Disadvantages of Indirect Exporting

 

Disadvantages of Indirect Exporting:

The following are the disadvantages of indirect exporting:

(a) Second-hand Information: Since indirect exporters are not in direct contact with the foreign consumers, they have to depend on marketing intermediaries for information regarding the overseas markets.

(b) Lack of Control: Indirect exporters cannot exercise a direct control over marketing decisions such as packaging, pricing, advertising, sales promotion and after sales service due to their dependence on market intermediaries.

(c) Less or No Export Incentives: In case of indirect exports, incentives given by the government get distributed among various marketing intermediaries. Hence, indirect exporters get less incentive or sometimes no incentives at all.

(d) Lower Prices: In case of indirect exports, there are many intermediaries. Hence, the total revenue gets distributed among various intermediaries and the exporter cannot charge a high price.

(e) Excessive Dependence: Due to lack of direct contact with foreign consumers, indirect exporters are totally dependent on market intermediaries for the information about foreign markets and receipt of export proceeds.

(f) Lower Sales Volume: Export houses arrange goods required for exports from various sources and therefore, the contribution of individual exporters is very meagre.

 

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