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It takes a long time to develop a good distributor/ supplier relationship. Unfortunately, it also takes a short time to destroy that relation. Best way to avoid most problems with International distributors is to prevent these from the beginning. Choose the right partnership with a company that fits your present needs and will evolve with you as your business grow.
Experience shows that starting with the wrong distributor will only lead to misunderstanding and contract termination.
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Choosing a Distributor Abroad . Step by step.
There are three ways to for your company to approach international distributors
Do nothing, just wait : And hope that someone from overseas will contact you with an order. Sometimes that does happen, but it could lead to more problems than benefits.
It could come from a retailer, trying to buy wholesale and skip distributor’s mark up . But mark up is not profit margin. So, what kind of labeling is requested by law, how are you going to ship and clear customs, what kind of export documents should you prepare.. After all these added costs, what shall be the wholesale price? Most important you probably will loose control on the merchandising and marketing of your own brand!
If it comes from a distributor : Who is the end customer and will it fit with your marketing strategy ? Is it a one shot or first of repeated orders? And what is the plan if the first order did not sell through? Who will manage your returns? You do not want your domestic buyers discover that your brand is dumped in a discount chain abroad. And there is no doubt that they will find out …
In either case, do not let your products leave your warehouse without exactly knowing and approving the marketing strategy behind this order.Your company’s image and name are at stake, so you should incorporate any concerns you may have into your contract. Moving forward, you will want to monitor the ongoing activities and progress of your intermediary.
Trade Shows opportunities: More and more foreign distributors and retailers visit US trade shows. Usually the ones you would not have selected if you had done your own research. Some small exports can be built up in this manner, but no serious, long-term strategy develops. Locating the best distributor to represent you overseas is important, so thoroughly research your options before signing an agreement. In addition, use due diligence and caution to thoroughly check out any potential intermediary.
If you have not seriously prepared your company prior to export, any adverse turn of events threatens to quickly undo this fragile structure. Ever had a shipment returned or even destroyed by customs abroad? A very expensive experience!
Export experts: This is the only correct approach to building long lasting business abroad. With We Globalize you build a plan, define your strategy and grow you exports step by step. This will be the best way to control of your International business development. A dedicated consultant, will commit to a strategic business development approach, and will help you gradually implement a systematic, sustainable expansion plan that will serve your company for years to come. We also will implement an ongoing training program for everyone involved in exports, finance, shipping and administration.
Select the best potential markets. There are about 200 potential countries in the world and some are easier to approach than others. Thoroughly explore the markets and select 10 that appear to have the highest sales potential for your company’s products.
Prepare for your target market. Once the locations have been decided, we will research the sales channels and define your products’ advantage in each, set the local pricing and check how it compares to the locally available products. Also review packaging, compliance policy and obtain local certifications and licenses that may be required.
Work with the right distributor who will be able to completely match your company’s needs. This is the most important step of all. Your local partner should:
Once the partner is selected, a comprehensive contract will structure the relationship in a way that allows you leverage and monitor the development of your abroad business.
Your agreement with any overseas business partner should at minima address the following:
• Whether the arrangement is exclusive or non-exclusive
• The territory to be covered
• The length of the association
• Performance requirements
• Termination of the relationshipOnce your export countries are identified, your partner selected, your product customized and positioned and your organization committed, execute the strategy patiently and consistently. Then watch your export business flourish.