What is direct export and indirect export? Which one is better for you?
In today's world, countries around the world are expanding trade relations with each other. Currently, the economies of many countries in the world depend on the same trade relations, or rather exports and imports. In our country, too, Iran is very active in exports and imports with other countries. In this article from Sindbad, we intend to introduce exports and their types in terms of commercial law.
The importance of exports in today's world
International trade has never been more exciting than it is now. Export and import opportunities are growing at an astonishing rate, and competition opportunities are beginning to emerge. Many factors are involved in this growth, including the establishment of the World Trade Organization; the implementation of trade agreements, such as the North American Free Trade Agreement and the Free Trade Agreement between the Dominican Republic, Central America, the United States, European Economic Integration, and the growing growth of emerging markets such as India, China, and Turkey. And ... we live in an exciting time. In the past, opportunities for small businesses were limited to country borders, and international trade was monopolized by large multinational corporations. Today, the global marketplace offers opportunities not only for multinational corporations, but also for small start-ups. The Internet, cheap advances in technology, and increased access to information have all made it possible for large or small companies to enter the international business arena.
What does export mean in today's world?
Most companies start international trade by importing and exporting. Export means sending goods abroad to sell them in another country, and importing means bringing goods from another country to sell domestically, both of which require at least It is an investment and basically they do not have a high risk. They allow individuals and companies to enter the international trade without the need for huge financial resources, as opposed to starting a store abroad. In this section, the main methods of import and export are described
The main types of exports
Export has two main methods called direct export and indirect export. In the following, different types of each of them are defined and examined.
Direct export is a commercial activity between an exporter and an importer without the intervention of a third party. This method is suitable for businesses that are established and are looking for ways to develop their activities.
Indirect exports are also easier to define than direct exports, according to the definition provided. This method includes the export of goods through several intermediaries in the country of manufacture. Indirect exports do not require much expertise and cost, and most new companies in the field of export use this method.
Types of indirect exports
After providing definitions of indirect exports, we will examine its types below. Indirect exports may include the use of an export management company or something called export-oriented, both of which are described below.
Exclusive exports: Export management companies:
Export management is a private company established in a country that operates as an export sector for several manufacturers. These companies, on behalf of customers, take orders and carry out export transactions. Export management companies usually take ownership of the goods and take all the risks associated with trading in other countries. It will be helpful to use an export management company as long as you are a novice exporter or do not have a distributor or brokerage abroad. Entrepreneurs who are not interested in production can enter the field of export by establishing an export management company. Export management companies usually specialize in a group of products. If you have a personal communications network abroad with general information about production and are interested in starting an export business, refer to manufacturers who do not have an active export sector and introduce your services.
When I worked for a healthcare company and sold goods internationally, I met customers in different countries. With this information, I decided to start an export management company. So I contacted local manufacturers of health products that weren't actively exporting, but whose products were appealing to my customers. I introduced my services to these manufacturers and found that they are also interested in creating a new market for their products, but because they do not want to deal with export issues such as payment, document preparation, shipping and handling, they avoid this. My company could do that for them.
Reliable export: Leave the export of goods to another manufacturer
Reliance exports actually mean the distribution of goods abroad. In this way, your products and those of other manufacturers are sold together. Companies whose products are related or complementary but not competitors use this method to supply their products. Suppose you own a press company and have not yet started exporting, but you are planning to sell your brushes in Italy, you just don't want to take any risks. On the other side of the city, there is a shampoo company; a well-known manufacturer and exporter of a range of shampoo products that currently sells all of its product line products in the Italian market. In the reliability export approach, you refer to this shampoo company and offer to offer and sell your hair brushes in Italy. Why does the shampoo company be interested in such a deal because this way the shampoo company can get a more complete set of products? Offer to distributors without or with the least additional investment. The shampoo company will benefit from buying and selling hair brushes at a higher price or from you.
Types of direct exports
In direct export, you export your goods yourself. Companies usually turn to direct exports after some time of indirect export activity. If you are interested in direct export methods, you should choose one of the following three methods to continue working.
Use an agent
An agent is a company that acts as an intermediary, but unlike an export management company, it does not take ownership of the goods. In each market (or country) you specify a client, and that client performs the ordering. While the exchange of goods and the payment of the amount between you and the buyer in another country is done directly.
Another method of direct export is the distributor appointment approach. Based on this approach, you can assign a distributor in another country. The distributor buys the goods, takes possession of the property, and provides services to customers on your behalf.
Launch a sales office abroad
Launching a sales office abroad is another popular approach to direct export. By setting up an office by renting a warehouse abroad, you can deliver the goods to customers. This direct export approach is exactly like exporting goods to your office abroad.
The last word
For many countries in the world, small and large economies will provide most of their revenues. Investors in different countries choose different export methods depending on their circumstances. In general, direct and indirect exports are the two main types of exports, the above of which defined and introduced the types of each.
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