In today’s market, the capacity to extend beyond one’s own country’s boundaries and sell items all over the world is virtually a need. Exporting is an element of many firms’ overall marketing strategy.
It costs money to export to certain foreign markets. Surprisingly, most businesses do not know whether direct exporting or dropshipping is the best option for them.
The guidelines and examples below may help in your road to global expansion by determining which alternative works best for your company.
What is direct exporting?
Direct exporting can be defined as an entity that sells its goods or services directly to a consumer in an international market
Companies usually benefit from direct exporting if they have a service they can provide from afar. Products that don’t require local installation have low shipping costs compared to the product value.
Directly selling smartphone parts to a phone manufacturing factory is an example of direct exporting. This route necessitates market research to identify potential markets, worldwide distribution of the goods, customer outreach, and collection.
Types of direct exporting
Here are a few types of direct exporting options available:
Self-contained export department
A self-contained export department works on its own. This export department is a separate entity from its own personnel. There is no friction with other divisions of the organization because it operates autonomously. The export department is positioned in port towns to make use of the easily accessible shipping and forwarding services.
Built-in export department
The built-in export department is the most basic and straightforward kind of export organization. The export organization is integrated into the normal domestic system under this setup.
This department’s role is generally limited to actual selling or guiding, while the relevant domestic departments handle all other tasks related to export transactions, credit, traffic, shipping, and accounting.
Separate export department
A built-in type of organization can handle a reasonably high volume of export business, but when the foreign business grows significantly, this arrangement becomes undesirable. As a result, a separate export department may be formed to effectively manage all aspects of the export company.
The separate export department, unlike the built-in department, is fundamentally self-sufficient and well-equipped to manage all aspects of the export industry. As a result, it is not subject to the whims of domestic departments.
Combination export managers
As for this technique, a combination export manager is appointed by two or more businesses participating in the export business. This individual will perform the duties of an export manager. Foreign clients interact directly with combination export managers and trade with them.
A combination export manager is a person who works for two or more companies whose products are related but not competing. They have the option of setting payment on the basis of salary or salary plus commission.
Direct exporting advantages
Here are some of the advantages of direct exporting:
- Eliminates all of the expenses and complications associated with using a “middleman.”
- It also gives you more control over sales and allows you to communicate directly with your customers.
- All parts of the transaction are within your control to a greater extent.
- Can get detailed information about trade in the target market, allowing it to make future decisions on whether or not to invest in market infrastructure.
- As your company grows in the international market, you’ll have more freedom to improve or divert your marketing activities.
- Your consumers provide you with more immediate and direct input on your product’s performance in the market.
Direct exporting disadvantages
Direct exporting, on the other hand, can be challenging, especially for companies that are new to international commerce. The following drawbacks should be considered by businesses:
- It costs a lot to create an exporting department, as huge manpower is required.
- The necessity to devote a substantial amount of time and money on gathering market data and developing marketing strategies.
- The staff must be educated on export documents, shipping procedures, and the capacity to make and receive overseas payments.
- You might not be able to reply as fast to consumer contacts as a local representative.
What is a dropshipping supplier from the manufacturers’ perspective?
Dropshipping is a business strategy that allows you to sell items online without having to maintain them in stock. When you get an order, you send it to your dropshipping supplier, who will ship the goods to your client directly.
In this case, MultiB2B acts as a 3rd party logistics company or fulfillment partner for manufacturers that want to expand their business to the USA through dropshipping. By partnering with us, manufacturers or brands will send their products to the US on a consignment basis to be dropshipped by the major online retailers such as Macy’s, Walmart, Amazon, and so on.
The products will be stored at our partner warehouses at various locations in the United States. When the online ecommerce retailers receive an order, the fulfillment partners will ship the goods to your client directly.
The most significant distinction between dropshipping and traditional retail is that the seller using the dropship model does not own or stock inventory. Instead, the seller fulfills orders by purchasing goods from a third party—usually a wholesaler or manufacturer—as needed.
