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Chapter 5: Methods and Channels

IN THIS CHAPTER

  • Finding the best approach to exporting for your company
  • Separating international from domestic business
  • Finding overseas partners/agents/distributors
 

Download a PDF of a Basic Guide to Exporting.

SUMMARY

The two most common methods of exporting are indirect and direct selling. In the first, another company is responsible for finding buyers, shipping the product, and getting paid. In the second, your company deals directly with foreign buyers. There are numerous variations on both methods. One increasingly popular indirect method is use of large online marketplaces such as eBay, Amazon, and Alibaba.

Several factors will be key in deciding whether to go indirect or direct:

  • The size of your company
  • Your tolerance for risk
  • Resources available to develop the market
  • Opportunity costs
  • The nature of your products or services
  • Previous export experience and expertise
  • Business conditions in the selected overseas markets

Another way to break down indirect and direct exporting is by the level of active involvement of your company. At one end of the scale, you may simply fill orders from domestic buyers who then export your products. Similarly, you may seek out domestic buyers representing foreign end-users or customers. Both of these methods are indirect. At the more active end, you may still export indirectly but through intermediaries. These can include export management companies (EMCs) or export trading companies (ETCs), as well as the previously mentioned e-commerce platforms. This approach lets you retain considerable control. The most active and involved method is of course direct exporting, which is also the most ambitious and challenging.

Driving an Export Surge
The first two approaches currently represent a substantial portion of total U.S. exports. This book concentrates on the second two, however, because they offer greater potential to drive a genuine export surge. It’s up to you to choose which approach best fits your company. It’s also worth keeping in mind that exporting indirectly through intermediaries doesn’t rule out exporting directly as well. In any case, trade specialists like those in the U.S. Commercial Service can help you sort through your options.

Such help will be particularly valuable because of the huge number of issues when deciding to sell overseas. In indirect exporting, for example, these include your choice of channels, intermediaries, and partners; the availability of local warehouse facilities; where to produce your product; and how much control you want to retain. If you’re looking at direct exporting, they include how much separation you want to have between your domestic and international businesses, and again your choice of channels, including sales reps, agents, distributors, retailers, and end-users. In both cases, you have to be particularly thorough in both evaluating your partners and in pinning down myriad complex commercial, contractual, and legal details.

This chapter’s Success Story is Infinity Air, which was founded by Jimmy Wu, the child of immigrants from China. A manufacturer and distributor of new and refurbished aircraft parts for the commercial aerospace industry, the company has sold $63 million in products and services to customers in 60 countries.


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