What does direct export entail?
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.
What does indirect export mean?
Indirect export means you appoint third parties, like agents or distributors, to represent your company and your products abroad.
| Advantages | Disadvantages |
|---|
| Direct export: | direct customer contact | greater financial risks |
|---|
| higher profit margins | investment of time and staff |
| independence from foreign partners | limited market coverage |
| | insufficient knowledge of market and culture |
| Indirect export: | no or very few extra staff required | lower profit margins |
|---|
| agent knows and has access to the market and distribution channels | dependence on commitment of partner |
| more complete market coverage possible | no direct customer contact |
| smaller financial risks | |
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? ›
What does indirect export mean?
| Advantages | Disadvantages |
|---|
| higher profit margins | investment of time and staff |
| independence from foreign partners | limited market coverage |
| insufficient knowledge of market and culture |
| no or very few extra staff required | lower profit margins |
4 more rowsAdvantages 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
Indirect exporting can be an accessible, low-risk way for businesses to begin exporting, or to move into a new country with which they're currently unfamiliar. It demands minimal involvement in the export process, allowing companies to concentrate on their domestic businesses.
What are the advantages and disadvantages of indirect market? ›
In many ways, indirect marketing can help you grow your business and establish yourself as a market leader. However, it can also be demotivating to run campaigns when you can't see results right away. That's why you should complement your indirect marketing campaigns with direct marketing efforts.
What are the cons 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 risks of direct exporting? ›
Direct Exporting Disadvantages
It takes more time, energy and money than you may be able to afford. It requires more "people power" to cultivate a customer base. Servicing the business will demand more responsibility from every level of your organization. You are held accountable for whatever happens.
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 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 the main differences between direct and indirect exporting? ›
Indirect exporting: goods are sold domestically to a third-party agent such as a wholesaler that exports the goods to the destination country on behalf of the producing firm. Direct exporting: goods are exported without going through any further sales chain before leaving the country of origin.
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 advantages of direct exporting in business? ›
😃Advantages of direct exporting
Eliminate intermediaries and own higher profit margins of your own. You own your client relationships. Greater flexibility to redirect or pull off your marketing activities. Hands-on experience gives you more insights into the market to boost your competitiveness.
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 are the advantages of direct exporting? ›
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 are the advantages of direct and indirect advertising? ›
If you need quick results or a way to generate profit while you're waiting for indirect marketing to kick in, direct marketing is perfectly viable. But to build a loyal customer base that continues to generate consistent sales for your business, you'll want to make use of indirect marketing.
Which of the following is an advantage of direct exporting? ›
It provides the exporter with control over the process and how the product or service is sold.
What are the advantages of indirect products? ›
Indirect distribution allows you to:
- share shipping and storage costs.
- make it easier for customers to find your products.
- benefit from your third-party's experience, infrastructure and salesforce.
- avoid the complexity of managing distribution logistics.
