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Why would buyers and manufacturers use an import export company instead of doing it on their own?

I continued doing business with my uncle's medical supplies company in Saudi Arabia. Every few weeks I would receive a new request (Quotation Request) for a medical product they are looking for to purchase immediately and in other times it was so they can submit their sealed bid on a government tender.

If the offer was for a specific product make and model, I would try to locate the direct contact for the manufacturer. The closer you are to the source of the goods, the cheaper the price you would have to pay. Some manufacturer would have their own export department to work with, others would direct you to another company that handles all of their export requests, and some would politely decline the business because of a pre-existing exclusive agency or distribution agreement with a third party in the buyer's region and in this case would simply provide you with their contact information.

You may ask yourself; why wouldn’t the international buyer simply contact the manufacturer directly instead of involving a middle agent like my import export company and paying a fee/percentage on top of the cost? and why would a manufacturer use an import export company instead doing it on their own? Fair questions. Here are some of the reasons as I understood them over time:

  • Time difference between buyers and sellers makes it inconvenient to conduct business. In my case, I was serving the middle east region where the time difference between them and the USA was the actual difference between night and day. As an export agent, I had two working periods; one that started at 10PM and ended around 2:00AM where I communicated with my customers in countries such as Saudi Arabia, Kuwait, Yemen, Bahrain, UAE, and Oman. My other working period started around 7:00am and ended around 11:00am where I communicated with manufacturers, banks, and shippers on the USA side.
  • Language barriers. By dealing through me, it was easier for my Middle East customers to conduct business since I was able to speak their language and represent them on this side of the world.
  • Cost savings and simplifying complex orders. Some of the orders I received were for various products that would be sourced from multiple manufacturers. I would handle communicating with all of these manufacturers and coordinating the orders to be shipped in a single shipment to my customers. This saves them time as well as cost since they are not paying for multiple shipments.
  • Finding a source for what they are looking for. Some of the orders I was receiving did not have a specific manufacturer in mind. They were simply orders with a description of what the product was and its specifications. I would do my own research to find as many manufacturers as I can that would carry the product that would match if not exceed the specifications. I would present the results of this research to my clients who can make the determination for which manufacturer they would like me to process the order through. It was easier for me to do this intensive research in comparison to the difficulty and slowness that my clients would encounter if they would have done it on their own. Of course with the propagation of the internet in almost every country and every facet of life and business, it’s much easier now to conduct this type of international research from anywhere.
  • An import export agent is an extension of your company. Like in outsourcing, you can increase your business activities and focus them by outsourcing some of your business tasks. If your company is involved in manufacturing goods, you may prefer to outsource handling your export sales and all logistics involved in it to another specialized company so you can focus on your core business of manufacturing these goods. The same for buyers; they are in the business of selling their imported goods within their local markets and they too can use the middlemen and women (import export agents and distributors) to handle getting the goods to them.
  • Import export companies are usually specialized in doing business between specific international markets and hence have a lot of in depth know-how about those markets dos and don’ts as well as pre-established connections in both. They can be a great asset in speeding a manufacturers entry into a new market and in expanding its sales. They also can offer valuable insights into market quality expectations, needed certifications, competitive pricing, local marketing habits, etc.

One of the business services I started offering to the USA market few years into my import export business, was a customized market report that companies can purchase that would include all information they would need about their target overseas market. The reports would include pre-existing market activities in their specific industry, their would-be competitors, average pricing per features/models in the targeted market, and a leads list of companies that could act as their agents and distributors in that market.

One of the companies that I provided a customized market report to got in touch with me again but this second time their request was interesting; they liked the report they purchased and they had very positive responses from the companies they approached (they sold computer hardware parts for outdated machines for their market but they were in high demand in less developed overseas markets). Their request was for me to be the middleman between them and the buyers. They would provide me back with the list of companies that were interested in doing business with them (which were some of the companies in the report I provided them with) and I would handle those orders for them. I asked the USA company representative; Why would you want to share some of your profit with me instead of simply doing it yourself? His simple answer was; We do not currently have the capacity or experience to handle exporting on our own. We can still make more money though by selling through your business.