International Distribution Channels

1. International
Distribution Channels
Submitted To: Ms Tanvi
Submitted By: Geetanjali
Class. : M.com - Final
Roll No. : 2022105

2. Introduction
> Once an entrepreneur has identified the item(s) for export and their
markets then next step is to understand as to how that item reaches
the consumer. For making the goods available from the producer in
one country to an overseas customer, a number of market
intermediaries are involved for physical transfer of goods. Besides,
the company receives the payment through the channel of such
intermediaries. Therefore, it is important for an organisation to
understand the concept of international distribution channels.

3. Meaning and Definition
> Channels of distribution refers to those interdependent organisations
which are involved in the process of making a product or services available
for the consumption of ultimate customers. The distribution channels are
also called as marketing channels. In an ever-widening market, particularly
in consumer goods market, distribution channels have a distinctive role in
the successful implementation of marketing plans and strategies.
> According to American Marketing Association, "Channel of distribution is
the structure of intra company organisation units and extra company
agents and dealers, wholesale and retail, through which a commodity, a
product or service is marketed".

4. Types of International Channel Distribution
> The multinational companies used to adopt two major channels of
distribution while marketing in overseas.
> These are:
> (I) Indirect channel of distribution
> (2) Direct channel of distribution
> In indirect distribution the firm sells its product in the foreign market
via an intermediary located in the firm's home country.
> In direct distribution the manufacturer himself takes upon the task
of managing the international sales.

6. Direct Distribution
> Export Agent: The individual intermediaries who operate on a commission
basis and travel frequently in international markets are known as export
agents. for example: Export trading Group ,Interek Group.
> Examples:
> Procter & Gamble (P&G): P&G, a multinational consumer goods company,
may use export agents to distribute their products in various countries,
ensuring that their products reach international markets effectively
> Coca-Cola: The Coca-Cola Company may work with export agents to
distribute its beverages globally, ensuring they reach a wide range of
markets efficiently.

7. > These agents are also referred as buyers for exporters. These
agents have on going relationship with buyers not sellers.
> Examples:
> Walmart: Walmart, a global retail giant, often employs
overseas-based buying agents to source products from
manufacturers around the world. They may also utilize export
distributors to supply these products to their international stores.
> Amazon: Amazon, an e-commerce and technology company,
utilizes overseas-based buying agents to procure a wide range of
products from different countries. These products are then made
available to customers on Amazon's global online marketplace.
Overseas based Buying Agents

8. > Export distributor is a foreign firm that has exclusive rights to carry
out distribution for a manufacturer in the overseas market.
> Example - Ingram Micro , DHL supply chain
> Examples:
> Nestlé (Switzerland): Nestlé, a global food and beverage company,
often works with export distributors to ensure their wide range of
products, including chocolates, coffee, and infant formula, are
available in international markets.
> Caterpillar Inc. (United States): Caterpillar, a multinational
construction and mining equipment manufacturer, utilizes export
distributors to supply heavy machinery, engines, and equipment to
customers in various countries around the world.
Export Distributor

9. > In some countries imports of goods are done by government
organisations like state trading organisations.
> Examples:
> Rosneft (Russia): Rosneft, a Russian oil and gas company, may
engage with state-controlled trading companies for the export
of energy resources.
> Alibaba (China): Alibaba, a Chinese e-commerce and
technology company, collaborates with various state-controlled
trading companies for international trade.
State Controlled Trading Company

10. > In some cases ,manufacturer deal directly with foreign retailer
particularly in case of consumer goods. Eg - Walmart ,Amazon.
> Examples:Zara (Spain): Zara, a Spanish fashion retailer, has a global
presence and operates numerous overseas retail stores in various
countries. These stores serve as distribution channels for their clothing
and fashion products.
> Sony (Japan): Sony, a multinational electronics and entertainment
company, sells its consumer electronics and entertainment products
through overseas retailers in many countries.
> Starbucks (United States): Starbucks, the international coffeehouse
chain, has retail locations worldwide, where they distribute their coffee
and related products.
Overseas Retailer

