How to Export - Part 7 Determining Sales Strategy

We have discussed how to develop sourcing strategy and and identify key markets in earlier issues. Once you have zeroed in on target markets and have your sales basket ready - the next step is to determine how will you sell your products or services overseas.

There are broadly four ways of selling in an overseas country :

  • Selling Directly to Overseas Buyers

  • Selling through Overseas Agents/Representatives

  • Selling through Domestic Buying Agents/Buying Office

  • Selling through Export Management Company

Your sales strategy may be based on one of above or you may go for a mix of several options depending upon product spec and available resources.

Selling Direct

You exercise maximum control over all overseas operations by selling directly to buyer. This option is also simple to manage and gives maximum profit margin as there is no third party between you and your buyer. However, it is often the hardest option and expensive too. Normally, it takes more time to establish oneself as selling direct requires time and resources for prolonged period. We shall discuss the details later

Selling through Overseas Agents/Representatives

You appoint commissioned agents or sales representatives to sell. Agents and reps act as brokers, finding specific foreign buyers for your product or service in return for a commission. While they do the selling, they often will not fulfill the orders or handle details such as collections or shipping.

For more information on Overseas Agents, Distributors and Representatives - particularly how to identify, negotiate and enter into agreement - please visit Agents / Distributors / Representatives section

Selling through Domestic Buying Agents/Buying Office

Major importers prefer to source products through their own buying office or representative. Having own office or representative means better control over sourcing process, wider selection of vendors, competitive price, better quality control and reliable pre-shipment inspection.

Selling through buying agent is advantageous for exporters also, as it helps in significant cost and time saving. Exporter saves in marketing cost, courier and communication cost, overseas travelling cost etc. This option also helps in reducing business risk significantly as buying agent representative keeps regular control over quality during production process. As goods have to go through pre-shipment quality inspection under supervision of buying agent - there is hardly any chance of getting quality complaint after the goods reach destination.

However, selling through buying agent is very competitive and entails far less profit marging compared to selling direct.

Here's a Directory of Buying Agents and Buying Houses in India

Selling through Export Management Company

Selling through Export Management Company (EMC) or Export Trading Company (ETC) is quite popular in the West - but is yet to catch up in India. Software and BPO sectors have a few well organized EMCs, but in merchandising trade - it is small companies and consultants ruling the roost. Neverthless, we discuss their working as large organizations like IMS may decide to visit India in this age of globalisation.

EMCs act as an outsourced export department, both representing your product to overseas buyers and taking care of all aspects of the export transaction. Among the functions EMCs perform are:

  • Conducting market research to determine the best foreign markets for your product

  • Attending trade shows and promoting your products overseas

  • Assessing distribution channels

  • Arranging export financing

  • Handling export logistics, such as invoicing, insurance, customers documentation, etc.

  • Advising on legal issues such as compliance issues and trade regulations

EMCs tend to work on a commission basis and represent products of many companies. However, a growing number of EMCs now take title to the goods they sell, making a profit on the markup. This carries the possibility that your products may be priced incorrectly, which can affect your competitive position in the market. Be sure to discuss issues related to pricing at the outset of any negotiation.

Export Trading Companies (ETCs) perform many of the same functions as EMCs, but they tend to be demand-driven, simply fulfilling orders instead of actively marketing a product or service. Most ETCs will take title to your goods for export and will pay your company directly while handling shipping and invoicing. While you may give up control over how your product is priced and serviced, this arrangement does eliminate many of the potential risks associated with exporting.

Happy and Productive Surfing

Dr. Amit K Chatterjee

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Source: FAIDA - Newsletter on Business Opportunties from India and Abroad Vol: 6, Issue 7 ; August 12' 2005

Author : Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various capacities like Research and Information Analysis, Market Development, MIS, R&D Information Systems etc. before starting his e-commerce venture in 1997. The views expressed in this columns are of his own. He may be reached at )

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