Direct and indirect exporting

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Should you approach customers directly or work with an intermediary? Your choice between a direct or indirect approach to overseas markets is important, as often you cannot do both.

If you commit to an intermediary, they may not want to see you selling directly to customers in 'their' market at the same time.

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 a share 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

  • 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

  • It requires 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.
  • Remote troubleshooting may not be possible, requiring additional visits.
  • Growth will be slower - a commitment to an in-market presence will have to be made for the business continue to grow.

Getting started

  • Conduct market research and draw up a shortlist 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 takes a margin
  • they still requires sales support
  • you have no direct contact with the end customer
  • there's less control over the actual final transaction
  • fewer opportunities to learn about the overseas market, which could slow down longer term expansion plans.

Find out more about working with agents and distributors.

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