Direct exporting
Direct exporting involves selling directly to your target customer in market. This could be from New Zealand through the internet and regular trade visits, or by setting up a branch, office or company in the target country.
Selling directly to customers prevents other businesses taking parts of your margin. However this approach requires a large commitment of financial and human resources. It takes time to make contacts and build relationships, negotiate deals, understand the market and carry out marketing.
Advantages of direct exporting
The advantages of exporting directly are:
- you are in control of pricing
- you are in full control of your brand
- you get a direct understanding of buyers' or end users' needs and an ability to customise accordingly
- you maintain the customer relationship
- you are able to identify possible new opportunities
- your customers may prefer dealing directly with the producer.
Disadvantages of direct exporting
The disadvantages of exporting directly are:
- it will take a lot of time, energy, staff resources and money
- competitors with a local presence will be perceived as lower risk to buy from
- after-sales commissioning and service may require local language capability
- daily follow up of genuine leads in-market can come second to business based in New Zealand
- prompt troubleshooting may not be able to be done remotely and will require additional visits
- growth will be slower. A commitment to an in-market presence will have to be made at some stage should the business continue to grow.
Getting started
- Conduct market research and draw up a short list of pre-qualified customers in each target country.
- Plan your strategy; either to market from New Zealand, or set up a local presence. Develop an export plan that outlines how you will successfully sell direct.
Indirect exporting
Selling to or through an intermediary is a relatively cheap and straightforward way to enter a new market. Intermediaries are typically agents or distributors based in your target export market who sell your products or services to end users.
A good intermediary will have in-market experience, reputation and contacts. Using them can be a quick way to get your products and services to the end user. They will generally require a level of support in the overseas marketing and selling of your product.
Some intermediaries are based in New Zealand. Using a New Zealand based intermediary means you will not have to contend with international freighting and customs issues.
The disadvantages of using an intermediary are:
- the intermediary still requires sales support
- the intermediary takes a margin
- you have no direct contact with the end customer
- you will have less control over the actual final transaction
- you don’t get to learn about the overseas market, which could slow down longer term expansion plans.
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