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Direct Exporting: Advantages and Disadvantages to Direct Exporting

Developing a Foreign Market Entry Strategy

By

Direct Exporting: Advantages and Disadvantages to Direct Exporting

Direct exporting means you export directly to a customer interested in buying your product. You are responsible for handling the market research, foreign distribution, logistics of shipment and for collecting payment.

The advantages of this method are:

  • Your potential profits are greater because you are eliminating intermediaries.
  • You have a greater degree of control over all aspects of the transaction.
  • You know who your customers are.
  • Your customers know who you are. They feel more secure in doing business directly with you.
  • Your business trips are much more efficient and effective because you can meet directly with the customer responsible for selling your product.
  • You know whom to contact if something isn't working.
  • Your customers provide faster and more direct feedback on your product and its performance in the marketplace.
  • You get slightly better protection for your trademarks, patents and copyrights.
  • You present yourself as fully committed and engaged in the export process.
  • You develop a better understanding of the marketplace.
  • As your business develops in the foreign market, you have greater flexibility to improve or redirect your marketing efforts.

The disadvantages:

  • It takes more time, energy and money than you may be able to afford.
  • It requires more "people power" to cultivate a customer base.
  • Servicing the business will demand more responsibility from every level of your organization.
  • You are held accountable for whatever happens. There is no buffer zone.
  • You may not be able to respond to customer communications as quickly as a local agent can.
  • You have to handle all the logistics of the transaction.
  • If you have a technological product, you must be prepared to respond to technical questions, and to provide on-site start-up training and ongoing support services.

Should you decide to export direct, make sure you have a company-wide commitment, which includes your Import/Export Dream Team to ensure the initiative is fully supported.

Photo credit: Laurel Delaney, Narita Airport, Tokyo, Japan

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