The buyer, or the employe of the commission house who executes the orders received from abroad occu pies an important position. He must know the de mands of widely separated markets and the peculiar needs of the customers of the house on the one hand, and on the other he must be thoroly familiar with the sources of supply in the domestic market. Unless the desired source of supply is indicated in the order he can place his order where his judgment tells him he can strike a most satisfactory bargain.
13. Manufacturer wed commission house .—The buyer, when he enters the market, will usually send out requests for quotations to various manufacturers or in the case of goods habitually handled by the house he may place his order with the firm which in the past has given the most satisfactory service.
The manufacturer on his side may approach the buyer in two ways; he may send his personal salesman to show samples and make quotations, or he may put his entire export promotion in the hands of a local export agent. Export agents frequently represent more than one manufacturer in closely allied lines. They sell to the local export merchants or commis sion houses thru samples and catalogs. In European ports, especially Hamburg, these agents maintain large display rooms. Both visiting foreign buyers and local export buyers find these displays helpful in making their selections. Many American textile mills maintain no selling organization and depend upon such firms for their domestic and foreign sales. This method is not generally desirable, since it intro duces still another middleman and increases the amount payable in commissions.
14. Creating of foreign demand.—The problem of creating a foreign demand for a manufacturer's trade marked product is not solved by dealing thru an ex port merchant or commission house. The manufac turer must start the ball rolling. He may undertake an independent advertising campaign and even send out travelling salesmen, but it is more economical to cooperate with the commission houses and make up a promOtion budget for the different markets.
15. Commission house as selling agent.—The com mission house may undertake an active selling cam paign under order. The campaign will be carried on by means of samples, catalogs, advertising and trav elling salesmen. A portion of the expense is usually borne by the manufacturer. In this case the com mission house becomes an agent and charges a com mission on all sales. The manufacturer may confine himself to sending out salesmen to instruct the com mission house representatives in the best way of sell ing his goods. In this way the commission house be
comes gradually indistinguishable from the factor. or manufaturer's agent.
16. Advantages of export commissi Ohl houses.— Both manufacturer and foreign buyer are greatly benefited by the services rendered by these commission houses. The combination of many small orders into one large one, the advantages of cheaper freight and insurance rates and the credit facilities are the princi pal advantages to the buyer—the same as in buying from an export merchant. The benefit derived from having an experienced buyer to select goods in a far away and highly competitive market is also an itn-• portant consideration. The manufacturer benefits by making direct domestic sales and by being relieved of annoying details.
17. Disadvantages of export commission houses.— Lack of specialization is probably the chief objection to permanent dealings thru such houses. The manu facturer will find that his goods do not, as a rule, re ceive the selling attention he would like on account of the large number of articles that the house handles.
The tendency toward specialization is increasing. One export commission house will handle only busi ness in South America or South Africa, or will con centrate on textiles or food products. Again, some other house may handle textiles in China, hardware in Australia, and paper goods in England and the Continent. But even so, the specialization in Ameri can houses is still relatively slight. England and Germany have gone further.
The commission house acting as buyer for the for eign concern is under a serious handicap when asked to quote prices. The foreign buyer must know what his goods will cost him delivered at his warehouse be fore he can make his calculations. This information the commission house is in a position to furnish only when handling staples subject to world prices, or ar ticles upon which it has received binding quotations for a fixed period. The house cannot always know even then what the goods will weigh, what the packing will cost, or what the freight will be. The direct rep resentative of a manufacturer or the salesman of an export merchant may close the deal long before the commission house can obtain the asked for infor mation. Manufacturers dealing thru commission houses, except where these are their authorized selling agents, will often find that inferior goods are getting .the orders because they are backed with better service.