International distribution strategy & global channel management

International distribution strategy

International distribution strategy means making choices:

  • Selecting the market(s) where you have the best chances.
  • Adapting your product to local standards and languages, or not…
  • Choosing your way of distribution: with local departments, channel partners or online.
  • If you want to work with partners, finding and convincing the best ones.
  • Monitoring and managing your sales channels properly.

Alliance experts is active in over 30 countries with local export developers. We help you define your optimal roadmap for market entry and execute it.

In what markets do you have the best chances?

If you want to export, then you need to know what drives the sales of your products or services. For trainings on cybersecurity, you may have to look at the countries with the biggest IT industry. For hearing aids, the countries with the most ageing population are relevant.

With global trade data and some desk research you may already make a first country selection. But also check what competition you can expect. It may be easier to compete in a market with many smaller players than with one big incumbent. Unless you have very clear competitive advantage or there is a niche that only you can serve.

In the market verification check that we do for our customers our local partners in the country always look at the following:

  • The suitability of your product or service in their markets. Is your offering useful and does it fit the local culture, habits or trends?
  • Publicly available data on market size, to get a first impression.
  • Possible distribution channels.
  • Potential competition and their price range.

With the information that we gathered we can have a discussion with you on the best market entry strategy for your company, also given your experiences in other countries.

Download our whitepaper ‘Growing your international sales’ for more info on country selection

 

Compliance and regulations scan

You don’t need to dive yourself in the legal bureaucratic procedures in the local language of the target country. Instead, our local partners in as many countries as you like will scan the local regulations and report on the following:

  • Are relevant licenses, permits, certifications and tests from your own country accepted in the target country?
  • Are there any import duties or levies that may impact your margin structure?
  • Should the involved documents be translated into the local language(s)?
  • For innovative products: what is the right product category to position it in?
  • Wat are general regulations, laws and restrictions on labelling and user instructions?
  • Do you need a law firm, customs broker, local distributor or to start your own legal entity?

If you have any specific questions or points of attention, we will try to answer them as good as possible.

Choosing the right distribution channels

If you want to enter a new market, in general you have three options how to set up your local sales:

  • Local departments. This means hiring staff and facilities and initiating all marketing yourself. It is often the most expensive way of entry, but gives you complete control on distribution. It may work best for bigger markets, where the cultural differences with your home country are limited.
  • Working with channel partners. Distributors with experience in shipping and importing have the fastest and easiest procedures when it comes to selling products in the foreign markets. For selling services or customised products agents or resellers can perform a similar rol. This way you can expand to more markets with less costs, although distributors and agents not only sell for you, and you need to reward them properly.
  • Online. If your product is standardised and can be easily shipped, then online sales is certainly an option. Platforms like Amazon, Alibaba or eWorldTrade facilitate marketing, deal-making and payment, but you can also invest in your own website. Local distribution partners may play a role in the import process and shipping your goods to the buyer. Online  sales may seem easy to set up, but often the investment needed in advertising and promotion is substantial.

Alliance experts has a decade of experience in finding the right channel partners for you, and can do this in over 30 countries. We see that working with an agent or distributor is often the preferred way of exploring a new market.

 

Information to convince your channel partners

If your product would be the ultimate solution to a pressing need in a market, then any distributor or agent would have found and approached you through the internet already. This means that you have to convince your potential channel partners why investing their time and shelf space for your product is a good idea. In order to have a compelling story, you need knowledge of their current portfolio and answers to the following questions:

  • Where would your product be positioned in their portfolio? What new customers would it attract?
  • What pricing do you suggest? And how much margin can they get? Also see our article on distributor margins.
  • What current part of their offering competes most with your product? Should they abandon this? Make an estimate of how much margin that product brings them now.
  • What is your estimate of the market potential? How quickly will this be realized and what investment are necessary?
  • What comparable data do you have from other markets?
  • How are you going to support them in introducing your products? Have you already marketing materials or channels (like social media) lined up for this?

Alliance experts knows the market and can help you formulate or check your answers. Especially if you only have a few potential channels, then your pitch should be spot-on, and you should have the right cultural awareness in your approach.

Distributor management and benchmarking their sales

Distributors are like employees and customers in one. They represent your company and sell your items like an employee while having extremely demanding requirements of a customer.

Many companies seem to be happy enough that they have a distributor in a specific country and do not push too hard for more sales. But especially if you have distributors in various countries, it can be good to benchmark them against each other. Two main aspects need to be taken into account:

  1. The relative market share, based on the estimated market potential. What are the drivers for your product and how does it differ in each market? Whether it’s the number of people over 80 years old or the number of secure internet servers, publicly available data will help you to compare markets.
  2. How long has the distributor been active for you? Especially with B2B products, with longer sales cycles, it takes time to grow the business. But also with consumer products there is something like brand awareness that may grow over time.

Setting out these aspects in a graph will quickly show which distributors are outperforming and which are staying behind. But this is only the beginning of the optimization process. The next step is to sit with the distributor to find out where the problem is.

Alliance experts has the knowledge of the local circumstances and can create a better rapport with your distributors or agents. We can have a more relaxed discussion and get to the real problem why sales is lagging behind. This can be caused by the market fit of your product or service or delivery problems. Our local experts can check whether this is just an excuse or that you really need to take action yourself.

Let Alliance experts be your export management company!

Whether it comes to doing research, discussing strategy or supporting you abroad, you can see us as the temporary and part-time extension of your team. Hiring us gives the following benefits:

  • We are short-term available and productive from day 1.
  • No need to set up an office abroad and hire somebody full time.
  • No search agency fees and training costs.

We mostly work on a fixed price basis, with a clear scope and deliverables, or with a monthly retainer if the activities are more diverse. We would be happy to have an extensive call with you, see where we could help and provide you with a detailed proposal. Just contact one of our team members, or use the button below and let us contact you!

Contact me now!