Export House : Meaning, Functions, Advantages and Disadvantages

What is an Export House?

Export Houses are companies that help in the export of goods and services to other countries. These companies basically help other companies to send their products and services abroad. They are responsible for the shipping, logistics, and other tasks. They act as intermediaries between the international buyers and the domestic market. These companies basically perform all the functions on the behalf of the sellers. They act as middlemen between the seller and the client. In India, export houses play an important role in the economic growth. As they facilitate foreign trade, these houses work with a variety of industries.

Functions of Export House

1. Drafting Documentation: Export Houses are responsible for drafting the documentation. By doing so, they establish strong communication between the international and the domestic market. They are responsible for drafting documents related to quality control, invoices, terms and conditions, Shipping and Freight Documents, etc. By doing so, they help the businesses to be conducted smoothly.

2. Identifying the Products or Services: Export houses help to identify those products or services that can have a huge impact on the market. They help to find the buyers who are interested in that particular entity. They conduct thorough market research to identify the demand for some products. By doing so, it helps to assess the market and accordingly identify those entities that will boost the financial aspects.

3. Shipping: Export houses are responsible for the shipping of products. They ship products in various modes including air, land, and water as well. They ensure that the shipping is smoothly done and that it is done by following rules and regulations. Export Houses also ensure that the damage is minimal and cost-effective

4. Negotiations: These houses are responsible for negotiations as well. They ensure that both the seller and the client are happy with the service. They also ensure that the seller earns the desired profit and the customer, also gets a satisfactory price. Since Export Houses conduct market research, they provide good pricing of the products and discounts to the client as well.

5. Quality Control: Export Houses are responsible for quality control. They also keep a quality check. If there is any issue with the service or the product they immediately send the report to the concerned team. They can involve third parties who are responsible for quality checking and testing the products. Continuous Audits are regularly held.

6. Customer Support: Some Export Houses also provide support to the customers. As they aim to satisfy the customers, they play a crucial role in doing so. They try to resolve the queries related to the particular service or product and also help those customers who are not satisfied with the product.

7. Damage Control: Export Houses ensure that the products are in perfect condition. Since these houses export the products, they also provide proper packaging to minimize damages. They also identify the risks. For instance, while shipping fragile items, they use fragile stickers so that while shipping, extra care is taken to avoid damage.

Advantages of Export House

1. Penetration: Export Houses can penetrate the market easily. They can identify those products which can affect the market in many ways. As they conduct a thorough market analysis, they can identify the trend of the market. This helps them to collaborate with those companies that can compete in the international market.

2. Providing Resources: If a parent company does not have much manpower, Export Houses can provide additional resources that can help with packaging and also, maintain the financial records. They also hire third parties who are exclusively responsible for quality checks and control.

3. Benefits of Domestic Market: Domestic Markets have benefitted largely from export houses. They can compete and sell their products in the International market. Export Houses have provided stable income to the Domestic Markets since these houses act as intermediaries, thereby reducing the notable cultural differences.

4. Competition: Export Houses have also increased the choices in the market as these houses have increased the competition in the markets. They are better at adapting to the latest technologies and fostering innovation that will ultimately improve the market scenario.

5. Provide Products at Affordable Prices: Since Export Houses conduct a market analysis, they provide products at affordable prices. They assist the domestic markets regarding pricing, investments, and discounts. They assist with documentation, packaging, and coordination with freight forwarders, ensuring efficient and cost-effective shipping processes.

Disadvantages of Export Houses

1. Levying Charges: Since Export Houses are responsible for packaging and shipment, they levy extra charges on the products. Some houses levy taxes as well. Therefore the market price of the product increases, and customers have to bear this extra cost. Sometimes Export Houses levy extra charges on fragile items as well.

2. Lack of Interaction: Since the Export Houses are intermediaries, they mostly deal with the customers, and the target company does not get much chance to interact with the customer. If a customer has any query regarding the product, usually export houses clarify, thereby, increasing the gap between the customers and the companies.

3. Lack of Predictability Power of Companies: Even if the Export Houses deal with the market and financial part, the target companies cannot predict future outcomes using this data. For this, they need to step into the market. Export Houses usually use their market research analysis for their benefit.

4. Logistical Problems: Since exporting involves compliance with strict rules and regulations, delays and damage to the products can be expected. These logistical problems can hamper the reputation of the companies as well as can cause huge losses as well.

5. Customer Dissatisfaction: Although Export houses provide customer support, it is still seen that they fail to resolve the queries of the customers, which leads to dissatisfaction. Often, customers receive damaged products, and if the team does not solve the issue, customers feel cheated, and this can harm the company’s reputation

How to start an Export House?

Since Export House is a company that helps to establish communication between the International and the domestic market, it has many roles. The steps to start an export house are as follows,

1. Analysis of the Market: Those who want to open an Export House, first need to analyze the market. They need to identify those products or services that will have a positive impact on the market and will attract a large number of customers.

2. Establishing a Plan: After analysis of the market, the team now sets up the business plan. In this plan, they highlight the aim, goals, targets, and services that will be provided to the customers.

3. License Application: After chalking out the business plan, the team now, completes the necessary registration. They apply for licenses. For instance, in India, if a person wants to open an Export House, they need to apply for a Pan Card, Importer Exporter Code, etc.

4. Establishing Infrastructure: Now, these houses establish the infrastructure. They establish their offices near the shipping locations. They also set up Logistic offices as well.

5. Recruiting Resources: After setting up the infrastructure they recruit resources. Manpower is a necessary part of Export Houses. They recruit people for Customer services and other services as well.

6. Establishing Connection with the Target Companies: The Export House now contacts the target companies. They establish partnerships with suppliers who are interested in selling their products in the international market.

7. Marketing and Sales: The Houses now target the audience and sell the products or services. They are also responsible for the pricing of the products and quality control.

Difference between Export House and Trading House

Basis	Export House	Trading House
Characteristics	Export Houses are responsible for exporting goods and services.	Trading Houses are responsible both for the import, and export of goods and services.
Scope	They act as intermediaries and help to promote products of the domestic market at the international level.	They deal with a broader range of products.
Operations	Deals only with the export part.	Deals with both imports and exports.
Task	They are responsible for promotion, packaging, and documentation.	They are responsible for end-to-end services, including finance, market analysis, etc.

Frequently Asked Questions (FAQs)

1. Mention some schemes provided by the Government of India for export houses.

Solution:

Various Government schemes have been introduced in India. Some of them are Merchandise Exports from India Scheme (MEIS) and the Export Promotion Capital Goods (EPCG) scheme. Government also provides rebate on taxes as well.

2. What types of products do Export Houses export to other countries?

Solution:

Export Houses export wide variety of products. The products include,

• Textiles
• Machineries
• Electronic Goods
• Agricultural Products

3. Define MSME Export House status eligibility.

Solution:

MSME Export house status eligibility is the status given to Micro, Small, and Medium industries so that these industries can get some extra benefits. The status is given solely on the basis of export performance.

4. Differentiate between Export House and Export-Import company.

Solution:

Export House deals with the exporting of goods and services to other countries. Export Import companies export as well as import goods and services.

5. Is Export Houses responsible for financial transactions?

Solution:

Yes Export Houses are responsible for financial transactions. Since they deal with the agreements on the behalf of the company, they help to assist the sellers by providing online payment gateways.