Direct export means direct sales to a customer abroad. You send your invoice directly to the customer. For instance: you produce handmade mobile casings, and mail them to your customers in Belgium and Germany. You maintain close contacts with your customers and undertake your own marketing and sales. Sales through a foreign branch of your company are also direct exports.
Direct export pros and cons
Advantages:
independence from foreign partners
Disadvantages:
investment of time and staff
insufficient knowledge of market and culture
What is indirect export?
Indirect export means you appoint third parties, like agents or distributors, to represent your company and your products abroad.
Indirect export pros and cons
Advantages:
no or very few extra staff required
agent knows and has access to the market and distribution channels
completer market coverage possible
Disadvantages:
dependence on commitment of partner
no direct customer contact
Record your arrangements
Whichever mode of exporting you choose, make sure you lay down your arrangements in writing. There are model contracts you can use as a basis, provided by the International Chamber of Commerce and the Verbond van Nederlandse Handelsagenten en Importeurs (page is in Dutch, but contracts are available in English). If you sell goods directly to the end user abroad, you can draw up an international sales contract. If you are starting a collaboration with an agent or distributor, you can draw up an agency or distribution contract.
Get help
Are you just starting to export? Get help:
The KVK Advice Team has extensive knowledge on international business. Call them on 088 585 22 22.
The Netherlands Enterprise Agency RVO offers extensive information and personal advice on Going international.
FAQs
Direct exporting may be more suitable for products with strong demand in the foreign market, while indirect exporting is often recommended for products with less demand. Both direct and indirect exporting can be effective ways for a business to enter international markets.
What are the disadvantages of indirect exporting? ›
Indirect exporters can't exercise a direct control over marketing decisions such as packaging, pricing, advertising, sales promotion and after-sales service due to their dependence on market intermediaries. (e) Lower Sales The manufacturer may not be able to get more sales through the intermediaries.
What is the advantage and disadvantage of exporting? ›
Exports are important to maintaining economic growth and development by increasing business opportunities. A disadvantage to exporting is that it raises prices for domestic consumers, and exporters must contend with the political climate of the nations they are exporting to.
Which of the following is a disadvantage of direct exports? ›
Advantages and disadvantages of direct exporting
| Advantages of direct exporting | Disadvantages of direct exporting |
|---|
| Increased profit Increased control Better communication with your customers | Increased workload Limited market knowledge |
Mar 28, 2022
Direct export pros and cons
direct customer contact. higher profit margins. independence from foreign partners.
What are the advantages of direct and indirect exporting? ›
Direct exporting may be more suitable for products with strong demand in the foreign market, while indirect exporting is often recommended for products with less demand. Both direct and indirect exporting can be effective ways for a business to enter international markets.
What are the advantages of indirect exporting? ›
Advantages of Indirect Exporting: a) Reduced Costs and Risks: Indirect exporting allows companies to minimize upfront investment and reduce the financial risks associated with entering foreign markets.
What are the advantages of direct exporting in business? ›
The advantages of direct exporting for your company include more control over the export process, potentially higher profits, and a closer relationship to the overseas buyer and marketplace, as well as the opportunity to learn what you can do to boost overall competitiveness.
What is the difference between direct and indirect exporting? ›
Direct exporting is a type of exporting where the company directly sells products to overseas customers. Indirect exporting is a type of exporting practiced by companies that sell products to other countries with the help of an intermediary.
What are the disadvantages of exporting? ›
Disadvantages of exporting
- Supply chain disruptions. ...
- High up-front costs. ...
- Export licenses and documentation. ...
- Product adaptation. ...
- Political disruptions. ...
- Cultural hurdles. ...
- Exchange rate fluctuations. ...
- Multi-currency payments.
Disadvantages of Direct Distribution
Direct distribution retailers may miss out on opportunities to capitalize on their products without having several indirect distribution channels to widen their reach. Wholesale agents and retailers understand their market and specialize in promoting products.
What is the disadvantage of direct shipping? ›
Lower Profit Margins: Retailers often have slimmer profit margins in direct shipping because they purchase products from suppliers at a higher cost than if they were buying in bulk. This can make it challenging to compete on price with businesses that buy in larger quantities.
What are two disadvantages of direct distribution? ›
One of the biggest challenges is the sizeable costs that can come with direct distribution. For example, you may need to purchase trucks, hire drivers and rent storage space. You may also find it harder to reach potential customers without the network an established distributor provides.
What is an example of indirect exporting? ›
For example, a manufacturer of shoelaces (Strings and Things) in West Virginia supplies shoelaces to a shoe company (OrgoFeet) in North Carolina and OrgoFeet exports its shoes to Japan.
What is an example of direct and indirect exporting? ›
A pharma company exporting drugs to USA is a direct export.An IT company selling a software to a company in SEZ in India which subsequently exports it to some overseas buyer is an example of indirect export.
What are the disadvantages of indirect distribution? ›
On the other hand, indirect distribution has some drawbacks, such as having less control over pricing, branding, quality, and customer service. You may also lose profit margin to your intermediaries and have to share customer data and insights with them.
What are the disadvantages of indirect product? ›
The main challenge with indirect distribution is the distance it puts between you and your customers. By adding an intermediary, you are also increasing the amount of time it takes for your product to reach the buyer. It's also harder to establish brand loyalty when you are not interacting directly with your customer.
What is the disadvantage of indirect marketing? ›
The Disadvantages of Indirect Marketing
With indirect marketing, the results often need time to build momentum before you begin to see results from your campaign. It is during these momentum periods that you will need to put in consistent efforts into order to keep building your campaign up.
What are the disadvantages of indirect sales? ›
Disadvantages of indirect sales
Inability to monitor and track the goods independently; Dependence of the company's reputation on the behavior of the intermediary.
