What are ancillary services and how they can help your exporting business

We’re heading into a global recession. Naturally, businesses are looking for ways to weather the storm.

Consumers have less money to spend, so they buy fewer foreign goods. According to the World Economic Forum, businesses are expected to respond to this decline in consumer demand by cutting costs, laying off workers and optimising their supply chains.

But can you have your cake and eat it — can you cut costs and optimise your operations? Ancillary services are a good place to start.

What are ancillary services? Why are they important?

Let’s get cracking and find out more.

This article at a glance

Often used in the healthcare and airline industries, the term ancillary services refers to additional services not tied to the primary business. For healthcare, this means services not provided by acute care hospitals and GPs, such as ambulance and audiology services. In the airline industry, ancillary services are “paid upgrades” like lounge access, baggage and seat selection.

For an import and export business, ancillary services include transportation, trade finance and legal services. If you don’t have in-house teams, consider hiring ancillary services when you plan to scale up. Doing so helps you save costs and concentrate on your business.

What are ancillary services?

Ancillary services enhance and support a business’s core operations or services. You could offer these services as an upgrade or add-on of a product or service. Or, you could engage an ancillary service provider to provide these services.

Ancillary services usually provide additional capacity or professional expertise that a company lacks. For an import and export business, ancillary services may include freight forwarding, customs brokerage, warehousing and distribution.

You might overlook the importance of ancillary services since they’re not part of your key activities. Engaging dedicated ancillary services providers may be the missing link to providing a seamless customer service experience. Tailor ancillary services according to your business needs. Sourcing for support lets you focus on your core business: international trade.

What are examples of ancillary services?

Let’s say you’re trying to break into the Spanish market. An example of an ancillary service could be a translation and localisation company developing a Spanish-language website for your business.

A call centre is another example of an ancillary service. If you receive lots of queries or your products need substantial post-service support, it is more practical for you to outsource your customer service operations. Often, this is more cost-effective than employing more customer service representatives.

Types of ancillary services

Ancillary services assist in various aspects of the import and export process. Some types of ancillary services that you may consider for your global exporting or importing business include:

1. Warehousing. As an exporter, warehousing is an essential ancillary service. Warehousing anticipates future demand for products from your customers, thus cutting the time to procure the goods from your suppliers. Maintaining a warehouse also means owning a safe storage facility for your products. Depending on the nature of your trade, having a warehouse gives you an edge over your competitors since you can deliver the freshest goods fastest.
2. Freight forwarding and customs brokerage. As a cross-border merchant, you move goods frequently across different countries. It would be simpler to engage a freight forwarder or customs broker service. A freight forwarder orchestrates all of your shipments with transport carriers. A customs broker navigates the complex regulations and procedures related to importing and exporting goods — from product classification and valuation to documentation and compliance.
3. Banking and finance. Financial institutions are the life’s blood of international trade. They make funds available for a company, provide overdraft facilities, offer insurance, and issue letters of credit. In doing so, the banks and financial institutions help importers and exporters hedge against risks and uncertainties.
4. Advertising, sales, marketing. Advertising plays a crucial role in supporting trade by promoting goods and services. It informs your B2B or B2C customers about your products and services, thus helping them make informed purchasing decisions. Advertising also generates more sales leads. Sales and marketing involve promoting and selling goods and services in new markets through market research, advertising, and sales channels.

Depending on the type of goods traded, and the jurisdiction, some ancillary services are legal requirements. Ancillary services include freight forwarders, customs brokers, logistics providers, and trade finance specialists.

How can ancillary services help your exporting business?

An ancillary business is a secondary or supplementary business that provides services to other entities. As companies have outsourced non-core functions such as human resources, payroll and call centres, these ancillary businesses have grown in popularity. These are some of the ways ancillary services can help your exporting business:

1. Cost savings. You save hiring, training and retention time and costs when you hire another company for quality control and risk management services. You may not need these services all year round due to the size of your business — outsourcing them can sometimes be more cost-effective.
2. Boosts reputation. Engaging a renowned company’s ancillary services improves your business' standing and gives your current and potential customers a sense of trustworthiness.
3. Focus on your trade. Outsourcing non-essential functions to ancillary businesses can save money and time for your company, allowing your business time to focus on its core objectives.
4. Flexibility. Businesses are free to choose which ancillary services providers with which they partner. Since most ancillary contracts are short-term, find a partner that caters well to your needs and has experience dealing with your industry.
   

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