A dropshipping supplier is a manufacturer that maintains inventories and distributes orders for an online retailer through fulfillment partners. The merchant is primarily responsible for attracting consumers to the business and processing orders, so he will basically be acting as a middleman.
Types of dropshipping suppliers
Here are a few examples of the types of dropshipping suppliers available for sellers today:
Many brick-and-mortar shops lack an internet presence. Many people don’t have the time, money, or experience to put their business online, even if they want to.
Some dropshipping firms opt to partner with these enterprises and take on the role of their online presence. When the dropshipping company makes a sale, they request that the item be sent to the buyer by the retailer.
This is the most common type of dropshipping where a firm collects items from a number of suppliers and offers them all in one location for online purchase.
This is frequently applied to an affiliate marketer in ecommerce.
Straight product reselling is ideal for someone who is well-versed in a certain sector or demography.
Print on demand (POD)
POD is an ecommerce strategy that lets businesses offer customized items on a per-order basis. They can produce white-label items with their own designs and sell them under their brand under this approach.
However, they don’t have to pay anything until the goods have been sold. They just have to upload photos to a POD service, and when they make a sale, the provider prints the product and sends it to the client on their behalf.
Some dropshipping firms opt to bundle or combine items together and sell them as a single product. A dropshipping company, for example, may select a supplier with a broad product range of craft materials and use those items to make their own crafts.
Advantages of dropshipping
Dropshipping is a wonderful business strategy to start with since it is simple. Here are some other benefits of dropshipping suppliers for manufacturers:
- Order fulfillment often includes storing, organizing, tracking, labeling, picking and packing, and shipping your inventory. Dropshipping allows a third party to handle everything.
- A dropshipping business may be conducted from almost any place that has access to the internet. You can run and manage your interactions as long as you can interact effectively with fulfillment partners.
- Dropshipping allows you to sell your products using your own brand name and gain brand awareness internationally.
- Manufacturers can also test the market with a small batch of products by selling on online platforms through fulfillment partners. This allows them to understand market demand and adjust the product’s quantity for future sales.
Disadvantages of dropshipping
Nevertheless, manufacturers as dropshipping suppliers also has its cons:
- The main drawback of operating in a highly competitive dropshipping niche is the low margins. That’s not to suggest it can’t be successful, but you should be aware that some areas have low product margins.
- Order fulfillment and lead times are less within your control.
Difference between direct exporting and dropshipping supplier
The main difference between direct exporting and dropshipping suppliers is that one has a middleman and the other doesn’t. Direct exporting is a straightforward entry approach that may be appropriate for businesses looking to grow their market share or increase profitability.
On the other hand, the dropshipping supplier is the best option for manufacturers who intend to penetrate a new market at a lower risk. Partnering with a 3rd party logistics or a fulfillment centre to fulfill orders may not be a bad thing given the market expertise they have.
Besides that, with direct exporting, you will have total control over everything. Businesses know exactly how much goods they have and how much shipping and inventory expenses will be from start to end.
There are rarely any unexpected shipping expenses, and inventory is tracked in real time to minimize stock-out issues. Businesses will also keep track of all consumer complaints to ensure that proper service is provided.
Dropshipping or direct exporting- which one’s for you as a manufacturer?
The most suitable option for you ultimately depends on what type of business you own. If you own a huge enterprise, direct exporting will be the perfect solution for you as you not only have the capability but also the manpower to execute this.
Taking on the role of dropshipping suppliers can be positive, provided you have good fulfillment partners who have the same vision as you; be your strategic partner that aims to grow profits, lower operational costs, and scale your business. It is useful to find out why do you need to outsource fulfillment services when shipping to the USA. You can also read more to understand how manufacturers expand their businesses in the US through dropshipping before deciding on which option to embark on.
There is no one-size-fits-all approach to selecting the appropriate distribution model. In general, both methods discussed above have substantial advantages and disadvantages. While shipping supply processes may not be as glamorous as other elements of your business, they are an important part of running a successful one.
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