Exporting and Internet and Direct sales


Exporting accounts for some 10 per cent of global economic activity. Exporting can be either direct or indirect. With direct exporting the company sells to a customer in another country. This is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized. In contrast, indirect exporting usually means that the company sells to a buyer (importer or distributor) in the home country who in turn exports the product. Customers include large retailers such as Wal-Mart or Sears, wholesale supply houses, trading companies and others that buy to supply customers abroad.

Early motives for exporting often are to skim the cream from the market or gain business to absorb overhead. Early involvement may be opportunistic and come in the form of an inquiry from a foreign customer or initiatives from an importer in the foreign market. His is the case with Pilsner Urquell the revered Czech beer, which for many years has sold in the United States through Guinness Bass Import Corporation (GBIC). However, recently the Czech firm severed its relationship with the importer because it wasn’t getting the attention of the other imported beers in GBIC’s portfolio. The firm is now establishing is own sales force of two dozen to handle five key metropolitan areas in the United States. Prices are being reduced and a global media plan is being developed with a British ad agency. The firm may import other brands from the Czech parent as well.

Exporting is also a common approach for mature international companies with strong marketing capabilities. Some of America’s largest companies engage in exporting as their major market entry method. (Boeing is the best example, as America’s largest exporter).

The internet

The Internet is becoming important as a foreign market entry method. Initially Internet marketing focused on domestic sales. However a surprisingly large number of companies started receiving orders from customers in other countries, resulting in the concept of international Internet marketing (IIM). Picture Phone Direct, a mail order reseller of desktop video conferencing equipment posted its catalog on the internet expecting to concentrate on the northeastern United States To the company’s surprise Picture Phone’s sales staff received orders from Israel, Portugal and Germany.

Other companies have had similar experiences and is actively designing internet catalogs targeting specific countries with multilingual Web sites. Dell Computer Corporation has expanded its strategy of selling computers over the Internet to foreign sites as well. Dell began selling computers via the Internet to Malaysia, Australia, Hong Kong, New Zealand, Singapore, Taiwan and other Asian countries through a virtual store on the internet. The same selling mode has been launched in Europe.

Amazon.com has jumped into the IIM game with both feet. It hired a top Apple Computer executive to manage its fast growing international business. Just 15 months after setting up book and CD e-tailing sites in Germany and the UK, the new overseas Amazon Web sites have surged to become the most heavily trafficked commercial venues in both markets. Among the companies with the most profitable e-tailing businesses are former catalog companies such as Lands’ End and LL Bean. However Lands’ End’s successes in foreign markets have been tainted by recent problems in Germany. German law bans advertising gimmicks – and that’s what regulators there call Land’s End’s unconditional lifetime guarantee. Indeed the firm took the dispute all the way to the German Supreme court and lost. Moreover, the uncertainly swirling around the EU’s approach to taxing Internet sales is great cause for concern.