As a seller, you many want to expand your business by serving overseas markets. This may be shipping your product to customers in countries outside of the U.S., manufacturing raw materials or selling component parts to a foreign company that will manufacture a product for sale.
To sell goods and services abroad, two important questions will need to be answered:
- First, how will you sell your product? The amount of time and effort required to sell to overseas customers and clients will be dependent on whether your company chooses to sell directly or indirectly to overseas customers.
- Second, where will you sell your product? The advantages and disadvantages of international commerce vary from country to country and if you are expanding your business to other countries, there are several special considerations you may encounter as a result.
Direct vs. Indirect Selling
Before you begin selling your product abroad, you must first decide whether to sell directly or indirectly to overseas customers. By selling indirectly to international customers, your business works with an intermediary firm, such as an export management company, to sell products overseas. The export management company serves as your company's representative to prospective overseas buyers and acting on your behalf. They can handle many aspects of the export transactions, including making arrangements for financing, dealing with operations, and advising on issues with compliance.
Hiring such intermediaries can be an advantage to smaller firms that are interested in the international market because it can decrease the risks and challenges presented by direct sales. It can also benefit companies that do not have the time or expertise to enter these markets independently. But of course, at the end of the day, you are trusting the expansion of your business to someone else and they may not act in your best interests (either intentionally or unintentionally).
On the flip-side, selling directly to international customers involves working directly with foreign entities. Unlike indirect selling, your company will need to do the legwork to market your products, find buyers and you will take on the demands associated with that effort. That being said, you also have more control over the way you approach your business expansion in that part of the world and reduce the risks of working with a partner, which is on top of the inherent risks of international expansion itself. For some businesses, the old saying, “If you want something done right, you have to do it yourself” may apply.
Whether your company intends to work with foreign entities or sell directly to overseas customers, you should consider the potential difficulties you can encounter due to language, cultural, or legal restrictions. Here are a few basic questions to keep in mind when investigating another country where you can sell your goods and services.
- Will language differences cause barriers in communication? If so, are you set up to navigate them?
- Is there a process in place to check whether labels or other printed materials are error-free?
- Are there international restrictions that can limit the goods you are selling?
- What is the process for importing the goods into the other country? Are there any restrictions?
- Is there any paperwork that must be submitted prior to selling your goods or services in the other country?