Direct vs. Indirect Exporting: Which Option is Perfect for Your Business?

Exporting has opened several opportunities for people looking to expand their business out of their country. Because of this, the global export industry is expanding at a surprising speed. According to the study, organisations exporting their products have noticed growth at almost double the rate compared to those not exporting their goods.

It’s confirmed that exporting your goods is entirely profitable. Regarding exporting, you need to opt for one exporting option between direct vs indirect exporting. We acknowledge that many of you are unsure about these types of exporting. Therefore, we have decided to provide a detailed comparison between these exporting types. 

We will disclose in detail the difference between direct and indirect exporting​ and discuss the perks and drawbacks of both exporting. At the end of this article, you will be able to choose the relevant type of exporting that best suits your business.

You should initially learn what is direct and indirect exporting to understand the difference between both types of exporting. In this section, we will highlight the basic information about direct exporting.

As the name suggests, the manufacturer starts directly exporting in this export option. In simple words, direct export means selling your goods directly to a foreign customer or distributor. This means that you must make arrangements to export your product either under an existing sales network or by developing an export department of a division. Therefore, its exporter is also referred to as a manufacturer exporter.

Countless ways are there that organizations can utilize for direct exporting. You may develop your website and join trade shows & other marketing events for this. In addition, it would also be helpful to connect with your importer or clients directly if you know them. Some people also begin their business branches in the nations where they wish to expand.

Like everything has perks, direct exporting has a few advantages that can turn it into an ideal option for your organization. Let us see the top perks of direct exporting:

• Direct exporting lets you access significant control over your sales procedure. It lets you easily adapt to the changing market conditions. 
• You can establish close professional relationships with your clients since direct exporting lets you connect with them directly. 
• Direct exporting saves you money by eliminating extra fees to distributors or agents. 
• Direct exporting could give you valuable insights that you can use to beat the competition. 
• Direct exporting will allow you to acquire a substantial part of your company’s profit.

Despite countless advantages, direct exporting has disadvantages that may harm your business. We have mentioned the top drawbacks of this kind of export below:

• You might lack support because direct export doesn’t involve the agent’s assistance. 
• You may need a significant investment to conduct all exporting efforts. 
• Without international trading experience, you may encounter difficulties when working with foreign customers and navigating international export regulations.

As you know the meaning of direct exporting, it would be simpler for you to understand the definition of indirect exporting here. In indirect exporting, you sell your products to a domestic company. Later, they will resell your products to foreign buyers, distributors, or customers.

Let us understand this approach better via an indirect export example​. Clothes made by an Indian company are sold to an Indian distributor, who ‌sells them to a retailer or customer in the US.

This indirect export is a cheaper and faster method of entering the global market since it involves mediators who manage all exporting tasks. Therefore, it is the best exporting for small and medium-sized businesses.

Similar to direct exporting, indirect exporting additionally offers advantages. The following are the top benefits of this exporting:

• You can enjoy less risk with indirect exporting as it lets you utilize the expertise and network that comes with domestic mediators. 
• You need less investment because you only need to aim at manufacturing. 
• You will have less limits on where you want to sell your goods. 
• You don’t require any exporting experience or skill if you choose indirect exporting.
• You don’t want to find buyers.

Indirect exporting also has the following drawbacks:

• The involvement of intermediaries in indirect exporting leads to a decrease in profits due to profit sharing. 
• You will have lesser control over your good’s export.
• You may also get lower sales because the intermediate might promote other manufacturers’ products more than your goods.

You have learned the detailed difference between direct and indirect exporting till now. Let us look at the head-to-head comparison of these exporting types:

Direct and indirect exporting are two doors to broaden your organization to the international market. However, both types of exporting have their pros and cons. While direct exporting allows you to make extra profit, indirect exporting is ideal for you if you are the owner of a small business. Now, it’s up to you which exporting alternatives you want to select.