Indirect Export Channels

With indirect channels, the firm exports through an independent local middleman that as­sumes responsibility for moving the product overseas. Indirect exporting entails reliance on another firm to act as a sales intermediary and to assume responsibility for marketing and shipping the product overseas. The manufacturer incurs no start-up cost, and this method provides small firms with little experience in foreign trade access to overseas markets with­out their direct involvement. However, using indirect channels has certain disadvantages: (1) the manufacturer loses control over the marketing of its product overseas, and (2) the manufacturer’s success totally depends on the initiative and efforts of the chosen interme­diary. The latter could provide low priority to or even discontinue marketing the firm’s products in cases in which a competitor’s product provides a better sales or profit potential (Figure 5.1).

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.