Head of Global Business Development
A major challenge to consumer brand sales growth lies in providing Distributors and Retailers a Free on Board (FOB) incoterms price list only. This article delves into the complications of this “FOB” strategy and explores solutions that can aid your brand in growing sales.
Understanding FOB Incoterms
Before delving into challenges, let’s clarify FOB incoterms. FOB denotes “Free on Board,” a global shipping term outlining responsibilities, costs, and risks. In this context, FOB pricing means the seller brand bears costs and risks until goods are loaded onto the transport vessel, at which point responsibility shifts to the buyer.
Challenges for your Buyers
- Logistics Complexity: FOB pricing necessitates intricate logistics management for your Customer. Coordinating shipping, customs clearance, and potential delays becomes the buyer’s responsibility post-loading, leading to disruptions affecting timely product delivery.
- Heightened Costs for Intermediaries: FOB pricing can escalate costs for your Customers. These costs include shipping, insurance, and customs duties. This can deter these Customers from listing your Brand.
- Market Accessibility Barriers: FOB intricacies may discourage potential distributors and retailers, hampering brand expansion into new markets, particularly for smaller players with limited resources, who cannot manage the intricacies of logistics and importation.
- Legal Disputes Risk: Customer can worry that disputes may arise over FOB responsibilities.
Solutions and Mitigation – Delivering Sales!
Consumer brands can navigate the challenges of offering FOB price lists only and can stimulate growth and sales through strategic initiatives:
- Transparent Collaboration: Open communication channels with intermediaries to establish shared FOB understanding. Collaborate on logistics planning and cost-sharing to streamline operations. In this way you can help your Customers deal with you on an FOB basis.
- Value-Added Services: Offset FOB-related costs by offering value-added services such as customs assistance and negotiated shipping rates, incentivizing distributor and retailer engagement.
- Incoterm Flexibility: Offer incoterm flexibility such as Delivered Duty Paid (DDP) options tailored to distributors and retailers, fostering partnerships that might be deterred by FOB complexities.
Exertis Supply Chain Services: A Solution
Exertis Supply Chain Services presents an effective solution to FOB challenges. With Exertis purchasing goods FOB from you and enabling your target distributor and retail customers to buy locally from Exertis under Delivered Duty Paid (DDP) terms, Exertis eliminates all complications for your buyers. This solution removes logistics hurdles for your buyers, reduces costs for intermediaries, ensures uniform pricing, and extends market accessibility. The result is seamless brand growth, and more sales, with minimized FOB-related obstacles.
Overcoming the challenges presented by FOB incoterms is essential for consumer brand growth and sales. By embracing transparent collaboration, offering value-added services, adopting standardized pricing, and leveraging incoterm flexibility, brands can pave their path to success. With innovative solutions like Exertis Supply Chain Services’ DDP approach, consumer brands can access sales to all those potential customers who find FOB only price lists challenging.