11. Indirect Distribution
> Export Management Company: an export management company manages
the entire export activity of a domestic company under a contractual agreement.
> Examples:
> Interroll (Switzerland): Interroll, a global provider of products for internal
logistics, collaborates with export management companies to expand its
international presence. These export management firms help Interroll enter new
markets, navigate trade regulations, and manage distribution networks.
> Pfizer (United States): Pfizer, one of the world's largest pharmaceutical
companies, utilizes export management companies to handle international
distribution and ensure that its medications reach global markets efficiently.

12. Broker/Commission Agent
> BGC partners , C.H. Robinson
> Examples:
> Louis Vuitton (France): Luxury fashion brand Louis Vuitton employs
commission agents in various countries to represent and sell their
products to high-end retailers and boutiques. These agents earn
commissions on the sales they facilitate.
> Nestlé (Switzerland): Nestlé, a major food and beverage company,
may use commission agents in international markets to connect with
local distributors and retailers, helping to ensure the distribution of
Nestlé's products to a global audience.

13. Importer's Buying Agent
> A large number of international companies send their agents in
overseas market to procure supplies.
> Examples:
> Walmart (United States): Walmart, one of the world's largest retailers,
often employs importers' buying agents to source products from
manufacturers around the world. These agents help ensure that
Walmart's stores are stocked with a variety of products from different
countries.
> Carrefour (France): Carrefour, a global retail giant, uses importers'
buying agents to procure goods from international suppliers. This
allows them to offer a diverse range of products in their stores across
multiple countries.

14. Country Controlled Buying Agent
> It is a foreign government agency or a quasi government firm engaged in buying
or importing products from other countries.
> Examples:
> China National Offshore Oil Corporation (CNOOC) (China): CNOOC, a
state-controlled oil and gas company, may have its own country-controlled
buying agents responsible for sourcing equipment, machinery, and supplies for
the company's operations.
> Petrobras (Brazil): Petrobras, the state-controlled oil and gas company of
Brazil, could utilize country-controlled buying agents for the procurement of
equipment and services necessary for their oil and gas exploration and
production activities.

15. Webb Pomerene Association
> A web Pomerene association is formed when two or more firms , usually in
the same industry, join together to market their product overseas.
> Examples:
> WorldTradeCoop (Hypothetical Name): A Webb-Pomerene Association like
"WorldTradeCoop" is an association of small and medium-sized companies
from different industries. They join forces to promote their exports and
expand into international markets collaboratively.
> AgriExportAlliance (Hypothetical Name): Another example could be
"AgriExportAlliance," a Webb-Pomerene Association of agricultural
producers. They band together to the export of various agricultural
products to global markets more effectively.

16. Cooperative Exporters
> Producers of a particular product in the domestic country form into
a cooperative union to manage their export activities.
> Examples:
> Ocean Spray (United States): Ocean Spray is a cooperative of
cranberry and fruit growers in the United States. They act as a
cooperative exporter, collectively marketing and exporting cranberry
and fruit products to international markets.
> Fonterra (New Zealand): Fonterra, a dairy cooperative, is one of
the world's largest exporters of dairy products. They work together to
export a wide range of dairy goods to various countries.

17. Export Merchant
> Export merchants buy directly from manufacturers according to their
specifications taking title to the goods and export directly in their
own name. Example: Cargill Incorporated, Louis Dreyfus Company.
> Examples:
> Global Spice Traders (Canada): Global Spice Traders, a Canadian
company, operates as an export merchant. They purchase spices in
bulk from local farmers and export them to international spice
wholesalers and distributors.
> Sunshine Agriculture Co-op (Australia): Sunshine Agriculture
Co-op in Australia serves as an export merchant for its member
farmers. They aggregate agricultural products like wheat and barley
and export them to international buyers.

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