| 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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