Intermediaries are the grease that allows the wheels of commerce to spin. International trade intermediaries have long been important facilitators of international trade. They have helped producing firms reach out to distant markets that they would never alone have reached, and they have been able to coordinate product offerings from many different suppliers and provide a broad range of products that many customers would not have been able to purchase. Buyers and sellers from all around the world have been successfully matched, thanks to the existence of intermediaries. Intermediaries are instrumental in bringing to life the gains from international exchange.
New relationships in international trade are developed routinely as the needs and offerings of market participants’ change. An international trade intermediary is typically responsible for locating appropriate importing businesses on behalf of exporting companies. International trade intermediaries usually earn a commission based on the size of trade deals that are performed. The business is highly relationship-driven and dependent on experience because of the complex nature of conducting business with foreign entities.
International trade is a business in which large and costly shipments are often arranged. An international intermediary is compensated based on the size of the deals he or she initiates.
When suppliers and buyers interact, certain transaction costs arise. Transaction costs are direct costs incurred in carrying out purchases and sales, as well as the time and inconvenience of searching. An important reason for the existence of intermediaries is they can facilitate and carry out a transaction at a lower cost than the supplier and buyer can on their own. By using an intermediary channel, buyers and sellers minimize the risk of failing to find a suitable partner to trade with.
International trade intermediaries have the ability to help exporting companies to lower three different costs relating to exports: search costs, negotiation costs, and monitoring costs. The intermediaries’ knowledge of foreign markets, experience from exporting processes, and understanding of marketing in an international perspective are the major reasons for their existence.
Markets, in general, have three functions in today’s economy. The first two functions are handled by intermediaries and consist of matching buyers and sellers and simplifying the exchange of information, goods, services, and payments that are connected to market transactions. The third function is to provide an institutional infrastructure, meaning a legal and regulatory framework. The first function, to match buyers and sellers, can be divided into three components. The first is to decide the product offerings. The second is to search for information about price, the products, and to match sellers’ offerings with buyers’ preferences. The last one involves price setting. The second main function handled by intermediaries, participating in processes associated with transactions, can be divided into three parts. They consist of logistics (to provide buyers with information, goods, or services), arrangement of the payment to sellers, and trust associated with the credit system and reputation.
In order to deliver the optimal level of service outputs, we perform a number tasks and participate in activities involved in the transaction–collection of marketing research information (information), agreement on terms for transfer of ownership or possession (negotiation), intentions to buy (ordering), acquisition and allocation of funds (financing), assumption of risks (risk taking), storage and movement of product (physical possession), buyers paying sellers (payment), and transfer of ownership (title).
We understand the what, where, why, when, and how of international trade. We bring ease to the process of buying and selling.