Approaches to exporting can vary widely for each company, but having an idea of how your company would like to start exporting is a great place to begin. Companies can have a wide range of involvement in their exporting success. Some companies may not even know that their goods are being exported, while others take a direct approach to make international sales. The rewards can be significant in exporting, but there are no guarantees. One or a combination of the approaches described below may assist in realizing a companies export potential.
Indirect exporting is a hands-off approach that requires little if any involvement from the company producing the goods. In this case, the company producing the goods may not even know that their products are exported. They will not reap the financial gains, risks, or global market exposure associated with this passive exporting tactic.
There are two indirect exporting types. The first is passively filling domestic orders for other buyers who ultimately export the products. The other is working with international buyers who represent the foreign market or end-user to fill those specific orders.
A more direct exporting approach is when a company engages an export management company (EMC) or export trading company (ETC) to manage their exporting business. EMCs or ETCs are experts in exporting and can provide access to market and trade contacts and a variety of other resources. With this approach, the company maintains more control of the product and its movements. Having control over the process means that the company can oversee more of where their products are going, anticipate inventory, and connect with international markets as a producer. The EMC or ETC will handle much of the paperwork and some of the risks involved with global exports. It is recommended to pay close attention to the contracts with EMC and ETCs to make sure roles are specified.
The most direct approach to exporting is to keep the logistics, payment collection, and paperwork in-house. Long-term direct exporters maintain control over the entire process. They can create connections with international buyers, have keen insights on the global markets, and expand as desired.
The main factors to be considered when choosing an exporting approach:
- Level of involvement wanted in the exporting process
- Risk tolerance
- In house expertise or time availability
- Available resources, from stock availability to staffing
- Market development capabilities, research, and marketing
Once it is determined how involved the company should be in the exporting process, there are several steps to move forward. Indirect exporting is a great approach for companies who do not have the staff or resources available to move exports forward. For an indirect exporting approach, there is little need for more company input.
For companies taking an active approach through EMCs or ETCs, seeking out these companies would be the next step. Doing some research and meeting with these experts to determine the level of control or involvement, services they offer, and the companies’ goals should be kept in mind.
Direct exporting can be a daunting task initially, and some companies opt to use EMC or ETC for larger or more complex exporting markets while handling nearby exports directly. This mix can help companies become comfortable with direct exporting as they gain more knowledge over time. Direct exporters take on everything from market research, logistics, distribution, and payment collection. Many direct exporters work through sales or distribution channels for specific markets.
There are many resources available for US exporters. Trade offices such as the North Dakota Trade Office (NDTO), and other states have local experts to assist companies directly. There are also funding opportunities available for exporters. NDTO currently has funding available for ND small businesses for a variety of exporting projects. Reach out to our expert staff at info@ndto.com. The US Commercial Service can assist with market research, strategy counseling, and qualified buyer identification. Export-Import Bank can assist with insurance and loan guarantees. Whichever approach is taken, know that there is a wealth of resources here to help. Finding the right balance for each company’s exporting needs is key to growing sustainably over time.
Resources: