Import Export Institute: How does an Import Export Broker make money?
The import export trade professional can earn income in several different ways. When an import export agent functions like a sales agent, he or she represents a product, locates a buyer, negotiates the transaction and receives a commission.
In today’s business world, the reality is that many U.S.-based companies KNOW that they should be exporting, but they have no idea how to get started. The benefits of exporting are many, and there are numerous resources to assist them.
Statistics tell us that only 1% of American companies export, and 70% of those businesses are very small, with 20 or fewer employees.
These companies are very open to the services of an Export Management Company, or an International Trade Representative (or broker or agent) to assist them in areas of market entry, locating buyers, and negotiating the transaction.
Professional consulting fees can be charged for services, along with commissions for any sales. International Trade Representatives may also negotiate a monthly retainer in addition to their commissions.
Businesses not only pay commissions for sales, but also for professional services. An Export Management company can complete an export business and international marketing plan and charge a professional fee for this service. These are not difficult to research and complete once you have been trained in global business and international marketing. Research the product, the industry, and provide the manufacturer with the market information. A representative may then also offer to implement the plan – you have done the research and identified the markets, now contact the buyers and earn a commission for the generated sales.
Some trade brokers may simply choose to function as a broker, connecting the buyer and seller. For example, Alex owns a trade company. He has a supplier in China for touch-screen tablets. He can get each tablet, including shipping and fees, for $75.00 per unit. He has a buyer who owns a small chain of video games and electronics stores. This buyer purchases each tablet for $110.00, and orders 200 units total. Alex makes $35.00 per unit, thus at 200 units, he has made a profit $7000.00. Seeing the potential for more profits, Alex now imports the tablets himself and sells them directly to buyers on his website. He purchases them at the price of $75.00 and resells them for $150.00. His profit is $75.00 per unit – he sold 20 his first month and made $1500.00.
Michelle lives in a southern state where a local manufacturer produces a snow removal device. As there are no local customers for this product, she asks the manufacturer where they are selling and learns that their sales are seasonal and limited to states where it snows. Michelle points out that somewhere in the world it is winter year-round, so why not export and turn the company into a year-round business instead of seasonal. She negotiates a representative agreement, and will earn a 15% commission on whatever sales she closes. Her first transaction is with a buyer in Germany. The customer orders 10,000 units at a cost of $15.00/unit, for a total sale of $150,000. Michelle’s 15% commission earns her a profit of $22,500.00.
Prakash has visited his family many times in India and has developed a relationship with a rug manufacturing company in India. He imported an order of 400 rugs for a regional chain of homegoods stores. He earned a $20 commission on each rug, netting him a profit of $8000.00. In addition to locating U.S. buyers, he is using some of the profits he is earning to expand his business to operate his own direct-selling business and will be selling the rugs direct to consumers at a local open-air market.
There are many ways for an import export trade professional to earn income. Some additional streams include negotiating shipping and warehousing contracts, representing customers at trade shows and trade fairs, developing promotional material, referral commissions made for negotiating financial instruments, offering export consulting services, developing export business plans, and of course, receiving a commission for negotiating a sale. The key is to find a need and fill it and offer excellent customer service in the process so that your clients will call upon you regularly.
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