This article was adapted from Differences between domestic and international trade on Alibaba.com Seller Central.
International trade is a critical way to expand your business. It offers higher quality goods at lower prices, and helps businesses reduce manufacturing costs while introducing new products to the market. Thanks to technology, international trade can now be achieved by both large-scale corporations and independent wholesalers. You may be interested in selling domestically to start out and gradually expanding your wholesale business to sell products or services to an international market.
There are many differences between domestic and international trade. We’ve put together this simple guide to help you understand what makes domestic and international trade different before you pass on expanding into global markets. We’ll give you a basic overview of what domestic trade is, and how international trade has the potential to unlock more opportunities for you and your company.
What is domestic trade?
Domestic trade is the exchange of domestic goods within the boundaries of a country. Domestic trade may also be subdivided into two categories: wholesale and retail. When you think about domestic trade in relation to a wholesale business, you may be investing in stock from local manufacturers and dealers and selling them on for a small profit to businesses within the same country. A domestic wholesale company will often buy in a large quantity to enjoy a discount from a local supplier.
Let’s say you are based in the US and you run a wholesale business selling stationery and printing supplies to local schools and offices. You will invest in a range of products and buy in bulk from the US. You may then brand the products and sell them on for a profit to US kindergartens, colleges, universities, and offices.
What is international trade and how is it different?
International trade is trading goods, products, or services across international borders or territories on a global scale. From trading spices and silk in the Middle East to shipping technology and devices from Asia to Europe, international trade has helped the world rapidly develop and grow. Nowadays, in most countries, international trade represents a significant share of gross domestic product (GDP).
There are many benefits associated with international trade, and it has become one of the major contributors to the growth of the global economy and the reduction of poverty. International trade enables greater diversity of goods and services to flow on a global scale. It also tends to promote efficiency in resource allocation and production and is likely to increase employment and encourage innovation.
For small business owners, expanding into foreign markets can make your business stronger and more profitable. You’ll be less dependent on a single market. This can help you counterbalance the effects of possible economic downturns and other political or environmental events.
As the world becomes more connected, there are many global trade opportunities you can take advantage of as a wholesaler. Although international trade can be complex, there are some pretty innovative solutions to help you unlock the many benefits. The ever-evolving tech industry is making international trade easier than ever. If you’ve been considering expanding your business and either selling to different markets or sourcing products and supplies from overseas, now is the perfect time.
Got questions about international freight? Watch our fireside chat to hear the experts at Alibaba.com Freight and Freightos.com break down answers to your burning questions.You can view our previous fireside chats here.
When you’re ready to go global, start with a market that is similar to the US. You can base this decision on culture, language, and business norms. This will make the transition easier.