Advantages: of indirect export is low, while
One of the best option for SMEs to internationalize is
indirect exporting. This international mode offers lower risk entry to the
market, as the intermediary will take care of most operations. Companies at the same time are going to be
responsible only for logistics and transactions, putting the main duties to the
reseller. The intermediary will solve technical, legal,
political documentation and issues. Moreover, SME’s often do not have enough
financial resources to make a research for foreign market by themselves.
Therefore, in the indirect exporting, the role of the researcher is taken by the export merchant, which performs as an expert of the market. It can
also take the marketing under control, although a share view on promotion can be negotiated.
In addition, the company can achieve mass production in the foreign market,
increasing the brand awareness of the product and distributing through
wholesalers. The cost of indirect export is low, while helping
the company to get bigger share in the market.
Although company can gain brand awareness, it will get
lower profits compared to other operational modes. The intermediaries are often interested only in companies that will offer a low-cost deal. In other
words, reseller will buy products from the company at a very low rate (price near to production cost).
intermediary sells similar products to the customer, so the competition is high for a market share. In cases, when the total
control of the promotion is on export merchants, company is totally dependent
on them. It is impossible for the company to personalize offers and develop the product due to lack of knowledge of target market. The final price on the foreign market is determined by
the reseller, as he takes all the risks of exporting, and the
company itself cannot influence it.