Direct export of its products offers a company greater control over the entire export transaction and entitles them to greater benefits. However, these profits are accompanied by a cost – the company needs to invest far greater resources and put in a lot more efforts.
But many companies prefer to stick to direct exporting since it confers them with the freedom to decide and choose which foreign market they want to enter, or which target buyers they want to approach, or which business contacts they want to use for distribution of their products, all of which play a very decisive role in the sale of their products.
However, the internal organizational structure must undergo sea changes to support the complex operations involved in direct exporting. It might necessitate the separation of international business from domestic sales to boost sales at both domestic as well as international level.
After the company has organized itself to handle exports, it needs to shift its focus to developing a proper channel for supplying its products. These channels must suit the foreign market that the company seeks to penetrate and includes sales representatives, agents, distributors, retailers, and end users.
A sales representative plays the role of the manufacturer’s representative, who works on a commission basis. He uses the product manual and samples of the product, which he presents to the prospective buyers and entices them to purchase it. However, unlike an agent, who is entitled to take decisions on behalf of his company, a representative has no authority, and he takes no risk or responsibility of the product.
A distributor, on the other hand, directly purchases the products from the manufacturer and sells it at a much greater profit. He is bound by a contract with the company and provides the much required servicing operations and maintenance for the products at a local level.
Most of the end users buy products from localized retailers or dealers. And to cash in on this fact, manufacturers can have a tie up with major domestic retailers, who have their offices abroad and sell their products in those foreign markets.
Alternatively, manufacturers can even sell their products directly to end users through trade shows or exhibitions or by advertising in international publications.